The one hurdle EVERY trader needs to overcome | Forex Factory

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The one hurdle EVERY trader needs to overcome

  • #1
  • First Post: Oct 29, 2010 3:50pm Oct 29, 2010 3:50pm
I had a realization in recent weeks, It came when I was reading my horoscope of all things. I cant remember the exact wording but it was something like:

Once you realize things will never be perfect you can start growing and becoming a mature and fully developed human being

or something. Anyway when I read it I immediately thought of trading and had one of those fleeting moments where everything is clear. I realized there can never be a perfect system for trading because once it's discovered it becomes imperfect and stops working. I think having this realization it a big step for my trading career. For years and years I searched for an EA that was "intelligent" and could outsmart the market. I don't consider myself a trader I consider myself a programmer. A trader spends all his time looking at charts. I feel more at home looking at equity curves and deciphering back-test results and weighing up probabilities. However in the end myself and the trader are not all that different. I am finally making some profit but the FAR MORE IMPORTANT thing is I've become "desensitized" or "immune" to the advertising and hype that is rife in forex. It's funny, a year ago I came up with a lousy system that I hadn't properly backtested and was too quick to open an account (which I blew).

A year later (now) I'm researching and improving my system and have it running on demo (and it's profiting nicely) and I feel ABSOUTELY NO rush in opening a real money account. It seems almost as if laziness has become the predominant influence in my trading.
  • #2
  • Oct 30, 2010 3:04am Oct 30, 2010 3:04am
Quoting FrinkFX

It seems almost as if laziness has become the predominant influence in my trading.
And that's a good thing?
  • #3
  • Oct 30, 2010 4:50am Oct 30, 2010 4:50am
Quoting FrinkFX
Once you realize things will never be perfect...
Agreed...
  • #4
  • Oct 30, 2010 6:04am Oct 30, 2010 6:04am
Quoting pipmutt
And that's a good thing?
Laziness, but a different type of laziness to being too lazy to work on strategies. More of a being-to-lazy-to-open-an-account type of laziness.

And furthermore, I think once the trader has overcome this first hurdle,
The next one they must encounter is the % return one. Anything more than about 30% annual return on investment is greed and is very likely to be punished by high drawdowns and eventual bankrupcy.
The "get-rich-quick" mentality that gets so many people into forex is also what empties their pockets and eventually scares them off. Going on my extensive research anyways, You can comfortable
make a lot more than leaving your money in a bank account. But all these "systems" that I constantly see in Google Adwords ads (which I click on for fun) that promise 200% return every month (or whatever outrageous
figure they plucked out of the sky) really make me laugh. I love those websites for the sheer entertainment value of them. I also chuckle at the fact that a mere year or two ago I read these websites actually
believing the stuff on them. Now that's progress!
  • #5
  • Oct 30, 2010 7:51am Oct 30, 2010 7:51am
Quoting FrinkFX
Laziness, but a different type of laziness to being too lazy to work on strategies. More of a being-to-lazy-to-open-an-account type of laziness.

And furthermore, I think once the trader has overcome this first hurdle,
The next one they must encounter is the % return one. Anything more than about 30% annual return on investment is greed and is very likely to be punished by high drawdowns and eventual bankrupcy.
The "get-rich-quick" mentality that gets so many people into forex is also what empties their pockets and eventually scares them...
You're just as brainwashed like any other guy who clicks on those ads with 'hope'. I think your beliefs came from failed attempts and bad advice that soon became etched into your mind of what is possible in forex or trading in general.
Imo, the biggest HURDLE in trading is to think beyond what is possible and do what seems difficult to natural tendencies. What i have learned in my short trading experience is to NEVER SAY NEVER. Keep the mind open for ideas and possibilities (i.e ideas that seem 'outrageous' from a naked eye). Never discredit or RIDICULE the possibilities. It's usually the losers who tell potential winners that it's impossible or outragoues to pursue such goals.
  • #6
  • Oct 30, 2010 7:56am Oct 30, 2010 7:56am
My signature which says:

The great irony of trading is that it is difficult precisely because it is so very simple.

There is a layer of complications in trading which human beings have developed through their innovation. Once a trader starts to penetrate this layer of complications,he enters in the world full of clarity and he also see the top 1-5% of traders in that world.

What changed my trading?

For few months i started to observe the futures market everyday and make a note of it in word file. Where price do gap opening, where it hit high, where it hit low, where it closes. Basically i observed how the price moves in S&P 500 futures everyday in a continuous series.

