Non-Scientific Study Of Trader Performance: The Background (Part 1)

I am asked many times for information about the performance of individual retail traders. It is a difficult question to answer because without actual data it is not possible to compute a norm or identify the characteristics by various categories. There is also this client / brokerage confidentiality issue. Even though I have very good relationships with quite a number of brokerages, it is a very sensitive issue thus not that many firms are willing to assist me in my quest.

I have successfully obtained some answers from several firms. It was done on a non-personal data basis meaning that I can only ask very specific questions where they would choose to either provide me with a generalized answer or telling me that it is not available. The reason for their concerns is competition. All the firms I asked for the statistics do not want their competitors to know the figures they have provided yet seriously interested in luring me to give them vital statistics from their competitors.

At the end, I avoided the problem by wording the questions as general as possible so that I can get some answers. The data I tried to collect surround 3 main themes.

First, I like to know the account size composition.

Second, I like to know for each category of account size the relative performance over their first 10 years.

Third, the characteristics of star accounts based on account size, relative performance, and number of years at the higher level of performance.

At the end, the data I collected has no actual figures on the account size. I was only able to find out the relative percentage of accounts from the firms based on the size criteria. If these firms are publicly traded companies I would be able to reverse engineer the actual figure from their financial reports. Unluckily, I do not have the luxury because these firms are privately owned.

Even though my pursuit was restricted by so many hurdles, there are some useful insights I have gained that worth sharing.

As a warning, the results I gathered show that there is absolutely no consistency whatsoever across the spectrum of trader performance from firm to firm. Any conclusion or educated guess I am making may seems far off from the firm you have intimate knowledge. Hence I named the title non-scientific study.

Traders of specific markets tend to show consistencies in behaviour on certain characteristics. I find grouping the results by the type of markets (directly correlate to the type of brokerages too) is the easiest way to present my findings. I will post my summary for each type of markets separately.

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