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

  • #101
  • Oct 21, 2007 11:37am Oct 21, 2007 11:37am
Perhaps the question should be, why 95% of systems fail? The thread started implies that the trader is the cause of losses...
Markets are damn difficult to beat, the odds are against you, this being a negative sum game and all. Good disipline and money management will slow down traders demise, but odds are odds and unless there is a statistical edge, trader will loose eventually.
Anyone wishing to proove me wrong, could propose a 100% mechanical system, with Stop Loss == Take profit, which would give positive returns. There are a lot of systems floating around the forums, all have been tuned and tweaked hundreds of times... we need something constant to act as a benchmark. Alternative to the Stop Loss=Takeprofit would be to take profit after "X" number of bars. This would proove nicely the statistical advantage.
A lot of talk and theories are present, but little hard evidence... If some kind soul could provides us with such system, at least we will have something solid to discuss.
I for one, don't believe in a 95% system. Market is simply too unpredictable. News, to me, present most obvious high probability events, but even they can fail. I'm not sure how something technical could fair better.

Best regards,

Vlad
  • #102
  • Oct 21, 2007 11:58am Oct 21, 2007 11:58am
Quoting merlin
if i see this baseless "95%" cliche one more time im going to puke. :

instead of figuring out "why" 95% lose money, shouldnt we first prove that it is actually true??


Also: Just forget about the crowd and focus on successful
models and mostly on ourselves.

For example: If you want to become a golf or tennis pro, would
you spend your time studying the failures of the vast numbers of
others who play like s###? No, they study the performance of
other highly skilled players and work on their own skills.
  • #103
  • Oct 21, 2007 12:19pm Oct 21, 2007 12:19pm
Quoting merlin
if i see this baseless "95%" cliche one more time im going to puke. :

instead of figuring out "why" 95% lose money, shouldnt we first prove that it is actually true??
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  • #104
  • Oct 21, 2007 12:30pm Oct 21, 2007 12:30pm
Quoting SunTrader
You are obviously not talking about an equal number of trades are you? Because then there is no doubt the 2nd strategy blows the 1st one away.
The second strategy is a loser. For every 2 trades, you will lose the spread.

Actually, I left part out. Assume a 1:1 Risk/reward ratio. You make 200, then lose 200 + spread. I'd rather make 1 pip every trade.
  • #105
  • Oct 21, 2007 12:35pm Oct 21, 2007 12:35pm
Quoting blueruby
The second strategy is a loser. For every 2 trades, you will lose the spread.

Actually, I left part out. Assume a 1:1 Risk/reward ratio. You make 200, then lose 200 + spread. I'd rather make 1 pip every trade.
LOL,

If you like 1:1 Risk/reward ratio, then go play blackjack. It is much easier to do a homework.

U cannot survive forex with risk/reward 1:1 bro.
  • #106
  • Oct 21, 2007 12:41pm Oct 21, 2007 12:41pm
Quoting vinnie99
LOL,

If you like 1:1 Risk/reward ratio, then go play blackjack. It is much easier to do a homework.

U cannot survive forex with risk/reward 1:1 bro.
I am gonna PUKE TOO.

I think MM is a bit more complex in FX than purely concentrating on risk/reward ratios. First you have a system then you need to know inside out it and weight your risk and reward ratios based on the capabilities of the system.. IT DEPENDS ON THE SYSTEM!!!. A 5:1 win/loss ratrio can be profitable in the long term as well as a 1:5. It all depends the risk capabilities of the model/method/system. I dont know how to explain this further. Plus you have the are of non correlated method mixture and non correlated instruments in your portfolio and capital and risk distribution amongst systems and instruments. Got it? This is a bit advanced stuff so I am not going in to it but just purely w/l is SHORTSIGHTED.
.
  • #107
  • Oct 21, 2007 12:46pm Oct 21, 2007 12:46pm
Quoting iandekoker
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
Priceless. Absolutely priceless.
Take a look at the record people. Don't bother I've already done it for you. A quick back test over October shows at least 10 "A grade" signals resulting in a loss. Now I may be seeing this through cynical eyes but I just couldn't find 200 winners for a break even. Sorry. I have included a couple to illustrate. As I said in a previous post a sure fire way to go broke.
Attached Images
Those that can, do, those that can't, teach.
  • #108
  • Oct 21, 2007 12:46pm Oct 21, 2007 12:46pm
Quoting bullrock
I am gonna PUKE TOO.

