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Attachments: Ridiculous Trading Myths
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Ridiculous Trading Myths

  • #161
  • Nov 6, 2010 10:19pm Nov 6, 2010 10:19pm
Yikes, myth hits the fan.
Stay calm, be brave, wait for the signs - Jasper Friendly Bear
  • #162
  • Nov 6, 2010 10:23pm Nov 6, 2010 10:23pm
Quoting fxhermit
Yikes, myth hits the fan.

At high speed.
  • #163
  • Nov 7, 2010 4:21am Nov 7, 2010 4:21am
Quoting nasir.khan
Let the winners run and cut the losers short.

Duh tell me how.........?

I mean ok it could be true for some traders who have low win rates but u cant just throw it out at every one!
.

Let the winners run until they are losers and then cut them short. :nerd:
  • #164
  • Nov 7, 2010 5:36am Nov 7, 2010 5:36am
Quoting brenzaj42
I like to think of my system as - if A happens then B happens, C will happen 80% of the time, that is how I approach the forex market.
Quoting brenzaj42
Couldn't agree more. I just taught one of my good buddies how to trade last month. It took me a Saturday afternoon to teach him
I understand money is meaningless to you these days but Ill give you 10k aussie dollars for a saturday afternoon of your time to teach me your a+b=c(80%) system. Being a trend following technique I am assuming the risk reward is better than 1:1. This is a serious offer that I have made publicly here on FF. Of course I will need to see some proof to validate your system results, 10k is alot of money for me, more than my net worth and I have already lost much more than this to the market so you can understand my need for due diligence. I have access to credit so obtaining the funds is no problem. You can donate it to charity. Your last two years of statements will be more than enough to validate your claim. I hope my offer is acceptable to you
BTC Return This Year: na
  • #165
  • Nov 7, 2010 9:39am Nov 7, 2010 9:39am
Quoting Monroe
you can risk 12% or so if you have a 90%+ hit pretty much... why not?
Cause if u get your 10 (in a 100 trades according to your 90% win rate) looses in a row you would loose 65% of your account......

and most people will change their trading system after that.

So i think 1%-2% is a good rule or maybe 3.5% if u have a super win ratio like 90%.
.
  • #166
  • Nov 7, 2010 9:45am Nov 7, 2010 9:45am
Ridiculous Trading Myth :
Your exit is simply the reverse signal to your entry.
Congratulations ScalaFX for coming out of the closet!
  • #167
  • Nov 7, 2010 10:05am Nov 7, 2010 10:05am
Quoting nasir.khan
Cause if u get your 10 (in a 100 trades according to your 90% win rate) looses in a row you would loose 65% of your account......

and most people will change their trading system after that.

So i think 1%-2% is a good rule or maybe 3.5% if u have a super win ratio like 90%.
.
Unless you can't handle the emotional swings, it doesn't matter if you lose 65% as long as you have a positive expectancy ensuring that you'll win in the long run.

Call me aggressive, but I believe that if you have an edge, you should make the most of it. My goal is to attack positions and have a MAXIMUM growth rate with 0% long-term Risk of Ruin. There are times when I go in as big as 8% trying to make the most out of a screaming opportunity (and no, I don't care what you think of the way I trade).

IMO, it would be stupid (both mathematically and practically) to keep risking that measly 1% when you have a really strong edge, unless you have a 6-7 figure capital or something. So yeah, it's a trading myth to stick to that percentage in order to be successful.
  • #168
  • Nov 7, 2010 10:08am Nov 7, 2010 10:08am
Quoting fxhermit
Although I agree that there really is no secret formula I don't necessarily agree that the markets are always changing in the manner that I think you must mean. Yes, the markets are constantly changing but that change, I believe, can be decifered and consistently exploited. As I said in my previous post, noise, in all of its various manifestations can obscure the undelying Impulse and Corrective wave motion of the market. That wave motion has been the the structure of all time/price plotted charts since the beginning of technical analysis. When...
Great post hermit, one of many on this and other threads I have seen Cindy start.

I hate "the market is random myth" myself, the higher the time frame you look at the less random they look.

I believe big big money moves the markets (by collusion) they create the new major trends all we have to do is capitalise on their changes in direction.

When I started out in this forex game the most important prerequisite was that whatever I learned to help me make money from it had to be sustainable for my lifetime.

As an example I can look at a gold chart from way back in 1992 where the price action patterns , trends and support and resistance work in exactly the same way as they do now.

