[Lionstrike]

I guess I did get a little overheated for no reason. My apologies. Anyway with respect to randomness, in the markets it's not like a simple coin flip. Power laws come into play. Price clustering takes place because of the scale invariance market prices exhibit. Risk isn't evenly spread out, but rather concentrated more in certain areas than others, relative to time. I'll leave it at that for now.

[Craig]

It's cool, no problems.
You are right, markets do all sorts of weird stuff jumps, skews, kurtosis, but not all the time.
I tell ya, I used to think it was all non-applicable BS as well, luckily I had someone point me in a different direction.

[BlackMage]

Originally Posted by Lionstrike

Anyway with respect to randomness, in the markets it's not like a simple coin flip. Power laws come into play. Price clustering takes place because of the scale invariance market prices exhibit. Risk isn't evenly spread out, but rather concentrated more in certain areas than others, relative to time. I'll leave it at that for now.

For someone how cares about these concepts it seems pretty odd not to be aware of the large amount of quantitative (e.i. objective) automated trading that's being done by institutions, prop firms and so on...

[nubcake]

Originally Posted by mathematician

Hmm...interesting. Good point. But I think it might still be a zero-sum transaction:

The average guy goes to a bank so he can convert his money from his domestic currency into a foreign currency. The bank will exchange it for him at an exchange rate that is not optimal. They will take the current interbank FX rate (as determined by the spot forex market), and they will add a huge spread. (If you look at the spreads in a typical currency exchange booth, like you might see in a tourist area of a city, they have spreads that are hundreds of pips.)

So...

The day you show me a way to be able to open a trade then close it and somehow break even is the day I stop calling this a negative sum game and start makin serious money.

It's not about where whatever money goes after each transaction and how the pie is split. No one has ever said money mysteriously vanishes. Completely wrong focus. Irrelevant even. It's about each individual traders individual battle against the nature of the market. The rules of the universe currently state that in forex you always buy at the worst price and sell at the worst price. This is the spread. Each trade begins in neg profit. Any positive movement is crippled by the spread and any negative movement is enhanced by the spread. How can anyone not understand this most basic concept?

I think you can't see the forest for the trees :s

Oh and people, please come to grips on exactly what the spread is! Go study share trading. Guess what, share trading has a spread too, you simply have more options with it because quite literally you create the spread in a way. So for hopefully the last time the spread is NOT broker fees. The broker in forex simply increases the spread you trade with and pockets the difference between the spread you trade around and the real spread. Again, please go study share trading to understand what a market is and how it works. There is simply too much basic lack of knowledge sometimes that goes unchallenged.

[BlackMage]

Originally Posted by nubcake

How can anyone not understand this most basic concept?.

It's not that I really dispute what you are saying...but what became of the rather simple concept that forex ECN's where one can choose to supply liquidity do exist...?

[Lionstrike]

Originally Posted by BlackMage

For someone how cares about these concepts it seems pretty odd not to be aware of the large amount of quantitative (e.i. objective) automated trading that's being done by institutions, prop firms and so on...

Well, who knows exactly who's running what.

I'm not saying programmed trading can never be profitable. I think it can be profitable under certain circumstances. For instance, let's just say you have programmed a simple crossover signal through some indicator, and you even set up something for it like a simple 1:1 R/R for say, 20 pips on each side for stop losses and taking profits.

Where I think it can be profitable is if you run it in a "semi-automatic" mode. That is, run only the long signals at one time, or run only the short signals at one time. So if you think the market is rising, turn on the long signals only when you think the (big) trend begins and turn them off when you think the trend ends. But you still have to make that decision on trend discretionarily. You will have a a large amount of trades doing this so its not as efficient as manually trading.

At the end of the day you need to be able to take an intelligent risk in order to try to catch as much of a trend as is reasonably possible, and I continue to maintain that requires at least some level of human decision making.

[nubcake]

My post was mainly a general rant towards anyone who hasn't taken time to even learn what a market is