What are the odds of becoming a Successful Trader?

Inspired by Steve Pavalina's post "What are the odds of becoming a successful black belt?", I feel compelled to shed some light on this trading myth. The myth of course is that 90% (or 85%, or 95% or whatever) of all traders washout. There are two inherent fallacies with this statistic - one is the quantitative fallacy (is there even a way to quantitatively measure this and if so has anyone actually ever conducted such a study), and two is the qualitative fallacy - do your efforts mean nothing if statistically you only have a 5% chance of success?

Remember, statistics center around averages, the solution - don't be average. "Never tell me the odds, kid."

The problem with these statistics (or any statistics for that matter) is that they look for averages. Quite frankly I see a lot of average people everyday. Most of them can barely drive, spend more than they save, believe that "American Idol" is worth watching, and eat fast food six times a week. So am I concerned about the competition - not exactly. As Steve so eloquently states in his article, the typical person is just a dabbler. They pull up some free information on the internet, think that they can trade with a $1k account, churn their account like butter while making all sorts of emotional stupid decisions and then give up in frustration. Is it any wonder that most of these people fail?

The real question that most people would like to know is what are the odds of an above average, driven, well motivated, positive thinking, well capitalized, well educated and totally driven person succeeding after spending 3-5 years of hard work, in other words a qualified trader? Unfortunately there are so many variables to the above statements that we may never have an answer. However, based on my experience observing and interacting with these types of people (and working towards being one myself) I would say the odds are quite good. Of the 10 or so people I know who meet these qualifications 80% of them are making enough money to sustain a modest lifestyle or better ($100K annually or better) from their trading income. Four of them are making at least medium 6 figure numbers and at least one of them is making 7 figures. Now of course these statistics are also fairly meaningless, but at least they seem a little more realistic. To me the odds of a qualified trader seem pretty good - basically an 80% chance of modest success, and a 40% chance of making a significant income (top 5% income earner or better).

Although some of you might draw some comfort from the above statistics, personally they are somewhat meaningless. Basically, your success or failure stands with your commitment to mastery. Or as my beginning statistics instructor said, "statistics are a lie".
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