Forex - A negative sum game for losers

let me ask you if i told you have i made $50000 this morning what would you say

Not employees of a company, and no hobby traders..
I am talking about "self employed and professional" individuals whose only source of income is through retail forex trading.
Apparently they found no one ...

yes i know what you are talking about those first two follows could not even speak properly and one managed a million dollars , ones a nurse with 3 kid , do not have the answer for you , i would not let them have my money

I would have to say that if a documentary is made about the "the world of brain surgery" and various characters in this field are represented, I am certain that they will also present the top performers.
It would be very odd that top perfoming brain surgeons do not exist.

the guys whos company was looking for new blood to manage larger money than these traders ever seen , if i remember only one had promise but had a big head i was disappoint at the series my self laughing at what they were trying to do and there excuses why

some good points there about randomness, especially when trading automated systems. Any automated system has a shelf life, and sooner or later it will die; and we must detect its death as early as possible.

have you tried discretionary trading?

nothing beats the human mind; we can adapt to changing market condition quickly. You just need to manage the emotional side.

Trading in the Zone by Mark Douglas (or his DVDs); do help in this area.

Yes, I have reached the same conclusions. The automated systems require adaptation, but this on itself makes you question their validity in the first place. Maybe all positive results are simply random and caused by curve fitting during optimization. You can also find perfectly winning systems in randomly generated data. So the whole thing is very problematic. You never know what you are dealing with until you see the damage, which often times is devastating.

The way we have to look at automated systems is like each active system represents open position in the market. And just like any position the system has a stop loss and take profit levels. These levels can be determined with simulations after you input the initial parameters of the system. The trailing stop of the system should be set as a fraction of the optimal potential profit. And the optimal potential profit is equal to exactly 1 standard deviation above the average expected return. This will give you reward/risk ratio of 2. Anything above that and your odds decrease exponentially.

So there are only 2 potential outcomes. You stop the system at 2 standard deviations above the starting point, or you stop the system at trailing stop 1 standard deviation below the highest point in the equity.
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In regards to manual trading, I have very little desire for this. I traded manually for many years, I made some money early on and then I decided to cut my losses while I'm still a winner (best decision ever) because I knew that manual discretionary trading is unsustainable. Even if you make profit, after a while the emotional swings become unbearable and the stress levels too high. This is not a way to live a healthy and happy life. Plus there are more important things in life.

So now automation is the only way for me to trade. It's much better to write code.
Analyzing the charts for hours, reading the news every day and the placing/managing positions manually now feels like a complete waste of time. It's just obsolete as a concept and feels like strategy from the stone age.

My automated systems can do all of this work in milliseconds, perfectly without error and with the ability to trade unlimited number of markets 24 hours a day.
Automation gives you so much power and control......and even if you don't make a lot of money in the end of the day, at least you learn something, and you can control the risks very well. No need to worry about emotions and stress anymore. Now the only thing I care about is my code an how to make it better.

i am completely on the other side. recently in July i stopped automated trading and switched to manual trading (semi automated, entry is manual, then position is managed automatically).

i find this experience to be the best. screen time is valuable. my system is 100% mechanical but it is traded manually. not all trades are taken.

backtesting the system failed miserably, but maually trading it is successful.

now i understand why CP and others were against automated trading.

Hybrid strategy. You try to get the best of both worlds. But you can still automate almost the entire procedure. Make the systems scan the markets, and to give you alerts in real time. Each Alert presents you with the opportunity to take a quick look at the situation and to give the algorithm permission to open and to manage the trade. In other words, you can make all of the presets and when the opportunity presents itself you just have to tell the algorithm a simple YES, or NO. This can be done even via mobile device /smartphone so you can manage trades remotely.

This is still way better way to trade in comparison to traditional discretionary trading where you are constantly stuck and have to do all these dreadful analysis.

am doing exactly that actually. EA trades fully atomated, but the trades are simulated not sent to broker.

i get alerts on both entry and exit. i then choose what position to trade.

screen time is what am benefiting from the most. in the past i was a bit blind to PA because i was always away from the screen when EA was trading.

there is an intuition component that gets built up as you go.

I luv it when you get two Alphas chatting :-)

Great discussion guys.

