'Traders must lose money': crypto traders are not better in terms of profitability

'Traders must lose money': crypto traders are not better in terms of profitability

The IW Capital group, the investment firm from the UK, made a research about the profitability of crypto traders in the country

The results show that less than 5% of Brits made some profit, the majority has lost. Only 7% of them think that crypto is superior than stock and shares.

No surprise here. If you read the classical book by Alexander Elder, 'Trading for Living', you will know that only a small percentage of traders actually make money by trading. According to this book, and countless other sources, this percentage is as small as 3—10%, with the upper threshold being an overly optimistic estimate. And here we talk about ALL traders, not only in crypto.

Why do most traders lose and wash out of the markets? Emotional and mindless trading are big reasons, but there is another. Markets are actually set up so that most traders must lose money. The trading industry slowly kills traders with commissions and slippage.

Alexander Elder, 'Trading for Living'

Does it look strange that crypto traders are no better than that? The percentage should be the same, as there’s only a limited amount of professionals who do their trade with a proper risk management and take money from all other participants. We all remember Buffet’s quote 'The stock market is a device for transferring money from the impatient to the patient'. He said that about stocks, but the principle is the same. That’s it.

Also, the crypto shouldn't be superior than stocks and shares. It's just another instrument for investment. Probably, in the future we'll see stocks tokenized, so the distinction between stocks and crypto assets will become more blurry. But that's just another speculation yet.

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