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About those 95% or: some research to discuss

  • #21
  • Feb 2, 2008 7:23am Feb 2, 2008 7:23am
It's not easy. I'll be honest I could not make money with intraday trading. I fully admit to not having what it takes, partly due to the fact I didn't have the passion for it. However, I have been doing well with longer term trading, this suits me much better.

One thing I think many traders don't realise, especially new traders, if you make 10 trades a day and you have a 1:1 risk/reward, you can often need to win significantly more than 50% of the time due to all the spreads you are paying. ECN brokers with lower spreads would make it easier though.
  • #22
  • Feb 3, 2008 11:35am Feb 3, 2008 11:35am
Quoting daytrading
Most of the guys trade the same strategy (which is the old pit trading style transitioned into electronic direct access trading), but on a variety of different instruments, although 99% futures.

That is because our trainees are being taught the way of the founder as you have correctly guessed.
yep thats how most prop firms are setup here in the US... a trader develops a successful method, then opens a desk and teaches everyone how to trade it. i guess its the same in the UK

btw if your friends on the desk want to join the TR discussions let me know so i can provide a vouch
Relax and be happy.
  • #23
  • Feb 4, 2008 4:41am Feb 4, 2008 4:41am
Quoting merlin
yep thats how most prop firms are setup here in the US... a trader develops a successful method, then opens a desk and teaches everyone how to trade it. i guess its the same in the UK

btw if your friends on the desk want to join the TR discussions let me know so i can provide a vouch
Hi Merlin,

I will forward your kind offer.

regards
daytrading
Enter Signature
  • #24
  • Feb 4, 2008 6:19am Feb 4, 2008 6:19am
Quoting peterM
One thing I think many traders don't realise, especially new traders, if you make 10 trades a day and you have a 1:1 risk/reward, you can often need to win significantly more than 50% of the time due to all the spreads you are paying. ECN brokers with lower spreads would make it easier though.
I have never understood this.

Say for example I want to aim for 100 pips day and I trade Eur/Usd 2 pip spread 4 hour charts. With my broker I need to make 102 pips to make 100 pips (spread) If I was day trading going for 10 pips a time I need to make 12 pips to make 10 pips 12 x 10 = 120 pips - 20 spread = 100 pips.

So yes you pay less spread per 100 pips in the above example but in theory you only pay spread if you lose.
  • #25
  • Feb 4, 2008 7:52am Feb 4, 2008 7:52am
Quoting cryten
in theory you only pay spread if you lose.
You always pay it. It is simply a proportional comission.

You start with 2 pips less or: you need to have price move 2 pips more than with no spread, etc. You ALWAYS pay, even if it simply means a shortening of the distance between start and cash-in-for-profit point by 2 pips.

You always pay.
Trust price. Know yourself.
  • #26
  • Feb 4, 2008 10:27am Feb 4, 2008 10:27am
Quoting SeekingLight
You always pay it. It is simply a proportional comission.

You start with 2 pips less or: you need to have price move 2 pips more than with no spread, etc. You ALWAYS pay, even if it simply means a shortening of the distance between start and cash-in-for-profit point by 2 pips.

You always pay.
ya I know you always pay but I look at it differently with regards to trading lower timeframes as per peterm's post.
  • #27
  • Feb 4, 2008 10:45am Feb 4, 2008 10:45am
Quoting cryten
ya I know you always pay but I look at it differently with regards to trading lower timeframes as per peterm's post.
Why? Pips are pips are pips are pips.

Open a position on any timeframe, close it instantly, and you have paid your spread. Always. Win, lose, or draw.
  • #28
  • Feb 4, 2008 11:20am Feb 4, 2008 11:20am
Quoting JFX81
Why? Pips are pips are pips are pips.

Open a position on any timeframe, close it instantly, and you have paid your spread. Always. Win, lose, or draw.
Sorry I don't get your point (I get what your saying) but I don't get your point in relation to what I was trying to convey but it seems no one gets mine either so I'll leave this thread now, already started one argument this week
  • #29
  • Feb 4, 2008 11:38am Feb 4, 2008 11:38am
Quoting peterM
It's not easy. I'll be honest I could not make money with intraday trading. I fully admit to not having what it takes, partly due to the fact I didn't have the passion for it. However, I have been doing well with longer term trading, this suits me much better.

One thing I think many traders don't realise, especially new traders, if you make 10 trades a day and you have a 1:1 risk/reward, you can often need to win significantly more than 50% of the time due to all the spreads you are paying. ECN brokers with lower spreads would make it easier though.
Peter,

forget the spreads for a moment. (yes, of course the transaction cost matters more if you trade high frequency)

But as you mentioned, the important relation exists between the two main ratios: risk/reward and win/lose.

