Forex Factory (https://www.forexfactory.com/forum.php)
-   Commercial Content (https://www.forexfactory.com/forumdisplay.php?f=158)
-   -   Is Forex trading worth it? If so, why? (https://www.forexfactory.com/showthread.php?t=568569)

scottik187 Jan 12, 2016 6:52pm | Post# 421

It's important to consider the market in which retail traders participate, and who the "winner" would be if it were a zero-sum game.

As trader34 points out, the real winners in the retail forex markets are the brokers. Why do you think there are so many of them, and why do you think their "education" sections all look the same?

Commissions, spreads, new traders, small accounts, leverage, extraordinary market conditions, etc. Sounds like a casino vs the gambler doesn't it?

verv Jan 12, 2016 7:13pm | Post# 422

{quote} Agreed, but that's a very different argument to what was being presented earlier, namely that forex isn't zero sum for the reason that if traders hold onto their trades for long enough, they can all profit.
Yes that is silly thing for them to say. I must have missed the context earlier.

I have always thought of zero sum as being if you bet al positive trades and all losing trades the sum of both (excluding spread is zero). I don't think that is true in currencies or stocks - seems like that isn't being discussed though

trader34 Jan 12, 2016 8:14pm | Post# 423

{quote} Agreed, but that's a very different argument to what was being presented earlier, namely that forex isn't zero sum for the reason that if traders hold onto their trades for long enough, they can all profit.

Incidentally, I never claimed that trading was not zero sum if traders hold positions. That was never mentioned. My illustration was to point out that in any single transaction at individual level, all parties can come out with profit.
But of course...not all the time.

Giganntor Jan 12, 2016 8:16pm | Post# 424

{quote} Agreed, but that's a very different argument to what was being presented earlier, namely that forex isn't zero sum for the reason that if traders hold onto their trades for long enough, they can all profit.
Forex is a conspiracy. It is comical. But if you know where the weakness is you can make a living off of it.

Rag2RichesFX Jan 12, 2016 9:13pm | Post# 425

If your woman doesn't support your passions and purpose in life, you shouldn't be with her. A good woman doesn't care if you are dirt poor so long as you are passionately pursuing your purpose in life. In the case of the OP, I'm glad your woman came around. I would tell my woman to leave me before I gave up my purpose in life.

I've always felt my purpose in life is to give substantial amounts of money to charity. I felt I was blessed with a gift of being born at the right time (booming internet trading era) and being born with the gift to see where markets are going. I never felt that this was something I was meant to do in order to be rich for myself. Because of me, 50 children are still alive, and nothing in the world surpasses that feeling. It costs me about $1000 a month. I would be providing more but I'm not doing SUPER well as a trader, yet. If I could afford $10,000 a month, I would.

Bottom line is, I love the trading, it's a challenge and it can never be mastered. You will always find yourself not getting the ideal entry, or exit. No trader in the world can swing trade every pip to perfection. But we can try and get closer and closer to that. But we will never reach it. That's what intrigues me.

To be a good trader requires patience and discipline, and the ability to tolerate a drawdown. Often people close a trade that would be profitable, because their stop loss was too tight or they weren't patient enough to see it go to profit. Scaling in is a highly effective strategy, especially when it is done with tiny position sizes, you can almost guarantee your trade will go back into net profit if you stay small enough (such as 0.1 lots with a $100,000 account)

Now if you are an even better trader, you can time the market right and use a relatively tight stop loss. Or even if your timing isn't perfect, as long as the PA is very strong and supportive to your trade, you will likely win.

The #1 problem I find with traders (and still myself, at times)... is that just because it's POSSIBLE to make money ALL THE TIME, doesn't mean that it's realistic or probable to make money all the time. After a successfully being patient and planning a trade and making a profit, we usually think to ourselves, NOW I HAVE A PROFIT... This next trade doesn't mean as much to me. If I lose it doesn't matter. So we take trades that aren't ideal or planned well, when in reality, all trades are the same. Traders need to treat PROFIT CAPITAL the same as they treat DEPOSIT CAPITAL. Then they can begin to be patient and disciplined.

5 good trades a week (lets just say 1:1 R/R) at a 90% win rate far surpasses 10 decent trades a week (1:1 R/R) at a 60% win rate.

Let's say risk of $1000, target of $1000.

Being patient, over 10 weeks, making 5 trades a week x 10 weeks = 50 trades.
Winning 45 of them would be $45,000 minus the 5 you lost is $40,000 in 10 weeks

Over trading (on lesser probability trades) even with a winning ratio of 60%, betting $1000 on 10 trades in one week, winning 6 and losing 4, you would make $2000 in one week, and $20,000 in 10 weeks.

So double the money from half the trades (only the best trade setups, not just the "good" ones)

Less is more!

