Forex traders gambling attitude and ways to blow up account

Did you hear margin call at least once in your trading career? I'm sure you have some number, it can be 0 but it can be also 39... nothin wrong about that, let's not judge book by cover and focus about main topic of this thread.

This thread is created for one purpose, discussion about why 90% 'traders' are losing in the long term (i think that's even more)
If you disagree on something posted here feel free to comment, it's all about having real conversation.
So let's start....
There are some things which makes me go wild about trading books and "educators", traps for your ming that dont have nothing to do with real performance (and even hurts) and exist only to make you feel comfortable.

1. PYRAMIDING 'casino paradox' -

Let's consider real situation. You go to casino with 100$, play 1 game and win another 100$. Now you have 200$ in hand and decide to bet all your cash and hope for 400$. Does it work? Clearly past performance won't change future performance, it's all about percentage game so pyramiding in casino will result in clearing account faster, you can make some maths and realise that for yourself.

Now let's make the same concept in the market
You place your position (1 lot) and it make some profit so you open another position (1 lot). Let's hope for trend to the moon and add another size...
Now question, let's assume that one time you didn't manage to open your first position but market is going your way and based on your strategy you would open another position. Will you :
A - Open 1 lot
B - Open 2 lot
C - Do nothing

Answer
If you chose A or C
Congratulations!
You think that past performance has an impact on future results, that's gambler attitude
You won couple of times and hope for strike for milion $(let's be clear - it won't happen).
If you chose B it means that you don't have this problem(Cheers!)

Im often shocked when i see this strategy in one place or another, especially when some trading guru post to his(or her) fans how it's easy.

You may say that pyramiding is all about following the trend, but in my opinion market makers won't make you profit entering simple one after another positions due to volatility. Traders are constantly getting their SL hit, not because some divine power but because big funds operating large amounts of money are making this way their income.
I couldn't find even one fund using this type of managing money strat. - and the reason is simple - it hurts performance, I'm not able to provide you specific values, it depends on many technical stuff and i'm not yet as good as i would love to as quant to break down this topic.

Feel free to comment and argue.
There will be new topics from time to time, i have few of them

Im confused as to why if you open 1 lot you hope to strike for a milion, but if you open 2 lot then its ok. Maybe you made a mistake a switched them up

I know that my thinking method may sound chaotic so im happy that you ask that!
Im talking that the more piramiding you would like to make the worse performance of your strategy, more risk and less return over long term.

Consider thinking about entries not like entries but like possible moves, the more entries you make the less possible move in your direction you can await before hit SL Also consider risk not like drawdown from before trade but drawdown from highest possible point of your account including open orers.
So if you miss your trading alarm and can only enter at second entry it's not about entry but possible move.
Answering your question :

Opening 2 lot hurts performance less than opening 1 because whole piramiding strategy is based on proper entry and then oversizing position as it goes in your way as a one move.
If you open 1 lot position you lover your exposition to risk but on the other hand greatly lower your possible win, and big piramiding is about 99 loses and 1 win
If this one position would turned out to be your big win you would be angry and abandon this strat, it's all about trusting your strategy

It's a tricky topic, i know. I don't have other idea how to explain that diffrent
But the main trick is that there are a lot of things like that which you may not see on the first place but may be a diffrence from even trader or a losing one to profitable

Very few traders carry out real pyramiding, though pyramiding with strict capital risk is a legitimate tactic to increase total returns.

But as I think you point out, it damages your profits and win rate and r:r - you initially spend time enlarging the total position while taking no profits. I also don't see it being viable intra-day and it only works really well in consistent trends and using a wide stop-loss. All these things make it untrusted by private retail traders.

Hi Guys,
Pyramiding can be very effective if handled correctly:
-Never increase your trade size when you are scaling into winning positions.
-If anything decrease your trade size.
-Always use small lot sizes if you are going to open multiple trades. If you have a big account sure. Trade accordingly.
-Always use stop losses. Your stops are like any other trade. You do not need wide stops.
-Lock your trades in as soon as possible. Protect your trades. Move your stops up gradually.
-Do not over trade. There will be another day in which an opportunity will present itself.
-Take profit at predetermined levels. Leave some trades on the board. You will be surprised to see how these trades grow to longterm winners.
-When I suspect a swing back in the opposite trade direction I hedge with opposite trades. Sometimes my opposite hedge trades turn out to be longterm winners.
-Pyramiding or scaling into winning positions is not for day traders but traders wanting to build long term positions.
-Trading is a business and must be treated as such.

