Statistical proof of the 90% rule | Forex Factory

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Statistical proof of the 90% rule

  • #1
  • First Post: Jun 1, 2007 7:20pm Jun 1, 2007 7:20pm
When faced with all those posts, "90% of traders fail", you start to think it can't be true. Afterall, "a coin toss can be right 50% of the time" (the second most popular cliche on these boards).
But I have found evidence of the truth behind this statement, on Oandas website!

Here is a graph showing the ratio of longs to shorts on USD/CAD from around May 19th.

http://fxlabs.oanda.com/cgi/fxlabs.pl?id=8

It shows that their customers have been long this pair over 80% of the time consistently! absolutely amazing!
  • #2
  • Jun 1, 2007 10:06pm Jun 1, 2007 10:06pm
Quoting Ted1983
When faced with all those posts, "90% of traders fail", you start to think it can't be true. Afterall, "a coin toss can be right 50% of the time" (the second most popular cliche on these boards).
But I have found evidence of the truth behind this statement, on Oandas website!

Here is a graph showing the ratio of longs to shorts on USD/CAD from around May 19th.

http://fxlabs.oanda.com/cgi/fxlabs.pl?id=8

It shows that their customers have been long this pair over 80% of the time consistently! absolutely amazing!
Wow... that is amazing. :surprised Going long on USDCAD for the past two weeks is fighting an obvious trend.


However, I can think of three reasons why this is happening:

-- Grid traders (which are common at Oanda because you can trade currencies down to a unit) going long had their lower limit orders filled and are waiting for the market to bounce back to cash in the profits.

-- A long carry trade on the USDCAD pays interest... but it's a whopping ~0.5%

-- Traders are too stubborn and/or greedy to cut their losses (and yes, this can apply to the two reasons above).
  • #3
  • Jun 1, 2007 10:09pm Jun 1, 2007 10:09pm
This has been pointed out on another thread, but this graphic makes it even more explicit, over 80% longs, that just blows my mind...you would have to have the IQ of a door stop to have even contemplated going long over the past couple of weeks.
The breaking of a wave cannot explain the whole sea.
  • #4
  • Jun 1, 2007 11:25pm Jun 1, 2007 11:25pm
http://www.forexfactory.com/showpost...&postcount=461

yeah a down trend that has been going for nearly 5 years......
Same Whore .... Different Dress
  • #5
  • Jun 2, 2007 12:02am Jun 2, 2007 12:02am
Ted

The debate is ongoing about the actual percentage of losing traders. We'll never know how many for sure, but you offer proof that the number is very, very, high!
  • #6
  • Jun 2, 2007 12:08am Jun 2, 2007 12:08am
Quoting billflet
Ted

The debate is ongoing about the actual percentage of losing traders. We'll never know how many for sure, but you offer proof that the number is very, very, high!

Take a look at this post regarding any debate about losing traders......http://www.forexfactory.com/showpost...&postcount=454
Same Whore .... Different Dress
  • #7
  • Jun 2, 2007 4:09am Jun 2, 2007 4:09am
Quoting Ted1983
When faced with all those posts, "90% of traders fail", you start to think it can't be true. Afterall, "a coin toss can be right 50% of the time" (the second most popular cliche on these boards).
But I have found evidence of the truth behind this statement, on Oandas website!

Here is a graph showing the ratio of longs to shorts on USD/CAD from around May 19th.

http://fxlabs.oanda.com/cgi/fxlabs.pl?id=8

It shows that their customers have been long this pair over 80% of the time consistently! absolutely amazing!
Iran will declare peace to the west, Canadian oil will drop to 3cents a barrel, Texas will find a previously unknown reserve of tens of billions of barrels of high grade oil, the Dollar will go to 10.5% reserve rate.......
  • #8
  • Jun 2, 2007 5:16am Jun 2, 2007 5:16am
Quoting johnedoe
Take a look at this post regarding any debate about losing traders......http://www.forexfactory.com/showpost...&postcount=454
very interesting graph... (note : works only with IE )
  • #9
  • Jun 2, 2007 7:25am Jun 2, 2007 7:25am
Quoting bluebuddha
Wow... that is amazing. :surprised Going long on USDCAD for the past two weeks is fighting an obvious trend.


However, I can think of three reasons why this is happening:

-- Grid traders (which are common at Oanda because you can trade currencies down to a unit) going long had their lower limit orders filled and are waiting for the market to bounce back to cash in the profits.

-- A long carry trade on the USDCAD pays interest... but it's a whopping ~0.5%

-- Traders are too stubborn and/or greedy to cut their losses (and yes, this can apply to the two reasons above).

I'd certainly discount the carry, because if you look at the stats for GBP/JPY and the like the ratio is long.

