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New study shows only 1% of traders are consistently successful

  • #61
  • Mar 31, 2010 10:01pm Mar 31, 2010 10:01pm
Quoting H. Rearden
Ok, here is how I see it:
...
P.S. for serious readers: 'The Time Paradox' by P. Zimbardo
Excellent post, Sir.
Thanks for sharing
  • #62
  • Mar 31, 2010 10:05pm Mar 31, 2010 10:05pm
Quoting TradeRunner
Dieting has a "negative expectancy". Only 95% are successful at it (according to stats).
Just human nature I guess. So maybe forex isn't that much harder than dieting?
LOL.
u mentioned dieting. another problem area.
i never thought of dieting etc. that way --- a negative expectancy multi-million/billion $ business.
im now playing an 'enumerate all the negative expectancy businesses' in my head, thanks to u
  • #63
  • Apr 1, 2010 2:03am Apr 1, 2010 2:03am
Quoting FX-Petra
1. Random entry forex has negative expectancy due to the spread.
Agree. Only if you enter purely random, as in having a program which every day, at a random hour and for a random pair, opens a long or short position, random too.

Quoting FX-Petra
2. If you could recover your spread + 1 pip on every trade you could kiss your day job good bye!
Agree.

Quoting FX-Petra
3. Forex pricing as experienced by the small, retail trader, on a DAY TRADING basis, is random.
Wrong. First, the prices are not random during the day. Second, if they are random today and tomorrow and the day after tomorrow and so on, they are random the whole week, month and year. Either you're not able to profit at all or you can find inefficiences every time.

Quoting FX-Petra
4. If you daytrade the retail forex market for a long enough period of time, you will lose all of your invested funds.
Change "you" with "I".
I hear a lot of people claiming that you can't daytrade forex profitable because they didn't find a way to do it.

Quoting FX-Petra
Hope this helps some people. No need to post hateful responses. If you disagree, then continue to enjoy daytrading retail forex. It is a thrilling ride with a lot of ups and downs. To bad it will leave you poorer for the ride!
Instead of posting the same useless idea about the markets, why don't you show some proof that the retail market is random on intraday basis?
  • #64
  • Apr 1, 2010 3:29am Apr 1, 2010 3:29am
[quote=akukaya;3601291]
Quoting H. Rearden
Ok, here is how I see it:

Some might say that an avg. 1.5% per month is a lousy return - but if the capital is $20m and more, its a decent living I'd say.


H. Rearden

]

Really the capital is $20m?
Are u interested with system with minimal drawdown and 10% per month.

If I have capital of $20m, yes, 1.5% per month is enough but yes, it is lousy return. If you would like to try out my system.
Dear poster,

I decline on your kind offer but thank you indeed.

You should be in a good position to raise $20K and arrive at $24.145.384,35 at the end of year 9.

If you need to pay yourself a salary from your trading - and you have the ability to defer the onset of such payments until the end of year 3 - you can use 20% of your 120% generated per annum to remunerate yourself generously while still producing an outstanding annual return of 100%.

By making 120% every year (based on your system), your salary based on $20K starting capital would leave you with a salary of $52.960 for year 3.

year 4: $148.512

year 5: $390.726

year 6: $987.598

...and so on, while you are still banking 100% of the profits for:

year 4: $320.000

year 5: $640.000

year 6: $1.280.000

and so forth.


That way you would arrive at $20.480.000,00 after year 10 while paying yourself a few million dollars on the way - I'd say that is splendid if you have the conviction, patience, determination and most of all the ability to be absolutely consistent for just 10 years.

I wish you all the best on your way.

H. Rearden
  • #65
  • Apr 1, 2010 11:42am Apr 1, 2010 11:42am
"The exceptions to this conclusion are those few cases of successful speculation in which governments have tried and failed to support a particular exchange rate. Nonetheless, despite extensive efforts on the part of analysts, to my knowledge, no model projecting directional movements in exchange rates is significantly superior to tossing a coin. I am aware that, of the thousands who try, some are quite successful. So are winners of coin-tossing contests. The seeming ability of a number of banking organizations to make consistent profits from foreign exchange trading likely derives not from their insight into exchange rate determination but from the revenues they derive from making markets. "
Remarks by Chairman Alan Greenspan
At the European Banking Congress 2004, Frankfurt, Germany
November 19, 2004

Of course, you may fall into the "Greenspan is an idiot" category. If so, please consider:

1)18 years experience as Chairman of the Federal Reserve Bank
2)Phd from NYU in economics
3)post doctoral work at Columbia University
4) to many presidental appointments to list
5) to many board of director posts to list
6) Knighted by Queen Elizabeth in recognition of promoting global economic stability.
7) This list could go on a lot longer, but you get the point.

