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Now I know why 95% of traders are on losing side

  • #61
  • Oct 20, 2007 4:02am Oct 20, 2007 4:02am
Quoting iandekoker
HHmmmm....like i said before...only a fool will trade the news. Newstime is the riskiest time to trade and forex is already not easy. So why would you wanna make it even more difficult for yourself? Besides trading the news is not as easy as you think. Remember oktober NFP where everyone expected good data to support the USD? Well the USD gained some ground as the numbers where announced BUT guess what? Some german bank knew the USD will gain so they decided to buy millons of cheap dollars right after the NFP. And that is the reason why the USD jumped up a 100 pips right after NFP. Hey and who can blame the german bank. Everyone want cheap USD so we can sell it later at 1.4500. But if you think you can make lots of money trading news then who am i to stop you
I traded the october NFP, and made good money. Initial surge was down, slightly higher number + huge revision (which is less focused on than the actual number, in fact to many people it seemed that the officials simply cooked the numbers to make them look better, the -ve NFP a month before was a real shocker) After the surge, price retraced about 50%, short again, another 50 pips collected. After that i closed up the charts and went shopping, but looking at it no, it looks like the price went to about the 50% level again, and fell for another 30 pips... I mean, what else could you ask for? After about 1 hour, price did reverse and went the opposite way, but news trading is rearly about predicting the price action for hours in advance, first 15-30 minutes are the main focus. Sometimes it is wise to live the position open for a day or two, but those situations are rare, and you don't live the whole of your position exposed. The point is, if you don't know much about news trading, please avoid making comments about it...

Secondly, i see a lot of people mentioning that it's all about phsycology. Traders set themselves up etc etc etc... This is true to a certain extent, but what stops you creating a automatic EA to avoid any decisions at all? The truth is, your profitability depends on the decisions you make. Sometimes it is wise to take profits early, some times you might have to set a wider stop loss, sometimes you should hold the position longer than usual. Trading is very subjective, hence decisions have to be taken, i rely on my instints a lot, and i have a great success rate.

Sometimes i go in overkill mode, take stupid trades, double up etc etc... but that's different, as this usually happens when i decide to try something new, or i'm bored. Those kind of emotions will surely speed up your downfall. Thankfully i'm doing that less and less, with smaller and smaller lots. Hopefully one day i will be free from reckless trading... but every day is a battle, and i always have to remind myself just how much i lost being stupid.

I would think, 500$, not a big loss. 1000$, not pleasant but not deadly. Adding up those losses over the past year, i've realised that i lost close to $200k... Cost of my education has been quite high

Now i have a mentality that every dollar counts, and i'm doing much much better, feeling much more relaxed. I've only lost $2.5k on being stupid this month Still a lot of room for improvement...

Best of luck,

Vlad
  • #62
  • Oct 20, 2007 5:22am Oct 20, 2007 5:22am
Quoting zek132
I traded the october NFP, and made good money. Initial surge was down, slightly higher number + huge revision (which is less focused on than the actual number, in fact to many people it seemed that the officials simply cooked the numbers to make them look better, the -ve NFP a month before was a real shocker) After the surge, price retraced about 50%, short again, another 50 pips collected. After that i closed up the charts and went shopping, but looking at it no, it looks like the price went to about the 50% level again, and fell for another 30 pips... I mean, what else could you ask for? After about 1 hour, price did reverse and went the opposite way, but news trading is rearly about predicting the price action for hours in advance, first 15-30 minutes are the main focus. Sometimes it is wise to live the position open for a day or two, but those situations are rare, and you don't live the whole of your position exposed. The point is, if you don't know much about news trading, please avoid making comments about it...

Secondly, i see a lot of people mentioning that it's all about phsycology. Traders set themselves up etc etc etc... This is true to a certain extent, but what stops you creating a automatic EA to avoid any decisions at all? The truth is, your profitability depends on the decisions you make. Sometimes it is wise to take profits early, some times you might have to set a wider stop loss, sometimes you should hold the position longer than usual. Trading is very subjective, hence decisions have to be taken, i rely on my instints a lot, and i have a great success rate.

