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The brutal truth of day trading

  • #61
  • Mar 29, 2021 11:13pm Mar 29, 2021 11:13pm
Quoting ryuryu
{quote} Hi traderfox7! I don't have much experience, I'm creating algos and robots since 2017. I have tried hundreds of systems and came to conclusion that 1. EA must do what human can't (for example trade 30 pairs at once on 1m tf) and 2. Everything must be dynamic. No static values. And now the picture is more clear as it was 1-2 years ago. But still a lot of work to be done.
you've it right on D TF open as benchmark entries slightly below for shorting downtrend,1R multiples is based on angle of daily trend higher the angle the greater the multiple. the slope of the trend is critical. for 3R multiple edge should be fine.
  • #62
  • Edited 2:38am Mar 30, 2021 12:21am | Edited 2:38am
Quoting BlackNapkins
Where is data about long term traders? Do we compare something or only blaming something? What role play in statistic words like "MOST", or "almost uniformly"? In trading only fraction market participants are winners, little fraction no matter of the timeframe... How you can compare day traders efficiency with long-term efficiency when some of long runners execute few trades monthly (maybe) with guys executing tens trades every day... this is ridicules to compare two different animals This thread is about why tigers are eating less grass then cows...
hey BlackNapkins,
Sorry, let me clarify my usage of "MOST"

If you read the wikipedia page I sent.
and I quote:

"A 2019 research paper analyzed the performance of individual day traders in the Brazilian equity futures market. Based on trading records from 2012 to 2017, it was concluded that day trading is almost uniformly unprofitable:

We show that it is virtually impossible for individuals to compete with HFTs and day trade for a living, contrary to what course providers claim. We observe all individuals who began to day trade between 2013 and 2015 in the Brazilian equity futures market, the third in terms of volume in the world, and who persisted for at least 300 days: 97% of them lost money, only 0.4% earned more than a bank teller (US$54 per day), and the top individual earned only US$310 per day with great risk (a standard deviation of US$2,560). We find no evidence of learning by day trading.[14]

An article in Forbes quoting someone from an educational trading website stated that "the success rate for day traders is estimated to be around only 10%, so ... 90% are losing money," adding "only 1% of [day] traders really make money."[15]"

Somehow when I use the quote feature in forex factory, it didn't quote all my message like I did in post47.
Okay back to topic:

According to a research done in the Brazilian equity futures market only 0.4% (day traders) earned more than a bank teller (US$54 per day).
Which deviates a lot from what the gurus were selling us. And that is why I used the word "MOST" to clarify that there are less than 1% of day traders that are actually profitable, and I gave it a deviation tolerance of 1%.

To answer your second question:
How you can compare day traders efficiency with long-term efficiency

First of all, day trading research: source
“We show that it is virtually impossible for individuals to day trade for a living, contrary to what course providers claim. We observe all individuals who began to day trade between 2013 and 2015 in the Brazilian equity futures market, the third in terms of volume in the world. We find that 97% of all individuals who persisted for more than 300 days lost money. Only 1.1% earned more than the Brazilian minimum wage and only 0.5% earned more than the initial salary of a bank teller — all with great risk.”

A 2011 study of Taiwanese day traders over a 15-year period, from 1992 to 2006, showed only slightly better results. Day trading is popular in Taiwan. In an average year, about 360,000 Taiwanese individuals engage in day trading, according to the authors.

Their conclusion: “Consistent with prior work on the performance of individual investors, the vast majority of day traders lose money.” They do note that a small group (about 15%) do earn higher returns net of fees, but that “some outperformance would be expected by sheer luck.”

A later version of the paper published in 2013 concluded: “Less than 1% of the day trader population is able to predictably and reliably earn positive abnormal returns net of fees.”

What about the tiny group that might do better than sheer luck? The authors speculate that “One way in which day traders could be earning profits is by supplying liquidity through passive limit orders to uninformed investors who are too eager to pay for quick execution.”

An older study, going back to 2000, fared no better for day traders. Brad M. Barber and Terrance Odean of the University of California, Berkeley, analyzed 66,000 trading accounts at Charles Schwab from 1991 to 1996. They found that those who traded the most earned an annual return of 11.4%, while the market overall returned 17.9%.