You can have a negative reward-to-risk ratio if your win/lose ratio is exeptionally high. (which is common in high frequency intraday strategies)

In turn if your reward-to-risk is high (let's say R10) you can have more losers than winners and still be profitable.

Forget the idea that its cheaper to trade through ECN (I do) - yuou get charged between $15 and £25 per million dollar traded - so if you trade a million cable for example, you have to add a tick to the price in commission.

regards
daytrading
Enter Signature
  • #30
  • Feb 4, 2008 11:57am Feb 4, 2008 11:57am
Quoting cryten
Sorry I don't get your point (I get what your saying) but I don't get your point in relation to what I was trying to convey but it seems no one gets mine either so I'll leave this thread now, already started one argument this week
The statement, "in theory you only pay the spread if you lose" doesn't make sense.

Ex. You make 1000 trades in a year with a broker with a 3 pip spread.
You also make 1000 identical trades in a year with a broker with a 2 pip spread.

After that year your account with the lower spread broker will be 1000 pips higher than the other account.

The whole "in theory" stuff doesn't add up on the P/L.
  • #31
  • Feb 4, 2008 12:14pm Feb 4, 2008 12:14pm
Quoting JFX81
The statement, "in theory you only pay the spread if you lose" doesn't make sense.

Ex. You make 1000 trades in a year with a broker with a 3 pip spread.
You also make 1000 identical trades in a year with a broker with a 2 pip spread.

After that year your account with the lower spread broker will be 1000 pips higher than the other account.

The whole "in theory" stuff doesn't add up on the P/L.

JFX,

not necessarily.

That would depend on whether the trader calculated the spread into the price target or not.

I.e.: you have a broker who quotes 3 ticks. If the price target is 10 ticks excluding the spread, it doesn't matter whether 2 or 3 ticks.

It only matters if the trader has a target that includes the spread because if the target is 10 ticks inc. spread, then the net result per trade is either 7 or 8 ticks. (which adds up over time of course)

regards
daytrading
Enter Signature
  • #32
  • Feb 4, 2008 2:11pm Feb 4, 2008 2:11pm
When you can make money at 1:400 leverage completely loaded, drugged, drunk and whilst you f..... and rock roll music at 2000 decibell.... Then you have ended the developmental process.... Just kidding.... But go big or go home... It is a nice thread SeekingLight... Congratulations...
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  • #33
  • Feb 4, 2008 2:46pm Feb 4, 2008 2:46pm
A couple of miscallenous and unordered thoughts because I could fill 1000s of pages...

The thing is. I have lost terrible amounts compared to my wealth and ability. When I have started to be modest. I have said "oh well I want just 20-50% a year or so" and started to risk only 2-3% I have started to think with a clear head and my nervousness disappeared that affected my decisions and most likely I have made wrong decisions. Simplicity and discipline is key. There is also called something "heat". If the risk is too high the heat is too high... Oh well you know what happens...

When it becomes boring and you loose your excitment and trading becomes just another regular activity then you might be there. I have performed thousands of money management calculations and I know that I can have 6 months or so drawdowns but that will wipe out onlz 10% of mz account as I do only 10-12 trades a year now.

I am now "constantly" profitable. And that means year on year. Oh no I do not want to get rich quick. I only want to be constantly profitable and have a relatively low risk stream of income of trading. That is the goal.
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  • #34
  • Feb 4, 2008 2:53pm Feb 4, 2008 2:53pm
Also... Profit targets... Whatever like 10 pips a day or 300 pips a week or 5% a month... How do you know that... I have stopped predicting the markets and that means mz targets too... I just go with the flow... As long my system says stay in the trend I stay there... What happens if I reached my 5% do I close my positions? Nope...

Did you know that the most of the traders are menatlly incapacitated to make huge amounts of money? When in profit thez have the urge to take it or follow silly rules like "I want 2 to 1 risk". So risk 50 pips and get out at 100 pips gain. This is silly. How about a trend hógives you 2000. But you have to accept that that happens in waves that is your floating capital grows and diminishes and grows and diminishes. And the mental problem comes. When it starts to diminish you have the urge to take it....
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  • #35
  • Mar 4, 2008 5:14pm Mar 4, 2008 5:14pm
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
Hi Seekinglight
and all others that have posted here, great thread - done my head in after 2 pages but well worth the read, gonna have to come back when i haven't been at work for 24hrs.

