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I Finally Figured it Out!

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  • First Post: Edited 7:27pm Jan 5, 2025 7:13pm | Edited 7:27pm
I have often failed as a trader. Why? Most retail traders lose 75% or more of the time, and I was no different. I failed because I made trades based on feelings instead of logic. I would think that prices couldn’t go any lower or higher and act on that belief. Instead of going with the trend, I tried to catch tops or bottoms.

I even started to think Forex was a scam. But the truth is, Forex isn’t a scam—I was just trading like a fool.

Think about this: if retail traders are wrong 75% of the time or more, following the crowd will likely lead to failure. To succeed, I need to do the opposite of what most people are doing. I must control my emotions and trade based on common sense.

For instance, look at the weekly chart. Is it smart to sell when the market is shouting, "I'm moving up!" No. I need to move with the market! And the reason why I mention the weekly chart is because lower time frames can be deceiving when it comes to gauging market direction. I wouldn't recommend going any lower than the daily to find market direction.

I believe this approach will lead me to more wins than losses over time. From now on, I will set my feelings aside and stick to logic. If there isn’t a trade to make, I will wait. What's the rush? Better to be patient than sorry.

Retail will eventually get it right. This happens sometimes. This means I might lose some trades by going against retail, but that's okay. Retail tends to be wrong more often than right, so any losses will likely be small compared to my wins (assuming I manage my money responsibly).

Just in case you may not know, one of the best ways to understand how retail investors feel is through sentiment analysis. The best free resource I’ve found for this is here: Forex Sentiment Live - Retail Client Sentiment Tool by FXSSI
Learn from your mistakes and march on.
So, sentiment for retail is Sell EurAud with 69% of the traders Selling, that means look only for Buy opportunities until the sentiment changes!

The bigger the Sentiment(this one is close to 70%) the bigger position size can be open trading opposite side.

I will not be able to, but it would of been interesting to keep track of this "Reverse Mentality" technique.
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Quoting driven18
So, sentiment for retail is Sell EurAud with 69% of the traders Selling, that means Buy Now! I will not be able to, but it would of been interesting to keep track of this "Reverse Mentality" technique. {image}
Buy at day open. How about that.

Cheers
Trade the value
Quoting driven18
So, sentiment for retail is Sell EurAud with 69% of the traders Selling, that means look only for Buy opportunities until the sentiment changes! The bigger the Sentiment(this one is close to 70%) the bigger position size can be open trading opposite side. I will not be able to, but it would of been interesting to keep track of this "Reverse Mentality" technique. {image}
The idea is to wait for it to get to about 75% before doing the opposite of the majority. You wait for a pullback and then get in at the right time. But it is important to be mindful of the overall trend. Retail is jumping in hoping they caught a top or a bottom, while larger players are for the most part going with the major trend. It could help to look at the COT report.
Learn from your mistakes and march on.
Quoting BWilliam
{quote} Buy at day open. How about that. Cheers
I haven't tried that. Have you had much success following that strategy?
Learn from your mistakes and march on.
HI bro I dont want to ruin your party but there is a small issue in this approach, once you will be in trade you will find all the traders are with you and the tool will change the sign.
Quoting IndianFX
HI bro I dont want to ruin your party but there is a small issue in this approach, once you will be in trade you will find all the traders are with you and the tool will change the sign.
That's why I wait until it gets to about 75%. Also, you need to be mindful of the major trend—not to trade against it. My plan is to enter on pullbacks using a lower time frame such as H4 or H1. Remember, retail is mostly trading against the major trend hoping to catch a top or a bottom. That's one of the main reasons why they lose so often.
Learn from your mistakes and march on.
Quoting here2there
{quote} That's why you don't do it until it gets to about 75%. Also, you need to be mindful of the major trend—not to trade against it. Remember, retail is mostly trading against the major trend hoping to catch tops or bottoms. That's one of the major reasons why they lose so often.
Still wont work manually try and make automation that might work.....timing is all important in this.
Quoting IndianFX
{quote} Still wont work manually try and make automation that might work.....timing is all important in this.
Auto trading is usually a bad idea, as things can change suddenly and make a mess of your account. Better to place trades manually. You are a better thinker than your bot. By the way, there are people who have been successfully following this strategy for years.
Learn from your mistakes and march on.
Quoting here2there
{quote} Auto trading is usually a bad idea, as things can change suddenly and make a mess of your account. Better to place trades manually. You are a better thinker than your bot. By the way, there are people who have been successfully following this strategy for years.
who are those? any real accounts to see the progress?
Quoting IndianFX
{quote} who are those? any real accounts to see the progress?
How about banks and institutions? Who do you think is on the other side of the trade wiping out retail? I have been observing sentiment for years, and almost every time I didn't do the opposite, I would lose. I lost because I allowed my emotions to get the best of me, thinking I was smart enough to catch a top or a bottom. I traded like a fool! Just take a look at the weekly chart on USDCAD. It is clearly in a strong uptrend. Now look at the sentiment tool from FXSSI. You will see that the majority of retail has been shorting USDCAD, hoping to catch a top. Who do you think is on the other side of the trade taking their money?
Learn from your mistakes and march on.
Quoting here2there
{quote} How about banks and institutions? Who do you think is on the other side of the trade wiping out retail? I have been observing sentiment for years, and almost every time I didn't do the opposite, I would lose. I lost because I allowed my emotions to get the best of me, thinking I was smart enough to catch a top or a bottom. I traded like a fool! Just take a look at the weekly chart on USDCAD. It is clearly in a strong uptrend. Now look at the sentiment tool from FXSSI. You will see that the majority of retail has been shorting USDCAD, hoping...
Just got news Justin Trudeau is resigning. now see how the sentiments changes.
Quoting here2there
{quote} How about banks and institutions? Who do you think is on the other side of the trade wiping out retail? I have been observing sentiment for years, and almost every time I didn't do the opposite, I would lose. I lost because I allowed my emotions to get the best of me, thinking I was smart enough to catch a top or a bottom. I traded like a fool! Just take a look at the weekly chart on USDCAD. It is clearly in a strong uptrend. Now look at the sentiment tool from FXSSI. You will see that the majority of retail has been shorting USDCAD, hoping...
Hi here2there