I personally think that the vast majority of us trade randomness without ever realising it. IMO there are very....and I mean very few systems that have an edge that is sufficient to overcome the frictional costs of trading. It is such an incredibly difficult game made toxic through the incorrect application of leverage. The Law of Large numbers means that you can never know with certainty whether or not your trade outcome was a random one or not. It is not the next trade....but the next thousand trades that matter and even then...curve fitting is probably lurking somewhere. Beating randomness out of trade outcomes is a fruitless task. There is always a degree of luck residing in those equity curves.

The better way to harvest a possible small edge IMO is through automation as this is the only way that you have a chance to validate whether or not your systematic processes possess a possible 'tenuous' edge or not. Furthermore a static solution in an adaptive market will never have a sustainable edge....rather it is the workflow process of adaptive system development where an edge resides.

As a discretionary trader, you may have a successful outcome over a vast array of trade events, but you will not be able to exactly repeat it if you could replay time. This variation in outcome prevents a discretionary trader from being able to obtain the prerequisite confidence to acknowledge if an edge is present or in his/her ability to transfer this process to others with the degree of fidelity required to ensure that his/her students can repeat the process with the same degree of success. (aka over the long term there is only one Paul Tudor Jones but many successful diversified systematic traders).

This is how the market should be traded; like Tyson in boxing; lots lots of screen time; patience, and hitting it when in the zone:

Some very interesting inputs from C, Mingary and the two Alphas. Thanks!

It is often very hard to see through all the lying here on FF. How to get a clue who is speaking just pure bullshit, who has an agenda, who is just bragging, who is in a state of self delusion, who is a victim, who is a snake oiler, who is really sharing valuable experience and knowhow.....

From time to time if one of the snake oilers is really pushing hard it's important to unmask them. Since most of them are not very intelligent fellows, they typically leave enough tracks to find out their true motives, so here an example:


So let me adress Drolph....

Based on his replies on this tread and on other threads it's clear he has an agenda. He is certainly not a successful retail trader sharing his experience.
Based on his reaction above you can see I hit something that must be true... so it's worth looking at it in greater detail.

Starting on myfxbook... a typical fishing ground for guys who want to sell something.... I find this:



He defends FXCHarger EA.... interesting.... What are his motives for this post?



Again a link to the same fxcharger software..... he tells that he uses this software and defends it again. Look again at his view angle and ask for the motive of his post. Is he really just a user of this EA or does he write from a viewpoint that he wants you to believe this is a good product?

So it's time to find out what fxcharger is:

https://fxcharger.com/index.html#statistic

Look at the charts and compare it to the ones he shows here claiming that these are his accounts:

https://www.forexfactory.com/showthr...3#post12501063

As next step you learn fxcharger EA is marketed over this site:

https://forexstore.com/de/fxcharger-max

And now you see through the whole thing. You are in the middle of snake oil industry. You kow where he is most likely comming from and what his true motives are....selling his EA or an EA he has a relation too.... If you continue to dig deeper there is a high chance that you can link him to other profiles based on the language he uses... as soon as this profile lost it's virginity... he will pop up somewhere else with a new one doing his thing over and over again.

Baiting for what? Are you stupid? Or blind? Or both? Which part of I do not sell anything is hard for you to understand?

You end up looking at an EA Seller of the worst kind possible using a grid / martingale system that distorts reality very effectivly till it blows up.

 

1. These kind of systems are the worst of all..... these are the Ferraris in luring in new victims.
2. They are highly addictive because they can deliver extrem performance over an unknown period of time till they finally implode at day x.
3. A retail trader gets hooked badly if he has a winning run in the beginning.... the addiction potential is huge.
4. there is a high risk a user thinks if I could do it once, why not again....
5. It's my mistake not to get out earlier.... next time I do it.... hey, it showed it's possible, just ride it less agressively...etc... etc.
6. A lot of small gains are giving him positiv feedback constantly till one hard hit pulls him back to reality and finally the last hit wipes out his account... the small gains program his brain more effectivly than the rare big losses.
7. The human brain isn't ideal to see the risk that is built up in such a system while it's delivering its constant gains.
8. These are effictive waepons of mass retail forex trader wealth destruction.

As a final step look at his interactions with other forum members to get an idea about his "network".... this might be helpful to identify his business partners.

Lessons learned:

1. Don't be blended by the "results" of such EA systems - 99% is fake and scam.
2. If there isn't a physical real person with a real company adress, correct contact data, listed in offical business registries (not the countless fake ones) and d having all the required licences to offer these kind of products, don't waste a second to believe them one single claim.

So Drolph, let's see if Twee thinks this is enough to identify you as a commercial member on a classical fishing mission on FF camouflaged as a trader.

