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

  • #261
  • Aug 17, 2010 12:30pm Aug 17, 2010 12:30pm
Quoting FibbinArchie

Welcome to the world of FX, aka. The Slaughterhouse...

I'd call it a lemming house rather than a slaughter house....


http://www.cartoonstock.com/lowres/rjo1077l.jpg
  • #262
  • Aug 17, 2010 12:35pm Aug 17, 2010 12:35pm
Quoting Troikaone1

there has been a tremendous influx of new traders. 95% of them will lose tremendously and give the FX industry a bad reputation.
I agree, an explosion of marketmakers and advertising over the past 5 years. Couple that with the get-rich-quick mentality, the low entrance requirement, and ridiculous leverage offered by these shops and you have a recipe for disaster!

Quoting Troikaone1

I honestly believe that once you gain a significant amount of experience (at least 3 years), you will go from the 95% crowd to the 5% crowd.
I don't share your optimism on that one, some of these people really have no place in the markets, the outcome is inevitable unfortunately!
  • #263
  • Aug 17, 2010 1:13pm Aug 17, 2010 1:13pm
Quoting Troikaone1
The fact that the OTC FX market is relatively new compared to other markets; there has been a tremendous influx of new traders.

The FX OTC market is actually the oldest in the world, started 600 years ago, before banking was even allowed (considered heresy back then) and even then people lost their shirt because there was no centralised market. The centralised stock market started in Amsterdam (yup the Cloggies again), and the first bond market in Paris, started by a Scottish convidcted murderer who absconded and fled to Paris ending up cornering the entire bond market and owning about half of the US before going bankrupt and starting the French Revolution.
  • #264
  • Aug 17, 2010 1:18pm Aug 17, 2010 1:18pm
Quoting cloggie
The FX OTC market is actually the oldest in the world, started 600 years ago, before banking was even allowed (considered heresy back then) and even then people lost their shirt because there was no centralised market. The centralised stock market started in Amsterdam (yup the Cloggies again), and the first bond market in Paris, started by a Scottish convidcted murderer who absconded and fled to Paris ending up cornering the entire bond market and owning about half of the US before going bankrupt and starting the French Revolution.
I think he might have been referring to the retail end of the business, when did that gain popularity, 1996 I think was the first online trading platform operated by Deal4Free in the UK (now CMC Markets), I was one of their first clients and still have an account with them. Bucketshop without a doubt but I don't have the heart to close it!
  • #265
  • Aug 17, 2010 1:23pm Aug 17, 2010 1:23pm
Quoting pipmutt
I think he might have been referring to the retail end of the business, when did that gain popularity, 1996 I think was the first online trading platform operated by Deal4Free in the UK (now CMC Markets).

I know that's what he meant, but that's not what he said. Kind of like most of the traders here; trading what they think and not what they see.
  • #266
  • Aug 17, 2010 1:24pm Aug 17, 2010 1:24pm
Quoting cloggie
I know that's what he meant, but that's not what he said. Kind of like most of the traders here; trading what they think and not what they see.
Ok, point taken.
  • #267
  • Edited 1:54pm Aug 17, 2010 1:24pm | Edited 1:54pm
Quoting pipmutt
I think he might have been referring to the retail end of the business, when did that gain popularity, 1996 I think was the first online trading platform operated by Deal4Free in the UK (now CMC Markets), I was one of their first clients and still have an account with them. Bucketshop without a doubt but I don't have the heart to close it!
You are quite correct.....that is what I meant. The FX market was once only relegated to the big players (banks,institutions,big players). How many of us had online direct access to the OTC FX market 10 years ago? Now, everybody knows foreign exchange has been going on for hundreds of years if you really think about it. Way before online trading was even thought about.

