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Who has become rich trading forex?

  • #141
  • Nov 16, 2010 12:25pm Nov 16, 2010 12:25pm
Quoting kundrit
I agree with you, its difficult to built an edge in forex trading, since its different from one to another participants
This is an extremely important point.

If you don't have an edge then ultimately you may as well flip a coin. (money management and discapline are irrelevant without finding an edge first).

However an edge is very, very difficult to find. Why? Because over the long run almost every variable/parameter gives a 50% percent probability of success.

So whatever you choose: breakouts, inside bars, MA's, in the long run they give a 50% chance of success. This is not an edge.

Another major flaw with Forex trading is that as soon as a significant edge has been discovered. Widespread computerised trading will erase the advantage. IE the edge will disappear.
  • #142
  • Nov 16, 2010 12:27pm Nov 16, 2010 12:27pm
I discovered a nice edge 5 years ago, which is still paying out at 10% per year. But when this ceases to work there will be no warning.
  • #143
  • Nov 16, 2010 9:01pm Nov 16, 2010 9:01pm
I started a couple of years ago with a friend's plan and last nearly $7500 in the next couple of months, leaving me $2500. I was pretty angry as I realised that this plan was just a way to relieve people of $250 for his club's annual fee.

But looking back, I'm still angry at him but it was a truly valuable learning experience. The disasters I suffered through at time taught me such valuable lessons. The following year after much searching I found another plan and have stuck to it. Using the remains of my first attempt at FX, I was getting 10 cents a pip for my trades last year (getting $3.00 profit per trade on average). This year after sticking to the plan (almost) religiously I got my first big win!! I still make errors occasionally, but nothing ever close to fatal. And since I follow the rules I feel safe (never know what might happen in the future though).

Now FX adds a considerable amount to my income. I can't live on it yet, but I can see that in the forseeable future I will make a living from forex.
  • #144
  • Dec 2, 2010 2:43pm Dec 2, 2010 2:43pm
I started with 500$ and I'm now at 1750$ in 4 months. The beginning was a little choppy, but from 1000$ to 1750$, my balance has grown consistently. I don't hurry anything.

No blown account
No chart with 45756 indicators
No 1M entry strategy with full-moon regulated stop losses

Just prices.
  • #145
  • Dec 2, 2010 4:06pm Dec 2, 2010 4:06pm
I believe the secret to becoming a profitable Forex trader is truly understanding money management. I know with that sentence, I just lost about 95% of the readers: but isn't that about the same % that consistently lose. Money management is an oft used term that few traders grasp. With a "marginal system at best" one can become profitable with good MM. Read the story of the original "Turtles" (commodity traders). Their system was only accurate about 40% of the time but with a good MM system that they were require to strictly adhere to while trading the system.. most made lots of money.
  • #146
  • Dec 2, 2010 8:02pm Dec 2, 2010 8:02pm
In order to be rich you have to do what the rich do. Most of them don't spend money foolishly and if they do the riches eventually flee from them.

So if the objective is just to become rich, stop buying worthless junk. Flashy cars with ghetto rims, electronic gadget this and electronic gadget that. Everyone knows a car depreciates in value the minute you buy it and everyone knows an electronic gadget is obsolete the minute you buy it.

The more money you spend, the more you have to make. The more you have to make the less rich you are. If money controls you and you are a slave to it, forex will likely cause you more heartaches than it is worth.

If you only spend money on needs rather than wants, you can become rich without forex... forex can take up the slack provided you don't think of it as a get rich quick scheme. The minute you think of it as such you're right where the market wants you to be and that's behind the eight ball.

The risk disclaimers on every broker advertisement is there for good reason. This market can swallow anyone in an instant if you play it foolishly.
  • #147
  • Dec 2, 2010 11:35pm Dec 2, 2010 11:35pm
You first need to define what rich is before you know what you're going after, careful what you wish for cause you just might get it.
  • #148
  • Dec 2, 2010 11:39pm Dec 2, 2010 11:39pm
Quoting fxarby
You first need to define what rich is before you know what you're going after, careful what you wish for cause you just might get it.
monkeys eating dance flakes soup apples.

see, i can make nonsense statements too. i win though because i didn't copy and paste this from somewhere else (yes, i have seen what you wrote somewhere else on here).

weeeeeeeeeee.
Congratulations ScalaFX for coming out of the closet!
  • #149
  • Dec 3, 2010 4:31am Dec 3, 2010 4:31am
Quoting ultfrisbee
I started with 500$ and I'm now at 1750$ in 4 months. The beginning was a little choppy, but from 1000$ to 1750$, my balance has grown consistently. I don't hurry anything.