Everyday i used to revise my journal and after few months i got the hang of the markets. Still a long way to go for me as a trader, but i am enjoying the simplicity.
  • #7
  • Oct 30, 2010 12:33pm Oct 30, 2010 12:33pm
Quoting hilmy83
You're just as brainwashed like any other guy who clicks on those ads with 'hope'. I think your beliefs came from failed attempts and bad advice that soon became etched into your mind of what is possible in forex or trading in general.
Imo, the biggest HURDLE in trading is to think beyond what is possible and do what seems difficult to natural tendencies. What i have learned in my short trading experience is to NEVER SAY NEVER. Keep the mind open for ideas and possibilities (i.e ideas that seem 'outrageous' from a naked eye). Never discredit or...
Read my post again. My Beliefs came from thousands of hours of hard work. To the best of my knowledge nearly all the "big players" in forex all make about 10% gains every year. Are you saying these people are wrong? Your post is suitably vague to allow me to wonder wtf you're referring to but I;'m offended by you calling me Brainwashed.
  • #8
  • Oct 30, 2010 12:42pm Oct 30, 2010 12:42pm
Quoting FrinkFX
To the best of my knowledge nearly all the "big players" in forex all make about 10% gains every year.
Probablly more as investing in the property market will bring you atleast that - well it used to. Remember though that the big players '10%' could equate to 30billion and order size becomes the limiting factor with huge positions. So small time players needn't necessarily look to institutions to see how to trade or what returns to expect. Essentially two different markets.
  • #9
  • Oct 30, 2010 12:58pm Oct 30, 2010 12:58pm
Quoting FrinkFX
The next one they must encounter is the % return one. Anything more than about 30% annual return on investment is greed and is very likely to be punished by high drawdowns and eventual bankruptcy.
For money managers with millions under management, then yes... a nice steady 10% is quite good. There are many instances of professional traders taking small accounts and creating huge returns with them. Obviously, their talent eventually becomes noticed and they attract the "big" money and can trade much more conservatively and still make more money than they ever had before.
______
Michael Marcus quote from Market Wizards, by Jack Schwager...
" There were years when I was up 300 percent and he was up 1,000 percent. He had a very great gift." (talking about Bruce Kovner)

From this, I feel that he was talking about more than one instance (one particular year), hence "There were years..."
And yes, Kovner is probably one of the greatest traders alive...
but it can be done.
______

"Nevertheless, my belief is that the largest profit percentages are made by short-term traders who really have their psychology together. I've seen short-term traders who could make as much as 50% or more per month (on small amounts of money such as a $50,000 account) when they were in tune with the market and themselves. "

page 85, Trade Your Way to Financial Freedom, 2nd Edition, Tharp
_______

I believe that it's quite possible to make extraordinary returns because of the leverage provided in forex (and futures), returns that "blow away" the good year for a mutual fund (30%).

Can a beginner do it? Can someone who dabbles a few hours a week in the markets do it? Someone who has no real grasp of money management, discipline, or a system/method with a real "edge"?
Absolutely Not.

But I'll put my money on the trader with a real "edge", proper money management, who trades every day... taking every valid signal regardless of his current P/L.

Just my 2 cents .
  • #10
  • Oct 30, 2010 1:24pm Oct 30, 2010 1:24pm
Quoting FrinkFX
Read my post again. My Beliefs came from thousands of hours of hard work. To the best of my knowledge nearly all the "big players" in forex all make about 10% gains every year. Are you saying these people are wrong? Your post is suitably vague to allow me to wonder wtf you're referring to but I;'m offended by you calling me Brainwashed.
Big players make only 10%? How did you come up with that number? I find it hard to believe you were even able to ask any of them and then that they would tell you. This sounds like a number you pulled "out of the sky". The truth is nobody makes the same percentage over different periods. A trader might make 50% one year and then 10% the next (whether using the same system or not). Which by the way, using the right startegy or set of strategies at the right time is key.
  • #11
  • Oct 30, 2010 2:45pm Oct 30, 2010 2:45pm
Quoting 2+2=4ex
Big players make only 10%? How did you come up with that number? I find it hard to believe you were even able to ask any of them and then that they would tell you. This sounds like a number you pulled "out of the sky".
This forum is filled with things pulled "out of the sky". There are a ton of threads like this, about "the one hurdle to overcome", "the most important thing", "the only thing you will need to succeed". Unfortunately, most of the info is regurgitated crap, that will never help anyone but the poster to feel better about themselves. There are almost no interesting, useful, fresh threads/posts left on the forum any more, and it si kind of sad. I come here mostly for entertainment...
Stubbornly persistent
  • #12
  • Oct 30, 2010 3:19pm Oct 30, 2010 3:19pm
Quoting 2+2=4ex
Big players make only 10%? How did you come up with that number? I find it hard to believe you were even able to ask any of them and then that they would tell you..
http://www.barclayhedge.com/research.../sub/curr.html
  • #13
  • Oct 30, 2010 4:49pm Oct 30, 2010 4:49pm
Quoting 2+2=4ex
Big players make only 10%? How did you come up with that number? I find it hard to believe you were even able to ask any of them and then that they would tell you. This sounds like a number you pulled "out of the sky". The truth is nobody makes the same percentage over different periods. A trader might make 50% one year and then 10% the next (whether using the same system or not). Which by the way, using the right startegy or set of strategies at the right time is key.
ugh. nobody told me. Common fucking sense told moe.
  • #14
  • Oct 30, 2010 5:42pm Oct 30, 2010 5:42pm
Quoting kingfisher
My signature which says:

The great irony of trading is that it is difficult precisely because it is so very simple.

There is a layer of complications in trading which human beings have developed through their innovation. Once a trader starts to penetrate this layer of complications,he enters in the world full of clarity and he also see the top 1-5% of traders in that world.

What changed my trading?

For few months i started to observe the futures market everyday and make a note of it in word file. Where price do...
And simple it is. You merely have to look.
The road to pipland is arduous and fraught with challenge.
  • #15
  • Last Post: Oct 30, 2010 7:38pm Oct 30, 2010 7:38pm
Quoting stevexyg
Probablly more as investing in the property market will bring you atleast that - well it used to. Remember though that the big players '10%' could equate to 30billion and order size becomes the limiting factor with huge positions. So small time players needn't necessarily look to institutions to see how to trade or what returns to expect. Essentially two different markets.
Same market, but different methods of battle. We're effectively guerrillas doing hit and runs, while the big boys are forced into open and protracted battles. The fact we can enter and exit positions near instanteously is a massive advantage. Our entries and exits can be more efficient, with far less risk, and we can take advantage of far more opportunities.
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