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Mathematical reasons why MOST DayTraders & scalpers fail?

  • #121
  • Mar 20, 2007 8:57pm Mar 20, 2007 8:57pm
Quoting Leugimp
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The simple answer is you do not know - the leverage available here is 100:1 - but to know the leverage used you need more information.
Then you are talking about "true" or "effective" leverage, that's not the same thing.

If Bill Gates opens a forex position with $50 and he now controls $10,000 worth of currency he is betting with a 200 to 1 leverage, no matter how much money he has in his FX account, in his bank account or under his mattress.
  • #122
  • Mar 20, 2007 10:16pm Mar 20, 2007 10:16pm
Quoting FXTerminator
Then you are talking about "true" or "effective" leverage, that's not the same thing.

If Bill Gates opens a forex position with $50 and he now controls $10,000 worth of currency he is betting with a 200 to 1 leverage, no matter how much money he has in his FX account, in his bank account or under his mattress.
Listen and listen good - you can rationalize all that you want, I guess acknowledging that you are wrong takes too much out of your system - that alone will kill you in trading. But just to answer your bill gates question, and this will be my last response to you, if bill gates has an fx account with me and his account balance is $1000 and he is trading a 10K lot he is using 10 to 1 leverage in this trade. period. forget true and effective leverage - it is all mumbo jumbo bullshit. If Bill gates opens a $100 account and trades 10K lots he is using 100 to 1 leverage in his trading and eventually he will blow this $100 account. Sure, he can fund it again with another $100 and start over and if he is using 100 to 1 leverage, he will eventually blow his account again. Ultimately, if bill gates lived forever and kept funding his account $100 at a time and trading 100 to 1 leverage, he would eventually be flat broke. Not an opinion, but a fact. I dont care that you are wrong, just trying to help, but obviously you are just too insecure, imature, or really(and I hate to say this) just plain stupid. I'm starting to believe the latter.
Man who scratches ass should not bite fingernails
  • #123
  • Mar 20, 2007 10:59pm Mar 20, 2007 10:59pm
A very seasoned trader told me this.
1) Beware of the academic market fundamentalist
2) Beware of the academic market technician

I believe the main reason is because these people gives good idea/theories about the market, but wrong idea about making money in the market. Follow these people and you will be stucked in the hole of unprofitability without actually knowing what is the true reason because what academician says always make sense in a way or another. It's impossible to fix a mistake when you can't see the mistake, right ?
  • #124
  • Mar 21, 2007 12:50am Mar 21, 2007 12:50am
Quoting Leugimp
. If Bill gates opens a $100 account and trades 10K lots he is using 100 to 1 leverage in his trading and eventually he will blow this $100 account. Sure, he can fund it again with another $100 and start over and if he is using 100 to 1 leverage, he will eventually blow his account again. Ultimately, if bill gates lived forever and kept funding his account $100 at a time and trading 100 to 1 leverage, he would eventually be flat broke. Not an opinion, but a fact.
A FACT you said!?!?

So according to you, depositing (over the year) 500 times $100 into your FX account at 100/1 leverage account (total $50,000) and is NOT the same thing as depositing $50,000 all at once now ???

Even more distributing, why do you automatically assume that I will ALWAYS lose in the long run if I keep betting $100 500 times?

Let's say my goal is to make $100 or lose $100 each time I open my position (we will forget about the spread for now). So I buy Eur/Usd at 100:1 leverage and the market moves 100 pips again me after a while so I lose. Then I deposit another $100 with the same goal. Remember I have $50,000 total. Now you want us to believe for one second that this way of betting is a losing proposition simply because the leverage is "too high"?

Let's do the math: on average I will get 250 wins and 250 losses, that's $25,000 profit - $25000 losses = 0. (break even)

So how can I possibly blow up my account (spread not included) and go "flat broke" like you said? How?

How is depositing $50,000 all at once and opening "only" $100 position each time with a 100:1 leverage any BETTER and SAFER (according to your "facts") than depositing $100 each time 500 times over with the same exact leverage??