Second, Longer term trading/investing research:
By some estimates, only 20 percent of investment professionals are successful investors. Success could be defined as producing returns that are as good or higher than the average profits earned in the stock market. source

There goes the Statistics.
Also to note that most of the richest person in the Forbes list didn't accumulate their wealth from the Stock/Forex Market.

Okay maybe Forbes is an extreme example, then we shall go to Hedge Funds:
Most Consistent & Profitable Hedge Funds: source
1. Bridgewater Associates
2. Renaissance Technologies (Medallion Fund)
3. Man Group
4. AQR Capital Management
5. Two Sigma Investments

How do they earn their money? source
1. Bridgewater Associates
The company offers four main funds:

  1. Pure Alpha, which focuses on active investment strategy
  2. Pure Alpha Major Markets, which targets a subset of opportunities that the Pure Alpha fund invests in
  3. All Weather, which uses an asset allocation strategy
  4. Optimal Portfolio, which combines aspects of the All Weather fund with active management

2. Renaissance Technologies
Renaissance Technologies is a New York-based quantitative hedge fund that uses mathematical and statistical methods to uncover technical indicators that drive its automated trading strategies.

3. Man Group source

4. AQR Capital Management
AQR Capital Management is based in Greenwich, Conn., and uses quantitative analysis to develop financial models focused on value and momentum investing.

5. Two Sigma Investments
Two Sigma Investments is based in New York and was founded by John Overdeck and David Siegel in April 2002. The company uses quantitative analysis to build mathematical strategies that rely on historical price patterns and other data.

In other words:
4 of 5 are doing quantitative hedge fund (Man Group have discretionary products as well)
and Bridgewater is a discretionary hedge fund.

none are doing day trading.

Steps to profitability: Collect data, money management, stay bored
  • #63
  • Mar 30, 2021 1:22am Mar 30, 2021 1:22am
Quoting remonpilip
{quote} hey BlackNapkins, Sorry, let me clarify my usage o
...
Remonpilip,


Again, I have bad feeling you are comparing wrong group of markets participants, and doing conclusions ...
Compare Hedge founds with other hedge founds ... big sample, not only the best ones. Find this broke ones for last 15 years, include them ...
Compare individual traders with individual traders ... short- term traders with long-term traders... but I am afraid you do not find reliable data for this, because nobody will pay for such research having no interest or idea how to use them for own benefit.
You are doing everything in wrong way...
Selecting data
comparing wrong groups
Assumption of conclusion and looking for proofs only, this is how it looks like for me...
Best Regards
  • #64
  • Mar 30, 2021 1:35am Mar 30, 2021 1:35am
Quoting remonpilip
{quote} hey BlackNapkins, Sorry, let me clarify my usage of "MOST" If you read the wikipedia page I sent.
Thanks Remonpilip for the details. It is interesting to read the articles.

I agree it is a brutal reality of how unlikely it can be successful in forex, either day trading or mid- to long-term investment. But may I also mention some additional information to let us think in different perspectives.
IMO forex trading, regardless of style, share almost the same stratification situations - Most of the resources are in the hands of the most elite minority (e.g. 90% wealth in 10% people; 90% clean water in <10% countries of the world)

1. Quoted study with specific "earning thresholds" was conducted in Brazil. Considering i) how many would put much savings in forex if not devoted to be full-time trader, ii) How much can a person put in his trading account (article mentioned "Great risk in each trade"), I am not surprised if the average income is lower than the minimum wage for most traders, at least I cannot growth 50% for my current account size of $4k. (Yearly minimum wage in Brazil as of 2021: ~$2160 USD/year)

2. "While the market return overall is 17.9%" is likely a skewed statistics. I am not sure an average individual casually investing their money can make 17.9% growth yearly... Just look at Table IV of the older study can spot most (>45%) return is in the top 1% subjects. Median was -0.01% drop. If I was to compare my performance, inflation may be a more reliable statistics for casual traders/investors ("gold standards" like SP500 index are another "active investment", which if I traded forex, I "should have" traded SP500, but I didn't, right? As if I am regretting not putting my money in SP500, better used by full-time traders to evaluate their performance)