BTW Bluebuddha, I never knew Kenny Rogers was one of the Market Wizards!
  • #10
  • Jun 2, 2007 8:41am Jun 2, 2007 8:41am
Quoting Ted1983
BTW Bluebuddha, I never knew Kenny Rogers was one of the Market Wizards!
Neither did I... but you have to admit, The Gambler is one song every trader should have on his mp3 player.
  • #11
  • Edited 1:28pm Jun 25, 2017 11:46am | Edited 1:28pm
[quote=Ted1983;1456589]When faced with all those posts, "90% of traders fail", you start to think it can't be true. Afterall, "a coin toss can be right 50% of the time" (the second most popular cliche on these boards). But I have found evidence of the truth behind this statement, on Oandas website! Here is a graph showing the ratio of longs to shorts on USD/CAD from around May 19th. http://fxlabs.oanda.com/cgi/fxlabs.pl?id=8 It shows that their customers have been long this pair over 80% of the time consistently! absolutely amazing![/qu0ote]

and if you look at the chart it did not matter what side the Retail traders where on the price moved to where the big players wanted it to.
  • #12
  • Jun 25, 2017 3:50pm Jun 25, 2017 3:50pm
Quoting dogdays713
if you look at the chart it did not matter what side the Retail traders where on the price moved to where the big players wanted it to.

Absolutely right.

99%+ of retail forex traders' trades don't involve the currency markets anyway: they're just side-bets against a market-maker.
  • #13
  • Jun 25, 2017 4:58pm Jun 25, 2017 4:58pm
the actual % of the losing traders, for a six months period (or 180 days), is in between 99.95% and 99.99%. everyone who claims different % is a round shaped liar.
Maadik Hugiis. IQ 69.
  • #14
  • Jun 26, 2017 4:49am Jun 26, 2017 4:49am
Quoting dogdays713
if you look at the chart it did not matter what side the Retail traders where on the price moved to where the big players wanted it to.
This is true. As a retail trader, you are either aboard the train or you are standing on the tracks.
  • #15
  • Jun 26, 2017 6:32am Jun 26, 2017 6:32am
Quoting Madinvestor
{quote} This is true. As a retail trader, you are either aboard the train or you are standing on the tracks.
No disrespect here. I cant understand what you mean. Could you explain how is this possible in a first place, please?

All risk/reward schemes gets easily melted down with the cubic system the market makers are using to move the rate up/down and in light with that approach, your opinion makes zero sense to me...
Maadik Hugiis. IQ 69.
  • #16
  • Jun 26, 2017 10:50am Jun 26, 2017 10:50am
It's pretty bad lol
  • #17
  • Jun 26, 2017 10:55am Jun 26, 2017 10:55am
Quoting MoneyZilla
{quote} No disrespect here. I cant understand what you mean. Could you explain how is this possible in a first place, please? All risk/reward schemes gets easily melted down with the cubic system the market makers are using to move the rate up/down and in light with that approach, your opinion makes zero sense to me...
What I'm saying quite simply is the train are the institutional traders. If your trade is not on the side that theirs is you will most likely be stopped out for a loss when they move the market.
  • #18
  • Jun 26, 2017 12:12pm Jun 26, 2017 12:12pm
Oh, this again? Before talking about statistics, one should look at one simple fact most traders ignore. Let's say the probability of winning a trade is 50%. The fact that you pay a commission makes it a negative-sum game. So it's a losing proposition. Period. Remember commissions decrease your gains and increase you losses . For most traders, the probability of winning a given trade is actually less than 50% (because they employ useless indicators) . So all the more, it's a losing proposition.
  • #19
  • Jun 27, 2017 1:45am Jun 27, 2017 1:45am
Quoting MoneyZilla
{quote} No disrespect here. I cant understand what you mean. Could you explain how is this possible in a first place, please? All risk/reward schemes gets easily melted down with the cubic system the market makers are using to move the rate up/down and in light with that approach, your opinion makes zero sense to me...
what is the cubic system if you dont mind me asking zilla?
  • #20
  • Jun 27, 2017 4:34am Jun 27, 2017 4:34am
Quoting Piphunter00
{quote} what is the cubic system if you dont mind me asking zilla?
the cubic system decreases the forward movement by 50%.

tp10 / sl10 ~ 50% / 50%
tp20 / sl10 ~ 25% / 75%
tp30 / sl10 ~ 13% / 87%
tp40 / sl10 ~ 7% / 93%
tp50 / sl10 ~ 4% / 96%
tp60 / sl10 ~ 2% / 98%
tp70 / sl10 ~ 1% / 99%

i am sorry to disappoint you, but i have scanned 25 pairs for the last 8 years and they all show similar data. it does not matter how big the cube is. everything is proportional. the base cube size really does not matter...

EDIT: also, the pair does not matter. everything is the same on all pairs. many will disagree with me, but the data shows NO DIFFERENCE WHATSOEVER in between the pairs. different pairs drive on different speed. this is the one and only difference. and the spread, of course. everything else, and above all - the tp/sl ratios are all the same on all pairs. it is a visual trick only.
Maadik Hugiis. IQ 69.
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