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How not to become part of the 90% losers’ gang in trading & thrive on their money instead

There is this big bunch of new market entrants who are all starry-eyed about trading.

Dec 06, 2019, 12.17 PM IST
Trading connotes impressions of a great deal of action, quick fire decision making, the thrill of earning a great deal of money within a short span of time.
Is trading worthwhile? This is a question a lot of people ponder about. They do so because trading, somehow, seems a lot more attractive, glamorous, when compared with investing. The latter appears dour, uninteresting, almost drab!

Trading connotes impressions of a great deal of action, quick fire decision making, the thrill of earning a great deal of money within a short span of time. Investing on the other hand, speaks of steady returns, to be gathered over the years, with minimal volatility and, hence, no promise of excitement.

So, there is this big bunch of new market entrants, who are all starry-eyed about trading and what riches it is going to create for them. Many of these people are not even clear whether they are there in it for the money or for the anticipated thrill of the ride!

Then there is the other set – the employed guys. Oh, how they hate their jobs and wish they could quit tomorrow! And what better to do than enter the world of trading: Buying and selling equities, commodities, currency pairs!

The sheer thought of doing all that in your own time, with no perfidy of a boss to report to, no pesky or irritating colleagues to put up with, no fixed timings and freedom to do whatever you want! This group is a legion, contained in number only because many of them lack the courage to actually quit their jobs and plunge in.

Then, there is a third set – the lazy, incompetent ones. They are actually unfit for any work, either because they are too lazy or they just don’t have the skills or the intelligence. Many of them end up as traders (and the balance as real estate agents!), because this business has no entry barriers, requires no capital, can be run from anywhere and keeps them occupied all day!

Now, many of them are told by their well-wishers NOT to get into this business of trading. Over 90% lose, they say. How can anyone be successful in there, goes their refrain? But do people listen?

Seldom. Somehow, they convince themselves that they are not among the 90% or that they will somehow find a way not to be part of it. The fact that around 90% of the people lose is true. So, the question really is valid: Is trading worthwhile? Can one run the risk of being part of the 90%?

The answer lies elsewhere. Consider this.

  • Most business enterprises fail, to the tune of 90%.

  • Most new products introduced into the market (even by big or reputed companies) fail up to 90% of the time.

  • Most movies made fail to become hits – up to 90%.

There are also other areas.

  • 90% of the people who go on a diet or join a gym in January first week drop out of the program shortly after starting out.

  • 90% of the people do not have the basic skills to run any business.

And more specific to trading:

  • 90% of the people trading currently are not doing it for the money, but more for the thrill or just to have something to do with their lives.

  • 90% of the traders are unwilling to learn, to educate themselves on basic and advanced skills.

  • 90% of the traders cannot admit to being wrong, to the error of their ways.

So, it is clear that this 90% figure dominates everywhere! It is not just confined to trading. Isn’t the statistic being twisted to show something that is much more prevalent across what most people do?

Unfortunately, no one tells you all this. In business communities, it is not a stigma to fail in one business, they just move on and start another. But even they don’t apply the same yardstick when it comes to trading the financial markets!

Why this double standard? No explanation. Just a ‘feely’ thing!

So if 90% is the norm out there, then why bother about it? Why not twist that into some kind of an advantage, if possible?

Let’s look at it this way: if 90% losers were not there, how would you win? Trading is a zero-sum game, after all! So, the more bad traders and investors there are, the greater the chances for you to win, right? (Wow, that actually makes it a whole darn more worthwhile than we thought it was at the beginning!)

Now, the question is only how to not be the 90% and how do we get to be in the 10%? Well, here are some of the things you could do:

  • Not think like the 90%

  • Not be in it for the thrill or the gamble or the fantasy

  • Be willing to learn, all the time, to build and refine skills at playing the game.

  • Create a process, vet it, refine it till it works consistently. And then sit back and work it.

  • Be more focused and less emotional in response to events and news. That is antithetic to the behaviour of the 90%.

  • Don’t fall for short cuts. Make the effort. Those who fail are always the short-cut guys.

Understand that all of these take time to become part of you, but it must happen if you have to elevate yourself to the 10%. Remember that the 90% gang comprises those who create the pool of money from which the 10% are going to draw their shares.

The only way that can happen is if you are not part of that 90% gang. The good news is that the world is always producing this 90% gang – there will never be any shortage of them! The need to seek thrills, the unwillingness to work hard, the intense desire to get ahead by using short cuts, the inability to skill themselves will always ensure that the pool of money will never disappear even 100 years from today.

So, the final answer to the first question is: Yes, Trading is indeed worthwhile. Provided you become part of the 10% gang.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of
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