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Forex is random

Quoting GEfx
{quote} From you last few posts, I can only say well done! There is intent and design in the forex market, but the challenge for retail traders is to recognize the intent and design, and then build a narrative or trading process around that recognition. Of course, sometimes something happens outside our understanding, and our challenge then is to learn to deal with the unexpected, rather than blame the unexpected on some malice in the market intent on hurting you. Sometime, shit happens. Move on. I sounds like you've got a nice process in place....
Hi GEfx

The biggest issue in trading forex I believe is this.

The setup we enter the market with may be valid for the following bar. All looks good then suddenly out of the blue comes some unexpected news that destroys our perfectly good setup and crushing our trade.
There is so many things that can go wrong between opening our position and waiting for our take profit level.

Most profitable and experienced traders I know and have seen their stats to back up their claims, make their money by only placing their money on the market for the shortest time possible, take profit and get the hell out of the market. They sleep safely with no live trades running.
For EA traders it is no different but on a longer time periods but not long term. They set conditions within their EA to only run during market structures that suit their strategy then turn off. I also run a small portfolio of EA’s which I totally shut down in February due to tanking markets that were toxic for my EA designs. I have a few running again now.

Cheers Rick
Trading thin liquidity at the boundary of the charts
Quoting RickM
{quote} Hi GEfx The biggest issue in trading forex I believe is this. The setup we enter the market with may be valid for the following bar. All looks good then suddenly out of the blue comes some unexpected news that destroys our perfectly good setup and crushing our trade. There is so many things that can go wrong between opening our position and waiting for our take profit level. Most profitable and experienced traders I know and have seen their stats to back up their claims, make their money by only placing their money on the market for the...
all good, until another unforeseen by even better design event shuts down another depo ))
Everywhere I look ... I see sardines for the taking

How can you not be eaten by the sharks, if you are behaving like a sardine ??
Don't swim with the sharks ...
  • Post #544
  • Quote
  • Edited May 16, 2020 11:51am May 15, 2020 8:49pm | Edited May 16, 2020 11:51am
Quoting RickM
{quote} Hi GEfx The biggest issue in trading forex I believe is this. The setup we enter the market with may be valid for the following bar. All looks good then suddenly out of the blue comes some unexpected news that destroys our perfectly good setup and crushing our trade. There is so many things that can go wrong between opening our position and waiting for our take profit level. Most profitable and experienced traders I know and have seen their stats to back up their claims, make their money by only placing their money on the market for the...
Hi Rick,
Yes I think it's important for traders to find confidence to regulate their behavior during times of market exposure. I remember struggling with this when I got started. I was fortunate to have a group of experienced traders who helped me reengineer my brain to overcome the instinct to jump out of a trade before it reached my targets.

I trade with an eye on the FF calendar as well as other pieces of financial date each day, like currency options expirations. But the idea always is to pick targets, evaluate PA, add to trades as PA progresses to targets, and exit trades at targets. I add a hard rule to this approach where I exit most trades regardless of progress at around 11:00 am EST, and might reenter later in the day when Tokyo opens.

I have traded longer term in the past (eg, I held open sell positions in the A$ from April 2013 and September 2014 for several months; I opened long term buy positions in the $CHF in late January 2015) but have cut back on that kind of trading in the past few years. Again, with long term positions, I am trading to targets, but those are Day targets rather than targets on the 4H or 1H.

I'm always interested in what other traders are doing and appreciate what you share. Good trading!

Edit: I will post an example of my approach from this past Friday, G$ sell positions from target to target, as a visual example.
Quoting GoldTheHun
{quote} What you mention is a binomial probability. So Standard Deviation of binomial probability is: StDev = Sqrt( P * Q * N) P = Probability of winning Q = Probability of losing (1-P) N = Number of Trials So for the coin toss example, number of tails (or heads) for 30 trials the formula becomes StDev = Sqrt(0.5 * 0.5 * 30) = 2.7386 So you would expect according to significant Z-Scores 1 StDev =15+2.7386=17.7386 1.96 Stdevs = 15+(2.7386 * 1.96) = 20.36 2.58 Stdevs = 15 + (2.7386 * 2.58) = 22.06 So in 30 tosses you can expect max of 22.06 heads...
1. Why did you use normal distribution here? assumption that binomial converges to normal when number of trials is big enough?
2. Basically your conclusion means that when we play "toss coin 30 times" game infinite times, the relative frequency of games where number heads doesn't exceed 22 converges to 0.99 right?
@ OP

Great thread.
Hits pretty damn close to home.