To break down the statistics in the older study, 49.3% of the 62,439 households earned money in the period of study. However only <5% of them performed better than the "market" (< average value of return of households in all percentiles). So it is really up to what you want to achieve and which statistics should you refer to

The Table IV also showed the same stratification statistics - >90% capital growth concentrated in the top 1-10% people. Forex should be treated as a business or profession and a high fail rate should be expected. The statistics are similar in many other professions, for example,
0.5-3% of working age population obtains a PhD, and <3% ends up becoming university professors (A very successful academic scholar, reason of many going for PhD)

A quick search cannot find equivalent research papers about forex swing traders or similar. But I believe the numbers are very similar. My message is if you are determined and serious to be full time forex traders, then you have to put in effort to become the top 1%, which is the top 96,000 in the world (~9.6Mi forex traders est. in 2020). So good luck and trade well!
  • #65
  • Edited 5:10am Mar 30, 2021 2:28am | Edited 5:10am
Quoting BlackNapkins
{quote} ... Remonpilip, Again, I have bad feeling you are comparing wrong group of markets participants, and doing conclusions ... Compare Hedge founds with other hedge founds ... big sample, not only the best ones. Find this broke ones for last 15 years, include them ... Compare individual traders with individual traders ... short- term traders with long-term traders... but I am afraid you do not find reliable data for this, because nobody will pay for such research having no interest or idea how to use them for own benefit. You are doing everything...
Hi BlackNapkins,

My bad,, I tried to find the long term traders success rate on the same source & research paper to better compare the stats.
But my venture has left me to no avail...
Tried to find studies on the success rate of investors, but what I got are just opinions..
I'm sorry if I did the wrong comparison..

Best Regards,
Raymond
Steps to profitability: Collect data, money management, stay bored
  • #66
  • Mar 30, 2021 2:34am Mar 30, 2021 2:34am
Quoting remonpilip
sMost traders operate with no idea if their methodology has a statistical edge. They assume if its from a book, or came from a famous guru, a fancy website with all sorts of bells and whistles, or cost a lot of money, it must be good. They have a highly subjective system with no way to test them. Don’t be surprised if you lose your money! There, you got 20 years of trading advice for free! I challenge you to prove me wrong!
Excellent Post! Fully agree with you and had to learn this myself the hard way. Took me 10 years to figure it out. Only once I started doing my own statistical analysis, I saw the truth. Simple math at the end of the day. I think people getting involved in trading always think they can somehow beat the market with their magical system. I say that, because that is what I thought too. Its easy to get influenced by so called "Trading mentors" and honestly the whole industry is one big trap to lure in easy money. It is done by design!

The retail market is controlled by a handful of players. They supply liquidity to the retail brokers. The brokers incentivize education programs/mentors to get clients, the retail trader. These mentors act as salesman to earn their commission. More traders is more profits for them. They have no incentive to really teach you. In fact if you understand the business model between educators and brokers, its very obvious that they are only after quantity and not quality. They also want a very quick turnover. Trader joins a platform, invest its 1k - 5k and lose it in 3months. They key point to realize here is, that they do it by encouraging Day Trading. Just search trading on Youtube and it will be filled with "Make 1000$ per day trading the fx market" or "By using this simple system, I will show you how to earn a living from home". Then there is also all the flashy lifestyle videos with ripped guys with models, trading from their yachts.

I don't claim that you can't make money day trading, but my point is that you need to do your homework thoroughly. Know the key statistics of whatever it is you are trading. Build your system around those stats and you'll be a few steps ahead.
  • #67
  • Mar 30, 2021 3:05am Mar 30, 2021 3:05am
Quoting tommydoginti
{quote} Thanks Remonpilip for the details. It is interesting to read the articles. I agree it is a brutal reality of how unlikely it can be successful in forex, either day trading or mid- to long-term investment. But may I also mention some additional information to let us think in different perspectives. IMO forex trading, regardless of style, share almost the same stratification situations - Most of the resources are in the hands of the most elite minority (e.g. 90% wealth in 10% people; 90% clean water in <10% countries of the world) 1. Quoted...
Hi tommy,
This is actually well put out.