I think MM is a bit more complex in FX than purely concentrating on risk/reward ratios. First you have a system then you need to know inside out it and weight your risk and reward ratios based on the capabilities of the system.. IT DEPENDS ON THE SYSTEM!!!. A 5:1 win/loss ratrio can be profitable in the long term as well as a 1:5. It all depends the risk capabilities of the model/method/system. I dont know how to explain this further. Plus you have the are of non correlated method mixture and non correlated instruments in your portfolio and capital and risk distribution amongst systems and instruments. Got it? This is a bit advanced stuff so I am not going in to it but just purely w/l is SHORTSIGHTED.
5:1 risk/reward ratio is different than the the 5:1 win/loss ratio
Sry I dont understand what you explain.
  • #109
  • Oct 21, 2007 12:47pm Oct 21, 2007 12:47pm
Quoting blueruby
The second strategy is a loser. For every 2 trades, you will lose the spread.

Actually, I left part out. Assume a 1:1 Risk/reward ratio. You make 200, then lose 200 + spread. I'd rather make 1 pip every trade.
Yeah but you gain 200 pips!!!!!!!!!

You didn't answer whether it would be equal number of trades.

Win 100% 1 pip = 100 pips

Win 1% 200 pips = 200 pips.

Easy for me to figure. What about you.
  • #110
  • Oct 21, 2007 12:54pm Oct 21, 2007 12:54pm
Quoting blueruby
I'm not defending either, but I can say that I'd rather have a system that takes 1 pip every time than one that takes 200 or 500 or (insert any number here) pips half the time.
Yes i agree with you
  • #111
  • Oct 21, 2007 1:14pm Oct 21, 2007 1:14pm
Quoting vinnie99
5:1 risk/reward ratio is different than the the 5:1 win/loss ratio
Sry I dont understand what you explain.
Yes sorry. I mean risk/reward. You can have a profitable system with 20 tp and 100 sl... You just need a higher probability... So say you have on average 7 winners and 1 looser. 140 - 100 = 40 pips (not counting the spread, slippage)
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  • #112
  • Oct 21, 2007 1:16pm Oct 21, 2007 1:16pm
Quoting FXSurfer


Also: Just forget about the crowd and focus on successful
models and mostly on ourselves.

For example: If you want to become a golf or tennis pro, would
you spend your time studying the failures of the vast numbers of
others who play like s###? No, they study the performance of
other highly skilled players and work on their own skills.
Lol...sorry but i just have to responde to this. My friend is a +2 handicapper. That means he shoots a round of 69 on average BUT he cannot make it as a touring pro on the golf scene. I know of two golf courses where he holds the course record.

Believe me if i tell you that your chances are better at making a living from trading forex than playing golf. For every Tiger Woods there are thousands of good golfers that doesn't cut it. And it is not because they are not good golfers, but cause of the immense pressure and financial expenses. A pro golfers needs 150 000 euros to be able to play 1 year on the european tour. He needs to pay his travel, accommodation, entry fees, caddy fees, etc. And then he is not even guarenteed a penny return on investment. Sponsors wanna see the trophies first before they sign you. And it is difficult winning the trophies when Tiger, Phil, Ernie, Vijay, Sergio, Padraig, Stricker, and those guys are around.

But i wouldn't mind playing pro golf if i could make the cut. Damn what a way to spend a life.....
  • #113
  • Oct 21, 2007 1:28pm Oct 21, 2007 1:28pm
Quoting bullrock
I am gonna PUKE TOO.

I think MM is a bit more complex in FX than purely concentrating on risk/reward ratios. First you have a system then you need to know inside out it and weight your risk and reward ratios based on the capabilities of the system.. IT DEPENDS ON THE SYSTEM!!!. A 5:1 win/loss ratrio can be profitable in the long term as well as a 1:5. It all depends the risk capabilities of the model/method/system. I dont know how to explain this further. Plus you have the are of non correlated method mixture and non correlated instruments in your portfolio and capital and risk distribution amongst systems and instruments. Got it? This is a bit advanced stuff so I am not going in to it but just purely w/l is SHORTSIGHTED.
I am with you. I know how you feel. Sometimes i get so "mad" when i read certain statements posted about risk/reward, money management, stop losses, profit targets, winning/loosing ratios.

