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Why are most retail traders usually on the wrong side of the market?

  • #101
  • Jul 23, 2010 5:54am Jul 23, 2010 5:54am
Basically, a trader will continue to lose if he is trading incorrectly; out of harmony with the markets. If a retail trader is taking huge losses, they are probably getting blindsided because of a lack of knowledge. Unfortunately, most retail traders are isolated and do not have the benefit of shared knowledge and experience that some of the bank traders have access to. Without a fresh supply of new ideas, the retail trader is more susceptible to failure.
  • #102
  • Jul 23, 2010 8:21am Jul 23, 2010 8:21am
Quoting Troikaone1
Basically, a trader will continue to lose if he is trading incorrectly; out of harmony with the markets.
harmony you say?
  • #103
  • Jul 23, 2010 9:21am Jul 23, 2010 9:21am
I would like to offer a new angle to all this.

If a trader constantly gets say 80% of their trades wrong, then why not continue analyzing the market in the same way that they are doing now but enter in the opposite direction.

As in this example, 80% is 80% whether it’s right or wrong. You could say that it is a correct call in the wrong direction. So logically stick to the call but go the other way.

There is an old erroneous saying that “practice makes perfect.” In my experience this is incorrect because if you practice a bad golf shot shall we say, then you get a perfectly bad shot. Perfect practice makes for a perfect shot!

I have done some back testing on this theory and it appears to work reasonably well. The hard part is to consciously stick to that perfect bad shot. I must admit that it goes against the grain and it takes a very radical mind set to act on this.

But then again, isn’t discipline a core part of this profession?

Comments?
  • #104
  • Jul 23, 2010 9:34am Jul 23, 2010 9:34am
Quoting Aodorico

If a trader constantly gets say 80% of their trades wrong, then why not continue analyzing the market in the same way that they are doing now but enter in the opposite direction.
Unfortunately direction isn't the biggest problem for the majority otherwise your solution would work great!
  • #105
  • Jul 23, 2010 9:49am Jul 23, 2010 9:49am
Quoting Troikaone1
Basically, a trader will continue to lose if he is trading incorrectly; out of harmony with the markets. If a retail trader is taking huge losses, they are probably getting blindsided because of a lack of knowledge. Unfortunately, most retail traders are isolated and do not have the benefit of shared knowledge and experience that some of the bank traders have access to. Without a fresh supply of new ideas, the retail trader is more susceptible to failure.
Well hopefully, this forum will be the "fresh supply of new ideas" that retail traders need.
Make your losses in demo. Earn your profits live.
  • #106
  • Jul 23, 2010 9:50am Jul 23, 2010 9:50am
everyone's on the wrong side of the market to begin with because of the spread!
  • #107
  • Jul 23, 2010 9:56am Jul 23, 2010 9:56am
Quoting qwertymyfx
everyone's on the wrong side of the market to begin with because of the spread!
Well, I tend to think the spread is the equivalent of the commission that you would otherwise have to pay. And in fact, with every single financial instrument you trade, there is always a spread in addition to the commission that you still have to pay.

Whether you are on the wrong or right side of the market is determined by the future direction of the market.
Make your losses in demo. Earn your profits live.
  • #108
  • Jul 23, 2010 10:02am Jul 23, 2010 10:02am
Inserted Video
Time hides Nothing
  • #109
  • Edited 10:46am Jul 23, 2010 10:33am | Edited 10:46am
Quoting Forexia
Well hopefully, this forum will be the "fresh supply of new ideas" that retail traders need.
True....but, there is a big difference when you are actually trading amongst a group of traders using a proven strategy for years and years. Forums do not provide accountability. Some guy from outta nowhere, enters a forum, comes up with an "idea" that flops and you never hear from them again. I find a lot of the stuff in FF interesting, but I have honestly never applied anything to my particular trading. FF is an excellent diversion, but I don't believe any viable trading strategy can be adequately explained in a forum. Forums are an excellent place to offer general trading advice and experiences. I have yet to find anyone in FF that approaches the market the way I do...and yet I am sure they are just as successful as I am. I have tried to seek confirmation of my system by finding similar approaches, but it just hasn't happened. Also, every trader evolves and changes over time as they are exposed to more data.

One of the interesting things about trading is that you can only track so many variables at once. For instance, you could swear by the Daily TF as the ultimate timeframe and denounce all others....you can hold this view for a number of years. Then, you find out that the weekly timeframe has equal validity. As soon as you switch timeframes, you are embarking on a journey that could last for months. This is what makes trading so darn difficult. Every time you change a variable, you know you will have to embark on yet another journey of discovery. Folks, there are dozens of trading variables.....this is why it takes years and years to get good at this FX thing.
  • #110
  • Jul 23, 2010 11:43am Jul 23, 2010 11:43am
Quoting Aodorico
I would like to offer a new angle to all this.

If a trader constantly gets say 80% of their trades wrong, then why not continue analyzing the market in the same way that they are doing now but enter in the opposite direction.

As in this example, 80% is 80% whether it’s right or wrong. You could say that it is a correct call in the wrong direction. So logically stick to the call but go the other way.

