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Admit it - your profits are based on luck

  • #281
  • Sep 21, 2008 8:45pm Sep 21, 2008 8:45pm
Sorry - first part for David, second for Tdion. Should have been more clear
  • #282
  • Sep 21, 2008 9:22pm Sep 21, 2008 9:22pm
Hanover,

I have enjoyed your posts. I can say for certain that there is only one long term market indicator---and that is the fundamentals of the underlying country. Short term (days, weeks, months...sometimes longer) fundamentals have no hold over the markets. Currencies move is sharp contrast to the fundamentals all the time--we see it every day. However, over the long term, the fundamentals of a countries economic health will be born out and reflected in the pricing of its currency. So, how to take advantage of this? Simple: Be a hedge fund or George Soros or the like with untold billions at your command. Take a small percentage (in total net worth terms) position based on the fundamentals and wait. Laugh at the market if it goes a few thousand pips in the wrong direction--because you can afford to wait until the fundamental truth is born out and all the noise and market maipulators fall away. Maybe you need to wait a month, or maybe 2 years, but the rewards of millions will be yours. You only need to buy some options placed far enough away to protect yourself from a major black swan event.

Unfortuantley, this option is not open to me. I can open a $10,000 account, take a .10 pip position, and play such a game but the rewards of $200 over a years time hardly seem worth the effort. So I am left to devise my strategies carefully, study and backtest, and implement them with a hope that statistical variance (or tdion's luck, if you prefer) will be in my favor long enough for my strategy to hold and to reach a sum of $ that I am hoping for. If there is a better way to attack this market, I have not found it. If someone else has, then they have not shared it with the rest of us.

Regards to you.....
  • #283
  • Sep 21, 2008 9:42pm Sep 21, 2008 9:42pm
Previous post extracted. Both yours and mine. Why, I don't know. Not allowed to disagree I guess. I'm outa here.
  • #284
  • Sep 21, 2008 11:10pm Sep 21, 2008 11:10pm
Quoting tdion
I'll post whatever I want to, whenever I want to, until the moderators tell me to stop. By the way, where are your live trade calls? I'll be happy to point you to mine, where I racked up several hundred pips last year..... so you might want to watch who you call a "washup." Oh, and your last post is ruining my thread.

By the way, what does "learn to trade" mean, anyway? Nobody has been able to define that one yet...
I don't need to post live trade calls, I am employed as a forex trader.... You loiter around a forum posting 20+ posts a day and starting arguments with people. You are the reason that FF has gone down hill.. It used to be a relatively professional place. But now its just riddled with junk like every other forex forum on the internet.

No matter what you say buddy, you will remain a washup until you clean up your act.
  • #285
  • Sep 21, 2008 11:13pm Sep 21, 2008 11:13pm
Quoting Takisd
I don't need to post live trade calls, I am employed as a forex trader....
Money talks and BS walks...
  • #286
  • Sep 21, 2008 11:20pm Sep 21, 2008 11:20pm
Quoting fxterrapin
Money talks and BS walks...
And losers sit around forums trying to get freebies... I would send you my business card etc.. But I do not want to be harassed during the day just to prove a point to people whom mean nothing to me, and never will.....So you can believe what you want. The bottom line is, this thread is created by someone who obviously knows very little about the profession of trading, and would have better chances of making money on the track. And the odds are even worse than 50/50 there.
  • #287
  • Sep 21, 2008 11:31pm Sep 21, 2008 11:31pm
Quoting hanover
There will always be those who claim that their method provides such an edge, and that their sample size (e.g. 1, 2, 5, 10, 20 years of profitable trading) is proof of its sustainability. Then there will be those who say that no matter how large a sample size is, it is not large enough.

David
Hi David, your posts are always well thought out and logical, and are therefore a rare and welcome commodity among the chest thumping and bickering that normally goes on. I completely agree with you, but there is something you did not mention, and that is the relationship between "luck" and the sample size (number of trades). In order to eliminate luck completely, one would have to have an infinite sample size, which is obviously not possible, but for all practical intents and purposes, a large sample size is a good enough approximation. What should really be discussed here is at what point does a sample become large enough to safely ignore the effects of random statistical fluctuation (luck). At that point, wherever it may be, you can say that luck plays no part in your trading, or at least that it plays a negligible part, and until you can say that with confidence, you shouldn't be trading at all.
  • #288
  • Edited 2:31am Sep 22, 2008 2:15am | Edited 2:31am
Well against all odds this suddenly turned into quite an interesting discussion, some great posts from the likes of hanover, fx-petra, topherhk88, fierceman and others (apologies if I left anyone out!)