Kindest regards, and I wish you all the best
  • #66
  • Apr 1, 2010 12:54pm Apr 1, 2010 12:54pm
1. Greenspan is not a trader and never has been.
2. It is harder for somebody with 5 billion to make money in forex than there's for me. I can buy 1 million without moving the market, you can't do it with 5 billion.

Greenspan is referring to the big banks, not to the small trader who can profit from inefficiencies. I don't have to consider Greenspan an idiot, I know he is right in his broad view.

The markets are not at all random. There's easy to prove this by using DIBS. For all the majors this system works. Use it on a random chart and you'll see it failing. Don't believe me, make your tests. If you know some programming it is easier than you thought.

Why the big boys don't use DIBS if it so profitable? Because they can't buy or sell billions with 1-2 pips spread.

And please, either you post to make conversation or you don't post at all. Keep the regards or best wishes to yourself.
  • #67
  • Apr 1, 2010 1:21pm Apr 1, 2010 1:21pm
Quoting FX-Petra
recognition of promoting global economic stability.
Great work! LOL!
  • #68
  • Apr 1, 2010 2:00pm Apr 1, 2010 2:00pm
Quoting Sauron
1. Greenspan is not a trader and never has been.
2. It is harder for somebody with 5 billion to make money in forex than there's for me. I can buy 1 million without moving the market, you can't do it with 5 billion.

Greenspan is referring to the big banks, not to the small trader who can profit from inefficiencies. I don't have to consider Greenspan an idiot, I know he is right in his broad view.

The markets are not at all random. There's easy to prove this by using DIBS. For all the majors this system works. Use it on a random chart and you'll...
I did not realize that civil discourse and politness would offend you. Anyway, Mr Greenspan was not only talking about big banks. You can google the entire speech a see for yourself. I have no desire to argue with you or convince you. Your results, over time, are all that matter. Watch out for those hobbits, though.... they are tricky little buggars!
  • #69
  • Apr 1, 2010 2:33pm Apr 1, 2010 2:33pm
Quoting Sauron
Why the big boys don't use DIBS if it so profitable? Because they can't buy or sell billions with 1-2 pips spread.
True, they pay even less. If you think thats the reason why they don't trade the DIBS-method..
Measure twice, cut once
  • #70
  • Apr 1, 2010 2:33pm Apr 1, 2010 2:33pm
Trading is the worlds toughest game/profession because of dark uncertainty.

It is easier to earn money from a tangible economy by becoming a teacher, engineer, auditor, accountant, receptionist etc.

On March 1, within 30 minutes of London opening, G/U fell 400 pips from 1.51 to 1.47- No one in the world could have predicted that fall except the clearing house which facilitated the sale.

Society does not expect you to become a trader..we dont have any formal trading qualification like MBA in trading, BA in trading etc.
  • #71
  • Apr 1, 2010 4:55pm Apr 1, 2010 4:55pm
Quoting kingfisher
On March 1, within 30 minutes of London opening, G/U fell 400 pips from 1.51 to 1.47- No one in the world could have predicted that fall except the clearing house which facilitated the sale.
IMO, this touches on an interesting and important point. Namely, that it's not necessary to forecast when a big move is imminent. By simply being on the right side of the market frequently enough, we will pick up some big moves, as a matter of course.

Look at the daily GU trend heading up to March 1; any long term trader who happened to be riding the downtrend would have picked up (at least a chunk of) the 400 pip bonus. And an intraday trader who trades the London open, and uses the longer term trend to influence his choice of direction, likewise.