just a thought to add to this - when the surveys were conducted - 95% of traders fail in there first 6 months - where was FF, you only have to read some of the post round here to know that FF has saved many more accounts than it's closed

that said it nearly closed mine when someone introduced me to hedgeing - 40% drawdown in 2 weeks ouch.

now though, with thanks to thoughs around here i have an average after one year that makes me very happy - even the Aus's don't pay that kind of interest

it's not about pips or pounds it's about a steady % per month, not in an uncrontrolled method but by steady consistant practices and patience all encouraged and taught right here at FF thanks to all

so say i reach consistantly over the next year the same % with some months being a little better than others but the lowest being my goal, all i need do is add to the capital and i making a very good living and saving some for a rainy day - am i a success or failure and who sets the standard


i'll read this tomorrow and wonder why i wrote it. just a thought.

i think my main point was - has FF changed that 95% - when's the next survey as i bet the numbers have changed.
  • #36
  • Mar 5, 2008 11:21am Mar 5, 2008 11:21am
Quoting MPP
now though, with thanks to thoughs around here i have an average after one year that makes me very happy - even the Aus's don't pay that kind of interest

it's not about pips or pounds it's about a steady % per month, not in an uncrontrolled method but by steady consistant practices and patience all encouraged and taught right here at FF thanks to all.
dont have much to add, just want to say this was a touching post. welcome to the club sir
Relax and be happy.
  • #37
  • Mar 6, 2008 2:19am Mar 6, 2008 2:19am
I EXPECT TO WIN 100% OF THE TIME LOSSING IS NOT AN OPTION ESPECIALY ON THE FOREX,

THE IMAGINATION TO SUCCEED IS MORE IMPORTANT IN TRADING THAN ANY OTHER SINGLE THING INDICATOR OR SYSTEM.

THAT IS THE ONE GREAT LESSON IVE LEARNT IN TRADING THE FOREX.

FROM FAILURE TO SUCCESS IT JUST A MATTER HOW YOU LOOK AT WINNING AND NOT RECONISING A LOSS AS THAT CAN QUICKLY TURN INTO A HUGH PROFIT.

TO DEMONSTRATE THIS let me tell you a story. a great close friend of mine suffers from THE condition Know as Panic stress disorder syndrome, a condition effecting a hugh % of the population today,


now JIM had a wonderful home and the dry spell started to crack the outside concrete . JIM STARTED TO LOOK AT HIS INSIDE FLOOR CERAMIC TILING (SQUARE WHITE TILES ABOUT 300 MM and started to see in his mind these tiles were starting to bulge. in fact he became so convinced that the floor and the house would start to crack,he got a straight edge and started to show every one how his floor was bulging, it dint mater that the floor was exactly the same uneveness it had been for 15 years,

the fact inhis mind the floor was bulging and moving,even the experts could not convince him.

you see in jims mind the fear was real he suffered from the sad condition of PANIC STRESS SYNDROME , THE MORE HE FOCUSED ONTH FLOOR THE PROBLEM BECAME GREATER THE FLOOR BULGES BECAME GREATER


NOW IN TRADING MANY TRADERS FOCUS IS CONSENTRATED ON LOSS PREVENTION AND THERE FEAR IS SIMULAR TO STRESS PANIC DISORDER SYNDROME

IF YOUR FOCUS IS NOT ON LOSING OR RECONIZING ANY THING BUT SUCCESS YOU HAVE MOVED YOUR IMAGINATION TO A WINNING FRAME

THAT DOESNT EXCEPT LOSS AS AN OPTION,

ONCE YOUR ATTITUDE IS POSITIVE AND YOU USE THE GREATEST GIFT OF SAYING WHAT IF AND GIVE TO OTHERS ALL YOU CAN.

THEN MIRACLES HAPPEN, YOU DONT BELIEVE IT?

THEN READ MY THREAD ON THIS FORUM AND YOU WILL SEE THE POSITIVE EFFECT OF PEOPLE PREPARED TO GIVE AND NOT EXCEPTING LOSS AS AN OPTION

THIS IS THE REAL MAGIC OF POSITIVE THINKING AND BECOMING THE 5% OF PEOPLE LIKE US THAT WIN AND MAKE MONEY TRADING THE FOREX

thats my opinion from Brian
  • #38
  • Mar 6, 2008 11:24am Mar 6, 2008 11:24am
interesting thread - wondered when the bollocks would start
https://linktr.ee/Soultrader
  • #39
  • Last Post: Mar 6, 2008 11:53am Mar 6, 2008 11:53am
Quoting soultrader
interesting thread - wondered when the bollocks would start
me too!
Virtue finds and chooses the mean. Aristotle, Ethica Nichomachea
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