Trader or Gambler?

[stueytrader]

one could say that the 5% *image* could be also happily perpetuated by those enjoying success - a smaller club is a more profitable club, therefore restricting membership by proxy maintains the status quo.

Yes, that is a kind of positive take on the 5% mythology. But, couldn't it also mean more people are put off trying, and ultimately damaging for the whole economic system, lower liquidity etc?

[jimibt]

one could say that the 5% *image* could be also happily perpetuated by those enjoying success - a smaller club is a more profitable club, therefore restricting membership by proxy maintains the status quo.

Yes, that is a kind of positive take on the 5% mythology. But, couldn't it also mean more people are put off trying, and ultimately damaging for the whole economic system, lower liquidity etc?

.. in short, it's a subjective stat that's kinda plucked from the air (or more likely, borrowed from the world of finacial day trade failure). doubt many here would be willing to particiate in a straw poll that identified them as being succesful or not. likewise, an anonymous poll would never reach a true figure either... catch 22

[stueytrader]

one could say that the 5% *image* could be also happily perpetuated by those enjoying success - a smaller club is a more profitable club, therefore restricting membership by proxy maintains the status quo.

Yes, that is a kind of positive take on the 5% mythology. But, couldn't it also mean more people are put off trying, and ultimately damaging for the whole economic system, lower liquidity etc?

.. in short, it's a subjective stat that's kinda plucked from the air (or more likely, borrowed from the world of finacial day trade failure). doubt many here would be willing to particiate in a straw poll that identified them as being succesful or not. likewise, an anonymous poll would never reach a true figure either... catch 22

In short I think we're all pretty much agreed the actual stat is fairly baseless, yes.

[Crazyskier]

Trading is a branch of gambling so all traders are gamblers but not all gamblers are traders. (A lion is a cat but a cat's not necessarily a lion).

Nail head firmly hit

+1

CS

[Derek27]

Perhaps the 5% figure was invented to make us feel good about ourselves?

[spreadbetting]

The 5% figure came from Betfair years ago and was supposedly the percentage of accounts in profit so nothing in depth. Could easily include Grand National type punters who'd signed up and only bet once win or lose, when you've got shareholders every account counts. They also released the fact under 0.5% of account holders were affected the premium charge which is probably a better indicator of how traders may be performing as it'd be unlikely to hit straight gamblers. I think they released %'s for the higher rate PC payers too when they were looking to justify the increased rate, can't remember off hand what it was though.

[ShaunWhite]

In short I think we're all pretty much agreed the actual stat is fairly baseless, yes.

Yep, most of these urban myth stats are like that.
Break it down and what's been measure and/or the source of the info are fuzzy at best.

Take the recent Serena Williams thing.....Are Women treated more harshly than men? ......Totally pointless looking at %ages about who's been given what penalties....you'd have to watch every single dispute on vid and make a subjective judgement about 'harshness'.

5% suits everyone, the winners feel special and the losers don't feel so bad.

[Jukebox]

I have a friend who is a 'gambler' - he puts a score on his team just before ko on saturdays (regardless of price) and then watches them play while having a few beers. He might lose his score - he might double it or more. He might sometimes dance around the room watching the slow motion replay of a crucial goal.

I think I'm a 'trader' - so at the same time as he's doing his 'gambling' I've put many bet's on several matches - I then watch some charts and daren't have any beers. Because I'm a 'trader' I use a lot more than a score to try to ensure that the tight margins I'm working with yield me a meaningful profit. If I make a mistake or am wrong I might lose a score - if everything goes right I might get double that or more. If Betfair goes down I might dance around the room and lose substantially more than a score. I occaisionally check a watch list and hear Peter Webb telling me that an event has been suspended.

We're both 'punters' - which one's the mug punter?

[Kafkaesque]

Aside from being mentioned with financial trading, you can kick in 5% often being mentioned in poker circles, although I just as often see 1-5% being bandied about both with poker and betting. Clearly, it's an arbitrary number, as several has already commented, and we'll only ever get closer to a true number if a bookmaker has a (corporate) brain meltdown and releases figures. Which they'll never do because it'll be so low as to hurt their customer acquisition and retention, or in the case of the exhange liquidity (as someone else alluded to).

My take has always been that it's linked to the assumption that it - be it finances, betting, trading or poker - requires being smart, and by extension the steep drop towards the smartest cookies in IQ terms, with only a few percent standing out from the masses of average(-ish) IQ.

