Myth Busters the Forex Edition | Page 9 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

1% Money Management is a myth, fib is a myth and so on.. 45 replies

Can someone become Retail Forex Millionaire - myth/hype/dream 23 replies

Myth busted: FOREX doesn't have directional bias 19 replies

The Development of MetaTrader 4 Mobile Smartphone Edition (SE) Has Been Resumed 2 replies

Attachments: Myth Busters the Forex Edition
Exit Attachments

Myth Busters the Forex Edition

  • #161
  • Oct 12, 2009 12:52am Oct 12, 2009 12:52am
Quoting eclayf
Hi forexmick,

Never said that academic education was wasted. BUT, I have seen more than a few extremely educated idiots in life.

The ONLY point I was making is that the ONLY limit is what one believes is the limit in THEIR life.

As for "logic" it's way over rated. Einstein was not using "logic" when he daydreamed about riding a beam of light and started working on his "Theory of Relativity." He was in FACT using the facility of imagination which specifically removes the need for "logic" to achieve that.

I mean, really, how "logical"...
Nice one...just a reminder some people no matter how much u argue will not agree with you...

V
  • #162
  • Oct 12, 2009 2:20am Oct 12, 2009 2:20am
Hey V,

I know. The sad part of that is that one of the founding documents of our country says the very thing I am trying to explain.

"We hold these truths to be SELF EVIDENT, That ALL men are created EQUAL....." IF that is true, then there is nothing one man has done, that other men cannot do IF they are willing to believe it and work toward it.

Our history as a country is replete with proofs of this. It's what built our country. "American ingenuity" built most of the world once we got a hold on these concepts.

A "democratic" nation, a republic where people elected the leaders was unheard of before the "Great Experiment" of American Democracy. Yes, a limited form of democracy had begun in London with Parliament, but the "leaders" were still aristocracy, not just "common" people like here.

I guess I'll shut up about this for now. I have made the point, given many, many examples from many "disciplines" of human endeavor.

"There are non so blind as those who WILL NOT see." Not sure who said that, but again, truer words were never spoken.

To those who ache and long for "more" for a success that exceeds anything you can now "imagine" KEEP AT IT! YOU WILL GET THERE and the more you achieve, the more you will be able to imagine and the higher your goals will go.

If you can't gain 100 pips a day consistently now,,, WHO CARES!? KEEP AT IT, you will get there. If you can gain 50 pips a day consistently now,,, WHO CARES!? KEEP AT IT, you will get there. If you can gain 20 pips a day consistently now,,, WHO CARES!? KEEP AT IT, you will get there.

Keep at it and you WILL become consistent. THEN your consistency will allow you to grow the profitability of your trades. THEN the size of your account, then the size of your bank accounts and so on.

DO NOT EVER, EVER, EVER quit!

God bless
Clay
  • #163
  • Oct 12, 2009 2:31am Oct 12, 2009 2:31am
Quoting eclayf
Keep at it and you WILL become consistent. THEN your consistency will allow you to grow the profitability of your trades. THEN the size of your account, then the size of your bank accounts and so on.

DO NOT EVER, EVER, EVER quit!

God bless
Clay
Thanks for the reminders!

  • #164
  • Oct 12, 2009 8:39am Oct 12, 2009 8:39am
Regarding the donkey, I think there's a balance somewhere here, but one that's largely subjective, given that each individual is different.

First of all, I think it's always possible to improve one's knowledge of how markets operate, and therefore enhance one's trading methodology. The process of learning is a never-ending one, and any limitation in this regard can only be self-imposed.

Secondly, one's trading is always going to be limited by what the market has to offer. Nobody is ever going to be able to extract 300 pips from a 200 pip move.

Thirdly, I don't believe that it's possible to be a successful trader on positive thinking alone. A profitable methodology is an essential prerequisite. But Clay has re-opened my eyes to the fact that it's possible to become locked into a mindset as to what's achievable, and limit my expectations accordingly.

A couple of examples. Some time ago I read this post. This contributor seemed particularly knowledgeable, and I took his words to heart. Hence I came away believing that 15% ROI per annum was all that I could ever realistically expect, unless I had some kind of 'insider info' like Darkstar apparently has. So if I suddenly make 10% in a month, my conclusion could only be that I've had a freakishly good month, and hence I must be overdue for some losses now, to restore the average. It didn't occur to me that I might be underestimating the potential of my own methodology, or that (as a fund manager) he might be operating under constraints that don't apply to a small retail trader.