Other days i find it very amusing. And i wonder where traders learned this stuff that they treat as the alpha and omega.
  • #114
  • Oct 21, 2007 1:43pm Oct 21, 2007 1:43pm
Quoting pf1966
Priceless. Absolutely priceless.
Take a look at the record people. Don't bother I've already done it for you. A quick back test over October shows at least 10 "A grade" signals resulting in a loss. Now I may be seeing this through cynical eyes but I just couldn't find 200 winners for a break even. Sorry. I have included a couple to illustrate. As I said in a previous post a sure fire way to go broke.
Regarding your first chart. I think our charts differ a bit. Cause on my 15 min charts there was a 5 pip profit for me.
Attached Image (click to enlarge)
Click to Enlarge Name: gbp.gif Size: 38 KB
  • #115
  • Oct 21, 2007 1:50pm Oct 21, 2007 1:50pm
Quoting pf1966
Priceless. Absolutely priceless.
Take a look at the record people. Don't bother I've already done it for you. A quick back test over October shows at least 10 "A grade" signals resulting in a loss. Now I may be seeing this through cynical eyes but I just couldn't find 200 winners for a break even. Sorry. I have included a couple to illustrate. As I said in a previous post a sure fire way to go broke.
Regarding your 2nd chart. Once again our chart differ. Either the brokers have different times or your setting are not like mine.
Attached Image (click to enlarge)
Click to Enlarge Name: gbp.gif Size: 39 KB
  • #116
  • Oct 21, 2007 2:06pm Oct 21, 2007 2:06pm
Posting usefull things about risk/reward, money management, stop losses, profit targets, winning/loosing ratios is far and far better than posting hundred of charts on FF. Newbies needs how to create MM and RM!

Is this why 95% of traders lose money? They concentrate too much on the beautifull charts with lines, crosses etc.. for (daytrading) make a deciscion.
  • #117
  • Oct 21, 2007 2:24pm Oct 21, 2007 2:24pm
Quoting vinnie99
Posting usefull things about risk/reward, money management, stop losses, profit targets, winning/loosing ratios is far and far better than posting hundred of charts on FF. Newbies needs how to create MM and RM!

Is this why 95% of traders lose money? They concentrate too much on the beautifull charts with lines, crosses etc.. for (daytrading) make a deciscion.
Yes you are right. Money Management is the MOST important thing in forex to me.
  • #118
  • Oct 21, 2007 3:31pm Oct 21, 2007 3:31pm
The other problem..

First you have long term trading (months), the mid-term trading (weeks-days), then daytrading.
Now daytrading, as it stands, is THE MOST DIFFICULT of all. I repeat the most difficult where you need nerves and years and years (5-10) experience. Even SEASONED VETERANS find sometimes it difficult because of the hillarious market conditions. I dont go there. No way. Now NEWBIES after a couple of months of trading and being "system whores" jump from system to system and claim they got it and ride the FX. They concentrate on optimal entries and so on. Why because they seek quick profits and get rich quickly. This is equal too gambling. Nothing todo with trading. IMHO the FX contains too much noise at daytrading level and just simply too risky. Oh yes, now a couple of guys will start to tel me that newstrading is the way to go, etc etc..Sure sure. What happens when the price goes in the reverse direction than expected jumping 70 pips in 5 seconds. And the account is off because the SL could not be handled by the broker because of the quick jump in the price.

Well just here it is. Now if I tell someone that by design my SLs are 150-500 pips depending on the currency and I am happy with 50% a year?? If more I wont throw it away though.

PS I have done all of these things too. No exception.
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  • #119
  • Oct 21, 2007 3:40pm Oct 21, 2007 3:40pm
Oh yeah the charts above... This can work one day, two days. The what happens if you got 10 loosers.
10*2000 = 20 000
Then you will need 40!!! winners to get breakeven.. No shit.
How about this. 50sl/150tp
When you have 7 loosers (7*50=350) and 3 (3*150=450) winners you still have 100 pips+?? But than 70% of the time you still a looser? In the previous example you need to be a winner 80% of the time. That would be quite a feat!!!
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  • #120
  • Oct 21, 2007 3:42pm Oct 21, 2007 3:42pm
One more thing than I am off... You know why the PROs say risk 1-2% of your equity? Because if you have a large a number of trades you have a better chance to be a winner (the rule of large numbers). So if you risk small you will have a smoother equity curve etc etc...
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