See again this" high-leverage-is-bad" myth in action?

High leverage is not bad in itself, but how much money you allocate to each trade percentage wise in relation to your total bankroll IS important.

We are waiting for your counter-demonstration, if you have one.

PS: one last friendly advice: avoid name calling and insults, it will only make you lose your credibility.
  • #125
  • Mar 21, 2007 4:16am Mar 21, 2007 4:16am
Hey Fanat,

Your numbers are incredible.... I never really looked at it that way! I thought about it and I realize that they are plausible. I am a day trader who has recently converted from futures to the forex. Consequently I have not yet opened a live account but have been paper trading for several months now, learning the differences between futures and the forex.

While trading the futures market I did enjoy a certain level of success but found the forex market a lot more alluring given the 24 hour schedule and the seamless format. So far my paper trading has been quite successful. In my most modest month I gained 36% on my account. My best month saw 120% gains.

But in spite of my apparent success rate thus far I must consider your point of view in the future and somehow assimilate those numbers.....

Thanks for sharing that gem of a thought!

smileslee
  • #126
  • Mar 21, 2007 9:15am Mar 21, 2007 9:15am
Quoting FXTerminator
A FACT you said!?!?

So according to you, depositing (over the year) 500 times $100 into your FX account at 100/1 leverage account (total $50,000) and is NOT the same thing as depositing $50,000 all at once now ???

Even more distributing, why do you automatically assume that I will ALWAYS lose in the long run if I keep betting $100 500 times?

Let's say my goal is to make $100 or lose $100 each time I open my position (we will forget about the spread for now). So I buy Eur/Usd at 100:1 leverage and the market moves 100 pips again me after a while so I lose. Then I deposit another $100 with the same goal. Remember I have $50,000 total. Now you want us to believe for one second that this way of betting is a losing proposition simply because the leverage is "too high"?

Let's do the math: on average I will get 250 wins and 250 losses, that's $25,000 profit - $25000 losses = 0. (break even)

So how can I possibly blow up my account (spread not included) and go "flat broke" like you said? How?

How is depositing $50,000 all at once and opening "only" $100 position each time with a 100:1 leverage any BETTER and SAFER (according to your "facts") than depositing $100 each time 500 times over with the same exact leverage??

See again this" high-leverage-is-bad" myth in action?

High leverage is not bad in itself, but how much money you allocate to each trade percentage wise in relation to your total bankroll IS important.

We are waiting for your counter-demonstration, if you have one.

PS: one last friendly advice: avoid name calling and insults, it will only make you lose your credibility.
this is how it gets you

say you have 1000$, a system with 50% winrate and 1.00 payrate. no spread. this is coin flip

first trade you bet all your money => 1000$ your win! now you have 2000$
2nd trade you bet all your money => 2000$ you win! now you have 4000$
3rd trade your bet all your money => 4000$ you win! now you have 8000$

you can see where this is going im sure.
if you bet all your money every trade you can only fail once.
if you bet 10% of your account each time you can actually lose about 45 times before your out of money.

more trades with less risk allows more chances
less trades with high risk give more money, if you win every time
  • #127
  • Mar 21, 2007 1:41pm Mar 21, 2007 1:41pm
Quoting witchazel
this is how it gets you

say you have 1000$, a system with 50% winrate and 1.00 payrate. no spread. this is coin flip

first trade you bet all your money => 1000$ your win! now you have 2000$
2nd trade you bet all your money => 2000$ you win! now you have 4000$
3rd trade your bet all your money => 4000$ you win! now you have 8000$

you can see where this is going im sure.
if you bet all your money every trade you can only fail once.
if you bet 10% of your account each time you can actually lose about 45 times before your out of money.

more trades with less risk allows more chances
less trades with high risk give more money, if you win every time
Witchazel, who says anything about doubling the size of your trade each time you win??
  • #128
  • Mar 21, 2007 2:39pm Mar 21, 2007 2:39pm
Quoting FXTerminator
Witchazel, who says anything about doubling the size of your trade each time you win??