There is an old erroneous saying that “practice makes perfect.” In my experience this is incorrect because if you practice a bad golf shot...
Noting with discipline, you have to know what setups will result in an almost 90% trading certainty. You need to be right about 9 out 10 times and if something goes wrong , know exactly why it went wrong.
  • #111
  • Jul 23, 2010 12:36pm Jul 23, 2010 12:36pm
Quoting Troikaone1
True....but, there is a big difference when you are actually trading amongst a group of traders using a proven strategy for years and years. Forums do not provide accountability. Some guy from outta nowhere, enters a forum, comes up with an "idea" that flops and you never hear from them again. I find a lot of the stuff in FF interesting, but I have honestly never applied anything to my particular trading. FF is an excellent diversion, but I don't believe any viable trading strategy can be adequately explained in a forum. Forums are an excellent...
Agreed. I find this forum is good in terms that it gives me ideas, shows me things that I might have overlooked and gives me fresh perspective and angle on the market that I did not see. All these I find help me in my trading.

But since there is no "Holy Grail" in trading strategies then everybody is on their own. So even if you are exposed to proven strategies in Institutions, that might work for Institutional traders but still might not work for us Retail traders because Institutional traders trade in totally different environment than Retail traders. I bet that if those Institutional traders go home and trade Forex for their own account, they wouldn't use the same strategy as when they were trading for the banks that they work for. So regardless, you would have to find the trading strategies that fits you and your trading style. You can take a look at others' strategies to see their merit and etc. but at the end you would still have to come up with your own.
Make your losses in demo. Earn your profits live.
  • #112
  • Jul 23, 2010 1:53pm Jul 23, 2010 1:53pm
Quoting StephanusR
Noting with discipline, you have to know what setups will result in an almost 90% trading certainty. You need to be right about 9 out 10 times...
lol, get in a landing pattern mate!
  • #113
  • Jul 24, 2010 12:43am Jul 24, 2010 12:43am
Quoting Forexia
Well hopefully, this forum will be the "fresh supply of new ideas" that retail traders need.
I hope its not "fresh supply of bad ideas"
  • #114
  • Jul 24, 2010 12:20pm Jul 24, 2010 12:20pm
Quoting domino
slow and steady isnt subjective.. as you increase leverage and aggression you increase risk and explode risk of ruin as it works as a product of the amplification of risk from leverage.. the scale isnt adjusted in a position to amplify profit you increase exposure through diversification and number of spread trades. firms know how to increase exposure without amplifying these effects this sets traders apart from each other as well.. an independent traders feels he has a higher tolerance for capital fluctuation but doesnt realize that account death...
I'm sorry, but I cannot follow the sentence that ties into "diversification", maybe there was supposed to be a coma.

Anyways, I am really interested in what you are trying to explain, maybe you could clarify a bit more. And is it system diversification as related to leverage, meaning is it completely bad or bad after a certain number of systems?

Or maybe something else all together.

Regards.
  • #115
  • Jul 24, 2010 1:49pm Jul 24, 2010 1:49pm
Quoting Forexia
But since there is no "Holy Grail" in trading strategies then everybody is on their own.
I would submit that there is no "Holy Grail", but there is a "right" way to trade and a "wrong" way to trade. There are "high probability" trades, and there are "low probability" trades. The key to being a good trader is knowing the difference.
  • #116
  • Jul 24, 2010 9:05pm Jul 24, 2010 9:05pm
What about information feeds like IFR which are free with Oanda and a few other brokers?

http://www.ifrmarkets.com/

They called to sell E/J short at 129.88 for Friday and I went short at that level (as probably did many other retail traders) and the market stalled flat and closed at 130.00

I should have reasoned that late on a Friday bankers would try to print 130.00 for the weekend but instead got caught up in the "infallibility" of the advice thinking the herd shorting would create momentum.

NOW IFR calls to buy E/J long at 130.00 (heh).

I suppose the smart thing is to see it as just another S/R data source.
  • #117
  • Jul 24, 2010 9:23pm Jul 24, 2010 9:23pm
Quoting watchtower4x
What about information feeds like IFR which are free with Oanda .......
Althought Oanda might be one of the biggest they pale in comparison to the clout the money center banks have so don't expect a big move just because they put out a buy or sell call on this or that pair.

BTW EJ is trading around 113 ???
  • #118
  • Jul 25, 2010 3:25am Jul 25, 2010 3:25am
Quoting watchtower4x
I should have reasoned that late on a Friday bankers would try to print 130.00 for the weekend but instead got caught up in the "infallibility" of the advice thinking the herd shorting would create momentum.
Ignoring the obvious error for a minute, why do you think "bankers would try to print 130.00 for the weekend"?

Quoting watchtower4x

They called to sell E/J short

NOW IFR calls to buy E/J long
What do they know, just rely on your own analysis instead of being influenced by people who evidently don't appear to know which way is up!
  • #119
  • Edited 4:09am Jul 25, 2010 3:50am | Edited 4:09am
Why is the sky blue?
Why is it dark at night?

It just is, and they just are

Its the same way 10 people walk into a high stakes poker room and only one comes out the winner, the others got out played. Enough said

Sure, in a perfect world ther'd be 10 winners, unfortunetly for them they would leave with no more than they came with and there would be no point in the first place.

So why retail traders? Ever tried playing poker with a 1K stack against someone with a 100,000K stack?
Time hides Nothing
  • #120
  • Jul 25, 2010 6:11am Jul 25, 2010 6:11am
Quoting CindyXXXX
Ever tried playing poker with a 1K stack against someone with a 100,000K stack?
This is not a correct analogy. If you have 1K and I have a 100K and we are playing $5-$10, then I might actually have an advantage playing against you short stacked if you are more skilled then me. Either way a 100K playing 1K, just means two 1K stacks against each other. Please do not confuse this with "eventually you will bust out". We are talking EV thats it.

Obv the money cash hoes vid by Jay Z is a whole diff ballgame .
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