Whether smarts is essential or even the most important quality is completely different can of worms, but it's an undeniable advantage in these fields with many different moving parts. Even in a fantasy land, where bookies (and BF exhange) doesn't want to earn money and it's a zero sum game, the starting point would be around 50% being in profit. When the race to get the money in good enough to beat the commssion/juice/rake, some will be smarter than others; some will have better work ethic than others; a select few will have inside information (in sports), and 50% will dwindle fast. Those left will still have to overcome biases galore, mental pitfalls (chasing losses, drunk betting/trading, TV-bias, and just plain emotionally-fueld betting/trading), solid BRM, understanding risk of ruin and preferably stake optimization.

Over a long enough period, like 10+ years, my guess would be that 5% is generous. Very much so, and that the true number is a lot closer to 1%.

[Derek27]

I have a friend who is a 'gambler' - he puts a score on his team just before ko on saturdays (regardless of price) and then watches them play while having a few beers. He might lose his score - he might double it or more. He might sometimes dance around the room watching the slow motion replay of a crucial goal.

I think I'm a 'trader' - so at the same time as he's doing his 'gambling' I've put many bet's on several matches - I then watch some charts and daren't have any beers. Because I'm a 'trader' I use a lot more than a score to try to ensure that the tight margins I'm working with yield me a meaningful profit. If I make a mistake or am wrong I might lose a score - if everything goes right I might get double that or more. If Betfair goes down I might dance around the room and lose substantially more than a score. I occaisionally check a watch list and hear Peter Webb telling me that an event has been suspended.

We're both 'punters' - which one's the mug punter?

I would define a mug punter as someone who's intent on making money but hopelessly inadequate and places under value bets. Punters who don't expect to win or place bets on events they're watching for the excitement of winning money are recreational punters.

[spreadbetting]

Over a long enough period, like 10+ years, my guess would be that 5% is generous. Very much so, and that the true number is a lot closer to 1%.

Here's what Betfair tell us from their own t&c's , https://www.betfair.com/aboutUs/Betfair.Charges/# , which you'd have to assume. being published figures. are reasonably correct and I doubt they'd inflate the figures so likely to be close to the 0.1 and 0.5's quoted.

Premium Charges

The Premium Charge only applies in respect of bets placed on the Betfair Exchange and it does not apply to any bets placed on other Betfair products.

In addition to the other charges detailed above, a small number (less than 0.5%) of our most successful customers will incur Premium Charges.

†Premium Charges at higher rates

Higher rates of Premium Charge will apply to the very small number of customers (less than 0.1%) that satisfy the following conditions over the lifetime of their account:

[Kafkaesque]

Over a long enough period, like 10+ years, my guess would be that 5% is generous. Very much so, and that the true number is a lot closer to 1%.

Here's what Betfair tell us from their own t&c's , https://www.betfair.com/aboutUs/Betfair.Charges/# , which you'd have to assume. being published figures. are reasonably correct and I doubt they'd inflate the figures so likely to be close to the 0.1 and 0.5's quoted.

Premium Charges

The Premium Charge only applies in respect of bets placed on the Betfair Exchange and it does not apply to any bets placed on other Betfair products.

In addition to the other charges detailed above, a small number (less than 0.5%) of our most successful customers will incur Premium Charges.

†Premium Charges at higher rates

Higher rates of Premium Charge will apply to the very small number of customers (less than 0.1%) that satisfy the following conditions over the lifetime of their account:

Well, inflate clearly not; deflate is a different proposition. Surely it's in BF's interest to mention as low a number as possible here. Correct me, if I'm wrong but I wouldn't think any gambling authority can be arsed to check up on and do something about it, if those numbers happen to be incorrect. With all the bad press they got with the launch of PC, I'm not by default trusting any number they throw out there.

[spreadbetting]

Wikipedia says they have 4 millon account holders so 4,000 and 20,000 do seem low. Might have been correct when pc started you'd imagine there's more than that amount.

[stueytrader]

It might be worth adding all those 'one-off' or very short lived gamblers/traders into the mix. There will be plenty of 'dead' accounts floating around Betfair showing a deficit (i.e. losing) but they don't really tell us much.

A better % question would be something like:

what % of traders (or punters) who take the pursuit reasonably seriously (though this would need definition of course) manage to be profitable?

That would be a more interesting question to consider.

[Euler]

I've had the actual numbers of PC payers leaked to me. It's actually a really small number because to fall into its clutches you need to hit many qualifying targets and all that is offset against commissions generated anyhow. So even if you are long-term profitable you may not pay the charge.

The situation is confused by lots of high profile traders that claim to pay higher rate PC, but that I know for a fact they don't. It's just another piece of publicity to give the impression they do this full time. There are probably plenty on lower rates as that hurdle is easy to cross. But I doubt many true gamblers pay it at all.