I agree with Tony Wonder (see the closed “I may have been dooped” thread) that not all those who sell FX tuition, systems and/or signals are failed traders. I know at least two guys who are both extremely successful, and allow an elite few to trade concurrently with them, for a significant monthly fee. If a trader is selling signals in this manner, it is in everybody's best interest that s/he focuses on trading his/her own account profitably, even if this means that response to individual customer needs and queries is relegated in priority. Would-be customers should keep this in mind.
However, after researching TA and trading (mainly stocks and derivatives, but more recently FX) for more than 5 years now, and having scoured the internet for systems that are consistently profitable, I would have to say that I maintain a “healthy but not insurmountable skepticism” toward vendors in general, and that my skepticism grows enormously when I hear sales pitch like “incredible”, “unparalleled”, “revolutionary”, “never before released”, “top secret”, or when I read customer testimonials like “Wow – I doubled my account in just two weeks!!”, which pander to the greed of potential buyers, but tell nothing of long term consistency. I'm also turned off by any high pressure “buy now before we increase the price” type pitch.
My objection lies not with teachers, tuition or systems, but with those whose claims are misleading, creating the impression that astronomical gains are easily and consistently obtainable. For example, in the FX arena there are vendors out there who claim to be making anything up to and beyond 500 pips a day, but what they don’t tell you is that they have several simultaneous or overlapping trades open on the same pair (e.g. for the purpose of taking profit at different pre-defined targets), and are summing the pips made by all of these trades. There are vendors who claim up to a 100% win rate, but don’t tell you that their systems fail to incorporate proper risk management (no protective stops means no recorded losses, but eventually leverage will cause the one trade that goes significantly awry to obliterate your account). There are vendors who trade several portfolios or pairs, but publish only the track records of the most successful ones. And so on.
I have come to realize that there is no “Holy Grail” system, that trading is a very demanding and stressful occupation, and that very few TA-based systems are capable of generating profit consistently across all market conditions. While taking in the excitement of the sales pitch, it’s all too easy to forget that trading is a marginally negative sum game; that for every buyer there ultimately has to be a seller who is equally convinced in the validity of his/her own analysis; and that (thanks to the emergence of high performance PCs, and the internet) even the “newbie amateurs” have access to most of the same technical tools, methodologies and information that almost everybody else has. To be consistently successful, then, one needs an edge that keeps one a significant step ahead of the masses, i.e. to somehow be part of the “smart money” that anticipates, rather than the “dumb money” that belatedly follows.
Virtually all technically-based systems do one of three things: (1) they measure oversoldness and overboughtness, then give a buy (enter long) signal at the former, or a sell signal (enter short) at the latter, and then attempt to fade the price as it reverts to, or beyond, a mean; (2) they attempt to ride established trends; or (3) they seek out the emergence of new trends, usually via breakouts. For example, if you have a look at all of the systems discussed here in FF – Vegas, Tlotami, Tiga Abdul, Fozzy, Mouteki, etc – they all fit into one of these categories. IMHO, many would-be traders become “method struck”, in that they believe that a newly devised system or indicator means a revolutionary new method for profit. What they don’t stop to consider is that (1) all technical indicators are actually derived from the same OHLC(V), and therefore don’t necessarily add independent confirmation, and (2) one must ultimately enter (and exit) on a price bar, and entry can be made a bar or two earlier or later simply by re-calibrating existing indicator(s) [(e.g. an EMA(3)/EMA(5) cross will always occur before an EMA(5)/EMA(10) cross]. Entering earlier will, on balance, increase average win size, but lower win rate; and vice versa, an extremely delicate balance. Timing is ultimately semantic – one can obtain improved overall profitability using an earlier entry, back-testing over one set of data, and then improved profitability using later entry, over another sample. Same applies to technically based exits – sometimes arbitrary profit targets work better than trailing stops, sometimes not. Price movements are that fickle; market character and cycle rhythms are forever changing.
As Gil Blake (interviewed in Jack Schwager's 'New Market Wizards', Harper Business 1992) says, devising a profitable entry/exit method is a case of “identifying non random price behavior, while recognizing that markets are random most of the time; then, absolutely convince yourself that what you've found is statistically valid; then set up your trading rules” (accordingly). [Note: if prices moved completely randomly (as suggested in Burton Malkiel's bestseller 'A Random walk down Wall Street'), then any kind of systematic approach to trading would be futile].
Of course having a successful entry/exit method is only part of the equation; capital preservation (money management) and psychology (discipline, courage, patience, confidence, perseverance, ...) also play a huge part. Although the vendor's method might offer some kind of statistically positive expectancy, one still has to apply the method successfully, a highly subjective process. One must take this into consideration when reading unsolicited customer testimonials and reviews. Even in the case of a well defined system, I would suggest that many are likely to deviate from its rules or principles, for a variety of reasons, obtain differing results, and yet still attribute any success or failure to “the system”. And unless a system incorporates precise position sizing rules, newbie traders might be tempted to oversize, inflating both profits and losses, and further polarizing opinion. Hence reviews are frequently a mixture of those who are ecstatically praiseworthy, and those who are bitterly scathing: leaving a potential buyer thoroughly confused.
Hence the dilemma facing the uninitiated newbie is this: there is a vast sea of information out there, and s/he must somehow make the decision as to whose are potentially genuine, and whose aren’t. And even if s/he gets this right, the markets offer no mathematical certainty: most buyers who end up losing their bankroll will probably never know the extent to which it was the system they purchased, their own ill-chosen decisions or indiscipline, or simply misfortune, that undid them. At the end of the day, the hard lessons learned from one's own trading experience offer the most genuine, telling, and personally relevant, tuition of all.