P.S. - To Cloggie...I apologize for not having my FX history correct in my comments. I didn't intend to mislead anyone. That's why I distinguished OTC FX market from FX market which we all know has been around for a while. The OTC market has been around for a while, but the retail traders back then needed millions and millions just to enter a trade. The OTC market as we know it today, as of around 1996 as alluded to by Pipmutt, is when the retail market was essentially opened up to everyone.
  • #268
  • Aug 17, 2010 1:54pm Aug 17, 2010 1:54pm
Quoting Troikaone1
You are quite correct.....that is what I meant. The FX market was once only relegated to the big players (banks,institutions,big players). How many of us had online direct access to the OTC FX market 10 years ago? Now, everybody knows foreign exchange has been going on for hundreds of years if you really think about it. Way before online trading was even thought about.

P.S. - To Cloggie...I apologize for not having my FX history correct in my comments. I didn't intend to mislead anyone. That's why I distinguished OTC FX market from FX market which...
I was a bit pedantic, you are spot on though, the PR machine of retail online brokers adds a huge amount of liquidity (sorry noobs I mean) to the market that wasn't there before.

FX trading is easy, become a millionaire in a week, trade while you sleep etc. etc.
  • #269
  • Aug 17, 2010 4:13pm Aug 17, 2010 4:13pm
Quoting Troikaone1

The OTC market has been around for a while, but the retail traders back then needed millions and millions just to enter a trade.
To get anywhere near preferential (interbank) rates you probably would have needed in excess of 500k but it wasn't just money which prohibited participation, there were other criteria. Pre-'96 it was still possible to trade retail if you didn't mind paying more or less tourist rates (>5c spreads plus commissions, no leverage!). The advent of online trading platforms, tight spreads, and leverage was like a dream come true! Unfortunately bucketshops and all their tricks came along with it, I guess there's always a price to pay!

I can't remember that far back, in fact I don't think I even knew about things like volume and volatility, I wonder if volatility has changed dramatically since retail has become more accessible and popular, anyone know?
  • #270
  • Aug 17, 2010 4:14pm Aug 17, 2010 4:14pm
Quoting pipmutt
I'd call it a lemming house rather than a slaughter house....


http://www.cartoonstock.com/lowres/rjo1077l.jpg
love this!
Time hides Nothing
  • #271
  • Aug 17, 2010 4:17pm Aug 17, 2010 4:17pm
I think this threads Ironic

As if there is a reason why really... Its just the way it is and the way it needs to be and I guess the way it will always be.

Until you can understand this I believe you will always be fighting the market.

Like looking in the rear view mirror trying to find a definative reason for all that road kill.... Watch out for the tree
Time hides Nothing
  • #272
  • Aug 17, 2010 4:21pm Aug 17, 2010 4:21pm
Quoting CindyXXXX
love this!
lol, that was me on the right, I used to check forums before making a trade, see what everyone else thought! If only I knew then what I know now......
  • #273
  • Aug 17, 2010 4:28pm Aug 17, 2010 4:28pm
Quoting pipmutt
lol, that was me on the right, I used to check forums before making a trade, see what everyone else thought! If only I knew then what I know now......
Yeah but we alll start in that seat thats the beauty of it, if we can stick around long enough ... if we're lucky we can slowly move up another chair
Time hides Nothing
  • #274
  • Aug 17, 2010 4:48pm Aug 17, 2010 4:48pm
Quoting CindyXXXX
Yeah but we alll start in that seat thats the beauty of it, if we can stick around long enough ... if we're lucky we can slowly move up another chair
There's so much truth in that cartoon... and also, I think, an answer to the thread question. When you first start out - guess what - you're going to be on the wrong side. The loser side. The lemming side. Then, if you're smart enough to not get blown out and determined enough to keep learning and growing, you can possibly advance toward the left. The people to the left have a decided advantage - they are not looking to anyone else for their trading decisions.

What percentage of traders - pro and otherwise - are acting in a completely responsible way when it comes to their trading? Not a big number, I'd bet.

