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The Big secret to trading success

  • #21
  • Apr 22, 2016 1:32pm Apr 22, 2016 1:32pm
Quoting alphaomega
Trading with the trend will not put the odds in your favour! If it was so simple.....everyone will do it and we will see a lot more successful people. But we all know that's not the case and its a little bit more complicated. First of all, from all markets forex has the strongest tendency to revert to the mean. (this is a fact, proven mathematically and there are many studies on the subject) This means that classic trend following is pretty much the worst strategy you can apply. Especially if you trade short term or intraday like 99% of the people....

Sure...
  • #22
  • Apr 22, 2016 1:35pm Apr 22, 2016 1:35pm
Quoting alphaomega
Trading with the trend will not put the odds in your favour! If it was so simple.....everyone will do it and we will see a lot more successful people. But we all know that's not the case and its a little bit more complicated. First of all, from all markets forex has the strongest tendency to revert to the mean. (this is a fact, proven mathematically and there are many studies on the subject) This means that classic trend following is pretty much the worst strategy you can apply. Especially if you trade short term or intraday like 99% of the people....
Wrong...Wrong.....Wrong...Wrong and finally Wrong again....in fact SO wrong it's laughable
Plan, Prepare, Execute, Repeat
  • #23
  • Edited 2:52pm Apr 22, 2016 2:30pm | Edited 2:52pm
Quoting swingtrade65
{quote}Wrong...Wrong.....Wrong...Wrong and finally Wrong again....in fact SO wrong it's laughable
It's not a matter of right or wrong! It's a matter of FACTS! And the facts clearly show that over 95% of traders lose all of their money in the long run. The more they trade - the more they lose!

And here are the other facts:
The large majority of traders use some form of technical trend following system usually with fixed rules, fixed stop, and even fixed targets (because this is the "right" way to trade). After all, almost everyone is preaching the same nonsense .....all the books and the gurus tell you to follow the trend, to cut your losses, to let your profits run.........and to shut up and be a good boy ( mindless sheep) .

But no one tells you to be smart and creative, to use your brain and to learn how to think out of the box!
No one tells you that the system is rigged, the market makers and banks manipulate the prices on a daily basis....

Look, trading is a game. Strategic game (like chess, like war) but sadly most people have no clue what type of game it is. Most people do not know how to play the game.
In this game you have only one choice - Either you learn how to swim with the sharks, (you have to learn how the big guys manipulate the markets and anticipate their actions) or you will become food for them!

The other option is to join "the club" and to become manipulator yourself. (if you know the game and you have at least a billion $$$ and the right connections.......)

But anyway, if you don't believe me, and think all of this is BS.....well then no one can help you!
You just continue to follow the trend blindly and continue to lose your money just like the other 95%.
But that's Ok!
Not everyone is born to be a real player.
  • #24
  • Apr 22, 2016 2:54pm Apr 22, 2016 2:54pm
1. Consistency
2. Unique plan
3. Know when to flip flop.....
4. And formost "BELIEFS" ....
Trade fearless not careless...
Syed Mohsin Ali Profit This Month: -940
  • #25
  • Apr 22, 2016 3:13pm Apr 22, 2016 3:13pm
Quoting alphaomega
{quote} It's not a matter of right or wrong! It's a matter of FACTS! And the facts clearly show that over 95% of traders lose all of their money in the long run. The more they trade - the more they lose! And here are the other facts: The large majority of traders use some form of technical trend following system usually with fixed rules, fixed stop, and even fixed targets (because this is the "right" way to trade). After all, almost everyone is preaching the same nonsense .....all the books and the gurus tell you to follow the trend, to cut your...
First off...FACTS as validated by who? You?
If you think that the "Big Boys" as you like to call them have a bunch of people running around trading millions of dollars with discretion...then you are seriously off your meds. Secondly, if you think that all of the major fund managers in the world are hiring Quants to develop some insight into the "manipulation" you spout off about...once again...get back on your meds.
You started off talking about how rules will make you a loser blah blah.