Caveat emptor!!
David
However, after researching TA and trading (mainly stocks and derivatives, but more recently FX) for more than 5 years now, and having scoured the internet for systems that are consistently profitable, I would have to say that I maintain a “healthy but not insurmountable skepticism” toward vendors in general, and that my skepticism grows enormously when I hear sales pitch like “incredible”, “unparalleled”, “revolutionary”, “never before released”, “top secret”, or when I read customer testimonials like “Wow – I doubled my account in just two weeks!!”, which pander to the greed of potential buyers, but tell nothing of long term consistency. I'm also turned off by any high pressure “buy now before we increase the price” type pitch.
My objection lies not with teachers, tuition or systems, but with those whose claims are misleading, creating the impression that astronomical gains are easily and consistently obtainable. For example, in the FX arena there are vendors out there who claim to be making anything up to and beyond 500 pips a day, but what they don’t tell you is that they have several simultaneous or overlapping trades open on the same pair (e.g. for the purpose of taking profit at different pre-defined targets), and are summing the pips made by all of these trades. There are vendors who claim up to a 100% win rate, but don’t tell you that their systems fail to incorporate proper risk management (no protective stops means no recorded losses, but eventually leverage will cause the one trade that goes significantly awry to obliterate your account). There are vendors who trade several portfolios or pairs, but publish only the track records of the most successful ones. And so on.
I have come to realize that there is no “Holy Grail” system, that trading is a very demanding and stressful occupation, and that very few TA-based systems are capable of generating profit consistently across all market conditions. While taking in the excitement of the sales pitch, it’s all too easy to forget that trading is a marginally negative sum game; that for every buyer there ultimately has to be a seller who is equally convinced in the validity of his/her own analysis; and that (thanks to the emergence of high performance PCs, and the internet) even the “newbie amateurs” have access to most of the same technical tools, methodologies and information that almost everybody else has. To be consistently successful, then, one needs an edge that keeps one a significant step ahead of the masses, i.e. to somehow be part of the “smart money” that anticipates, rather than the “dumb money” that belatedly follows.
Virtually all technically-based systems do one of three things: (1) they measure oversoldness and overboughtness, then give a buy (enter long) signal at the former, or a sell signal (enter short) at the latter, and then attempt to fade the price as it reverts to, or beyond, a mean; (2) they attempt to ride established trends; or (3) they seek out the emergence of new trends, usually via breakouts. For example, if you have a look at all of the systems discussed here in FF – Vegas, Tlotami, Tiga Abdul, Fozzy, Mouteki, etc – they all fit into one of these categories. IMHO, many would-be traders become “method struck”, in that they believe that a newly devised system or indicator means a revolutionary new method for profit. What they don’t stop to consider is that (1) all technical indicators are actually derived from the same OHLC(V), and therefore don’t necessarily add independent confirmation, and (2) one must ultimately enter (and exit) on a price bar, and entry can be made a bar or two earlier or later simply by re-calibrating existing indicator(s) [(e.g. an EMA(3)/EMA(5) cross will always occur before an EMA(5)/EMA(10) cross]. Entering earlier will, on balance, increase average win size, but lower win rate; and vice versa, an extremely delicate balance. Timing is ultimately semantic – one can obtain improved overall profitability using an earlier entry, back-testing over one set of data, and then improved profitability using later entry, over another sample. Same applies to technically based exits – sometimes arbitrary profit targets work better than trailing stops, sometimes not. Price movements are that fickle; market character and cycle rhythms are forever changing.
As Gil Blake (interviewed in Jack Schwager's 'New Market Wizards', Harper Business 1992) says, devising a profitable entry/exit method is a case of “identifying non random price behavior, while recognizing that markets are random most of the time; then, absolutely convince yourself that what you've found is statistically valid; then set up your trading rules” (accordingly). [Note: if prices moved completely randomly (as suggested in Burton Malkiel's bestseller 'A Random walk down Wall Street'), then any kind of systematic approach to trading would be futile].
Of course having a successful entry/exit method is only part of the equation; capital preservation (money management) and psychology (discipline, courage, patience, confidence, perseverance, ...) also play a huge part. Although the vendor's method might offer some kind of statistically positive expectancy, one still has to apply the method successfully, a highly subjective process. One must take this into consideration when reading unsolicited customer testimonials and reviews. Even in the case of a well defined system, I would suggest that many are likely to deviate from its rules or principles, for a variety of reasons, obtain differing results, and yet still attribute any success or failure to “the system”. And unless a system incorporates precise position sizing rules, newbie traders might be tempted to oversize, inflating both profits and losses, and further polarizing opinion. Hence reviews are frequently a mixture of those who are ecstatically praiseworthy, and those who are bitterly scathing: leaving a potential buyer thoroughly confused.
Hence the dilemma facing the uninitiated newbie is this: there is a vast sea of information out there, and s/he must somehow make the decision as to whose are potentially genuine, and whose aren’t. And even if s/he gets this right, the markets offer no mathematical certainty: most buyers who end up losing their bankroll will probably never know the extent to which it was the system they purchased, their own ill-chosen decisions or indiscipline, or simply misfortune, that undid them. At the end of the day, the hard lessons learned from one's own trading experience offer the most genuine, telling, and personally relevant, tuition of all.
Caveat emptor!!
David
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I can't see many noobs doing only two mini lots on 5k account but it all adds up at the end.