I think just about every trader with more than 5 years experience has already tried this tactic and unfortunately failed. Here is what is really happening.
First of all retail traders are better than professional traders at getting on the right side of the market on any trend. Their fault is they exit very quickly for small profits which is something not registered by the sentiment tool. So 65% of retail traders nail the entry but are gone in average by 43 pips for a nice win. The bad trader stays in and lets the loss grow into a huge loss which is what we are actually seeing.
So in a 500 pip bullish run, 65% of retail traders have a smile on their faces while 35% of traders are suffering horribly. Thats all we see, it just shows us the bad traders which are still in and not majority of retail traders who made money.
Also remember that we are all B book any way so no professional trader is even looking, they are focussed on the depth of liquidity on the future markets and option markets.
Trading thin liquidity at the boundary of the charts
Quoting here2there
I have often failed as a trader. Why? Most retail traders lose 75% or more of the time, and I was no different. I failed because I made trades based on feelings instead of logic. I would think that prices couldn’t go any lower or higher and act on that belief. Instead of going with the trend, I tried to catch tops or bottoms. I even started to think Forex was a scam. But the truth is, Forex isn’t a scam—I was just trading like a fool. Think about this: if retail traders are wrong 75% of the time or more, following the crowd will likely lead to failure....
Hi

Don’t want to ruin anything but check how sentiments are calculated. You will find that sentiment doesn’t even show 0.001% of market participants.

Good luck
How to succeed in zero sum game?
Your reflection on your trading journey offers valuable insights into common pitfalls many retail traders face, and it's commendable that you've identified key areas for improvement. Here's a breakdown of your observations and some additional thoughts:

Emotions Over Logic:

  1. Your acknowledgment that trading based on feelings rather than logic has been detrimental is spot-on. Emotional trading often leads to poor decision-making, like trying to predict market tops or bottoms, which is notoriously difficult.


Understanding Market Trends:

  1. You correctly note the importance of following trends rather than fighting them. Markets have a tendency to move in trends, and aligning your trades with these trends increases your probability of success. The weekly chart provides a broader view, helping to filter out the noise of short-term fluctuations which can be misleading.

Quoting driven18
So, sentiment for retail is Sell EurAud with 69% of the traders Selling, that means look only for Buy opportunities until the sentiment changes! The bigger the Sentiment(this one is close to 70%) the bigger position size can be open trading opposite side. I will not be able to, but it would of been interesting to keep track of this "Reverse Mentality" technique. {image}
Is there a service that provides historical data? Would be interesting to overlay it on chart to check it's utility from a wide angle... if any

I have tried it with FF sentiment, but history is very limited
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Want to trade the opposite way or retail? Exit losers quickly and hold on to winners. It's really not hard to find a TE with a 90% win rate and an account balance of -99%.

Retail sentiment is a flawed concept, youre making trading decisions based on positions taken weeks or even months ago by traders who can't let a bad positions go.
Quoting Anotan
Want to trade the opposite way or retail? Exit losers quickly and hold on to winners. It's really not hard to find a TE with a 90% win rate and an account balance of -99%. Retail sentiment is a flawed concept, youre making trading decisions based on positions taken weeks or even months ago by traders who can't let a bad positions go.
Really? Can you explain where and how you can read this data?

Please

If you trade like me, you'll be homeless and broke within a week.
Texas-2-Step All Time Return: -1.0%
Quoting here2there
{quote} How about banks and institutions? Who do you think is on the other side of the trade wiping out retail? I have been observing sentiment for years, and almost every time I didn't do the opposite, I would lose. I lost because I allowed my emotions to get the best of me, thinking I was smart enough to catch a top or a bottom. I traded like a fool! Just take a look at the weekly chart on USDCAD. It is clearly in a strong uptrend. Now look at the sentiment tool from FXSSI. You will see that the majority of retail has been shorting USDCAD, hoping...
Banks and institutions are in a different game: as market-makers they form the trends, where the real money moves between, say, USD and EUR due to international trade and corporate investments. It cannot happen in one go, and is distributed over time.

Then there are more global trends - if you zoom out for the full history of EUR/USD - it is clear, that after confirmed break below 1.20 and testing it the EUR has been going to below parity with USD at a multi-year speed. The re-distribution of economic power, investment opportunities, and change in competitiveness is a slow process behind this decline. All the short-term news, political and economic mismanagement are just noise on top of this trend.

As a retail trader, you can profit from the inefficiencies of trends without making a difference to the market. However, as a market maker you cannot catch small fluctuations as any significant amount will affect the intra-day trend.
"Luxury is one of the basic needs", (c), Don Corleone
Yeah, sentiment’s cool and all, but it’s not like a cheat code or anything. If your timing’s off, it can still mess you up. I try to focus on the bigger trend and not overthink it too much. What about you—do you mess with sentiment or just do your own thing?
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