Sometimes i go in overkill mode, take stupid trades, double up etc etc... but that's different, as this usually happens when i decide to try something new, or i'm bored. Those kind of emotions will surely speed up your downfall. Thankfully i'm doing that less and less, with smaller and smaller lots. Hopefully one day i will be free from reckless trading... but every day is a battle, and i always have to remind myself just how much i lost being stupid.

I would think, 500$, not a big loss. 1000$, not pleasant but not deadly. Adding up those losses over the past year, i've realised that i lost close to $200k... Cost of my education has been quite high

Now i have a mentality that every dollar counts, and i'm doing much much better, feeling much more relaxed. I've only lost $2.5k on being stupid this month Still a lot of room for improvement...

Best of luck,

Vlad
Well obvisously we didnt trade the same NFP in october. I have attached a 1min chart of the actual NFP event on friday 5 october and the downspike and reversal happened in less than 16 minutes and not hours like you mentioned. Also i dont see the how you could have known within 2 minutes that the price retraced back to 50% level? Most traders would still be expecting the price to go down after those good numbers. And once again the numbers were good.

Hhmmmm you must have an account with a excellent broker cause Interbank where i am widens their spread and you will hardly ever get filled at your price during NFP. They keep requoting you. And i dont blame them cause the market goes crazy at that time. Even if i knew the price had retraced back to the 50% fib then i still wouldnt have managed to enter a trade cause at that time the spread of eur/usd would have been 1.4080-1.4100 or something like that with interbank.

Anyway each to his own. If you wanna trade NFP then good for you.
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  • #63
  • Oct 20, 2007 6:14am Oct 20, 2007 6:14am
Quoting iandekoker
Well obvisously we didnt trade the same NFP in october. I have attached a 1min chart of the actual NFP event on friday 5 october and the downspike and reversal happened in less than 16 minutes and not hours like you mentioned. Also i dont see the how you could have known within 2 minutes that the price retraced back to 50% level? Most traders would still be expecting the price to go down after those good numbers. And once again the numbers were good.

Hhmmmm you must have an account with a excellent broker cause Interbank where i am widens their spread and you will hardly ever get filled at your price during NFP. They keep requoting you. And i dont blame them cause the market goes crazy at that time. Even if i knew the price had retraced back to the 50% fib then i still wouldnt have managed to enter a trade cause at that time the spread of eur/usd would have been 1.4080-1.4100 or something like that with interbank.

Anyway each to his own. If you wanna trade NFP then good for you.
Interbank is a retail bucketshop broker, to trade the news you need a ECN with fast execution. I trade on currenex, such thing as a requote is non-existant as i'm trading directly with the liquidity providers.

I've attached a GBP/USD chart, which is pretty similar to the EUR/USD...

The second entry was basically based on experience, price shot down hugely, then came back just as fast, the numbers were good, so i expected to see at least a retest of the previous low, price salled at 50s, which is also a round number, so i entered... It does require some quick thinking, obviously experience helps... Still, there was another entry, again in the 50s, price stalled, then fell again... As you can see, it didn't manage to retest the low, which is a good sign that the tide is changing, so taking some profits, or setting a stop/loss at break even would be a good idea...

The number was positive, but it was only slightly higher than expectation.. which means most of the increase has already been priced in by the markets. The shock was caused mainly by the positive revision of the previous number... and as i've said, revisions don't have as much credibility, this could be to blame for the short lived plunge... You can't just expect to see a +ve number and see the price keep going down all day long... even hugely surprising numbers can have a short lived effect... but the predominant direction in the first 15-30 minutes is always in the direction of the surprise (notice "surprise" not +ve or -ve reading. I.E if expectation for the NFP was 200k but it came out at 100, although the reading is still +ve, it would cause weakness in the dollar)
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  • #64
  • Oct 20, 2007 9:17am Oct 20, 2007 9:17am
In response to the original question about why 95% of traders lose money, look at it from another angle. Why do 95% of traders NOT make money? The single biggest reason is risk to reward ratio. To make money, or if you prefer, not lose it you need at least a 1/2 ratio. Anthing less is gambling. For that you might as well give up forex and go to a casino.

