Why 90% of Traders Lose Money: Trading Is a Competition

Trading is a ruthless competition where, short of some utopian revolution, the majority of participants active in the financial markets lose money. You can compare trading to a Formula 1 Grand Prix and its podium: finishing 4th isn’t bad — you’re doing fairly well — but it’s not a great result. In fact, I’ve never seen a world champion get there without a significant number of Grand Prix wins and podium finishes to their name. It’s easy to pull off a few good trades from time to time, but doing it consistently takes technique and experience that remain well above average. I can see you coming with SMC Trading… but I’ve already written an article about it 😉

Today, social media makes trading look easy and accessible to everyone. That is obviously false, and the statistics prove it.

Availability bias: why traders misjudge the reality of the market

This is a cognitive bias that leads all of us, sooner or later, to confuse reality with the first ideas that come to mind on a given subject. Sometimes those ideas are perfectly true, but unfortunately, they are often “truths” that get drummed into us over and over and that we repeat straight back without any critical distance.

It’s a phenomenon you’ve surely already noticed on social media. I experience it regularly myself in the comments on my content, despite all the prevention and education work I provide for my followers.

There’s always THAT troll… ANYWAY!

Let’s be realistic: trading is profitable for 5 to 10% of active traders at the VERY most. The rest lose money — sometimes a lot of it — and give up before acquiring the necessary skills.

Why do the vast majority of traders lose money in stocks and crypto?

1. First of all, because it’s a hierarchy of skill where only the best survive.
2. Moreover, no matter when you trade or which timeframes you trade on, liquidity is limited. This means you absolutely have to be faster than everyone else to get in and out. Even with a good plan, the available liquidity sometimes can’t satisfy everyone.
3. You need better strategies than everyone else. Those who are good eat; those who aren’t get eaten. Just like in any competition, to earn a better living than others in this field, you absolutely have to be better than the majority!
4. There are very few industries where you are immediately up against the best in the world — and trading is one of them!

A trader who makes $1,000 a day is taking it from others. Others will have lost or missed out on that $1,000.

When you take up a sport, you can’t measure yourself against the best — there’s no point; you’ll quickly get discouraged. In trading, if you don’t take precautions and start out with expectations that are too high, it’s exactly the same!

Before turning pro, it takes time no matter how talented you are… Besides, it’s by losing to players better than you that you level up — you just need to keep a certain balance so you don’t blow up your capital.

Time, research, and practice: the three pillars of a profitable trader

Becoming better than everyone else in order to make money requires putting in more “deliberate” work than everyone else. It’s a discipline that doesn’t tolerate half-measures.

Most people quit too early; the reasons vary (lack of method, frustration, undercapitalization, poor emotional management…).

In my view — at least with the method I offer as an example — it takes about a year to trade decently, but to get really good, it generally takes considerable time and constant self-questioning.

Spreading yourself too thin: the classic crypto beginner mistake

If we look at the crypto market, traders who fail to make a profit usually get lost in far too many strategies or too many coins instead of focusing on 1 or 2 assets and 1 or 2 strategies. At that point, it’s a casino if you’re just starting out! Hence the importance of building solid foundations with a proper trading journal and a real risk management method.

Succeeding in trading: simple tips to start off right

Successful traders trade 1 or 2 very specific strategies, setups, or patterns. You don’t need to know everything; you just need to know a few patterns that work, level up, and only THEN broaden your skills.

Markets evolve, and some segments remain the preserve of a specialized minority: options trading, for example, accounts for only a modest — though fast-growing — share of crypto derivatives volume. It’s no coincidence that it’s often the most experienced players who venture into it.

Choosing the right platform from the start

Your choice of platform also plays an important role in getting off to a good start: going with a serious, regulated, and recognized player like OKX lets you start on solid ground, with a reliable interface and controlled fees.

Personally, I started out with a slight advantage: even though I got lost across multiple markets and strategies in my early days, I’ve always been someone who likes to proceed step by step — I don’t start a new job before finishing the previous one.

Many traders fail because they are undercapitalized and quickly find themselves with their backs against the wall for lack of coherent risk management. As a result, they can’t absorb losses at the right moment, have no strategy or don’t follow their strategy, bet too much or not enough (position size), trade when they’re not supposed to, and so on.

Follow good advice from the very beginning, because you probably won’t have the means to learn by ruling out everything that doesn’t work. Finally, focus on the process rather than solely on the results… to name just a few.

Mindset: the real reason most traders fail

Psychology affects everything we do as traders. If we’re too impatient, too confident, anxious, angry, or stuck dwelling on our past trades, it naturally affects what we see and how we trade our positions — that’s normal. Knowing how to manage your stress in trading is therefore no small detail: it’s a skill in its own right.

That’s exactly where you need to make the difference and let the pressure roll off your shoulders! To get over the hump, you sometimes need to find your catalyst, your “positive thought,” or simply trade within your means by starting with paper trading.

Paper trading isn’t mandatory — you can perfectly well start trading with very little! We’ve all played poker games with a 5, 10, or 20 euro buy-in because we play well, with pleasure and without the fear of losing. That doesn’t stop us from walking away delighted when we’ve multiplied our stake — and that’s normal, because we played well.

Trading isn’t just about practicing strategies; it’s a daily exercise in self-reflection. Take a close look at how our way of thinking affects our trading. Most people never do, and so they never level up. To go further on this crucial topic, I recommend our complete guide to trading psychology.

If your mindset isn’t right, all the strategies and all the trading books in the world won’t change your results!

For more Psychology & Mindset courses, head this way!

FAQ: is trading really a competition?

What percentage of traders actually make money?

According to the most recent studies, only 5 to 10% of active traders are consistently profitable. The vast majority lose money, and nearly 84% of retail crypto traders are estimated to lose money within their first year. Trading really is a negative-sum game once fees are deducted.

Why do most traders lose money?

The main causes are a lack of method, undercapitalization, the absence of genuine risk management and, above all, poorly mastered psychology. Many traders spread themselves across too many assets and too many strategies instead of focusing on what works.

How long does it take to become a profitable trader?

Allow about a year to trade decently with a structured method, and much longer to become truly proficient. What matters isn’t speed but consistency of work, practice, and constant self-questioning.