And as for me, well you know nothing about me or the fact that I was hired by one of the Big Boys straight out of university and I actually KNOW what goes on in those trading rooms that generate hundreds of millions of dollars in profits...and of this you can rest assured....it IS NOT a bunch of folks throwing around millions without rules and guidelines...that YOU CAN TAKE TO THE BANK...no more replies to your lunacy will be warranted
Plan, Prepare, Execute, Repeat
  • #26
  • Edited 3:40pm Apr 22, 2016 3:24pm | Edited 3:40pm
Quoting alphaomega
{quote} It's not a matter of right or wrong! It's a matter of FACTS! And the facts clearly show that over 95% of traders lose all of their money in the long run. The more they trade - the more they lose! And here are the other facts: The large majority of traders use some form of technical trend following system usually with fixed rules, fixed stop, and even fixed targets (because this is the "right" way to trade). After all, almost everyone is preaching the same nonsense .....all the books and the gurus tell you to follow the trend, to cut your...
Why don't you create your own thread where you can gather with like-minded traders and discuss away conspiracy theories?

It is no wonder really, that most traders lose money, especially in the beginning. I'd go so far to say that it is expected. Since most of us start out without a mentor, we are forced to walk on the path of trial and error. That path is often long and the journey is costly. Many give up on the way, others run out of capital before they manage to absorb the fundamentals. There are thousand of pitfalls in trading but you probably get the picture.

Imagine if you had to become a doctor by trial and error. What would be the mortality rate of your operations? How many cases would you have to lose to become a successful lawyer if you had no training in it whatsoever and you were forced to develop the necessary skills and knowledge by yourself?

I don't believe that Market Makers and the institutional traders are out there to hunt your 100$ SL. Anyway, it is no place to continue this nonsense, I am here to learn from Cat and we should be grateful for him for sharing his knowledge.
Invincibility lies in the defence; the possibility of victory in the attack
  • #27
  • Apr 22, 2016 3:45pm Apr 22, 2016 3:45pm
Quoting swingtrade65
{quote} First off...FACTS as validated by who? You? If you think that the "Big Boys" as you like to call them have a bunch of people running around trading millions of dollars with discretion...then you are seriously off your meds. Secondly, if you think that all of the major fund managers in the world are hiring Quants to develop some insight into the "manipulation" you spout off about...once again...get back on your meds. You started off talking about how rules will make you a loser blah blah. And as for me, well you know nothing about me or the...
Read here! https://en.wikipedia.org/wiki/Forex_scandal
This is only a very small part of manipulations. (somehow the regulators were able to catch these guys.....but this doesn't change anything.)

There are many other teams and individuals who continue to manipulate prices EVERY DAY! Not to mention the central banks and the FED..........The game still goes on and will continue for a long time.

And please, don't talk to me about funds, and fund managers because these are the biggest losers. Most of them consitently underperform the stock market. They make their money from commisions and management fees. Not from trading skills.

And the quants......most of them are losers too. The only really profitable quants are the HFT guys. But actualy they are part of the manipulators club. They make money mostly by front running and by manipulating the orderbook with fake orders (spoofing).

I'm am telling you, you and most retail traders have no idea how deep the rabbit hole goes!
  • #28
  • Edited 4:11pm Apr 22, 2016 3:55pm | Edited 4:11pm
Quoting alphaomega
Trading with the trend will not put the odds in your favour......
I've moved my reply here, as I don't wish to disrupt the flow of cat's thread.
  • #29
  • Apr 22, 2016 5:24pm Apr 22, 2016 5:24pm
Quoting alphaomega
{quote} Read here! https://en.wikipedia.org/wiki/Forex_scandal This is only a very small part of manipulations. (somehow the regulators were able to catch these guys.....but this doesn't change anything.) There are many other teams and individuals who continue to manipulate prices EVERY DAY! Not to mention the central banks and the FED..........The game still goes on and will continue for a long time. And please, don't talk to me about funds, and fund managers because these are the biggest losers. Most of them consitently underperform...
Actually Alpha....I agree with you on several points.
1) the way that most retail traders are taught is insane
2) Central banks are BIG players...although they cannot even alter the destination of a free market....temporarily hinder YES...change destination...not likely
3) You are correct in how deep the rabbit hole goes.....HOWEVER you forgot one thing.....the traded price at any tick has an informed buyer and seller hat have made a decision on the information available to them...this goes back to the tulip markets in Holland 500 years ago

I dont disagree with your premise on a wholesale basis....but, there are ways to make money in these markets with a trend following point of view. I personally know several people who you would recognize their name because of books and TV etc and their ability to profit has been proven to me without question... There really are people out there who make a LOT of money in these markets.