So what you are saying is use all the leverage early, hope to be lucky and scale down in leverage as you make more money. Interesting.
Man who scratches ass should not bite fingernails
  • #129
  • Mar 21, 2007 4:25pm Mar 21, 2007 4:25pm
Quoting Leugimp
So what you are saying is use all the leverage early, hope to be lucky and scale down in leverage as you make more money. Interesting.
Please copy and paste the post where I say that.
  • #130
  • Mar 21, 2007 4:47pm Mar 21, 2007 4:47pm
FXT - the important question here is if 10 people are sitting in a room and 1 hears a noise and the others don't, was there really a sound?


Ok, yes none of them are deaf and all have perfect hearing, the acoustics of the room are set up so that.....blah..blah....blah.


Point being, you can believe whatever you want to believe just as a schitzo gets the messages from the trees. Just realize that if you are going to communicate with the rest of the world, you might as well do that with the worlds generally accepted language. I can say go F yourself and then claim that in my town that is a friendly comment, as it really is in my town....However I must realize that my own personal definitions for words aren't necessarily what the rest of the modern world defines them as. That is the case here. In FXT world you are correct- everywhere else you're just an idiot(Idiot in my town means smart guy). So just leave it alone - if you want to call a dog a cat thats all good and fine just dont be surprised when people stare akwardly at you when calling fido a pussy.
Man who scratches ass should not bite fingernails
  • #131
  • Mar 21, 2007 5:02pm Mar 21, 2007 5:02pm
Quoting Leugimp
FXT - the important question here is if 10 people are sitting in a room and 1 hears a noise and the others don't, was there really a sound?


Ok, yes none of them are deaf and all have perfect hearing, the acoustics of the room are set up so that.....blah..blah....blah.


Point being, you can believe whatever you want to believe just as a schitzo gets the messages from the trees. Just realize that if you are going to communicate with the rest of the world, you might as well do that with the worlds generally accepted language. I can say go F yourself and then claim that in my town that is a friendly comment, as it really is in my town....However I must realize that my own personal definitions for words aren't necessarily what the rest of the modern world defines them as. That is the case here. In FXT world you are correct- everywhere else you're just an idiot(Idiot in my town means smart guy). So just leave it alone - if you want to call a dog a cat thats all good and fine just dont be surprised when people stare akwardly at you when calling fido a pussy.
Plain vulgarity: 100%
Argumentation: ZERO.

No comments.
  • #132
  • Mar 21, 2007 5:32pm Mar 21, 2007 5:32pm
Quoting FXTerminator
Plain vulgarity: 100%
Argumentation: ZERO.

No comments.
Amen
Man who scratches ass should not bite fingernails
  • #133
  • Mar 21, 2007 5:53pm Mar 21, 2007 5:53pm
lol...I never saw the point to arguing over theoretical situations that don't apply to reality. FXT seems to think everything in the forex world is black and white and textbook perfect and leugimp was foolish enough to try to debate him. Instead of some gained knowledge to both parties, leugimp probably got frustrated and risked dropping out of "the trading Zone" and FTX....is..idk. lol

I really don't see the point to arguing over theoretical situations that don't apply to reality. I'd ask a rhetorical question here but I'm afraid someone would answer it and in the process start another useless argument.
  • #134
  • Mar 21, 2007 6:10pm Mar 21, 2007 6:10pm
Thanks for the good read you two. Leugimp must come from a similar town to me in Aus, cos we all call each other like that ... lol
If we aren't supposed to eat animals..... why are they made out of meat??
  • #135
  • Mar 21, 2007 6:39pm Mar 21, 2007 6:39pm
Quoting AndrewM
Thanks for the good read you two. Leugimp must come from a similar town to me in Aus, cos we all call each other like that ... lol

