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In the early 1990s, forex margin trading in Taiwan was primarily conducted through placing orders via phone calls. A single forex contract cost approximately 20 to 30 pips, and due to longer trade durations, the trading frequency of most traders was low. High-frequency trading and day trading were almost non-existent. According to a survey conducted by a research institution at that time, only 41% of speculative trading accounts lasted over five years, and profitable accounts made up 37% of the statistics based on the Gregorian calendar year.
With the changes of times and the advancement of technology, trading has become significantly more convenient for traders. Traders can now benefit from electronic quotations, and trading costs have been greatly reduced. At present, even traders with limited bargaining power can trade one forex contract for only 1 to 2 pips. However, the survival and profitability of traders' accounts have hit a record low. According to data provided by a forex broker, the survival rate of forex investment accounts for more than five years is only 5.39%, and the proportion of profitable accounts is remarkably low, at only 0.81%. Although this data is inconsistent with earlier statistics, it raises questions about the factors contributing to the significant difference in survival and profitability rates.
The main reason for traders' losses is not transaction costs alone. Although transaction costs may appear to be the primary cause of losses among losing traders, I believe that there are deeper factors at play that are worth our attention. One major factor that affects sustained profitability and that trading coaches need to pay attention to is "overtrading." Before discussing this factor, we need to provide a conceptual analysis of what it means to overtrade. In my opinion, if a trader is trading solely for the sake of trading, rather than to execute a previously established trading model, then they may be overtrading.
Why do so many traders suffer from this problem? Our research team has been exploring this issue for several years, but due to resource limitations, we can only offer hypothetical answers. To illustrate the logic behind this, we will use a case study of ADHD research as a reference.
In the history of treating ADHD in children, psychiatrists once believed that since ADHD children exhibit symptoms such as inattention, hyperactivity, and impulsivity, they should be given sedatives to calm them down and reduce their hyperactive behavior. This logical thinking was based on an understanding of natural phenomena, such as cooling down when overheated or reducing when excessive. However, it was later discovered that the human body is different from other natural phenomena. The human body is composed of several different systems, and according to systemic thinking, we should consider the interactions between these systems.
In fact, sedatives did not work as expected on children with ADHD. On the contrary, after taking sedatives, ADHD children's hyperactive state not only did not improve but even showed signs of deterioration. It was not until many years later that some community workers found a strange phenomenon when organizing files of children with ADHD. Some patients, after becoming adults, came across drugs such as alcohol, marijuana, and cocaine, and reported that these drugs could calm them down and increase their focus, while reducing some irrelevant behaviors. Therefore, psychiatrists had a bold idea to try giving stimulants to children with ADHD, and this "fight poison with poison" strategy was successful!
Based on current scientific explanations of the causes of ADHD in children, the disease has a fundamental genetic basis. ADHD patients typically have lower levels of dopamine in their brains, which leads to the hypothesis that they require more stimulation to experience the same pleasurable feelings as those with normal dopamine levels. Stimulant drugs like Ritalin, Adderall, or guanfacine can increase dopamine levels in the brains of ADHD patients, restoring their brain activity to levels similar to those of people without the condition.
Therefore, it can be inferred that everyone has a certain threshold for the amount of stimulation they need on a daily basis. It is impossible for someone to spend all day just eating, washing up, and sleeping in bed. While it may be tolerable for a day, living/>/>/>/>/>/>/>