Perhaps the biggest piece of marketing tripe I've ever seen

I'm posting this because I've just seen the biggest piece of marketing tripe (oops, hype), and I don't want to see gullible folk waste their money on potentially worthless EAs that are being sold. I've been down that path, and I want to save people from falling into the same trap.

I'm not allowed to cite names and URLs on FF, so I'll just say that I've received three separate e-mails within the last 24 hours from vendors who are talking about a trading competition that attracted 569 systems, and the top 6 are being sold (the best performed one made something like 2,300% in 30 days) to a limited number of subscribers.

Rather than re-typing my thoughts here, I'll simply post my reply to the e-mails I received:

XXX, I'm afraid you've just lost all credibility with me.

Making 2,300% in 30 days can only be the result of over-leveraging. Vendors 'tune' their EAs to take massive risks, in order to give them a chance of winning the competition prizemoney, while the publicity gives them a great spingboard from which to sell their EA. If their EA fails, then they rename and repackage it for the following year's competition, hoping for better luck.

Trading competitions are a lottery. Any system can 'get lucky' in 30 days, and luck is not indefinitely sustainable. Performance over 30 days tells nothing of long term profitability.

Out of 569 systems (and especially given the over-leveraging) one or two systems are bound to perform exceptionally. That's nothing more than the inevitable product of a probability distribution.

In marked contrast, the genuinely expert traders focus on managing risk, and seek small but steady gains, using compounding to gradually grow their accounts. Do you think that the world's best traders make 2,000% every month? If they did, they'd own the whole world in less than a year. Yet I don't see too many forex traders on the Forbes list. LOL.

Up until now I thought you knew what you were talking about. But if the results of a trading competition excite you, then I'm afraid your understanding is very limited. It now seems to me that you're a vendor selling worthless EAs, and not a real trader. Anybody who buys a system on the basis of 30 days' performance is extremely gullible.

Let me clarify: I'm not in the position to state categorically that all of these systems are long term unprofitable. But I can say with some assurance that trading competitions give completely unrealistic performance, and that a 30 day track record proves nothing.

And ask yourselves this question: if you had a system capable of generating 2,000% per month, would you sell it? Then why would anybody else?

Caveat emptor!!

make them put 10,000 into a live account and trade their EA's for the competition and lets see if they get 569 entrants. Competitions that trade demo mean nothing to me. They are nothing more than the first step of a marketing plan for selling their products.

hear here!

Hanover:

It has been a long time since you started your journey. I am wondering if you ever concocted a trading system that you trade real money with?

Or - are you still searching?

Or - you may have purchased a system to trade, or trade in a fund.


For all you statistical knowledge (monopoly champtionships and what-not) are you close to conceding forex to be a wild goose chase, or are you confident that there is a definitive path for you to go down?

-Tom

Tom, I've been trading demo accounts for the last few months, and more recently microlots. To be honest, I haven't been putting in as much screen time as I'd like, due to other commitments, and an unwillingness (OK, laziness) to stay awake all night to monitor trades through the European and American sessions from my location in NZ. Recently I've won more than I've lost, but the BIG question is (and of course, always has been) do I have a lasting edge? And how/when can I ever know that I have one?

There are folk here who claim to have been successful with forex trading for many years, and I don't believe that all of them are BS-ing. Hence I don't think that forex is a wild goose chase.

I've given up on vended EAs. I admit I did buy a couple recently, but only beacuse they came with Clickbank's money back guarantee, which I ended up exercising in both cases. I've stopped searching for any magic cocktail of indicators, and am instead trying to hone my knowledge around price action, order flows, and what might be driving them. I've started afresh with some highly regarded PA-based approaches (James16, Jacko, BillyRayValentine, DIBS, Skunny, and others) and then putting in the screen time to slowly assemble the puzzle pieces in a way that fits comfortably with my own observations.

Unfortunately my primary approach (my own take on James16, with some other ideas thrown in) is too pattern-oriented, that I can't simply write an EA overnight, to backtest it. And it's discretionary in that I vary the entry and exit points on the setup candle, depending on my assessment of the trend strength, and possibly S/R. Moreover, the method has kind of 'evolved', as my knowledge and confidence have improved, and will probably continue to do so.

I wonder whether I'll ever be able to conclusively answer the question as to what extent forex trading is luck, but I'll happily ride my luck for however long that it lasts. All while staying well within my comfort zone, stake-wise, playing only with money that I can easily afford to lose.

hannover

there is a championship with real money. i can't post the link- i don't want to be banned

TD, to further answer your question, I don't believe that markets are a random walk. Patterns definitely occur - for example, the white line on yesterday's GU chart (below) shows price bouncing from the same support area five times, which I can't believe is mere coincidence. And if the market is not random, then there are (at least theoretically) exploitable patterns.

Hence I don't believe that 'luck' is really the underlying issue - explained here.

Given the prior support, the pinbar at "X" offers a very high probability entry at minimal risk, and hindsight reveals that it was good for anything up to 260 pips, depending on one's exit strategy. The indicator that draws the blue arrows at pinbars has located 10 that met its criteria. No less than 9 of these offered some kind of reversal that could potentially have been exploited.

With entries I'm in total control, I can be as selective as I wish.

For me, these are compelling reasons to continue persevering with forex. But not by using an EA that won a trading competition.

As far as I "know" the "probable" biggest edge is the divergence...
That is the one and only indication that I belive in.
I would like to here your thoughts on this subject hanover or tdion.

Respect

Divergence is caused deceleration in price. See my post here for more info on how MACD divergence is arrived at. The whole thread is a worthwhile read, IMO.

Deceleration will either result in a reversal, which will generally result in a profitable trade; or prove to be merely a lull in a longer move, which will generally result in your being stopped out for a loss. I don't have stats on how frequently each occurs, presumably it depends on a host of other factors.

Philmcgrew is very experienced at trading divergences, perhaps you could try to find some of his posts on the subject.

A real "edge" is something that will always be there under normal market conditions. Price will break out and price will reverse.

How often you trade and how many pips you set for TP and SL is up to you.

The problem with most traders is their reliance on (too many) indicators.

yes todd

catch on 1 truth break out and 1 year's investment goal is done
trouble is many noise esp on low time frames..it's hard to tell a break out is to happen, or if it's a penetrate.

so it is still hard work with some luck, I saw people keep trying s/l at b/e and see if a break out can happen, keep trying and once every a month they can catch a breakout and win good points. it's still really hard.

believe it was two years ago (didnt check last years winner) that a simple trend following and HEAVY buying EA won the championship with its UCAD trend run.

obviously the designer first studied the market to determine strong trending currencies, using everything possible (and he was VERY correct !) and then set the EA to buy heavily on each dip and to take profit along the way to keep increasing the equity to support the margin.

NOTHING wrong with this very good system BUT only goes to prove the original post on this thread --- these EA's are created to win in a highly specialized environment, like NASCAR or INDY cars and NOT for the normal retail trader to suddenly become a multimillionaire.

theyre interesting, in that there are certainly different approaches exhibited by each, but theyre VERY specialized race horses and NOT to be confused with any trading we do normally !

enjoy and trade well

mp