I realise I may have to tweak my methods to suit volatility etc but that quantity of data is enough to keep me happy.
  • #169
  • Nov 7, 2010 10:14am Nov 7, 2010 10:14am
Quoting jag1966
I hate "the market is random myth" myself
Yes we all hate it, but it's true and proven that the market is mostly random.

If you believe otherwise then please show me a system/set of rules that consistently beats it.

You can't because if it weren't "random" then a set of mechanical rules could easily be devised to consistently beat it.

It is my belief that one of the first steps a trader should take is to acknowledge and learn how to deal with such predominant randomness in the markets, yet it seems most traders bypass that through ignorant denial.
  • #170
  • Nov 7, 2010 10:35am Nov 7, 2010 10:35am
Quoting fxhermit
Yikes, myth hits the fan.
lol

Personally I believe the 95% of traders don't make it statement is a myth.

I just think 95% of people don't have the patience to become a successful trader.
  • #171
  • Nov 7, 2010 10:45am Nov 7, 2010 10:45am
Quoting Oshawa
Would you mind sharing a bit of your very simple trading method? e.g., based on what would you decide to take a trade etc. A few sentence or one short paragraph or two would do. I am sure that would help out a lot of newbies and even the experienced. Thanks.
I just use two moving averages. They have to cross in a certain way. Use your imagination about what type of cross would have to happen. i also use parallel and inverse analysis to study specific currencies. The last part is just knowing the best times to jump in. It is so simple, people here would probably not believe it but I don't care. If you know the basics of the forex market, you should be able to figure it out.
  • #172
  • Nov 7, 2010 10:53am Nov 7, 2010 10:53am
Quoting Marv
Yes we all hate it, but it's true and proven that the market is mostly random.

If you believe otherwise then please show me a system/set of rules that consistently beats it.

You can't because if it weren't "random" then a set of mechanical rules could easily be devised to consistently beat it.

It is my belief that one of the first steps a trader should take is to acknowledge and learn how to deal with such predominant randomness in the markets, yet it seems most traders bypass that through ignorant denial.

Quoting jag1966
Great post hermit, one of many on this and other threads I have seen Cindy start.

I hate "the market is random myth" myself, the higher the time frame you look at the less random they look.

I believe big big money moves the markets (by collusion) they create the new major trends all we have to do is capitalise on their changes in direction.

When I started out in this forex game the most important prerequisite was that whatever I learned to help me make money from it had to be sustainable for my lifetime.

As an example I can look...
IMO Market is both Random and Predictable.

Lets say we have a system/method that tells us that if price breaks 100, it will hit 110. This is where market is predictable to some extent, like 70%-95% of the times ( according to our Win ratio).

Now we do not know in what manner price is going to hit 110 and this is where its random.

Will is shoot straight to 110 in a day?

Will it go to 105 than retrace back to 102 and than will hit 108 and than retrace back to 105 and than shoot straight to 110??

Will it go to 109 and than stay there for next 5 days and than one morning breakout and hit 110??

I think i can make up like 100 patterns here and still price may not act exactly like one of them lol.........and this what randomness is but again i am still sure that price will reach 110 so i am putting a trade and this where its predictable no matter how much random it could be.
.
  • #173
  • Nov 7, 2010 11:03am Nov 7, 2010 11:03am
Quoting Marv
Unless you can't handle the emotional swings, it doesn't matter if you lose 65% as long as you have a positive expectancy ensuring that you'll win in the long run.

Call me aggressive, but I believe that if you have an edge, you should make the most of it. My goal is to attack positions and have a MAXIMUM growth rate with 0% long-term Risk of Ruin. There are times when I go in as big as 8% trying to make the most out of a screaming opportunity (and no, I don't care what you think of the way I trade).

IMO, it would be stupid (both mathematically...
I totally agree in what u are saying. It all comes down to Psychology of the person putting on the trades, Some cane handle a drawdown of 65% and some simply cant.

It all comes down to confidence in your trading system/method too and that confidence is made up of years of experience and more than a 1000 trades showing you that what u are doing is really works over the longterm no matter what the outcome is in short term.

Well you should never care about what an idiot with an internet connection thinks of you.


PS: Can u please explain what do u really mean here?

Quote
My goal is to attack positions and have a MAXIMUM growth rate with 0% long-term Risk of Ruin
.
  • #174
  • Nov 7, 2010 11:08am Nov 7, 2010 11:08am
Quoting ReaperKK
lol

Personally I believe the 95% of traders don't make it statement is a myth.