Best of Luck to You!
Plan, Prepare, Execute, Repeat
  • #30
  • Apr 22, 2016 6:18pm Apr 22, 2016 6:18pm
Quoting alphaomega
The other thing is that mechanical systems by default do not work. No matter what type of indicators or combinations of techniques you apply, if you use system with fixed rules - you will fail in the long run. Adaptivity and proper discretion is the name of the game. It's not about systems, or rules. It's about understanding of the game, understanding of fundamentals and human/crowd psychology, market manipulations.. and so on...

I agree with you that the market is living and that adapting is essential. Understanding the players of the game is very important too.

However, I do not agree that following the trend does not work. We become naturally biased by our own beliefs about the market. Here is my belief on why trend trading works:

If the market is different every second then the question becomes how is it different? It is different because the market moves based on orders. Orders are placed by people (or programs, but still ultimately decided by people). So where the market will go next is pretty much random because we do not know who places those orders, when, and the size of their orders. But there is one variable that may provide some clues. That variable is 'why' orders are placed. The 'why' IS the trend. The trend is formed and sustained by expectations and changes in fundamentals and sentiment. So if we were to figure this out then we can stay on the right side of the trend as the big players place and adjust their positions to reflect their expectations.

Notice I never said that trend trading is the only way to trade successfully. If trends form based on expectations then would not the same trend end and revert based new changes and expectations?
  • #31
  • Edited 7:43am Apr 23, 2016 3:12am | Edited 7:43am
Quoting loleno
{quote} I agree with you that the market is living and that adapting is essential. Understanding the players of the game is very important too. However, I do not agree that following the trend does not work. We become naturally biased by our own beliefs about the market. Here is my belief on why trend trading works: If the market is different every second then the question becomes how is it different? It is different because the market moves based on orders. Orders are placed by people (or programs, but still ultimately decided by people). So where...
Well said, except that the above-mentioned adaptation comes from within. Our survival mechanism tells us to run from losses, while we know that they are part of the routine. So after trying to overcome said mechanism with recklessness (which doesn't work), you either fall into blaming the market for not fulfilling your needs, or you'll end up overcomplicating things.
We would literally need to act as robots, which is by definition "insanity", lol.
I'm sure that so called "sociopaths" are more prone to succeed in this business than us "common mortals".


Possible solutions:
1) avoid overtrading at all costs
2) trade mid-long-term
3) learn programming and aim at 5%/month

  • #32
  • Apr 23, 2016 3:56am Apr 23, 2016 3:56am
Quoting cat
I'll post the strategy I was talking about this coming weekend when I'll have the time to hopefully put something decent together. It won't be a full trading strategy, but it should help keep traders on the right side of the market by only taking trades with the main momentum of the market, on any time frame. Yes, counter trend trades can be profitable, but they are much more difficult and so I won't be concentrating on them on this thread.
Hi Cat,

looking forward to seeing more on this as I try to trade mainly with the trend and are profitable most of the time but have trouble with reversals and prob that trend on 1 timeframe is pullback on larger tf
Hope for the best, prepare for the worst.
  • #33
  • Apr 23, 2016 4:44am Apr 23, 2016 4:44am
trading with the trend is a load of BS. Trends do change and there are trends within the trend. Trends will change every week every month every quarter for some simple reasons: such as investor fund inflows/outflows, risk adjustment, fiscal period start and end, interest rate curve inversions etc etc.