Run with the probabilities; and manage risk to reduce the potential effects of the "dark uncertainty" (I like your choice of words there, BTW ).
  • #72
  • Apr 1, 2010 4:56pm Apr 1, 2010 4:56pm
@ FX-Petra. I don't mean to be rude, but your assertion that the market is random on an intraday basis yet ordered (so to speak) on a daily time frame is ludicrous. By what mechanism can series of random events magically coagulate into order?
The markets aren't some crazy quantum process. It's just people selling sh!t.

edit: Also like to add that you might be right about about day trading being "impossible", but that ain't because it's random.
  • #73
  • Apr 1, 2010 5:22pm Apr 1, 2010 5:22pm
Quoting FX-Petra
..... So are winners of coin-tossing contests. The seeming ability of a number of banking organizations to make consistent profits from foreign exchange trading likely derives not from their insight into... "
He is right about the coin-tossing for one thousand times. But if the coin toss for about a million times, he will find no ones win or lose the contests.
  • #74
  • Apr 1, 2010 5:25pm Apr 1, 2010 5:25pm
I find it ironic that so many people assert that trading is impossible and yet they still trade and post on message boards
  • #75
  • Apr 1, 2010 5:26pm Apr 1, 2010 5:26pm
Quoting FX-Petra
"Nonetheless, despite extensive efforts on the part of analysts, to my knowledge, no model projecting directional movements in exchange rates is significantly superior to tossing a coin."
These comments of Greenspan's, if true, spell the death knell for every retail trader.

There are a zillion ways to approach trading, and nobody has infinite knowledge. Hence I don't believe that anybody can really prove that profitable trading is impossible (i.e. beyond mere 'luck'). The best that any one person can say is that "I haven't yet found a real, enduring edge".

Conversely, I would also argue that it's easy to be fooled by randomness. How many profitable months' trading, or trades behind him, must a trader have before he can say with any assurance that he has a real edge, let alone one that will stand the test of time? Markets are ultimately driven by collective belief systems, and belief systems can gradually change.

As I've said before, the best that any trader can do is to stack the probabilities in his favor in the best way that he knows how, and then let the market do its darnedest. One must be willing to understand and embrace the risks inherent in trading. The only alternative is to seek another source of income.
  • #76
  • Apr 1, 2010 5:33pm Apr 1, 2010 5:33pm
Quoting FX-Petra
" to my knowledge, no model projecting directional movements in exchange rates is significantly superior to tossing a coin."- Alan Greenspan
Note that "significantly" is the operative word.

If you've ever played poker you'll know how often you need to take a 1 or 2 percent edge to come out ahead in the long run.
  • #77
  • Edited 7:28pm Apr 1, 2010 6:48pm | Edited 7:28pm
Quoting FX-Petra
"The exceptions to this conclusion are those few cases of successful speculation in which governments have tried and failed to support a particular exchange rate. Nonetheless, despite extensive efforts on the part of analysts, to my knowledge, no model projecting directional movements in exchange rates is significantly superior to tossing a coin. I am aware that, of the thousands who try, some are quite successful. So are winners of coin-tossing contests. The seeming ability of a number of banking organizations to make consistent profits from foreign...
Critics of technical analysis attack not what it can do - which is control risk, but what they wish it could do - which is show a direction to trade in. Direction is simply trader's momentary choice Most, not understanding that the market itself never shows any single moment where one can make an obvious decision, simply throw up their hands and say, "well what can you do, it's random!" Random indeed, heh. Actually, it is exactly half random and half perfectly ordered, as is any system that exists perpetually on the critical boundary - existing permanently in a state of ubiquitous (and novel) cyclicality. Like this forum for instance. New threads are created, and threads eventually "die out" by being relegated to history with lack of posts. Some threads last longer than others...Can a person who constantly spends time on the forum, and has a good sense of the kinds of people who frequent and post in the forum, tell - simply from the first post of a thread - if it is more likely than not to last longer than any other thread - simply by comparing the first posts? Absolutely!
  • #78
  • Apr 2, 2010 9:13am Apr 2, 2010 9:13am
Quoting Ted1983
@ FX-Petra. I don't mean to be rude, but your assertion that the market is random on an intraday basis yet ordered (so to speak) on a daily time frame is ludicrous. By what mechanism can series of random events magically coagulate into order?
The markets aren't some crazy quantum process. It's just people selling sh!t.

edit: Also like to add that you might be right about about day trading being "impossible", but that ain't because it's random.
Ted,
You are not rude at all. As to randomness: I do not say that the intraday market is random in the traditional sense, like dice or a roulette wheel. I mean that, to the small retail investor, the markets have a 'Practial Randomness' in that you, as a small retail investor, have to way to accurately predict its gyrations. Just because a trader makes 20 succesful trades in a row does not mean that his method is correctly forecasting the market. Astute Money management, market voilitlity, and a tiny bit of luck can produce some fabulous results over the short term. Those short term results have nothing to do with the fact you are trading with a disadvantage, or negative expectancy.