I think you're spot on about risk management too. Just another deterrent to keep the account from blowing up (for now).
What's your take on losing on trades quickly? (your trade never being green for a second and sort of instantly stopping you - losing the entire amount of risk you allocated to any given trade)

I'd like to think I can skew the risk reward notion in my favor in the in the long run by consistently reducing my allocated risk on every trade and avoid full stop outs. On the return side, I wouldn't need to rely on large returns anymore to net positive relative returns. In whatever conditions that constitute an entry for you (that you shouldn't instantly lose on), the individual randomness of your trade result won't disappear but you could make money on the positive outcomes that are relatively higher returns than your risk on losers.
In other words, making money on 30,40% win rates on small returns, absolutely speaking. Avoiding account blowup to the downside by managing the downside with a regular risk-reward outlook.

Not gonna change anything ref. the randomness of your outcomes or the market but I wouldn't give a damn about it being random or not if I can consistently make money on this? Would be great to hear your thoughts on this.
It's something I'm working on but if this derails too much from the original convo for you to reply on here, then feel free to DM me.
Quoting AmmaBoss
{quote} Stop hunting doesn't exist, just a made-up thing so retailers can blame their loss on someone else.
nobody gives a s**t about our stops of course.

I think the whole retail flow is about 1% of the FX market. out of that 1%, a good 90% is internalized by brokers.

I dind't say stop hunting is done against us poor retailers lol for god's sake, I'm not that crazy / paranoid.
and it is not done by market makers. it would not just be a good way to lose all their clients.. the entire FX would look like a big scam hahahaha..
Quoting v2vboni
{quote} Are you talking about the GAPS somewhat like MESCH method? https://www.youtube.com/watch?v=nYv5E5ubBdA
Thanks for the video. She is a good presenter... starting with the finger exercise to catch the keen attention. And then the bell curves and the vaccums....! Sounds exciting at first.. but afterwards, when you think on a practical side.... there is no edge It's just like a candle itself. Her method would not have a predictive capability with an edge. Because whichever period you choose... it'll be filled with high activity areas and the vaccums, all over the place. You cannot predict.. to which vaccum would this move... next.
My thoughts...!
Quoting vinforex7
{quote} ... starting with the finger exercise to catch the keen attention. And then the bell curves and the vaccums....! Sounds exciting at first.. but afterwards, when you think on a practical side.... there is no edge It's just like a candle itself. Her method would not have a predictive capability with an edge. Because whichever period you choose... it'll be filled with high activity areas and the vaccums, all over the place. You cannot predict.. to which vaccum would this move... next. My thouhts...
Exactly! Your thoughts. No rebuttals... To each his/her own just like yours. No MESCHing around ; )-
Since Frank Sinatra sings in his own way, my chart sing... I did it, my way
Retail forex is a gambling.

even the trading legend jim rogers said this.

I suggest you hunt the information

this video proves forex price action is random

just like roulette but trading costs much worse

Assets or business is the real way to wealth or gamble in vegas and have fun with hookers also better than retail forex more fun

Inserted Video
since the price is in a trend state of 70-80%, the rest is different.
so it does matter whether the market is random or not.
because trends exist, and that’s the point, so we have the opportunity to make a profit.
The shape of the FX price curve is not just random but it is in fact much worse then random.
It's chaotic and the odds are not proportional due to cost and fat tails.
Cost accumulates over time multiplied by leverage and the fat tails are impossible to predict or avoid.