Rag2RichesFX Jan 12, 2016 9:15pm | Post# 426

It's important to consider the market in which retail traders participate, and who the "winner" would be if it were a zero-sum game. As trader34 points out, the real winners in the retail forex markets are the brokers. Why do you think there are so many of them, and why do you think their "education" sections all look the same? Commissions, spreads, new traders, small accounts, leverage, extraordinary market conditions, etc. Sounds like a casino vs the gambler doesn't it?
No. It sounds like a business providing a service. IE, connecting you with the worlds liquidity, usually for a fee of 1 pip per trade (real bank spreads + 1 pip is typically what your spread will be). 1 pip is nothing.

Do you think they should do it for free? That would be ideal certainly, but it's not realistic.

scottik187 Jan 12, 2016 9:33pm | Post# 427

{quote} No. It sounds like a business providing a service. IE, connecting you with the worlds liquidity, usually for a fee of 1 pip per trade (real bank spreads + 1 pip is typically what your spread will be). 1 pip is nothing. Do you think they should do it for free? That would be ideal certainly, but it's not realistic.
Not at all, I don't think they should do it for free. What I am saying is that these companies exist to make a profit, and thus have gamed the system to be in their favor. Nothing wrong with that...if a person wants to trade then it's on them to understand what they're getting themselves into.

Rag2RichesFX Jan 12, 2016 9:50pm | Post# 428

{quote} Not at all, I don't think they should do it for free. What I am saying is that these companies exist to make a profit, and thus have gamed the system to be in their favor. Nothing wrong with that...if a person wants to trade then it's on them to understand what they're getting themselves into.
I wouldn't say they have gamed the system, they just encourage people to trade high volumes and high frequency. It's not exactly ethical, but it's business.

Rag2RichesFX Jan 12, 2016 9:53pm | Post# 429

{quote} Just to clarify, big net worth doesn't matter. You can have a $10m account at a retail broker. Your trades are still not sent to the true market. What we see on the charts is a price feed representing the interbank market. Even if we use a market maker broker who takes the other side of the trade, we are still not participating in the price feed we see

Not sure where you get this non-sense from. Too many retail Forex conspiracies.

Yes, they are sent to the true market. Retail brokers are simply a middle men between small traders and the "true market"... institutional orders and other clients from other retail brokers combine to equal the whole market. Most of the time, you will be filling part of a institutions orders, because like you said they are 94% of the liquidity.

When I bought 5 standard lots of AUDJPY at 82.20, I was taking a tiny sliver of a bank or hedge fund or other institutions order. Of course, it could be another retail client with an equal 5 lots of sell limit at 82.20, or 10 retail clients with sell limits of 0.50 lots at 82.20, but the odds of my counter party being another retail trader are significantly lower than me taking a drop in the ocean of a big institutions sell limit at 82.20 (probably 1000s of lots)

If retail wasn't connected with big money, and only with other retail clients of the same broker, spreads would be enormous because liquidity would be practically non existent.

trader34 Jan 12, 2016 9:54pm | Post# 430

{quote} Yes, they are sent to the true market. Retail brokers are simply a middle men between small traders and the "true market"... the banks orders and other clients from other retail brokers combine to equal the whole market. Most of the time, you will be filling part of a banks orders, because like you said they are 94% of the liquidity.
No, they are not. LPs are not interbank market participants. They are aggregations of liquidity who deal away from the interbank market because the volumes we trade are insufficient.

trader34 Jan 12, 2016 10:15pm | Post# 431

{quote} Not sure where you get this non-sense from. Too many retail Forex conspiracies. Yes, they are sent to the true market. Retail brokers are simply a middle men between small traders and the "true market"... institutional orders and other clients from other retail brokers combine to equal the whole market. Most of the time, you will be filling part of a institutions orders, because like you said they are 94% of the liquidity. When I bought 5 standard lots of AUDJPY at 81.90, I was taking a tiny sliver of a bank or hedge fund or other institutions...

Not a conspiracy at all, and you clearly have your players mixed up.
You are not participating in the interbank market. The only people who can do that are institutions, via interdealer brokers, and they do not play with a few lots here and there. Look it up. http://www.investopedia.com/terms/i/...alerbroker.asp https://en.wikipedia.org/wiki/Inter-dealer_broker

When you trade, you are not trading against fellow retailers. You are placing an order through an intermediary (broker) which then goes to their LP's to accept the order based on the quotes that LP is currently offering.
Those LP's are not feeding your 5 lots into the interbank market. Your order is accepted by the LP aggregation, a cooperative of banks/institutions who make money on the spreads of your trades.
You are not taking a realtime chunk of Goldman's $2bn order. At best, you have completed a sub transaction which may have allowed them to make a little money on the side!

In this way, a broker is only a customer of a bank, not a counterparty.

If you've followed the institutional trader thread, or anything Skenobi has said, you may understand. Specifically here: http://www.forexfactory.com/showthre...16#post8422116

It's not just Skenobi who claims this. I have heard the same years ago, and from a broker.