Example.

10 trades.
20 pip SL 40 pip TP ( 1 to 2 R/R )

4 winners
4 * 40 = +160
6 losers
6 * 20 = -120

Profit +40

Conclusion. You can be wrong 60% of the time and still make money. That's better than a coin flip. Anything less than 1/2 means just 1 loser can wipe out 2 winners, and that is a sure fire way to blow your account. Maybe in 6 months, maybe a year but you will lose eventually.
Those that can, do, those that can't, teach.
  • #65
  • Oct 20, 2007 10:01am Oct 20, 2007 10:01am
Quoting pf1966
In response to the original question about why 95% of traders lose money, look at it from another angle. Why do 95% of traders NOT make money? The single biggest reason is risk to reward ratio. To make money, or if you prefer, not lose it you need at least a 1/2 ratio. Anthing less is gambling. For that you might as well give up forex and go to a casino.

Example.

10 trades.
20 pip SL 40 pip TP ( 1 to 2 R/R )

4 winners
4 * 40 = +160
6 losers
6 * 20 = -120

Profit +40

Conclusion. You can be wrong 60% of the time and still make money. That's better than a coin flip. Anything less than 1/2 means just 1 loser can wipe out 2 winners, and that is a sure fire way to blow your account. Maybe in 6 months, maybe a year but you will lose eventually.
So are you saying because i only take 5 pip profit and use a 20 pips stoploss i will NEVER make money in forex?
  • #66
  • Oct 20, 2007 10:03am Oct 20, 2007 10:03am
Using a 20 pip stoploss for a 5 pip target would have me shitting down my pants!!!
  • #67
  • Oct 20, 2007 10:23am Oct 20, 2007 10:23am
[quote=zek132;1657440]Interbank is a retail bucketshop broker, to trade the news you need a ECN with fast execution. I trade on currenex, such thing as a requote is non-existant as i'm trading directly with the liquidity providers.

Lol....yes currenex dont have requotes, they just have 250 pip slippages during CAD Trade Balance releases......
  • #68
  • Oct 20, 2007 10:34am Oct 20, 2007 10:34am
Quoting iandekoker
So are you saying because i only take 5 pip profit and use a 20 pips stoploss i will NEVER make money in forex?
Sure am. Let me break it down for you.

TP 5 pips
SL 20 pips

10 trades

7 winners + 35
3 losers -60

Result loss -25

You need to hit 80% of winners just to break even. 90% to make a profit of 5 pips. Fine if you're hitiing them for $50 a pip. But even then 5 pips profit from 10 trades. No thanks.
Those that can, do, those that can't, teach.
  • #69
  • Oct 20, 2007 10:38am Oct 20, 2007 10:38am
Quoting WTB
Using a 20 pip stoploss for a 5 pip target would have me shitting down my pants!!!
Maybe it is just the idea of risking 20 pips to make a certain 5 pips....

BUT

what if you enter a trade and put a trailing stop loss of 15 pips......and the market turns around and take your trailing stop loss out...leaving you with a 5 pip profit....would that also have you shitting down ur pants? lol

I find it very interesting to read all the responses on this thread. Guess i am fighting a loosing battle to help traders see there are more constant profitable oppertunities in 5 pip profits than in larger ones....lol
  • #70
  • Oct 20, 2007 10:57am Oct 20, 2007 10:57am
Quoting zek132
I traded the october NFP, and made good money. Initial surge was down, slightly higher number + huge revision (which is less focused on than the actual number, in fact to many people it seemed that the officials simply cooked the numbers to make them look better, the -ve NFP a month before was a real shocker) After the surge, price retraced about 50%, short again, another 50 pips collected. After that i closed up the charts and went shopping, but looking at it no, it looks like the price went to about the 50% level again, and fell for another 30 pips... I mean, what else could you ask for? After about 1 hour, price did reverse and went the opposite way, but news trading is rearly about predicting the price action for hours in advance, first 15-30 minutes are the main focus. Sometimes it is wise to live the position open for a day or two, but those situations are rare, and you don't live the whole of your position exposed. The point is, if you don't know much about news trading, please avoid making comments about it...