When you place a particular trade, what reason do you have that it will move in your favor? The only valid reason that I know of is concrete knowledge of upcomming events or trading activity. For example, if the trading team manager at HSC or BOA was a college buddy and faxed you their trading plan every morning....that is concrete knowledge you could use to gain an edge. That is an example of concrete knowledge. There is nothing on your chart, tradestation, news feed, or forex factory thread that can give you that edge on a basis consistent enough to overcome the negative expectancy inherent in your trades.

You can make good money in forex. You can take 5K and have a few good months and turn it into 20K, or a good year and turn it into 80-100k. This is hard to do, but it has been done before and will be done again. But that does not change negative expectancy. Keep trading long enough and your fortunes will reverse.

Best wishes to you.....
  • #79
  • Apr 2, 2010 9:40am Apr 2, 2010 9:40am
Quoting hanover
These comments of Greenspan's, if true, spell the death knell for every retail trader.

There are a zillion ways to approach trading, and nobody has infinite knowledge. Hence I don't believe that anybody can really prove that profitable trading is impossible (i.e. beyond mere 'luck'). The best that any one person can say is that "I haven't yet found a real, enduring edge".

Conversely, I would also argue that it's easy to be fooled by randomness. How many profitable months' trading, or trades behind him, must a trader...
David,

I direct this to you, as I believe we understand each other fairly well. Probabilites really are of little use to the small reatail investor. First, let me say that I dispute that real trading probabilities exist. By that I mean, for example, "When price hits the 38.6 fib for the first time on a 15 min chart, it will reverse for 10 pips 60% of the time." (I made this up). This is a nice piece of info, if true. I do not believe this statement, or any other based on fibs, EW's, round numbers, MA's, Ema's, the color of my shorts or my wife's mood has any basis in fact or staistical reliability. That being said......

Let's assume we could find a statistically significant, definable, repeatable pattern in price action. Now we must enter the jungle of statiscal expectation and the kelly criterion. Even with a whopping 10% edge over the market, that does not mean you will win your trade. You could lose, lose, lose and continue to get your teeth kicked in over your 1st 100 trades, or even 1000 trades. Over 1 million trades, you will certainly be rewarded and probabilites born out....but what trader will make 1,000,000 trades? Will your first 1000 trades match your statistical expecations of a 10% advantage? Maybe. But you probably will do better or worse than your expectation. In a lot of cases you will do a lot better or a lot worse. What I am saying is the first year or 2 of trading a system has as much to do with stastical variance as it does with whether or not you actually have an edge.

Regards,
  • #80
  • Apr 2, 2010 10:18am Apr 2, 2010 10:18am
Quoting FX-Petra
....But that does not change negative expectancy. Keep trading long enough and your fortunes will reverse.
I certainly don't mean any disrespect, but that comment seems like one of those "perfect" lines that is never wrong......a person has been profitable for the last 3 years...obviously hasn't traded long enough. Wait, I meant 5 years....well, it won't be long now.....you say you've been profitable for 8 years? You are going down, buddy, any day now.....

And yes, I am making light of it, but in my simple mind, I trade different venues for one purpose: to make money. Not for a hobby or the thrill, but to make money. And not just a little money, but a lot of money. If I am going to put the time and effort into trading, it needs to be worthwhile to me. If I thought for even a second that I would eventually lose all the money I've made, why continue trading? Why would anyone do ANYTHING if it was a negative expectancy?

I just think that statistics does not always rule the outcome, nor paint a clear picture. It seems simple enough that if a professional bass fisherman casts 500 times, he should catch more fish than the fisherman that casts 100 times. However, if the 500 casts are to open water when the fish are shallow but the 100 casts are shallow, that won't be the case. But what if both are to open water? If the 500 casts are with a crank bait and the 100 casts are with a jig and pig, the 500 casts will catch more. There are a million different variations that decide the outcome of random casts....but if you think about it, a professional bass fisherman is going to use all of his knowledge and skill to put his casts in the most likely places using the most likely lures to catch a fish. I am sure that if he thought he would never win a tournament, he would not waste his time and energy and money.

Again, I mean no disrespect, just a different point of view....
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