Forums offer a double edged sword. I'm indebted to FF, because perhaps as much as 80% of my current approach has been the result of processing 'raw' ideas and data that have been freely shared here. However, there's a danger in embracing the posted replies to the repeated newbie questions of "what return is possible?". Everybody's answer can only ever be the performance that they themselves have achieved, or rumors about others that they've read or heard. This may sound naïvely obvious, but I have now come to realize that this has absolutely no bearing on what I will achieve. I will almost certainly outperform some traders, and of course be outperformed by others. But the point is this: my focus should always be improving my own trading, rather than setting comparative or meaningless targets for myself. My personal benchmark can, and therefore should, only ever be me.

That brings me to another example. I've read over and over again that one should never size beyond the 2% rule, because even the world's best traders dare not exceed that. Again, that had me subconsciously thinking that any statistical justification for exceeding this (based on my own track record and testing) must somehow be an aberration, i.e. that I'd just been 'lucky' to date, and of course luck is not sustainable indefinitely. Whether rightly or wrongly, I'd assumed that traders with 20 or 30 years' experience must know more than me, hence I'd believed that I must adjust my expectations to meet theirs. Potentially, another especially limiting mindset, because sizing at 4% (for example) is going to instantly and automatically double my return (even moreso if I'm compounding using fixed frac).

There's recently been an interesting thread on orderflow. I'm awe-struck with the amount of research that some contributors have performed, in reading the likes of Larry Harris and Carol Osler, in order to better understand market microstructure. Now I might be thinking wrongly here, but I suspect that the findings of Skfx and Darkstar go way beyond a knowledge of microstructure; that they've stumbled upon inefficiencies that, even if I stared at charts, or read the relevant material, for a million hours, I would in all probability never find. Negative thinking? Maybe, but I feel that the most productive use of my time is to further my current path, rather than being distracted by a 'needle in a haystack' search. But if I do happen to incidentally stumble upon a needle along the way, then fantastic! I haven't closed my mind to the possibility altogether. Hopefully that represents a realistic balance.

I've rambled on about a lot of personal stuff, and perhaps I've stated what's already very obvious, but I hope that it makes sense to somebody.
  • #165
  • Oct 12, 2009 9:06am Oct 12, 2009 9:06am
Quoting hanover
I've rambled on about a lot of personal stuff, and perhaps I've stated what's already very obvious, but I hope that it makes sense to somebody.
I could listen to you ramble for hours .

If my brain was half as analytical as yours, I'd probably be living in France now, not just dreaming about it.
  • #166
  • Oct 12, 2009 9:52am Oct 12, 2009 9:52am
Quoting hanover
Secondly, one's trading is always going to be limited by what the market has to offer. Nobody is ever going to be able to extract 300 pips from a 200 pip move.
Hanover, good post. There is a "gotcha" in it though.

There are trading styles that can extract more pips than the market gave or gives in a single move up or down. NOW BEFORE I GET SLAMMED, let me explain.

In every move there are retracements of some sort. With decent volatility, it's entirely possible to get more pips than the "full move" gave from top to bottom or vice versa.

A true "trend following" strategy probably won't get that, but a counter trend strategy coupled with a trend strategy might just do it.

Very early on I found a book titled "Forex Surfing" by Robert Borowski. It talks about this very thing. Even Jacko's method, if one uses P/A, the round numbers and his "50% Fib Rule" could possibly catch more than the total move in ONE DIRECTION gave up.

I have included, merely for analysis of "possibilities" today's Gbp/Usd chart as of the time I type this. And by the way, I just got out of a trade on this exact time frame and NO; I did not get all the pips!

I have noted on the chart, a couple of decent entries by my trading style which I could have capitalized on. Keep in mind that I was considering NOT trading today at all because it's a U.S. bank holiday, so this was only an "ok" trade by my rules.

There really are no limits, only those each of us believe, and those limit us, but not others. For example, the original "Turtles" trade only trend trades,, but they add to the trade at EVERY retrace and end up with MORE than the trade itself would have given had one taken a position and simply ridden the trade.

But, again, this style is NOT for everyone and I had a hard time even understanding it when I first began.

Below is the screen shot with the trades "my" strategy would have indicated,,, and the one I actually took. I was not awake for most of the others yet, and as I said, was considering not even trading today.

I have also included a Google Search link here for the e-book "Forex Surfing" by Borowski, which in the book he says is a way of him "paying it forward." It is copyrighted,,, but was free when I found it and there is no mention of cost in the book other than "paying it forward."

If Twee or anyone from FF management would like me to remove it I will immediately.

DO NOT ASK my rules or strategy yet, I'm not ready to share that, though I am putting together a manual on it which I will post on FF for free when it's done and I am finished with it. When I am,,, it will be time to "give back," on a different thread.