Secondly, i see a lot of people mentioning that it's all about phsycology. Traders set themselves up etc etc etc... This is true to a certain extent, but what stops you creating a automatic EA to avoid any decisions at all? The truth is, your profitability depends on the decisions you make. Sometimes it is wise to take profits early, some times you might have to set a wider stop loss, sometimes you should hold the position longer than usual. Trading is very subjective, hence decisions have to be taken, i rely on my instints a lot, and i have a great success rate.

Sometimes i go in overkill mode, take stupid trades, double up etc etc... but that's different, as this usually happens when i decide to try something new, or i'm bored. Those kind of emotions will surely speed up your downfall. Thankfully i'm doing that less and less, with smaller and smaller lots. Hopefully one day i will be free from reckless trading... but every day is a battle, and i always have to remind myself just how much i lost being stupid.

I would think, 500$, not a big loss. 1000$, not pleasant but not deadly. Adding up those losses over the past year, i've realised that i lost close to $200k... Cost of my education has been quite high

Now i have a mentality that every dollar counts, and i'm doing much much better, feeling much more relaxed. I've only lost $2.5k on being stupid this month Still a lot of room for improvement...

Best of luck,

Vlad
Wow!!! lost 200k !! a lot of money bro....

I hope i have that much capital to trade... but i only have few hundreds to trade...

But its ok..... what i needs now is to sharpen my trading skills....as the market is there fovever 5 days a week...no rush... and grow the profit slowly..
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  • #71
  • Oct 20, 2007 11:21am Oct 20, 2007 11:21am
makes sense

Quoting Daemien

Most people are conditioned to react emotionally to emotionally-charged situations. When threatened, we either punch back or run away. This type of attitude will not work in trading. You cannot 'Punch the Market' back into compliance, neither can you 'run away' from a trade gone awry (altho you can exit gracefully within the boundaries of your established system).

Just my .02c

D.
  • #72
  • Oct 20, 2007 11:52am Oct 20, 2007 11:52am
[quote=Ted1983;1657099]
Quoting Northernstar
On average 1.32 losses occur for every 10 trades. So after 8-9 winning trades I look always for the loss to come it is more probable than a winner.


This is absolute bollocks, didn't they teach you anything in school!:surprised
If you make a statement like the one above it is polite to give an explanation to accompany, is it not??
If you misunderstood it is 8-9 winners and 1-2 losses equals 10 trades, 9+1=10 and 8+2=10. Most of the time it is 9+1 but sometimes 8+2. These are statistics, in reality it can be any combination like ...3W+L+6W... or ...W+L+4W+L+3W... or some other. Only one part of the statistics I can use in practice and it is the fact that 2 consecutive losses have never taken place L+L, always at least L+W+L. When you know the statistics from the long run it gives you confidence that you are doing something right and when the loss comes you take it as it comes and do not make a big thing out of it. Are we on the same page? Here is some information you will find helpfull to understand. I trade 4-5 hours per day and always between 8-18, I do not beging sooner than 8 or take trades after 18 but I can hold a trade after 18 if I took it say 17.59. Also if I trade from 12-16/ I always look if there were trades that I would have taken in this case between 8-12 and take them in count to apply the fact of L+L. If I skip a day the next day before I even begin to trade I check what trades I would have taken the previous day and so on. I tried to make it as simple as possible but do let me know if this is too complicated. Have a good weekend.
  • #73
  • Oct 20, 2007 12:44pm Oct 20, 2007 12:44pm
[quote=Ted1983;1657099]
Quoting Northernstar
On average 1.32 losses occur for every 10 trades. So after 8-9 winning trades I look always for the loss to come it is more probable than a winner.