(A side note: Does a forum, like this, tend to lead a person more toward responsible, independent trading or lemming trading? Interactive Trading, Trading Systems etc.. You can be the judge of that.)
  • #275
  • Aug 17, 2010 5:00pm Aug 17, 2010 5:00pm
Quoting FXSurfer

(A side note: Does a forum, like this, tend to lead a person more toward responsible, independent trading or lemming trading? Interactive Trading, Trading Systems etc.. You can be the judge of that.)
My point exactly (Ironic) - well said
Time hides Nothing
  • #276
  • Aug 17, 2010 5:17pm Aug 17, 2010 5:17pm
Quoting FXSurfer
(A side note: Does a forum, like this, tend to lead a person more toward responsible, independent trading or lemming trading? Interactive Trading, Trading Systems etc.. You can be the judge of that.)
Totally not, this forum is the CNBC of trading forums, it exists as a commercial venture for the owners, nothing else. That's why I can't understand why some senior members seem so concerned over the 'decline' in standards, did it ever have any good content? (i.e. stuff that is not repeated in a million other places on-line) FF is enticing to the rank beginner (and let's face it, we all start somewhere) due to the multiplicity of supposed systems and 'gurus', but really it's nothing more than newbie churn and burn.
The breaking of a wave cannot explain the whole sea.
  • #277
  • Aug 17, 2010 5:30pm Aug 17, 2010 5:30pm
Quoting pipmutt
To get anywhere near preferential (interbank) rates you probably would have needed in excess of 500k but it wasn't just money which prohibited participation, there were other criteria. Pre-'96 it was still possible to trade retail if you didn't mind paying more or less tourist rates (>5c spreads plus commissions, no leverage!). The advent of online trading platforms, tight spreads, and leverage was like a dream come true! Unfortunately bucketshops and all their tricks came along with it, I guess there's always a price to pay!

I can't remember...
Yes, the spreads were outrageously wide back then.....which is why I laugh when folks complain about a 1.2 pip spread vs a 1.7 pip spread.....it is totally funny to me. Folks, you have it made nowadays!!!
  • #278
  • Aug 17, 2010 5:37pm Aug 17, 2010 5:37pm
Quoting FXSurfer
There's so much truth in that cartoon... and also, I think, an answer to the thread question. When you first start out - guess what - you're going to be on the wrong side. The loser side. The lemming side. Then, if you're smart enough to not get blown out and determined enough to keep learning and growing, you can possibly advance toward the left. The people to the left have a decided advantage - they are not looking to anyone else for their trading decisions.

What percentage of traders - pro and otherwise - are acting in a completely responsible...

Wise words buddy,
Only by playing the game on your own and with hard work will get you on that side consistently....

But off course, knowing the basics is essential atleast in my eyes...

happy pippin'
  • #279
  • Aug 17, 2010 6:26pm Aug 17, 2010 6:26pm
Quoting Craig
Totally not, this forum is the CNBC of trading forums, it exists as a commercial venture for the owners, nothing else. That's why I can't understand why some senior members seem so concerned over the 'decline' in standards, did it ever have any good content? (i.e. stuff that is not repeated in a million other places on-line) FF is enticing to the rank beginner (and let's face it, we all start somewhere) due to the multiplicity of supposed systems and 'gurus', but really it's nothing more than newbie churn and burn.
I do agree, Craig.

I don't mean to bash Twee or the forum at all, I want to be clear on that point.

But, let's face it. It's good for two things:

1) Very beginner info.
Like you say, we all start somewhere and the info in print and online regarding forex trading is straight-up laughable and a huge misinformation campaign. If a person is diligent and objective enough, they can find some basic start-up info here - trading platforms, data feeds and of course brokers. (Links thoughtfully provided by management)

2) What others are doing (badly).
I think that it was in The Art of the Trade that I read about focusing on what losers are doing - who's getting currently spanked in their positions and what their next probable actions will be. A main focus of Trading and Exchanges is informed vs. uninformed traders. Steidelmayer primarily concerns himself with distinguishing trader classes and aligning oneself with those who are positioned for profit. There's a lot to be learned from how traders here do their trading - as the old saying goes: Do as I say, not as I do. Except in this case, don't do as they say or do. No joke.
  • #280
  • Aug 17, 2010 7:45pm Aug 17, 2010 7:45pm
think like and trade a market maker ,find STOPS, then pay for your kids school LOL
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