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Are trading costs the main reason of losses in trading?

  • #181
  • Aug 12, 2019 12:58pm Aug 12, 2019 12:58pm
Quoting tropical_g
{quote} if you are using leverage then what do you think you are paying for the privilege? would you open a business that lends money to people and not charge them for the service? get real
why would you willingly pay higher swaps in 'forex' when futures offer you everything without any hidden costs?
  • #182
  • Edited 1:31pm Aug 12, 2019 1:05pm | Edited 1:31pm
Quoting nim1984
{quote} why would you willingly pay higher swaps in 'forex' when futures offer you everything without any hidden costs? Either you're not aware of it or haven't made it to the big leagues of futures trading.
I don't hold overnight so don't pay swaps and it isn't hidden costs, its on every brokers website in black and white.
  • #183
  • Aug 12, 2019 1:08pm Aug 12, 2019 1:08pm
Quoting nim1984
{quote} compare the contango/backwardation in futures with the swaps charged by the fake market brokers. Then you’ll realize how much they’ve been shafting the lazy/poor retail gambler. But I guess in a losing game, the retail gambler will just lose faster so it doesn’t make a difference at the end of the day
all trading involves costs. if a trader can cover these and remain profitable then what's the big deal?
  • #184
  • Aug 12, 2019 1:18pm Aug 12, 2019 1:18pm
I don't think trading costs are the main reason for losses.

Leverage and ego are undoubtedly a bigger killer than frictionnal costs (that are actually necessary). Also, a sort of edge is needed to have a positive expectancy. But if you look at a chart and can't find price patterns, the best thing to do is to stop trading.

According to me and unlike popular belief, market are not a negative sum game but positive. The reason is that there are many different actors with different purposes. Big commercial companies, government policies, Central bank policy, Financial companies, have each with their own goal, actions and benefit from each others in financial markets. The retail FX trader has to formulate a strategy to properly blend in and scrap some profit.
  • #185
  • Aug 14, 2019 12:47pm Aug 14, 2019 12:47pm
Quoting nim1984
{quote} why would you willingly pay higher swaps in 'forex' when futures offer you everything without any hidden costs?
What leverage do you have while trading futures? That is the answer, swaps — is the cost of leverage.
  • #186
  • Aug 14, 2019 4:30pm Aug 14, 2019 4:30pm
Lack of smith system
  • #187
  • Aug 14, 2019 8:16pm Aug 14, 2019 8:16pm
Quoting komposter
{quote} What leverage do you have while trading futures? That is the answer, swaps — is the cost of leverage.
i didn’t get you, do you mean there’s no leverage in futures as opposed to ‘forex’?

there’s no cost of leverage in futures. It’s up to the broker to manage risk and cut position before account goes negative, that’s all
  • #188
  • Aug 14, 2019 9:47pm Aug 14, 2019 9:47pm
[quote=komposter;12434758]
Your idea is clear for me — if you trade bad, size of costs has no matter.
No, that's not my idea (but it is true). My point is that if you trade well, cost does not matter. Consider the posts on my journal on August 9 describing my trades in the G$. I captured about 100 pips that morning in 3 trades, with total spreads/cost of approximately 6 pips among the 3 trades (my broker was averaging 1.5 pips spread that morning). My point is this: if you are not seeing and trading for significantly greater pips than the spread (not 2 or 3 times, but 30 or 40 times), you are needlessly putting yourself at risk. Stop doing that.

But you don't want to understand my idea. And it is very simple too: if you trade good, your results will be much better with low costs.
No, it you trade well, as describe above, your results will not be "much better" with lower costs. They might be fractionally better, but you are not here to become fractionally better. I refer back to those posts in my journal. "Much better" results would have been achieved by holding to my original target at 1.2045, for an additional 46 pips. That is significantly better than worrying about shaving off some portion of the 1.5 pip spread on each trade.

Of course, if you trade 20 deals per year, trading costs will not affect you so much.
I work my charts every day, actually trading 4 or 5 times a week, when there is opportunity to trade with the banks. I am disciplined in that way.

Good luck and have successfull week!
Same to you, and I truly mean that. Sorry for being such a dick to you!
  • #189
  • Aug 15, 2019 7:46am Aug 15, 2019 7:46am
Quoting nim1984
{quote} i didn’t get you, do you mean there’s no leverage in futures as opposed to ‘forex’? there’s no cost of leverage in futures. It’s up to the broker to manage risk and cut position before account goes negative, that’s all
As I know, you can have up to 1:20 (or even 1:10) with futures.
So, if you want to have 1:50 or more, you should pay swap.