I'm Portuguese - to call my friend an SOB is probably the best compliment I can give him
Man who scratches ass should not bite fingernails
  • #136
  • Mar 21, 2007 8:02pm Mar 21, 2007 8:02pm
Quoting FXTerminator
Witchazel, who says anything about doubling the size of your trade each time you win??

eehehehehe this is so funny. im gonna die

read the post where it says "lets pretend we have a 50% winrate and 1.00 payrate"
  • #137
  • Mar 21, 2007 8:50pm Mar 21, 2007 8:50pm
If I've got $100 and buy a 10K lot (100:1 leverage). How far does that market have to move against me before I get margin called?
  • #138
  • Mar 22, 2007 12:13am Mar 22, 2007 12:13am
Quoting witchazel
eehehehehe this is so funny. im gonna die

read the post where it says "lets pretend we have a 50% winrate and 1.00 payrate"
Yes so what, what about it witchazel? That's not my post.
  • #139
  • Mar 31, 2007 10:33pm Mar 31, 2007 10:33pm
It's amazing how we all are victims of situations that we don't seem to
understand. Why?....because we don't understand that Price is a function
of time: P=f(t)....better yet: y=mx+b and the chart is a visual behavior of
that function. The market is extremely complicated...more so than one can
imagine. There was only one guy who came the closest to knowing the true
market and his name was Charles Drummond. Gann came close to Drummond
but Gann was mistaken about "range". Range is nothing but the tangent and
secant lines. But an answer to the above..... You are a hunter confronted
with a charging rhino. You know how to shoot straight, so you pull the trigger
and hit the rhino right in the middle of his forehead. But he still keeps coming.
You pump more shots into his forehead...but he is still coming. Now WHO IS
IN TROUBLE? The situation is a guarantee that you'll drop a load in your
pants. Why try to answer any question of hunting with a pea shooter? The
margin is the "pea shooter". Would you bet on a horse at the race track
that starts from a kneeling postion? Or even bet on a turkey that has to
lean against the fence to gobble. We're all like a bunch of chickens with
false teeth trying to do our "soft shoe dance act"....and hope we don't
get the GONG before we finish. I'm an octogenarian and made mine in
commodities. What worked for me then...probably wouldn't work today.
Remember...I started trading when the market was using the clapper board.
We made our own charts...and if you weren't there watching and listen-
ing to the sound of the clapper, you were getting a quote during the day
from your broker over the phone. The other day...I dug out some of my
charts during 1970 "Cattle". I made money. How? To tell you the truth....
I don't know how. I looked at my notes... where I got in and out...and
I haven't the slightest idea why I did what I did. Except I was a Point
and Line Methodology trader...a creation of Charles Drummond. The
"Point and Line" is a very complicated method. It comes closest to
Cartesian Quadrant system...along with the works of Bernard Bolzano and
Karl Weierstrass, but fell short of it's real potential. Because Drummond
couldn't or didn't understand that point and line can not have holes in it.
Trading stocks or commodites have holes in it. Why?....Time. The market
is only open around 5 hours...both commodities and stocks. That's why
you have gaps if you trade the commodities or stocks. You don't get
those kind of incidents in the Forex...because it's a 24 hour market....
but you do at it's very week end. So Joe Ross is wrong about the forex
even though it has some pimples and tight jockey shorts....a few market
transvestites arguing with some hyenas....some fire-crackers popping off
in the back ground. But a lot of you guys are right in your thinking...and
you'll know this when you get to my age. If you do get to my age...and
they pronouce you dead....MAKE SURE YOU GET A SECOND OPINION.
  • #140
  • Apr 7, 2007 9:22am Apr 7, 2007 9:22am
Quoting Pip Stalker
I like the way you think.
You might be interested in knowing this. Yesterday I got locked out of my Oanda account with no explanation. I was not near any margin requirement or any other reason for this action. I have demanded an explanation of why they locked me out, and they have not responded. The only reason I can guess is that they did not appreciate my scalping.
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