Why only 1% of traders make money - Nithin Kamath's personal homepage (2024)

FAQs

Why only 1% of traders make money - Nithin Kamath's personal homepage? ›

I'm surprised that, so many are surprised that just 1% of active traders make more than bank fixed deposits over 3 years timeframe. Active trading is like running a business, only a small % succeed. The only easy bit about trading is starting trading.

Remember, the 1% who succeed do so because they persist. They don't quit, and they view failures as part of the learning process. Fix your mindset on not giving up; focus on the process rather than immediate results. Trust the journey, and one day, you'll find yourself among the 1% of successful traders.

However, a widely accepted figure suggests that a successful day trader can pull between 1% to 2% of their account balance per day. For a $50,000 trading account, this equates to approximately $500 to $1,000 per day.

This is one of the most important reasons why most people fail to make money in the markets. Unrealistic expectations. First of all, you're misquoting Zerodha (Nithin). The actual stat was - 99% traders on Zerodha (mostly retail traders) fail to earn more than the risk free rate of return (FD returns used as proxy).

Nithin Kamath

Nithin bootstrapped and founded Zerodha in 2010 to overcome the hurdles he faced during his decade long stint as a trader. Today, Zerodha has changed the landscape of the Indian broking industry.

The 1% risk rule means not risking more than 1% of account capital on a single trade. It doesn't mean only putting 1% of your capital into a trade. Put as much capital as you wish, but if the trade is losing more than 1% of your total capital, close the position.

One of the biggest reasons traders lose money is a lack of knowledge and education. Many people are drawn to trading because they believe it's a way to make quick money without investing much time or effort. However, this is a dangerous misconception that often leads to losses.

With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].

A common approach for new day traders is to start with a goal of $200 per day and work up to $800-$1000 over time. Small winners are better than home runs because it forces you to stay on your plan and use discipline. Sure, you'll hit a big winner every now and then, but consistency is the real key to day trading.

But, those who follow strict trading rules can easily make an income of over $100,000 per year or more. Likewise, the national average salary for day traders who work for a company is $122,724 (source: Glassdoor). You can see below that this average varies based on where you work.

What is the failure rate of traders? ›

As much as 95 per cent of day traders lose money in the market, it demands an investigation. Intraday trading is the most popular, yet data suggests that most intraday traders lose money. A 70 percent don't last beyond the first year, and 95 percent stop trading by the third year.

It might sound as simple as “buy low” and “sell high,” but the reality is that the vast majority of traders end up losing money over time. Here's why day trading is an extremely difficult pursuit, and what's likely to happen when inexperienced traders get in over their heads.

Not having and not following a trading plan is a big reason most traders fail. People without a plan are making an assumption that they are smarter than people who do this for a living, and therefore they don't need to prepare, plan, or practice.

Synopsis. Nithin Kamath, aged 44, is the fourth youngest Indian billionaire on the latest Forbes list, with a net worth of $4.8 billion, while his brother Nikhil Kamath, aged 37, ranks as the youngest Indian billionaire, with a net worth of $3.1 billion.

Nikhil Kamath, the youngest billionaire in India and co-founder of Zerodha, recently imparted his life philosophy to a group of young entrepreneurs. With a staggering net worth of $3.1 billion, Kamath's journey from dropping out of school to becoming a thriving entrepreneur serves as a source of inspiration.

Seema Patil, wife of Zerodha CEO Nithin Kamath, bravely shared her battle with breast cancer. Diagnosed in November 2021, she underwent chemotherapy, a tough journey she described as feeling like it might be better to die. However, after a year of treatment, she was declared cancer-free.

Approximately 1–20% of day traders actually profit from their endeavors. Exceptionally few day traders ever generate returns that are even close to worthwhile. This means that between 80 and 99 percent of them fail.

According to various studies and reports, between 70% to 90% of retail traders lose money every quarter. This article will discuss the main reasons retail traders lose money and how they can enhance their performance and profitability.

Ineffective Risk Management: Failure to manage risk properly, such as putting too much money at risk in a single trade, is a common cause of failure. Unrealistic hopes: Some traders join the market with unrealistic hopes of immediate gains.

High Attrition Rate: 40% of day traders quit within a month, and only 13% remain after three years. Low Success Rate: Only 13% of day traders maintain consistent profitability over six months, and a mere 1% succeed over five years.