Hanover, please do not see this as any sort of criticism, or attack. I don't work that way. It's just another limit we ALL have had at some time or another.

The MOST productive thing as traders that we can do is to take a harsh and hard look at what be "believe" and challenge it!

Clay
Attached Image (click to enlarge)
Click to Enlarge Name: Example.jpg Size: 171 KB
  • #167
  • Oct 12, 2009 9:53am Oct 12, 2009 9:53am
Quoting eclayf

"We hold these truths to be SELF EVIDENT, That ALL men are created EQUAL....." IF that is true, then there is nothing one man has done, that other men cannot do IF they are willing to believe it and work toward it.


.......

DO NOT EVER, EVER, EVER quit!
Clay,

At times i have learnt that if i cant make people understand in simplest way they generally take a long time to understand..no matter how much i try some people will never understand...

but if some one needs to understand the above bolded lines are enough...

Rest its a lonely journey and everybody has to pay there dues ... some less some more...

V
  • #168
  • Oct 12, 2009 10:47am Oct 12, 2009 10:47am
It's always a pleasure to read Hanover's posts. He's an honest thinker.
  • #169
  • Oct 12, 2009 3:47pm Oct 12, 2009 3:47pm
@eclayf: RE the '300 from 200', point taken. I was speaking in general terms; perhaps I should have said something like: "you can't take more pips than the market is willing to offer you". But of course you're correct, there are always smaller waves that are potentially tradable, if one is willing to take on the challenge of trading the shorter timeframes. And rest assured that I certainly don't view your post as any kind of criticism or attack.

@PeterFM, @Dopey: Many thanks for the confidence-building feedback.
  • #170
  • Oct 12, 2009 4:57pm Oct 12, 2009 4:57pm
Indeed, hanover's posts are one of the few things worth reading on this forum.
He repeatedly takes the time to lay out the options in a concise and logical way, I don't always completely agree, but this is the nature of discourse.
The breaking of a wave cannot explain the whole sea.
  • #171
  • Oct 13, 2009 2:13am Oct 13, 2009 2:13am
Because eclayf comes so often with that "Amway style BS" I will try to explain why he is wrong.

There is a certain amount which can be realistically obtained from trading. We all try to obtain the maximum profit from a trade. But simply because the markets are mostly random we must find some equilibrium between taking profits and letting our positions run.

If we have a system which provides a small edge the next logical step is to increase our accounts using compound interest. These two, edge and compound interest, are the only things that count in this business.

This is why I'm advocating that we don't need thousands of pips and high ROIs daily or weekly. 5% per month is great if we have 10K in an account and we wait 5-10 years. And 5% ROI on a monthly basis is achievable with 2-3% risk per trade.

Maybe this simple formula sounds silly for guys as eclayf. He thinks that every ROI is possible if somebody really wants it and anybody who is satisfied with 5% per month has "limitations".

eclayf, if you are really serious, show some proof. Do NOT come into this thread and tell us something can be done unless you have several years of actual proof and can also prove that those results are typical and not unusual. (quote from FXAnalytics).

For the third time I will repeat the analogy with the casino. You can enter with 1000$, play 2 times the roullette wheel and you're a millionaire in 5 minutes. Possible? Yes. Reasonable? Maybe not. Can you do it? Of course, everybody can. WHY DON'T YOU?

eclayf, if your answer to this questions is another motivational rant it will simply mean that you have no idea what you're talking about. I rest my case.
  • #172
  • Oct 13, 2009 6:09am Oct 13, 2009 6:09am
Quoting Sauron
Because eclayf comes so often with that "Amway style BS" I will try to explain why he is wrong.

There is a certain amount which can be realistically obtained from trading. We all try to obtain the maximum profit from a trade. But simply because the markets are mostly random we must find some equilibrium between taking profits and letting our positions run.

If we have a system which provides a small edge the next logical step is to increase our accounts using compound interest. These two, edge and compound interest, are the only things that...
Evidently Sauron used to be in the Amway business himself. I think Clay's points that one's returns should be up to the individual trader are quite valid. There are numerous people on FF that do quite well from trading and do way more that the oft quoted 2-5% per month.
  • #173
  • Oct 13, 2009 6:15am Oct 13, 2009 6:15am
Quoting endroute
Evidently Sauron used to be in the Amway business himself. I think Clay's points that one's returns should be up to the individual trader are quite valid. There are numerous people on FF that do quite well from trading and do way more that the oft quoted 2-5% per month.

Totally any amount is possible.