Rag2RichesFX Jan 12, 2016 10:52pm | Post# 432

1 Attachment(s)
{quote} Not a conspiracy at all, and you clearly have your players mixed up. You are not participating in the interbank market. The only people who can do that are institutions, via interdealer brokers, and they do not play with a few lots here and there. Look it up. http://www.investopedia.com/terms/i/...alerbroker.asp https://en.wikipedia.org/wiki/Inter-dealer_broker When you trade, you are not trading against fellow retailers. You are placing an order through an intermediary (broker) which then goes to their LP's to...
Utter nonsense. Our market order bids take out the ask stack in the same way interbank orders do.

To say retail traders don't provide liquidity is ridiculous.

Someone just took the other side of my trade at 83.33/38. LP either matched my order with other retail traders or took on the trade themselves, and then immediately matched their order with interbank to cover.

This is one of the most perfect TPs I had in a while. Expected this trade to take 12 hours, it took 4 hours.
Click to Enlarge

Name: image.jpg
Size: 92 KB

trader34 Jan 12, 2016 11:11pm | Post# 433

{quote} Utter nonsense. Our market order bids take out the ask stack in the same way interbank orders do. To say retail traders don't provide liquidity is ridiculous. {image}
Yes ...in the same way...but not in the same arena!
The quotes we get are coming directly form whichever LP our broker uses, which is a reflection of the interbank market.
Ever wonder why the quotes on different brokers are slightly different!? How could this be if all of them were coming from the one interbank feed?

And, I didn't say retail traders provide no liquidity.
See my earlier post...approximately $330bn daily, or 6%

I did say that this liquidity is insignificant from an institutional point of view, and the market would function perfectly well without it.
And I did say that this liquidity is not directly participating in the interbank market.

Look, I don't care what you believe, nor is it my interest to convince you of anything.

nubcake Jan 12, 2016 11:40pm | Post# 434

{quote} Utter nonsense. Our market order bids take out the ask stack in the same way interbank orders do. To say retail traders don't provide liquidity is ridiculous. Someone just took the other side of my trade at 83.33/38. LP either matched my order with other retail traders or took on the trade themselves, and then immediately matched their order with interbank to cover. This is one of the most perfect TPs I had in a while. Expected this trade to take 12 hours, it took 4 hours. {image}
Do you really think your fucking 5 lot makes it's way to the interbank market that deals in YARDS? Are you serious!?

What the fuck are you forex factory regulars smoking up in this joint? Why haven't I got any? And how much glue do I need to sniff to be as enlightened as the rest of you?

sharpshoot Jan 13, 2016 12:20am | Post# 435

I started using SL after 3 year trading experience but I all ready lost 30k like you , now I am a successful trader I got back all my lost , every beginners are greedy its fact so there is some rules will get from experienced trades no 1 is use SL no 2 is use BE no 3 is low liverage

SingaFX Jan 13, 2016 12:32am | Post# 436

human is naturally greedy not just beginner

Rtm Jan 13, 2016 12:38am | Post# 437

{quote} Do you really think your fucking 5 lot makes it's way to the interbank market that deals in YARDS? Are you serious!? What the fuck are you forex factory regulars smoking up in this joint? Why haven't I got any? And how much glue do I need to sniff to be as enlightened as the rest of you?
rofl !!! No homo or anything but worth the subscription !

Rag2RichesFX Jan 13, 2016 1:55am | Post# 438

It doesn't require THAT much money to open with an inter dealer broker like Reuters. To say retail traders trade with "artificial liquidity", you are simply kidding yourself.

You really think interbank ONLY deals in yards? Laughable.

It's not often 1 bil is placed as one order anyway. As a set of dozens of orders to build the position, yes.

Anyway this is getting really off topic from the OP. I don't want to argue about this anymore

Rag2RichesFX Jan 13, 2016 2:11am | Post# 439

{quote} Do you really think your fucking 5 lot makes it's way to the interbank market that deals in YARDS? Are you serious!? What the fuck are you forex factory regulars smoking up in this joint? Why haven't I got any? And how much glue do I need to sniff to be as enlightened as the rest of you?
Smoking good shit, obviously. Sorry you haven't got any.

As I said before, if liquidity from another retail trader doesn't exist, how does an order get filled?

There is no downside to passing the order interbank. None whatsoever.

jmn5611 Jan 13, 2016 2:12am | Post# 440

As a retailer, it helps to read the fine print.

We, as retailers, do not have direct access to the FX market unless you trade futures contracts. Spot FX is an artificial market made by the broker. Now some brokers hedge against your order, but make no mistake, you as a retailer are on the books of your broker, and no one else. Your broker matches up orders, not the interbank. Now, that said, the broker may take the aggregate positions of all of us guppies and put that on the actual market. But we are not really a part of that.

That is why there is no volume in FX. It is a decentralized marketplace.

Just putting that out there.

I am open to correction if I am wrong.


© Forex Factory