From something fx-petra said I think I've just realized why some people sincerely believe that profitable trading is nothing more than luck....."If there is a better way to attack this market, I have not found it. If someone else has, then they have not shared it with the rest of us.", and then of course the inevitable challenge "anyone who can prove diffently to kindly step forward and reveal such a method, but of course no one has. Why not? Because no one can!"

That's it isn't it, some people have simply never found a 'better way' and have come to the conclusion that success or failure in this business rests on luck, and therefore they believe trading is simply gambling, a logical assumption I suppose given the information and personal experiences they have.

I doubt any genuinely consistently profitable trader is going to fall for the 'prove it' challenge and post a detailed description of how they trade, the most you're likely to get is a trading blotter or two but nice try! Traders are extremely protective of their 'edge', perhaps (justifiably?) superstitious that if shared with the masses then it might somehow lose it's effectiveness, besides which they have probably spent years developing a profitable strategy and are understandably reluctant to give it away to the first skeptic who comes along demanding proof of their trading prowess! A reply to skeptics might be something like "fine, believe whatever you like, your loss not mine!"

Good (or lucky!) trading all!


-
  • #289
  • Sep 22, 2008 2:48am Sep 22, 2008 2:48am
Quoting fierceman
Hi David, your posts are always well thought out and logical, and are therefore a rare and welcome commodity among the chest thumping and bickering that normally goes on. I completely agree with you, but there is something you did not mention, and that is the relationship between "luck" and the sample size (number of trades). In order to eliminate luck completely, one would have to have an infinite sample size, which is obviously not possible, but for all practical intents and purposes, a large sample size is a good enough approximation. What should really be discussed here is at what point does a sample become large enough to safely ignore the effects of random statistical fluctuation (luck). At that point, wherever it may be, you can say that luck plays no part in your trading, or at least that it plays a negligible part, and until you can say that with confidence, you shouldn't be trading at all.
Thanks, Fierceman. I agree with your thoughts about statistical confidence. All I was trying to say was that those who believe that long-term profitability is luck must, when confronted with a trader who's been profitable for several years, assert that it is the result of random statistical fluctuation, and that their sample size was therefore too small. It is their only possible defense.

Anyway, I am not taking one side or the other; I have no conclusive proof either way.

Quoting FX-Petra
Hanover,

I have enjoyed your posts. I can say for certain that there is only one long term market indicator---and that is the fundamentals of the underlying country.
........
If there is a better way to attack this market, I have not found it. If someone else has, then they have not shared it with the rest of us.
FX-Petra, thanks, and I believe I understand where you're coming from.

There are traders here with 20+ years experience who claim to be profitable, using primarily TA. No offense to anybody, but either you are one step ahead of them, or they have (as you suggest) found something that the rest of us haven't. I may be gullible, but I will give four examples of traders who I believe have been very profitable for many years, and are freely sharing their ideas: James16, Jacko, BillyRayValentine, and TheRealThing (see his web page and blog). I have no doubt that there are others who have also posted on this forum.

So I have two choices:
-- either I quit now, in the belief that their achievements are the result of luck (which must eventually run out);
-- or I persevere with the learning curve, hoping that one day I might have the expertise needed to emulate them.
I walked away from forex about 12 months ago, but, after a couple of months' rest, I returned again, figuring that I have nothing to lose.

David
  • #290
  • Edited 3:20am Sep 22, 2008 3:06am | Edited 3:20am
Quoting tdion
If the people here mean nothing to you, why even bother posting?

We'll do just fine without you.

Tdion,

I have read your posts that you have just graduated from college and that $500 was a big deal at this point of your life.
http://www.forexfactory.com/showpost...postcount=5319

I also saw a post this week (which I can't find anymore) where you said that you were only an armchair speculator of forex trading (The bottom line is that trading is a spectator sport to me)and that you thought that forex trading was pure gambling.
So you don't even trade, because you think it is gambling?

I am uncertain of why you are here. Are you just another young turk who wants to argue with people while you are waiting to get a job? You have early 2500 posts to your name. And all of them are saying the same thing. That forex trading is gambling. Why do you keep saying the same thing over and over? Why don't you find another job in life.
I am not arguing. I want to know why you spend so much of your time here.

Can't get a job??
  • #291
  • Sep 22, 2008 3:14am Sep 22, 2008 3:14am
Yet another newbie. Join date, June 2008.... 5 posts.

Okay, I have a MASTERS DEGREE IN ENGINEERING and a high paying job.

I write EAs that trade for me, hence the "spectator sport" comment (I do not believe in discretionary trading.)

Now let's see.... you claim all I do is argue. I guess these are argument threads, huh?

http://www.forexfactory.com/showthread.php?t=103920
http://www.forexfactory.com/showthread.php?t=95895
http://www.forexfactory.com/showthread.php?t=95892

There are plenty more than that. So why don't you go F yourself.