Have a nice one.
Hudi

https://www.forexfactory.com/showthr...3#post12507583

I am continously looking for evidence that gives you an idea about long time performance of retail forex traders. I am especially interested in broker performance data, because all you can get is data over relatively short periods of time (ESMA, CFTC, FCA etc). The reason for this is obvious, most brokers fear to deliver the proof that over a long enough period, very close to 100% of all forex retail traders lose money.

I found a very interesting article from the social trading plattform darwinex. They draw in a lot of points the very same conclusions as I do. They start to understand that it is harmful for their business modell if all starts with lies. They are willing to show the numbers and even start to ask other brokers to do it in a similar way. I call that a start and hope one day all brokers have to do it.

Are these trustable facts? Well, this can only be answered by those persons who put together these numbers, but since I don't think a company like Darwinex has an incentive to show trader performance worse than it is I think it's highly unlikely that they show worse numbers than reality, they rather have an incentive to tilt it to the better side.

https://blog.darwinex.com/evolution-...der-community/

Here are the numbers of Darwinex:

Quote:
Trader community’s return month on month since Darwinex was born. We calculate the value

1. supposing that all the trader funds are in one trader account and
2. taking into account
   1. the monthly deposits and withdrawals of said account,
   2. the profit and loss generated in the same period, as well as
   3. commissions and swaps.

   
   
   

Ruling out the year 2014, because we had very few clients, our community’s return has improved year on year.

https://blog.darwinex.com/wp-content...d-darwinex.png

 

1. Darwinex startet out with traders in 2014.
2. community’s return month on month was in aggregate negative every year and the numbers are in the range reported by ESMA
3. very few months have been positive.... with the SNB Jan 2015 event as a very positive outlier for the community
4. The community total aggregate loss over 5 years is 97.7%
5. They think despite these numbers they are better than most other brokers (I agree - most likely they are)

Further more, they confirm that the leverage reduction through ESMA improved the results of their traders significantly.
This is something that I am 100 percent sure off to be true.... every broker or trader that doesn't confirm this, is in my opinion highly suspicious and has really very little knowledge about the topic.... low leverage is one of your biggest edges in a zero sum game in the long run.

I really would like to see more data of this kind from other brokers or social trading plattforms. Best would be, if regulators force brokers to deliever such data and publish these statistics each year. Just a 3 month or a 12 month periode is acutally very misleading.... because this doesn't show the effect that the winners in one periode do not have a higher chance to be winner in the next periode.

Lessons learned.....

1. If you enter into this game, expect to lose 98% over 5 years on average
2. Trading cost optimization is very important - trading longer timeframes with little leverage improves your chances. It reduces your risks and your potential profits - so all outragous profit claims are nonesense anyway.
3. A standard job will deliever a far better profit/risk and profit/effort ratio than retail forex trading - you can't do this as a job and make a living from it.

Energy intensive crypto currencies will drop to zero, when there use as a money extorsion tool comes to an end.

 

1. BTC value is controlled by a very limited number of individuals.
2. The gini coefficient is close to 0.99 in relation to global population.
3. 456 wallets hold over 50% of all bitcoins.
4. The energy consumption of BTC has surpassed 159 countries and already greater than Switzerland.
5. shady actors controll the majority of BTC
6. BTC transactions are highly inefficient - only extrem greed made this scam possible

Outlook:

1. BTC (and most of the other cryptocurrencies) will be used to prey on the weak using all tools of manipulation you can think of
2. Als long as regulators do not adress manipulation and regualte cryptos like shares on exchanges, the manipulation will become even worse
3. The broader BTC is traded and distributed, the more can those who manipulate distribute their coins into the masses without collapsing the price
4. The main distrubution occurs outside the real BTC trading within finacial instruments like CDF's, futures, ETF's etc. , spreading worthless crap to the stupid masses.
5. As soon as the hype has passed and the manipulation becomes totally obvious for the public, prices will no longer reach new highs and the whales will start to prey on each other.....
6. At a certain point those who control most of the physical BTC's will have similar sized hedges outside the physical BTC ecosystem
7. Now the can prey on both sides and do no longer have an interest to make sure the price continues to climb to earn money
8. At one point the price is low enough and energy costs are high enough that mining and transaction handling isn't worth it anymore if you can earn more by taking BTC down to zero. Those who can will do it.
9. Less and less miners control the network, the vulnerabilty rises (hidden from public), the insiders start to smell the danger and run
10. A 51% attack (maybe even by a state actor) as one single black swan event wipes out the entire BTC ecosystem within seconds.
11. BTC goes to zero, crypto miners, crypto exchanges, crypto traders and most block chain companies go belly up
12. Only a small part of useful blockchain products find their way into the real economy
13. Not-KPMG loses his main hobby nutering the crypto scam.... but remains probably still in denial.