Scaling in or Pyramiding works for me and has done so for years. I am no longer impulsive when I trade. I am able to level headedly open and close trades. It is not for all but can be very effective.
Cheers.

Nicely done!
Correct me if comething what I will say isn't true,
I see that you dont really use pyramiding core concept, you rather wait for a opportunity on daily/weekly chart for strong trend and scale out only in the beggining, making just two entry zones, it may does hurt performance a little if we are talking only about math concept but as you said you also hedge your positon in some cases and(I assume) let your trade run after closing your first zone trades. I do belive that's rather trend trade with a concept of money management similar to pyramiding at first sight but that's whole diffrent concept.
I wonder how looks your data and is it something similar to that :

(That's perfect example of trend trading strategy)

Hi Ryuku,
Thanks for starting this thread. I am sure it will give traders some insight. I have had a lot of questions regarding my trading method. Why don't you just take profit at predetermined levels etc?. Let's start off by saying that I am a self-taught home-based, probably rough around the edges, been through the school of hard knocks trader. I stand to be corrected when it comes to proper pyramiding. However, I find that my approach works best for me and it has been through lots of trial and error. I like to build positions that can give me a solid platform and the confidence to enter into more trades.

As far as I know, there is no hard and fast rule for the position size that follows the first trade. Some say, to build a proper pyramid your first trade is the biggest and subsequent trades are usually smaller. Definitely not the other way around as you have also mentioned in point B. This is very dangerous in my opinion. However, in my research, pyramiding is basically not laying all your cards on the table in one go. So basically I do not open 1 trade at 1 dollar lots and hope for the best. If my stop gets taken out it becomes a psychological and mental blow for me. I would rather let two .05c trades hit my stop loss than a $1 trade. I do not in my case use smaller lot sizes for my subsequent trades but fixed lot sizes. I know I can afford a max of 1 dollar in open trades per pair and would want to spread it over a period. It is very important however to lock your trades in as soon as possible so that you trade risk-free. If this deviates from the core principle of pyramiding I stand to be corrected. As far as I know, however, there is no particular rule for pyramiding. Each one follows a particular method suitable for their own personal circumstances. It is important to feel comfortable and know how much of your money is at risk. One thing I do know however is that if all your trades are locked in you are trading Risk-Free and this is important.

Pyramiding is basically trading the breakouts and pullbacks which becomes support in an uptrend as per my picture so if it becomes trend trading rather than Pyramiding I tend to disagree. Pyramiding is a concept of money management in trendy conditions and nothing else. It does not work well in ranging periods for sure, but I overcome this by hedging on either side of the range and wait for the breakout of whichever direction with one of my locked-in positions being taken out and then follow my normal scale in strategy. It is not an easy concept and certainly not for newbies but well worth it if you want to build longterm positions. I often see traders say they wish they stayed in on the trend and they would be smiling right now if they had kept their position open. The truth is that in real-time it looks like the trend is turning against your trade only to turn vigorously back in your trade direction. You want to kick yourself for closing your trade and not staying in.
Pyramiding has helped me overcome this and building long term positions.

Anyway, just some food for thought especially for short, medium to long term traders.

Cheers.

I can't really say that any risky approach is what you need to use in order to be successful at Forex. I would probably prefer to use something more conservative and accessible when making this choice, because that's what will allow you to stay within a safer framework and work the way you like. Although, actually, a lot depends on the wishes and needs of traders, and probably there are people for whom such risky methods are absolutely working format. And here you should probably focus on your needs and capabilities. And of course, check your guesses, because in theory, you can talk about anything. But practice will show that, there is in reality.

I think it's more about the fact that people really don't take trading seriously and deep down believe that you can make money here without much effort just because you're lucky or because you managed to catch up with the market.
And only this or maybe some other emotional shocks lead to the fact that a person starts to rush and act without a strategy, according to his or her feelings. I can't judge it, because trading is a really difficult business, and it's really not easy to make really right decisions, so I think that traders should just give themselves time to get used to it and get the necessary experience. This is absolutely normal.