But it is better to clear this moment with broker, I haven't trade futures.
  • #190
  • Aug 15, 2019 7:47am Aug 15, 2019 7:47am
Quoting GEfx
Quoting komposter
Your idea is clear for me — if you trade bad, size of costs has no matter. No, that's not my idea (but it is true). My point is that if you trade well, cost does not matter. Consider the posts on my journal on August 9 describing my trades in the G$. I captured about 100 pips that morning in 3 trades, with total spreads/cost of approximately 6 pips among the 3 trades (my broker was averaging 1.5 pips spread that morning). My point is this: if you are not seeing and trading for significantly greater pips than the spread
...
You just a great trader! I know only 2 or 3 such traders myself.
So, my calculations for all other, who like scalping and other modern strategies
  • #191
  • Aug 15, 2019 8:59am Aug 15, 2019 8:59am
Quoting komposter
{quote} As I know, you can have up to 1:20 (or even 1:10) with futures. So, if you want to have 1:50 or more, you should pay swap. But it is better to clear this moment with broker, I haven't trade futures.
no it’s not like that, futures margins are decided by exchange
  • #192
  • Aug 16, 2019 7:22am Aug 16, 2019 7:22am
Quoting nim1984
{quote} no it’s not like that, futures margins are decided by exchange
And what leverage on CME, for example?
  • #193
  • Aug 19, 2019 6:17am Aug 19, 2019 6:17am
Quoting nim1984
{quote} no it’s not like that, futures margins are decided by exchange
Actually futures margins are set by brokers) because all of them are CFD
  • #194
  • Aug 19, 2019 6:28am Aug 19, 2019 6:28am
Quoting Lk009
{quote} Actually futures margins are set by brokers) because all of them are CFD
And what is max leverage on CFD can you have?
Any hidden costs/commissions?
  • #195
  • Aug 19, 2019 6:38am Aug 19, 2019 6:38am
If we captured a sample of 10.000 random players with his strategies, this strategies would have a roughly 50% winners because they are random..(we are mostly random traders in the long term)

So, the expected net worth with no transaction costs are $0. If you add transaction costs the strategy will be a net loser.

Darwinex has carried out a study with his traders and the conclusion is the same. Reducing transaction costs near 0, his base traders didn't lose much money ...
  • #196
  • Aug 20, 2019 12:07am Aug 20, 2019 12:07am
If all the retail forex accounts funds are added up at the beginning of any period and added up at the end of any period. The total amount of funds will be down by the amount of the transaction cost for the period.
Over time this aggregate retail forex account gets eaten up 100% by transaction costs.
I will let you ponder the implications.
  • #197
  • Aug 20, 2019 12:30am Aug 20, 2019 12:30am
Quoting DavidRP
If we captured a sample of 10.000 random players with his strategies, this strategies would have a roughly 50% winners because they are random..(we are mostly random traders in the long term) So, the expected net worth with no transaction costs are $0.
You're forgetting 1 factor - time.
For 10,000 random players with each of their strategies, the outcome is not binary win/loss the same as 10,000 players flipping a coin. Even if everyone starts with risk:reward trades of 1:1 then price does not immediately move from entry to win or loss.
  • #198
  • Aug 20, 2019 3:39am Aug 20, 2019 3:39am
Quoting Mingary
If all the retail forex accounts funds are added up at the beginning of any period and added up at the end of any period. The total amount of funds will be down by the amount of the transaction cost for the period. Over time this aggregate retail forex account gets eaten up 100% by transaction costs. I will let you ponder the implications.
if you take a trade and your stop gets hit that isn't a a transaction cost its a loss. just under 80 percent of retail traders lose because they don't know what they are doing. it has nothing to do with transaction costs.
  • #199
  • Aug 20, 2019 7:01am Aug 20, 2019 7:01am
Quoting Mingary
If all the retail forex accounts funds are added up at the beginning of any period and added up at the end of any period. The total amount of funds will be down by the amount of the transaction cost for the period. Over time this aggregate retail forex account gets eaten up 100% by transaction costs. I will let you ponder the implications.
That would of course be true if every retail trader is trading with the counterparty being another retail trader.
-but most of the time retail traders are trading with a market maker / liquidity provider.
  • #200
  • Aug 21, 2019 8:58am Aug 21, 2019 8:58am
Quoting tropical_g
{quote} if you take a trade and your stop gets hit that isn't a a transaction cost its a loss. just under 80 percent of retail traders lose because they don't know what they are doing. it has nothing to do with transaction costs.
no no no ... the transaction cost is paid on a win or a loss. Both incur a transaction cost.
I agree, there is no transaction cost cheap enough that can save a bad trade.
But, here I don't agree.. it's not "just under 80 % of retail trader lose" it's more 99.9999 % depending on the period considered.
Like I read somewhere else "retail forex is a negative sum game for losers"
https://www.forexfactory.com/showthread.php?t=651547
and so it must be true ...
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