Theory being :-

Risk 3% on a trade of your account.
Good system short TF's 70%+ win rate is possible easily.
Quite frequently on Short TF's you can make 10% from a 3% risk.

There is no maths reason you can't make 10 - 30% account growth per day, risking 2 - 3 % seriously.

Not many can trade this well and most of wasting there time on higher TF's cause of that Myth being preached, longer your in a trade, bigger the SL and especially if fixed TP the more it becomes a 50/50 game and so the small % is only possibly Myth is born.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #174
  • Oct 13, 2009 8:56am Oct 13, 2009 8:56am
Quoting Sauron
5% per month is great if we have 10K in an account and we wait 5-10 years. And 5% ROI on a monthly basis is achievable with 2-3% risk per trade.
Agreed. Small edge + some leverage + compounding + frequent turnover = significant account growth. The projections are easy to calculate, and provide an irresistibly exciting lure for many newcomers. Compounding an average return of (your example) 5% monthly equates to something around 80% p.a., which is astronomical compared to the 8%–10% that's about the maximum available from 'conventional' investments. It's all relative.

So the key question is: am I smart enough to craft an entry/exit method around an aspect of non-randomness in price movement, that will provide a genuine, and enduring, edge? If the answer is yes, the returns are potentially huge; if no, transaction costs will make trading a futile (and expensive) exercise for me. So, at least in theory, I should either win big, or lose big; and middle ground can only be the result of undue conservatism, or unrealized potential (self-imposed limitations?) that Clay is perhaps alluding to.

I think that, ultimately, the key is to somehow ascertain the nature and extent of each limitation, and where it lies: with the trader (knowledge, methodology, implementation: where improvement is always possible), or the market (where obviously it is not).

One final point. Forex is completely scalable, courtesy of leverage and position size. Edge is the ratio of return to risk, the product of how accurate entries and exits are (see latter part of post #49). But sizing can be used to inflate both return and risk (drawdown) to whatever level the trader feels comfortable with. The Kelly formula, despite being way too aggressive a sizing algo for prudent trading, nonetheless highlights what is theoretically possible.
  • #175
  • Edited 9:16am Oct 13, 2009 9:09am | Edited 9:16am
Sauron, I will attempt one last time to explain. Perhaps you'll get it, probably not.

Quoting Sauron
Because eclayf comes so often with that "Amway style BS" I will try to explain why he is wrong.
First, I like the Amway products, but NOT the business model. It requires one to "recruit" followers. Leaders rarely if ever recruit anyone. Leaders lead and those who can see the value of that leadership follow and grow. The rest graze with the cows.

Quoting Sauron
There is a certain amount which can be realistically obtained from trading. We all try to obtain the maximum profit from a trade. But simply because the markets are mostly random we must find some equilibrium between taking profits and letting our positions run.
People who hide behind the words "realistic," "normal," "average" and so on are the ones who never accomplish much if anything in this life. There is always a balance between success and failure, but failure is NEVER truly failure, unless you give into it. Thomas Edison learned literally thousands of ways that did NOT lead to the light bulb, and ONE that did and changed life for all of humanity.

The balance you speak of is a whole lot closer to the "edge" than you would ever have the courage to go. Perhaps you should stick to stocks and savings accounts, after all all you need is a small return and patience, right? If that is true, why bother with such a highly leveraged financial instrument like Forex?

What you talk of is sort of like those who buy million dollar race cars to drive in inner city traffic. Ludicrous in the extreme.

Quoting Sauron
If we have a system which provides a small edge the next logical step is to increase our accounts using compound interest. These two, edge and compound interest, are the only things that count in this business.
I agree that one only needs a "small edge" to become wildly successful in life. Compound interest used with that edge is a wonderful thing. At least you understand that part, but this is where you start to derail all of your own hard work.

Quoting Sauron
This is why I'm advocating that we don't need thousands of pips ...
Never said you needed thousands of pips. In fact, you only "need" a relatively small number of pips per day to become extremely wealth. Starting with only 100.00, and gaining only 20 pips per day one can grow to over a million dollar account in 467 trades. At one trade a day that is about 23 months assuming no losses during that time, but wait, it gets better!

If you do that with a beginning balance of 1000.00, it only takes 350 trades, even less time. 17.5 months to be exact.

NOW, lest you say that's not "realistic," to never have a loss, even with losses it would only increase the time a bit, perhaps even to the 5 years you talk about. If you can't get a 50/50 ratio and learn to cut the losses quicker, perhaps you need a bank account!

REMEMBER NOW,,, this is ONLY ONE TRADE per day and ONLY 20 pips at 2% risk per trade!