I agree with everything to a T, especially the last 3 paragraphs.

Can't word it any better, thanks for the comparison with other ventures.

but have to disagree with the 'skewed statistics', did a quick look-up on the S&P market return from ,as suggested, 1991-1996
1991 +30.47%
1992 +07.62%
1993 +10.08%
1994 +01.32%
1995 +37.58%
1996 +22.96%
(source)
with an average return of +18.33% per year (not including commission).

referring to:
How much can a person put in his trading account (article mentioned "Great risk in each trade")

I have no idea as well the definition of "Great risk in each trade".
but I can speculate that they are either:
a.) not using stop loss (these are level2/DOM scalpers) (fyi, not using stop loss is the equivalent of you are risking 100% of your account.)
b.) high risk high return for insider trading.

referring to:
casual traders/investors ("gold standards" like SP500 index are another "active investment", which if I traded forex, I "should have" traded SP500, but I didn't, right? As if I am regretting not putting my money in SP500, better used by full-time traders to evaluate their performance)

sounds like we should just place our money on index funds because of the high "sure" returns haha.

But IMHO, diversification should do the trick (beating the S&P), doing a "risk off" and "risk on" strategy like the banks have been doing. (link)
Steps to profitability: Collect data, money management, stay bored
  • #68
  • Mar 30, 2021 3:26am Mar 30, 2021 3:26am
Quoting PiptheRipper
{quote} Excellent Post! Fully agree with you and had to learn this myself the hard way. Took me 10 years to figure it out. Only once I started doing my own statistical analysis, I saw the truth. Simple math at the end of the day. I think people getting involved in trading always think they can somehow beat the market with their magical system. I say that, because that is what I thought too. Its easy to get influenced by so called "Trading mentors" and honestly the whole industry is one big trap to lure in easy money. It is done by design! The retail...
Hi Ripper,,

Yes totally agree, I was once there too, it's just part of the learning process.

Watching & Listening to these 'gurus' felt like I was doing something, being productive.
dopamine levels were high every time I heard a new term and 'learn' the 'big secret' on how the bank trades.

but in reality I was just being lazy and not doing my own due diligence.
Steps to profitability: Collect data, money management, stay bored
  • #69
  • Edited 3:51am Mar 30, 2021 3:27am | Edited 3:51am
[quote=remonpilip;13474266]{quote} hey BlackNapkins, Sorry, let me clarify my usage of "MOST" If you read the wikipedia page I sent. and I quote: "A 2019 research paper analyzed the performance of individual day traders in the Brazilian equity futures market. Based on trading records from 2012 to 2017, it was concluded that day trading is almost uniformly unprofitable:
What is cure?
I mean what trading system can you use to be part of the 5% that make money daytrading?
Play playable hands only
  • #70
  • Mar 30, 2021 5:02am Mar 30, 2021 5:02am
[quote=Entuculo;13474495]
Quoting remonpilip
{quote} hey BlackNapkins, Sorry, let me clarify my usage of "MOST" If you read the wikipedia page I sent. and I quote: "A 2019 research paper analyzed the performance of individual day traders in the Brazilian equity futures market. Based on trading records from 2012 to 2017, it was concluded that day trading is almost uniformly unprofitable: What is cure? I mean what trading system can you use to be part of the 5% that make money daytrading?
Hi Entuculo,

Good question,
I won't give you a direct answer, but what I can I do is to give you this advice:

First step, you have to stop believing other's word by word, especially fake gurus.
Second, you need to start by doing your own research, get your hands filthy dirty and
fail, you must fail a lot.

Quote
The master has failed more times than the beginner has even tried.


To be honest, I can't say it any better than this dead chap:
Quote
You cannot wisely read a book on “How to Keep Fit” and leave the physical exercises to another. - Jesse Livermore

You want to get good at playing the piano?
start practicing and stop watching "How to master the piano in 5 minutes"

Want to get abs?
start working out and stop watching "The secret on how to get 6 pack abs without working out"

I hope you get my point..