Quoting tuguntrumpet
Tdion,

I have read your posts that you have just graduated from college and that $500 was a big deal at this point of your life.
http://www.forexfactory.com/showpost...postcount=5319

I also saw a post this week (which I can't find anymore) where you said that you were only an armchair speculator of forex trading (The bottom line is that trading is a spectator sport to me)and that you thought that forex trading was pure gambling.
So you don't even trade, because you think it is gambling?

I am uncertain of why you are here. Are you just another young turk who wants to argue with people while you are waiting to get a job? You have early 2500 posts to your name. And all of them are saying the same thing. That forex trading is gambling. Why do you keep saying the same thing over and over? Why don't you find another job in life.
I am not arguing. I want to know why you spend so much of your time here.

Can't get a job??
  • #292
  • Sep 22, 2008 3:24am Sep 22, 2008 3:24am
[quote=tdion;2234154]Yet another newbie. Join date, June 2008.... 5 posts.

Okay, I have a MASTERS DEGREE IN ENGINEERING and a high paying job.

quote]

Tdion,

Your words: the fact of the matter is that just graduated from college, and $500 is a big deal at this point in my life.
http://www.forexfactory.com/showpost...postcount=5319

I think that high paying jobs for engineers don't pay very well.

  • #293
  • Edited 3:56am Sep 22, 2008 3:41am | Edited 3:56am
None of those who have criticized tdion for not supporting a civil conversation, have even considered building on the very meaty bait he through out to us. With that said, I have put down some thoughts which resulted from the fairly substantial blow he let out against existing forex system and, if carried further, perhaps even the forex market itself. However, continuing this conversation requires us to look beyond our 4H charts or even our back and foward tests (which most would consider part of a healthly long term outlook) and think independently.

No proposition that could potentially exposed prior held beliefs makes us feel comfortable--it is unsettling. However that is the aim. Let's not shy away, let's delve in. And let's certainly not shoot the messenger. We can always return to our familiar cacoons afterward.

Why the forex?

The entire point of participating in the forex is the aim for consistency. It is a market that serves traders who want to find a winning strategy and stick to it (consistently). I'd say that most have fled the equitites market for exactly this reason.

1) Forex is much more scalable than stocks. This is really what people mean when they say that forex is the most liquid market. If you do have a profitable strategy and apply it consistently, then the idea is that you will sooner or later be able to scale out into 10-100 mill orders with no problem. This is indeed not possible in the equities market.

2) Currency pairs don't go out of business like stocks do. And if a currency is phased out, you'd know ahead of time. This is another benefit that is lauded over and over again. And again, if you have a consistently profitable strategy you would theoretically be good to go for the next decades and wouldn't have to worry about the underlying issue disappearing and going through the pains of crafting up a new strategy.
It is indeed hard to argue with the above points. And it is exactly these that are found on many bucketshop sites on the net, extolling the forex as the solution to the problems found in other markets.

HOWEVER, what tdion put into question is if it is really ever possible to know how long a stategy or "edge" will last and no foward or backward testing will ever tell you this. Technical system can be adversely affected by slight shifts in volume and market structure over time. Worse even, you can't be forewarned about these potential shifts. This is an issue that is particularly current when you consider the increase in volatility and changes in liquidity providers. So even with scalibility 1) and longevity 2) in the underlying issue, these mean nothing until tdion's conundrum is given some serious thought. We are, after all, in it for the long haul, right?

What's next?

One way to overcome this problem might be to trade forex fundamentally not technically. However this is very hard, if not impossible. We are talking about the relative valuation of currencies which have full, global economic exposure, not companies in a specific sector (where fundamental analysis is indeed manageable if done correctly). This is not a market where an instrument's long term movements are determined soley by one all important factor: earnings.

It has been very easy to guess the long term direction of most currencies over the long run since 2000-2001. Why? Carry trader have undoubtedly made the forex much trendier (no pun intended) than it once was. The steady hunger for those higher yields has undoubtedly established a bias toward currencies such as the AUD and NZD and away from the YEN and CHF. However, it is becoming clearer that thisparty is starting to end as once strong trends with few retracements are turning into an unwinding, range-bound mess of unpredictablility.