This is absolute bollocks, didn't they teach you anything in school!:surprised
I went through some of my papers and the best strike of consecutieve winner has been 17 this means, W-W-W-W-W-W-W-W-W-W-W-W-W-W-W-W-W. But I have also had some occasions where it has been W-L-W-L-W-L...I am sure you get the picture. Now if I have 8-9 consecutive winnings just to make it more visual, W-W-W-W-W-W-W-w-w. This does not happend very often but when it does statistically it is more likely that I will have a loss after one of the small-w. This is all I have to say, if you cannot comprehend this perhaps you should go back to school.
  • #74
  • Oct 20, 2007 1:27pm Oct 20, 2007 1:27pm
Quoting iandekoker
I find it very interesting to read all the responses on this thread. Guess i am fighting a loosing battle to help traders see there are more constant profitable oppertunities in 5 pip profits than in larger ones....lol
You certainly are fighting a losing battle trying to convince most of the readers that risking 20 pips for a 5 pip target will make money in the long run, but I'd be interested to hear the reasons you put forth to defend such position.
  • #75
  • Oct 20, 2007 6:29pm Oct 20, 2007 6:29pm
Quoting WTB
You certainly are fighting a losing battle trying to convince most of the readers that risking 20 pips for a 5 pip target will make money in the long run, but I'd be interested to hear the reasons you put forth to defend such position.
Yup, risking 20 pips to get 5 pips ..... I'd shit and piss my pants too because if you get stopped of your trade, there goes your 20 pips ... shit !!!

To get 5 or 20 pips, I just don't use any stop-loss and just let it ride until I get my 5 to 20 pips ....
  • #76
  • Oct 21, 2007 3:23am Oct 21, 2007 3:23am
Quoting WTB
You certainly are fighting a losing battle trying to convince most of the readers that risking 20 pips for a 5 pip target will make money in the long run, but I'd be interested to hear the reasons you put forth to defend such position.
Ok my premises is trading thr eur/usd with a 2 pip spread.

The reason is very simple. Keep record of your trading this week. i assume your a experienced trader who only enters a trade once you have done your homework. So now you are in the trade. Most often you will show profits straight away. In 99% of the cases you will show a profit of 1-5 pips straight away. (If not, then you are either in the wrong trade or your trading system have given you a false signal or you have jumped the gun). Anyway so you are in the profits and now you are looking for x amount of pips. Now keep record of how many times the market gives you 5 pips and then turns against you stopping you out. Also see how many time you actually hit you x amount target?

My conclusion was this: In 99% of the cases i was showing a 1-5 pip profit within 1 minute. In 1% of the cases i never showed any profit and my trade resulted in a loss. In 70% of the cases did I NOT hit my 50 pips target. In only 30% of the cases did i hit my 50 pips target. So i would rather take my chances with the 99% success rate. Afterall when there is a profit on the table i take it. And i can because i dont trade mini lots but BIG lots. So with my 5 pips profit i make 5 times what the average trader would make hitting 50 pip targets. But once again i dont take just any trade. I only take the "A-grade" trades (look at 15mins chart of eur/usd on the 18th of october @ 12:00 it was a candlestick that offered almost 40 pips but i settled for only 5 pips making me $500 in total. I got a signal on the 11:30 candlestick but did not enter there cause that was only a "C-graded" trade in my opinion even if it would have offered me 13 pips).

Also look at 19 oct the 06:45 candlestick that offered a run of almost 40 pips but i only took 5 pips = $500

Also look at 19 oct 13:00 candlestick offering a run of almost 50 pips but i only took 5 pips = $500

Also look at 19 oct 18:00 candlestick that offered a run of almost 30 pips but i only took 5 pips = $500

So in 4 trades i took 20 pips (5 pips each) in total equaling $2000. Now you tell me if those where bad trades i took? Did i gamble? Did i scalp? For me it's not about the amount of pips i make but the $$$$$$ i make out of every trade.
  • #77
  • Oct 21, 2007 3:33am Oct 21, 2007 3:33am
Ok let's do a little experiment for all the none believers out there. I am gonna keep a journal of all my 5 pip trades. I will record every trade i make. I will aim for a 5 pip profit. I will use a 20 pip stop loss.

Let's see how many time i make my target AND how many times i get stopped out with a 20 pip loss. This way we can see if i am bullshitting or have a solid profitable approach

You are welcome to follow my progess on the journal factory. Maybe we could change those stats and soon 95% of traders will make be successful in forex. lol
  • #78
  • Oct 21, 2007 3:38am Oct 21, 2007 3:38am
Quoting iandekoker
Ok my premises is trading thr eur/usd with a 2 pip spread.