Retail crypto trading is the next level negative sum game for losers.

So take bitmex and its CEO Hayes



This guy is a master snake oiler ^2 !

Roubini vs. Hayes...... guess on which side I am.

You have to watch this:



Thank you Nouriel! It takes courage to do what you do - keep on fighting.

Stop this fraud now!

FINMA Switzerland, when the hack are you moving forward in limiting leverage in retail forex in Switzerland?

You guys don't even f...king know who is responsible to adress this question.
This is a very clear sign that there is corruption in this regard.
Those who should act are gaming the system to make sure nothing changes.

Unbelivable!

BTC is nothing! It's just a very very small part of the global pyramid scheme called financial markets.
If you think that Forex or BTC is the worst game for losers - think again!

The amount of money lost on the Forex market is nothing compared to the amount of money lost on the stock markets globally!
STOCKS! This is where the biggest scams happen! You know, people put their pensions on the line. People keep their saving in stocks. They think the market is going up forever. People forget the history so quickly..... (Or even worse - they don't even know the history.) The market goes up.... and then down. And when it's down many companies will go bankrupt. When a company is bankrupt the stock price of that company is ZERO.

Look, the same people who OWN the Forex market and the banks, the same people also own the stock market. They are the major shareholders of the largest corporations and most of the small corporations are part of the large corporations.
In the end of the day, the financial markets are very efficient mechanisms for legal transfer of wealth from the middle class to top 1%.
If you understand how the mechanisms work, you can ride the waves and you can take profits here and there. But it's not easy.

Main problem is that you never know where the trend begin and where it ends. You always try to play somewhere in the middle. And this often is the worst place/time to play because you automatically join the crowd. And we all know that the crowd is on the losing side.

People like Buffett and other large sharks did not make billions by chasing trends! They look to buy low (undervalued), they look for stocks where there is huge potential for growth. In other words they buy before the price goes up (not after). And where the price is up and the trend is clear - they sell the stock to the small guys. And after they sell all - they have positions in cash (this also affects the Forex market....) the stock market crashes because no one wants to buy anymore, all suckers already have long positions so there is only one outcome - down.
And when it's down, the big sharks will buy again....and we repeat the cycle. The average investor is simply liquidity provider for the large sharks. This is how the transfer of wealth happens.

What you do not mention is that financial markets do benefit from regualtion. Since the potential for fraud is enormous, regulators are in a constant fight to keep up with innovation and new types of financial products. Typically they are late....and most of the damage is done by the time they really act. But small investors have the best chances to compete in the most regulated markets.

You are correct that you can lose money with stocks too.. that is for sure. I think a major difference to forex and crypto is the fact that behind companies you have real people working on real products and services that provide a real benefit. This part of the business is not zero sum. Their daily activity creates value and you can participate in that wealth creation in the long run limiting your risk if you use diversification, rebalancing, specific knowledge about a certain industry etc.

On top of that you have the whole financial industry putting speculation (zero sum game) in between you and real businesses. They have a kind of parasitary position which allow them to take the cream off everything and play it against you by selling you stupid derivates, charge high rates, front run your trades, scare you out of positions and lure into positions through a giantic, nowadays almost automated propaganda machine that automatically generates financial articles favouring their current books. There game will always work on those market participants who think they can outsmart the marekts, but they cant do much against long term investors that optimize diversification, costs, risks, do not use any leverage etc.

The current problem is that all markets are heavily distorted through central bank actions world wide. They are new players with very deep pockets that compete with you and driving up asset prices beyond the motivation of a fair and ealistic price discovery. They have an other motivation and reason to participate and its not their personal money they are putting at risk. Reaching a inflation target through QE and other unconventioal monetary tools and zero to negative interest rates are a new way to kind of tax the masses while limiting the impact on those who have been already strongly invested in these asset classes by lifting them up and up. That is why the wealth gap between those who have and those who don't grew very strongly during these periods.

This game will end one day when we shift from the current quantitative growth model to a sustainable qualitative growth model.

https://www.metalsmine.com/showthread.php?t=951189