BUT, you say! Isn't the flight to those lower yielding currency enough supporting evidence for a new, long term trend in the other direction? The answer is: Perhaps, but since we are talking about negative carries, traders will not want to hold them for years and will cover their short position or jump on the chance to pick up the higher yielding direction at every possible moment (this can be clearly seen on the daily NZD/JPY). All this leads to jagged trends that will be marred by indecision and choppiness as traders split themselves between the main trend and the positive carry. Sorry, but the future outlook looks a bit grim for consistent, long term currency trends which up to this point have been the cornerstone of many existing systems (including jacko's).

fxterrapin
  • #294
  • Sep 22, 2008 4:55am Sep 22, 2008 4:55am
Quoting fxterrapin
None of those who have criticized tdion for not supporting a civil conversation, have even considered building on the very meaty bait he through out to us. With that said, I have put down some thoughts which resulted from the fairly substantial blow he let out against existing forex system
Sounds like a dodgy curry or something, 'let out a substantial blow after some very meaty bait'!

Ok, I must have missed that bit, what exactly was this meaty bait and substantial blow? What, that trading results are luck? I thought we'd already solved that one, they're luck for those who have simply never found a 'better way'.

This reminds me of ugly people who say beauty is only skin deep, or poor people who say money isn't everything.....
  • #295
  • Sep 22, 2008 5:01am Sep 22, 2008 5:01am
Three statisticians go hunting. When they see a rabbit, the first one shoots, missing it on the left. The second one shoots and misses it on the right.
The third one shouts: "We've hit it!"
  • #296
  • Sep 22, 2008 5:10am Sep 22, 2008 5:10am
Quoting lostinspace
I thought we'd already solved that one, they're luck for those who have simply never found a 'better way'.
Nope, you didn't get it. We'll talk again in 10 years.
  • #297
  • Sep 22, 2008 5:21am Sep 22, 2008 5:21am
Quoting tuguntrumpet
Tdion,

I have read your posts that you have just graduated from college and that $500 was a big deal at this point of your life.
http://www.forexfactory.com/showpost...postcount=5319

I also saw a post this week (which I can't find anymore) where you said that you were only an armchair speculator of forex trading (The bottom line is that trading is a spectator sport to me)and that you thought that forex trading was pure gambling.
So you don't even trade, because you think it is gambling?

I am uncertain of why you are here. Are you just another young turk who wants to argue with people while you are waiting to get a job? You have early 2500 posts to your name. And all of them are saying the same thing. That forex trading is gambling. Why do you keep saying the same thing over and over? Why don't you find another job in life.
I am not arguing. I want to know why you spend so much of your time here.

Can't get a job??
Tdion,

Lemme get this straight:

a. You have just graduated from college

b. $500 is a big deal at this point of your life.

c. you were only an armchair speculator of forex trading (The bottom line is that trading is a spectator sport to me)

d. you think that forex trading was pure gambling.

e. You only trade a demo account .
By the way, I'm up 4000% this year on my demo account
http://www.forexfactory.com/showpost...postcount=5345

f. You spend all day here fighting with people and destroying a (previously) great Forum. So much for having a well paid Engineering job...work must be slow at the moment for you to be able to spend all day here.


Please stop destroying a great forum.
  • #298
  • Sep 22, 2008 5:33am Sep 22, 2008 5:33am
Quoting fxterrapin
Nope, you didn't get it. We'll talk again in 10 years.
Get 'it', get what exactly? I'm not trying to be argumentative here, I'm trying to understand how other traders think.

This is a human nature thing, do you really think a trader who analyses the market and has the ability to predict a price move correctly a percentage of the time, and then manage his trade and risk, questions his success? No, he credits himself with the skills it took him years to develop. If trading was just down to luck then why was he (and thousand like him) so unlucky to start with, and why did his luck change after years of hard work studying the market? Coincidence? Oh come on, you don't seriously believe that.

Some traders who are unable to trade profitably excuse their inability by saying that their profitable peers are just lucky, because to admit it takes skill to trade profitably would be admitting they have not managed to master that skill despite their best endeavours and they view that as some kind of personal failing.

Human nature....
  • #299
  • Sep 22, 2008 5:56am Sep 22, 2008 5:56am
@lostinspace:

He's sayin how do you know your "better way" is better if you admit the inherent flaws in backtesting and indeed forward testing. Yes, statistical assumptions have a certain validity but the market sructure which your system is founded on might change unbeknown to you.
  • #300
  • Sep 22, 2008 6:00am Sep 22, 2008 6:00am
I challenge anybody who's posting here to actually prove anything.

-- Those who aren't trading profitably (myself included) can't prove that those who have traded profitably for several years won't continue to do so. The "if I haven't been successful myself, then it's clearly impossible for anybody else to succeed also, therefore trading must be luck" inference just doesn't wash.

-- Those who are trading profitably, and believe that it's due to their superior knowledge and skill, can't really prove that their edge will last indefinitely.

If you can't prove anything, I'm afraid you're just speculating. And if everybody here is speculating, the argument can never be resolved.

Time for me to move on.

David
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