It takes months and years to build up you capital and only 1 fat tail to lose it all! Remember that!
Nothing in the universe is random, everything has some logic behind it. The dumber a person is, the less he understands, the more random things seem then.
Everyone can see the chart, but only a few can actually read it.
From$1toMillion All Time Return: 22,067.0%
Quoting OnlineAddict
Nothing in the universe is random, everything has some logic behind it. The dumber a person is, the less he understands, the more random things seem then.
Actually, the flip of a fair coin is random. Just shows how dumb you are
Humans try to find patterns and meaning in everything. You are focusing on the wrong part of trading. Forex trading is not tea leaves. Don't put much weight into patterns.
Love to talk on Discord: DividendGamer#1324
Quoting Trenderer
{quote} Actually, the flip of a fair coin is random. Just shows how dumb you are
No, it actually shows how dumb YOU are, because it is not random. The fact that you cannot guess the outcome, doesn't make it random, the laws of physics still apply to it.
Everyone can see the chart, but only a few can actually read it.
From$1toMillion All Time Return: 22,067.0%
Quoting OnlineAddict
{quote} No, it actually shows how dumb YOU are, because it is not random. The fact that you cannot guess the outcome, doesn't make it random, the laws of physics still apply to it.
So when I play DotA and type -random, it isn't random?
I will tear the world apart for you.
Quoting OnlineAddict
Nothing in the universe is random, everything has some logic behind it. The dumber a person is, the less he understands, the more random things seem then.
@OnlineAddict -- Hmmmmm -- speaking of dumb... I'm not so sure "logic" plays a role -- physics, yes -- but not logic. Logic is an abstract concept that only exists in your mind.

@OnlineAddict -- since you brought up physics, have you ever heard of the Heisenberg uncertainty principle? There is a difference between knowing the exact location of a quantum particle in advance versus computing the locaton with a certain probability. Even when the laws of physics are applied, those are not sufficient to know in advance the exact location of a quantum particle. So -- unless you claim to be G-d and are in command of the laws of physics both known and unknown to man -- then, yes, there is randomness.

When flipping a coin I suppose if you performed that in a chamber and could control all the variables you could predict the outcome with a very high probability -- but I've never flipped a coin in a controlled chamber. I don't know -- maybe that's how you do it. So, realistically, the only practical role that physics plays in that case is the coin will ascend with a particular velocity and acceleration and then descend with a particular velocity and acceleration -- due to gravity. But as to whether it would land as heads or tails, well, that's anybody's guess. Randomness and probability can exist at the same time. @Trenderer and the others you refer to are not dumb -- rather, you are the one with a very shallow understanding of physics and probability.
Quoting robots4me
{quote} @OnlineAddict -- Hmmmmm -- speaking of dumb... I'm not so sure "logic" plays a role -- physics, yes -- but not logic. Logic is an abstract concept that only exists in your mind. @OnlineAddict -- since you brought up physics, have you ever heard of the Heisenberg uncertainty principle? There is a difference between knowing the exact location of a quantum particle in advance versus computing the locaton with a certain probability. Even when the laws of physics are applied, those are not sufficient to know in advance the exact location of a...
AGAIN, the fact that you cannot predict something, doesn't mean its random!!! There are laws of nature, everything happens for a reason. If you flip a coin, it doesn't fly to the sky...it falls down, everytime, because of gravity. And then there are million other factors involved how and where it falls, but its not random...its random to us, if we want to predict, but why would we?

Forex is a completely different thing...currencies influence economies and its people(mostly) who trade them. People are very easy to predict, if you learn to understand them. Why do you think a TV station only needs a sample of 1000 people to know what 1 million people will do? Because people are not as complicated, their herd behaviour is easier to predict than everything that happens around us, obviously.

So trading can be predictable...for people who know what they are doing...I don't know how many do...1%? 5%, 10%? No idea...but how many people can fly a plane? How many people can split an atom? How many people can perform brain surgery? Everything takes knowledge and experience. People have the impression that trading is something easy that anyone can do...well, no, not anyone, obviously, just like everything else that requires intelligence and knowledge. How many people fail at running a successful business? In anything there is...my guess would be 90%, if not more. If we asked 1000 random people to start ANY business they want and checked for their success 1 year later, I am pretty sure 990+ would fail.
Everyone can see the chart, but only a few can actually read it.
From$1toMillion All Time Return: 22,067.0%
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