Quoting Sauron
Maybe this simple formula sounds silly for guys as eclayf. He thinks that every ROI is possible if somebody really wants it and anybody who is satisfied with 5% per month has "limitations".
We all, myself included have limitations. THAT is NOT the issue, the issue is what are you willing to settle for in your OWN life. As for ROI, hmmmmm let me see,,,,, if I grow an account to billions, whether it be FX or stocks, whether through investment, or creating a company like Bill Gates, Larry Ellison and many others, the total ROI is huge.

If YOU are satisfied with 5% per month ROI, fine. Enjoy life the best you can and be happy. Just quit running around as if you knew something telling everyone else that more is not "realistic." Or, perhaps you would rather we still had a buggy whip industry?! You appear to be one of "those" who fight against progress pretty heavily and are always losing to it.

Quoting Sauron
eclayf, if you are really serious, show some proof. Do NOT come into this thread and tell us something can be done unless you have several years of actual proof and can also prove that those results are typical and not unusual. (quote from FXAnalytics)....
First, I never said I could do it YET. If you had read my posts honestly, you would realize that I said in one of them that I had JUST turned the corner on being consistent. Still, even with that, I have nothing to prove to you or anyone else. Only to myself.

I DO know a few who do EXACTLY what I am talking about. Out of respect, I have not used his name, but there is one on this very thread who 'averages' waaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaay more than you talk of. For additional proof, go read EOHater's thread where they earn literally hundreds of pips per day and make huge returns! If that one, or Jacki's thread, or any of the others all over FF aren't enough for you, if you can't do your own research and find tons of examples of what I am saying, the bite me! You will never have enough proof. TO YOU, the world will always be flat and we never had men on the moon!

With that said, here is the last of it. From here on you are on my ignore list and not worth the time. You see, I learned a long time ago that ignorance is curable, but stupid is for life! YOU CHOOSE WHICH, I have nothing to do with it.

I try very hard to be patient and kind, but there are some troglodytes that can't be helped because the choose to be blind and never see. I suspect you will continue trying to drag others down to your level so you can feel good about yourself and perceive yourself as some sort of "authority" on the things you know nothing (or very little) of.
  • #176
  • Edited 9:50am Oct 13, 2009 9:26am | Edited 9:50am
Quoting Some Motivational Dude
I suspect you will continue trying to drag others down to your level
My level is 5% month after month. 99.99% percent of the traders, investors or businesses of this world will never reach it.

Quoting The same dude
With that said, here is the last of it. From here on you are on my ignore list and not worth the time. You see, I learned a long time ago that ignorance is curable, but stupid is for life!
This is your way of convincing others that you're right.

Quoting Nice one
First, I never said I could do it YET.
Don't forget to call us!

Quoting Dream baby
For additional proof, go read EOHater's thread where they earn literally hundreds of pips per day and make huge returns!
And the only reason they don't earn literally milions of pips per day is that there aren't enough pairs to trade. Isn't life a bitch sometimes?
  • #177
  • Oct 13, 2009 9:33am Oct 13, 2009 9:33am
Troglodytes! ROFL!!! Post some screenshots of SOMETHING or just make sure you serve my Bigmac without onions!
FF = Forex Faggots
  • #178
  • Oct 13, 2009 12:49pm Oct 13, 2009 12:49pm
eclayf I just wanted to let you know that I am with you on what you say, I trade the same way as you do. I trade Tuesday to Thursday and I trade EUR/USD GBP/USD and EUR/GBP and only on a 5 min chart. You always get losses but I cut my losses at £7 - £10 and take profit at £7 - £50. You can make money at forex you just need to ride the market not guess what’s it going to do just go with it and not have loads of indicators or pay money for robots. But there is 1 rule that everyone needs to have and that’s don't let your emotions take over
  • #179
  • Oct 13, 2009 2:16pm Oct 13, 2009 2:16pm
Quoting Sauron
My level is 5% month after month. 99.99% percent of the traders, investors or businesses of this world will never reach it.


This is your way of convincing others that you're right.


Don't forget to call us!


And the only reason they don't earn literally milions of pips per day is that there aren't enough pairs to trade. Isn't life a bitch sometimes?

It's a interesting life when 1 person can't do it for what ever reason so therefore assumes no one else can either and there all lying without evidence to back it up.

I'm shooting for well over 5% per day and the days I trade I 95% of the time get it
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #180
  • Oct 13, 2009 8:48pm Oct 13, 2009 8:48pm
eclayf
i am on the road with very limited connection speed but before I forget.

You are brilliant. You compose and write the way I wish I could.

Dead balls on.
Keep it going.
0 traders viewing now