I just think 95% of people don't have the patience to become a successful trader.
So what you're saying is that 95% of people aren't successful (due to lack of patience), but they "make it" anyway?
  • #175
  • Nov 7, 2010 11:19am Nov 7, 2010 11:19am
Quoting nasir.khan
Cause if u get your 10 (in a 100 trades according to your 90% win rate) looses in a row you would loose 65% of your account......

and most people will change their trading system after that.

So i think 1%-2% is a good rule or maybe 3.5% if u have a super win ratio like 90%.
.
lol 10 in a row... IMPOSSIBLE!! whuhahahaha!!!

but I agree with what Marv said, it's really about what your system is capable of. what is the reward on wins?

Take it to the max, or go home like a chump. If you really have an edge with anything close to 90% win rate, you're telling me you're going to stick to (what I consider a definite trading myth) 1-2% BS?

1-2% risk with no real edge playing TA patern/indicator probabilities fine... but if you have a real edge things are different aren't they?
  • #176
  • Nov 7, 2010 11:23am Nov 7, 2010 11:23am
Quoting Marv
Yes we all hate it, but it's true and proven that the market is mostly random.

If you believe otherwise then please show me a system/set of rules that consistently beats it.

You can't because if it weren't "random" then a set of mechanical rules could easily be devised to consistently beat it.

It is my belief that one of the first steps a trader should take is to acknowledge and learn how to deal with such predominant randomness in the markets, yet it seems most traders bypass that through ignorant denial.

I believe short term(small time frames) prices can be random although random is the result of thousands of transactions in the short term. But in the long term, price trends for a reason. Who cares what the reason is or if it is random as long as it trends. Ill just jump on and ride it.
  • #177
  • Nov 7, 2010 11:30am Nov 7, 2010 11:30am
Quoting Marv
but it's true and proven that the market is mostly random.

That may be so in your mind, but there are plenty of us that know differently and make money by seeing clarity and opportunities in your chaos.

Think about it if the market was truly chaotic and random then anybody using a coin toss would make the same returns as a trader with 10 years on the floor.

If you truly believe in the randomness of the markets why waste the time trading? Do you think you have more luck then others? Is that why you even attempt trading in your chaotic markets?

If the markets were truly chaotic and random, there would not be a market in the first place.
  • #178
  • Nov 7, 2010 11:31am Nov 7, 2010 11:31am
Quoting brenzaj42
If you know the basics of the forex market, you should be able to figure it out.
I'm really happy for you that you're able to beat the market, but finding an edge cannot be "easy" for the very simple reason that Forex is a zero sum game, and that you have to pay to participate. On that note, I'm curious how your apprentice is going to perform in the future.
You can find it easy (and apparently you do), but it isn't easy for the general participant, for the reason described above. It's like Usain Bolt saying running 100 meters in under 10 seconds is easy, as he does it consistently.
The nail that sticks out gets hammered back in
  • #179
  • Nov 7, 2010 11:33am Nov 7, 2010 11:33am
Quoting Noloqy
Forex is a zero sum game
Another myth to add to the list.
  • #180
  • Nov 7, 2010 11:40am Nov 7, 2010 11:40am
Quoting Marv
..
Unless you can't handle the emotional swings, it doesn't matter if you lose 65% as long as you have a positive expectancy ensuring that you'll win in the long run.
It requires ~186% return to recover from 65% drawdown. Not impossible, but it's not a situation I'd like to find myself in.

Call me aggressive, but I believe that if you have an edge, you should make the most of it. My goal is to attack positions and have a MAXIMUM growth rate with 0% long-term Risk of Ruin. There are times when I go in as big as 8% trying to make the most out of a screaming opportunity (and no, I don't care what you think of the way I trade).
Agree 100% that risk per trade is a personal decision. I don't believe that any strategy can ever guarantee "0% long-term Risk of Ruin" however.

IMO, it would be stupid (both mathematically and practically) to keep risking that measly 1% when you have a really strong edge, unless you have a 6-7 figure capital or something. So yeah, it's a trading myth to stick to that percentage in order to be successful.
I guess that much depends on how an individual defines success. If you mean that risking 1% fixed frac per trade of a $1k account is not going to generate a healthy income for MANY years, then the math definitely backs you up. But I'd respectfully suggest that 1% risk is still 1%, whether you have a $1k or a $1m account, i.e. there's no mathematical justification for decreasing pos size based on your equity (unless slippage/fills become a problem). Market behavior and probabilities are not going to change because of the size of one retail trader's account.
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