Best of Luck on your ventures,
Raymond
Steps to profitability: Collect data, money management, stay bored
  • #71
  • Mar 30, 2021 6:21am Mar 30, 2021 6:21am
Quoting remonpilip
{quote} Hi tommy, This is actually well put out. I agree with everything to a T, especially the last 3 paragraphs. Can't word it any better, thanks for the comparison with other ventures. but have to disagree with the 'skewed statistics', did a quick look-up on the S&P market return from ,as suggested, 1991-1996 1991 +30.47% 1992 +07.62% 1993 +10.08% 1994 +01.32% 1995 +37.58% 1996 +22.96% (source) with an average return of +18.33% per year (not including commission)....

thanks for the feedback. I think just like my previous post, if we are to evaluate how well a trader perform, the more relevant is to compare with other traders. If the evaluation is see how much better or worse one’s system is, the market gold standard like sp500 can be a reference. Just that the 17-18% growth is top 1% or even less.

so the illusion is that 99% traders fail but in reality >30% traders did not lose money within a year (seen this number in some statistics summary webpage).

just my opinion, the objective of trading is to grow capital in value. So IMO the indicator should be inflation rate. So is up to how one want to evaluate
1. 50% better than another random trader
2. 30% chance with some degree of growth
3. 5-10% beating inflation
4. <1% better than the “market”

And I think the “great risk” came from determining those Brazilian traders’ performance based on fixed value. Earning $2000 per year can be good or not so good performance unless you know the account size and % growth. And I believe majority of traders in Brazil has less than $10k, and to grow >20% in a year needs “great risk” per trade.
  • #72
  • Edited 8:44am Mar 30, 2021 8:24am | Edited 8:44am
As I see the problem with long term trading is that the DD can be very big. In short term day trading DD is lower.
Now let's return to math. For example you have 10000$ and want to earn 0.05% daily which is 5$ (13%/year without any compound interest). With 1 lot size it is only 11 points (5$ gain and 5.5$ commission + 0.5$ spread). If you will trade 0.1 lot size you have to gain 110 points. If you will find 2-3 pairs to trade per day you can easy get 30 points each. For example today EU gain >294p, GU >426, AU >312, UC >288, UJ >239, UC >363 and Gold >931. If using average cost per point equal to EU all of them gained >300p.

So is it possible to earn 13%/year? The answer is yes. And the risk is very low.

But. You can't trade for living in that case. Because 13% from 10000$ is only 1300$, so it is 108$ per month. So you need to have 100k account to gain 1080$/month which is not good too. Then you need at least 500k account to have some.

And here is the basic problem appear. No one will risk 500k to have 5k/month. It is better to get traditional job. That's why all the gurus are trying to sell courses, EAs and signals. There are no risk, but the profit can be higher than returns from trading.

For example for me it is barely impossible to get 1% daily. The DD sometimes is very high and the losses are too big to recover fast. Sometimes it is even not possible to recover at all. My results are: +0.12,-0.16, +0.17, +0.45, +3.50, +0.70, +0.39, +0.51, +0.99, +0,-0.4,-11, +1.4, +0.5, +2.3, +1.6, +0.7. So how to recover -11% loss? It will take a year...

That's why there are no low risk traders around. Most of people are not happy with 0.05%-0.1% daily and want to have 1-10%. But the risk it that case will ruin the account for sure.

On other hand I'm sure that it is possible to have 1% daily. And such a traders do exist. But they are not selling courses and not teaching others. That's why there are no "stories of success" around.
Observer effect
  • #73
  • Mar 30, 2021 9:42am Mar 30, 2021 9:42am
Quoting ryuryu
.......
Generally there are not many bussiness what you can start investing couple thousend and hope you will double or triple that short period of time. Like a plumber etc... But they usually are pro and have connections before creating own bussiness.

How its possible start making living which needs capital and start as newbie without any proffesional experience of field.
Which is complex, odds are low, lot of scammers, and shady bussiness practices, can see less information what some of the bigger than you or me can see. I mean they see under hood of car, while they sell us used cadilac run by fiat 500 engine.

I would ruin my plumber bussines under month, because i dont have such a important skills.

About your trading, how about not let -11% happend, and cut DD ammount what you can earn back during 1-3 months.
I think you are high risk intraday trader, and its possible achieve better results go watch the trading room where Rick and others do day after day , month after month, you will see low risk trading with reasonable results.