Markets especially FX are 20% trend 80% range. The more important value add advice is to identify range high lows and value areas where price will trade 80% of the time and sell high and buy low within the range. This will make money. Trend trading will get you bust in the long-run since most traders buy high and sell low and then trend will change on them.
  • #34
  • Apr 23, 2016 4:50am Apr 23, 2016 4:50am
Recent example NZD USD daily. A lot of traders are piled in LONG NZD USD on a fake break out. But it was an uptrend!
60% retail is net long NZD USD. Now think about it. What the institutional players will do next? But it's an uptrend.
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  • #35
  • Apr 23, 2016 4:53am Apr 23, 2016 4:53am
using HTF you can see that NU was trading at top of almost 2 year range range is defined by 6260-6900, fake breakout was an overshoot and the price will revert to it's mean around 50% of range which is 6500-6600.
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  • #36
  • Apr 23, 2016 4:58am Apr 23, 2016 4:58am
I wonder where do people find statistics like how much in terms of % does the market trends. You can't really measure it as I don't think there is a universally accepted way to define a market trend. If you don't like the idea of trend following, then why are you here? Seriously.
Invincibility lies in the defence; the possibility of victory in the attack
  • #37
  • Apr 23, 2016 5:05am Apr 23, 2016 5:05am
Bbalazs ok so please tell me where's the trend in here on GBP USD since Feb 2015? And how are you going to trend trade this?
if you are trend trading this probably means you are not trading very much at all.
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  • #38
  • Apr 23, 2016 5:10am Apr 23, 2016 5:10am
You should look into Ren Tech hedge fund here's a brief info page on Ren Tech https://en.wikipedia.org/wiki/Renaissance_Technologies
Last 2 decades generating annual average returns over 35% p.a. and 10s of billions of dollars AUM. Using market neutral strategies and beating the markets since inception.

You should call up James Simmons tell him to follow trend trading strategies.
  • #39
  • Apr 23, 2016 5:23am Apr 23, 2016 5:23am
Quoting asgcorp
trading with the trend is a load of BS. Trends do change and there are trends within the trend. Trends will change every week every month every quarter for some simple reasons: such as investor fund inflows/outflows, risk adjustment, fiscal period start and end, interest rate curve inversions etc etc. Markets especially FX are 20% trend 80% range. The more important value add advice is to identify range high lows and value areas where price will trade 80% of the time and sell high and buy low within the range. This will make money. Trend...
What you overlook is that there are trends within ranges. You may identify a trend as a market movement which only moves in one overall direction for hours, days or perhaps weeks, whereas I define a trend as a market movement relative to the time frame you are using, so whereas one trader may be trading off of a 30 minute chart and not have a single trend establish itself all day, another can be trading off of a 1 minute or 20 second time frame and have multiple trends. If you look through my posts here, I don't usually use the word trend anyway, I use momentum, and there is a difference. People equate trend with a long sustained move, whereas momentum is different, for it means no more than entering a trade with the force of the move behind you, that is, shorting when there are already a majority of sellers in the market, not shorting when it is the opposite, which is what so many inexperienced retail traders do.

That is the angle I am coming from, not so much trend trading, but trading with the momentum, and this can be done most effectively, if you are not already in the trade, by trading pullbacks. The majority of successful traders do precisely this, and this explains why, following a pullback, the price moves away so fast - it does this because of the sudden influx of new or added positions.

I am grateful to anyone who contributes to this thread constructively, but to merely condemn trend trading as inefficient is failing to recognize the complete picture. Trading is of course much more complex than merely waiting for a pullback and jumping in with the trend, you have to know that it is a continuation and not a top or a bottom for example, but getting into the habit of trading with momentum instead of against it, like surfing a wave instead of trying to paddle through it, is the most effective way I know of making consistent money in this business.
  • #40
  • Apr 23, 2016 5:31am Apr 23, 2016 5:31am
Trading with momentum - yes I agree with you. Trend trading - no that don't make sense. It's like Jim Cramer's buy and hold strategy and 401K strategy for retirees - I'm going to buy and hold and see what I get in 10 years time. Well this sounds good but bottomline here is that buy and hold will get you broke 80% of the time it just don't work.

Riding waves with momentum and more importantly volume will make money.

Anyhow not here to argue the cause just saying that in my 10 + years of experience trend trading didn't make any decent money. Trends in FX will change weekly/monthly. In stocks it's true that you can ride momentum for a few months up to a quarter, but only 10% of the stocks will trend any particular year. If you are not sure where these stats come from than quite obviously you are lacking trading experience in a wider array of markets.

Good luck guys.
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