Trading obstacle

Chapter 1. The Premise

Majority of traders will fail… I can hear boos already coming from readers of my blog, but maybe you have to hear this.

What does scientific studies and statistics say, lets just look through some of them together:

Day Trading

• A study analyzing 19,646 Brazilian day traders from 2013 to 2015 found that 97% lost money, with only 1.1% earning more than the minimum wage and a mere 0.5% consistently making significant profits. 

• Research on Taiwanese day traders between 1992 and 2006 revealed that only about 5% were profitable, and less than 1% consistently earned positive returns after fees. 

• In India, the Securities and Exchange Board reported that 70% of intraday traders incurred losses between 2019 and 2023, with 80% of those executing over 500 trades annually recording losses. 

Forex and CFD Trading

• Due to European regulations, brokers must disclose the percentage of clients who lose money. Data from 25 leading brokers show that 60% to 83% of retail traders lose money, with an average of 76%. 

• An analysis of 104 EU-regulated brokers found that 79% of traders lose money trading leveraged products like Forex or stocks.

General Trading Statistics

• Estimates suggest that 70% to 90% of traders lose money, highlighting the challenges of achieving consistent profitability in trading. 

• Approximately 80% of day traders quit within the first two years, and only about 1% are able to predictably profit net of fees. 

These are statistics taken from studies with references below and looking at this information it does actually look like you are more likely to fail than not, unless..

There is one big obstacle - The right knowledge.

Just opening youtube you get bombarded with excuse my foul words “garbage”.

Every strategy seems to include time, when to take trades, unreal expectations and making it sound easy.

This is the knowledge that 80%+ people use, while trading.

Is it the right knowledge? Of course not.

Let me explain what is the right knowledge in trading

This is being sold in markets as the holy grail, the next best thing, this has again unreal expectations, from chart you can see stop loss size is barely there and target is 17 times your stop loss, meaning you can make 17 times more than you risk.

So if it works so well, why isn’t it widely used in wall street, obviously if Warren Buffet got his hand on this super simple strategy, he will make money, right?

Well you see there is a saying “Not everything that shines like gold, is gold”

All these lines, blue blocks, it makes you think that it would be perfect to hire art student instead of economist to hedge fund, they surely will make charts look nice.

The problem lies that your success is determined by quality of knowledge that you consume and it is related to economical factors, this is the reason why investors are often graduating economic and not art studies.

Chapter 2. Conclusion

If the premise is that majority of traders fail and it is connected to the right type of knowledge that mainly economist understand, shouldn’t the conclusion be: good traders are the ones that can interpret economical data and not just use technical analysis?

🧠 1. Professional Traders Use Both (but Fundamentals Matter More for Longer-Term Success)

• Hedge fund and institutional traders often combine both fundamental and technical analysis, with a heavier weighting on fundamentals for medium- to long-term positions.

• A study by Barber, Lee, Liu & Odean (2008) found that individual traders who focused on news and fundamentals tended to outperform pure technical traders over time.

• Fundamental analysis (earnings, macroeconomic trends, balance sheets) is key for understanding why price might move. Technical analysis helps identify when it might move.

📈 2. Retail Traders Often Rely on Technicals Alone—and Underperform

• Research shows most losing retail traders rely heavily or exclusively on technical analysis, often using indicators like RSI, MACD, or moving averages without a fundamental thesis behind trades, with SMC and ICT these statistics just became worse.

• A 2019 paper titled “Day Trading for a Living?” found that the rare profitable day traders often had a pattern of reacting to market news and fundamentals, not just charts.

🧩 3. What “Good” Traders Tend to Do

Successful traders often:

• Use fundamentals for context – earnings reports, Fed decisions, inflation data, company health, sector strength.

• Use technicals for timing – entries, exits, stop loss placement, and identifying short-term momentum.

• Adapt to different market conditions – e.g., being more technical in range-bound markets, more fundamental in trending ones.

• Focus on risk management as much as their strategy.

So we can conclude, that biggest trading obstacle is the type of knowledge you consume and the shortcuts that trader takes in order to make process easier.

No one’s journey in trading will be perfect. I would advice everyone to start learning market drivers and fundamental knowledge, this will help you think more like an investor and improve abilities to follow the money better. Good luck on reaching for profitability.

Reference list:

https://thestatlab.medium.com/the-truth-about-day-trading-why-most-traders-fail-backed-by-data-1febb20a36c8

https://www.quantifiedstrategies.com/what-percentage-of-day-traders-fail/