It's nice and important have dreams, some are possible reach one point of time, but like me who has not beautifull voice, i cant make career as lead singer or street singer. So many dont understand which is suitable for them, and i dont mean you, i mean usually in life.
  • #74
  • Mar 30, 2021 9:46am Mar 30, 2021 9:46am
Quoting kk100
About your trading, how about not let -11% happend, and cut DD ammount what you can earn back during 1-3 months. I think you are high risk intraday trader, and its possible achieve better results go watch the trading room where Rick and others do day after day , month after month, you will see low risk trading with reasonable results.
It just happened. The funniest thing that I'm algo guy, but this DD I made using manual trading. Shit happens. But anyway this happened. So its already recorded, calculated and now is the part of my trading history.

I'd love to watch RickM trading but I don't know how to get the invitation... I'll try to ask him. Thanks for advice!
Observer effect
  • #75
  • Mar 30, 2021 9:51am Mar 30, 2021 9:51am
Quoting remonpilip
Market prices are highly random with a trend component. Within chaotic systems is the concept of a fractal, “self similar”. Just like the branches of a tree that get smaller and smaller but look like the original tree as a whole. Therefore a system can be random in the short term, but deterministic in the long term. Your lung is another example. So is the coastline view at 10,000 feet. As you slowly get closer, the coastline looks the same! Ice crystals, nautilus shells. However, short term patterns and repetitive short term cycles with predictive...
It is correctly stated here that the market consists of patterns that repeat each other creating a general pattern that reflects these patterns in the long term. I disagree that they are impossible to predict. Knowing the conditions of the long-term picture, we can assume the likelihood of a pattern forming within a long-term trend.
But I am also convinced that fractals cannot be the basis for a full trading strategy. By the way, a trend channel is also a pattern in a broad sense.

Quoting remonpilip
If you employ too much technology and trading indicators you will never make a trade because some of them will even contradict each other. You will be too confused to do anything!
Indicators are created to perform an auxiliary function, indicative. Therefore, their use in principle cannot be the basis for trading decisions but only confirmation.
  • #76
  • Mar 30, 2021 10:26am Mar 30, 2021 10:26am
Quoting ryuryu
{quote} It just happened. The funniest thing that I'm algo guy, but this DD I made using manual trading. Shit happens. But anyway this happened. So its already recorded, calculated and now is the part of my trading history. I'd love to watch RickM trading but I don't know how to get the invitation... I'll try to ask him. Thanks for advice!
if you do not have good defenses, you've nothing in trading. Like Sun Zhu quotes" invincibility lies in defense with a possibility of victory on attack".
that's trading 101 when you get hammered for 1-3 years and markets eviscerates any fantasy you have possess of trading without stop loss or huge SL.
market is the greatest teacher
  • #77
  • Mar 30, 2021 11:02am Mar 30, 2021 11:02am
Quoting ryuryu
As I see the problem with long term trading is that the DD can be very big. In short term day trading DD is lower. Now let's return to math. For example you have 10000$ and want to earn 0.05% daily which is 5$ (13%/year without any compound interest). With 1 lot size it is only 11 points (5$ gain and 5.5$ commission + 0.5$ spread). If you will trade 0.1 lot size you have to gain 110 points. If you will find 2-3 pairs to trade per day you can easy get 30 points each. For example today EU gain >294p, GU >426, AU >312, UC >288, UJ >239, UC >363 and...
Hey ryuryu,

long term trading doesn't equate to high DD.
high DD is, if you didn't control your risk to fit your risk appetite.

about the 1% daily target,,
IMHO
technically, there is potential.
realistically, it is utterly delusional.

technically, you can win lottery.
realistically, you have 1 in 14Million chance to win it. (source)

I rather do blackjack than trying to achieve 1% daily.

Prove me wrong that a trader can't achieve 1% daily for at least a year, I'll do you one better - 3months.
with exceptions: maximum daily drawdown is 1% (I'm already being too generous here)

The trading game is quite simple to be honest, it is to protect your capital long enough to hopefully get lucky in that one good trade.