The reason is very simple. Keep record of your trading this week. i assume your a experienced trader who only enters a trade once you have done your homework. So now you are in the trade. Most often you will show profits straight away. In 99% of the cases you will show a profit of 1-5 pips straight away. (If not, then you are either in the wrong trade or your trading system have given you a false signal or you have jumped the gun). Anyway so you are in the profits and now you are looking for x amount of pips. Now keep record of how many times the market gives you 5 pips and then turns against you stopping you out. Also see how many time you actually hit you x amount target?

My conclusion was this: In 99% of the cases i was showing a 1-5 pip profit within 1 minute. In 1% of the cases i never showed any profit and my trade resulted in a loss. In 70% of the cases did I NOT hit my 50 pips target. In only 30% of the cases did i hit my 50 pips target. So i would rather take my chances with the 99% success rate. Afterall when there is a profit on the table i take it. And i can because i dont trade mini lots but BIG lots. So with my 5 pips profit i make 5 times what the average trader would make hitting 50 pip targets. But once again i dont take just any trade. I only take the "A-grade" trades (look at 15mins chart of eur/usd on the 18th of october @ 12:00 it was a candlestick that offered almost 40 pips but i settled for only 5 pips making me $500 in total. I got a signal on the 11:30 candlestick but did not enter there cause that was only a "C-graded" trade in my opinion even if it would have offered me 13 pips).

Also look at 19 oct the 06:45 candlestick that offered a run of almost 40 pips but i only took 5 pips = $500

Also look at 19 oct 13:00 candlestick offering a run of almost 50 pips but i only took 5 pips = $500

Also look at 19 oct 18:00 candlestick that offered a run of almost 30 pips but i only took 5 pips = $500

So in 4 trades i took 20 pips (5 pips each) in total equaling $2000. Now you tell me if those where bad trades i took? Did i gamble? Did i scalp? For me it's not about the amount of pips i make but the $$$$$$ i make out of every trade.
Hello , I am wondering what account size you have and what leverage you use?

I indeed think it is reasonable to take many smaller profits instead of gunning for rare big profits but what are your usual positions sizes and your account balance along with leverage? because eventually there must be a certain relationship between them
  • #79
  • Oct 21, 2007 3:48am Oct 21, 2007 3:48am
Quoting fx_amateur
Hello , I am wondering what account size you have and what leverage you use?

I indeed think it is reasonable to take many smaller profits instead of gunning for rare big profits but what are your usual positions sizes and your account balance along with leverage? because eventually there must be a certain relationship between them
My account size is big and i use a 10:1 leverage. I trade $100 lots. Aiming for $500 or 5 pips profit. Risking 20 pips or $2000
  • #80
  • Oct 21, 2007 3:49am Oct 21, 2007 3:49am
One of the amazing things I read in forums is the bashing of customers using micro or mini accounts. I fail to see what is the difference if I have 100, 500, 1000, or 10,000 in my account. If I use 1 lot and win 20 points I have won 20 dollars and it is totally irrelevant how much money I have in my account. If I bid 1 lot and lose 20 pips, I have lost 20 dollars whether I have 10,000 or 100 dollars the amount of loss is the same. The problem in trading is not the amount of money I start or have in my account. My trades are either winners or loser. The one benefit in a micro or mini account is my loses are limited to the amount of money I have in my account. I usually keep 100-150 dollars in my account and play 50 cent or 1.00 lots. WHY?? I can then only lose that amount of money. I limit my losses to that. If I do well, I have a check cut every Friday on my winnings so I never lose my profits. I can consistently win 100 -200 dollars a week and create a nice part time job for myself. Maybe someday when I feel I am really good at this. I will go to 500 dollar account and play 3-5 lots. If you play one lot and let it go 10-20 dollars in the hole you made a bad entry. Get out and try again. I see in these threads and the courses online very little teaching on how to enter the market with a trade and not have it back up on you. Maybe we should start a new thread on this subject.
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