Quote
Master Splinter sat everyone down that Monday and explained that in the end there's only one thing that's important in trading, and that's living to fight another day.
Steps to profitability: Collect data, money management, stay bored
  • #78
  • Mar 30, 2021 11:18am Mar 30, 2021 11:18am
Quoting PipsCrasher
{quote} It is correctly stated here that the market consists of patterns that repeat each other creating a general pattern that reflects these patterns in the long term. I disagree that they are impossible to predict. Knowing the conditions of the long-term picture, we can assume the likelihood of a pattern forming within a long-term trend. But I am also convinced that fractals cannot be the basis for a full trading strategy. By the way, a trend channel is also a pattern in a broad sense. {quote} Indicators are created to perform an auxiliary function,...
Hi PipsCrasher,
referring to:
I disagree that they are impossible to predict. Knowing the conditions of the long-term picture, we can assume the likelihood of a pattern forming within a long-term trend.

there is this one theory that I really like about the smaller timeframe, it goes a bit like this:
inside a predictable solid object, there are a certain magnitude of still atoms, and inside those atoms are chaos.

look closer you'll see chaos, and it is the building blocks of a solid object if you look at it on the bigger picture.

why is it chaos? because of the uncontrollable & unpredictable forces that might affect the electrons.

'nough on chemistry.

what I'm trying to point out is that:
there are so many uncontrollable forces that might affect the smaller timeframe structure my friend.
such as: news, sentiment, tips, insider information, time zones, a drunk trader accidently bought 10k lot USDJPY, etc.

might as well just trade the more rigid structure.
Steps to profitability: Collect data, money management, stay bored
  • #79
  • Edited 1:08pm Mar 30, 2021 12:00pm | Edited 1:08pm
Well yes, it can be brutal if we believe all the hype out there. But it doesn't have to be. First of all, forget about making a huge fortune in less than 10 years. That's just a sirens song to lure cash away from unsuspecting victims. If anyone does know how to do that, and I doubt they do, they sure wouldn't be willing to sell it for a few thousand dollars. If we set our position size at 0.01 lots and leave it there until we are long-term consistently profitable, it's not brutal at all. If we don't have the self control to set the position size at 0.01 lot and leave it there until we are consistently profitable, then we don't currently have the self control to trade forex. Self control can be developed though and in my own humble opinion that's a good place to start the journey. - G
  • #80
  • Edited 3:31pm Mar 30, 2021 3:20pm | Edited 3:31pm
Quoting remonpilip
{quote} Hey ryuryu, long term trading doesn't equate to high DD. high DD is, if you didn't control your risk to fit your risk appetite. about the 1% daily target,, IMHO technically, there is potential. realistically, it is utterly delusional. technically, you can win lottery. realistically, you have 1 in 14Million chance to win it. (source) I rather do blackjack than trying to achieve 1% daily. Prove me wrong that...
Hey remonpilip!

I've got your idea. You say that it is better to catch 1 good trade and gain 12%/year but not to try to gain 1%/month.
But I can't agree. It seems to me it is magic, or luck. But there is no magic in the world. But math and physics exists for sure. I think time and gravity together is the key. Moving average called average because it is average. And the price will always cross it sooner or later.

Another example: look at the majority of traders. They even don't know how indicators works. They apply stoch and rsi together, or just draw random lines on the chart. And look at the competitors like RickM for example. He is using external data, real-time calculations, custom EAs and indicators.

How is it possible that average trader without any knowledge and good instruments can win? Only luck. It's like buying bitcoin in 2016 or later, then falling into coma for 4 years and selling it today with impossible million% profit. But it is not trading. It is pure luck. "I'm trading 1 hour a day after my main job on 1W tf drawing red lines on the chart and I'm so successful, because trading is simple" - that is the red line of 99.9% messages here.

About low TF that is noisy. It is not. Low TF is exactly the same. All the movements, all the setups and patterns are the same on every TF. Only distances and timings are different. Also there is no difference between stocks, forex or crypto. Everything works the same. That's why there is an idea that some algo rule in the casino. But this is another story... But more trades more chance to lose. So may be it is better to have 1 trade per year not 30000 trades. There is logic here.
Observer effect
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