No blown account
No chart with 45756 indicators
No 1M entry strategy with full-moon regulated stop losses

Just prices.
ultfrisbee if you don't lie than you were vey very lucky to earn 250% in only 4 months
  • #150
  • Dec 3, 2010 9:09am Dec 3, 2010 9:09am
Quoting alig
ultfrisbee if you don't lie than you were vey very lucky to earn 250% in only 4 months
Hopefully I'll requote you in april with a much larger figure!
  • #151
  • Feb 1, 2011 7:34pm Feb 1, 2011 7:34pm
Quoting alig
ultfrisbee if you don't lie than you were vey very lucky to earn 250% in only 4 months
How much evidence would you need before you would stop ascribing success to luck. Richard Dennis took $400 on the CME, and using only technicals, he grew it to over a million in five years. Later, he made a bet with his partner that he could teach anyone to trade successfully. Using a relatively small group of trainees (in all about 30 people, I think), he taught them to trade technically. Over a five year period they made about $175 million in profit. Just luck?

By the way, Warren Buffett is almost purely a fundamental investor. In Fooled by Randomness, Nassim Taleb makes a pretty strong argument that Buffett's success may have been just luck too.
  • #152
  • Feb 1, 2011 8:08pm Feb 1, 2011 8:08pm
Quoting duffypratt
Just luck?
http://upload.wikimedia.org/wikipedi...iagram.svg.png

http://en.wikipedia.org/wiki/Probability_distribution
  • #153
  • Feb 1, 2011 8:41pm Feb 1, 2011 8:41pm
From my personal opinion what people lack the most is patience and self control. If you stare the charts entire day, you see certain things and easily regret not going for it when you should.

I see a lot of people that understand the game much better than I yet they lack self control to follow their own rules they set for themselves.

Once you break the ice and start trading like a smart man this is the best job in the world. A beach on Thailand, a coffee shop in Paris, your bed, the Ski resort in Italy....These are all the places where you office might be

You can imagine by how far it beats the cubical

Find your rules, find your system, and STICK ( i cannot stress how this is important) to your system if you know it works.

Reason why 95% traders fail is because this is not a job for anyone, just like being a professional mixed martial artists isn't for anyone.


I wish you all the best!
  • #154
  • Feb 1, 2011 9:53pm Feb 1, 2011 9:53pm
Quoting Marv
http://upload.wikimedia.org/wikipedi...iagram.svg.png

http://en.wikipedia.org/wiki/Probability_distribution
What makes you think that trading success should approximate a normal distribution? The evidence is that almost everyone loses. That's not what would happen if a normal distribution applied. Even if you take into account transaction costs, most people would end up losing much more slowly than they do. It seems perfectly clear to me that there is a "skill" to losing, and it's an easy skill to attain. What's not as clear is the converse.
  • #155
  • Feb 1, 2011 11:10pm Feb 1, 2011 11:10pm
Quoting duffypratt
What makes you think that trading success should approximate a normal distribution? The evidence is that almost everyone loses.
Your understanding of probability distribution as it applies to the performance of the masses of traders seems a little faulted here.

The plot shows the distribution in terms of standard deviations around the mean (expectation), not around break even point as I suspect you have assumed. "Almost everybody loses" because that's what the mean is: Loss, due to transaction costs (spreads & commissions).

Winners and losers (be it traders or individual trades for that matter) are randomly distributed around expectancy. You can verify this by, say, simulating a few million trading accounts (each using a different strategy/system and trading conditions), backtest them over a statistically significant period, then plot the results around an already calculated theoretical average mean/expectation. Observe the distribution plot. Now find the one or two best-performing accounts (with the strongest positive deviation from the mean) and notice how "not due to luck" their performance seems.

Now there is still the chance that some of the winning accounts won as a result of a true statistical edge (created by their strategies) instead of merely a random positive deviation (and the same on the losing side btw!), but that is not the point. The point is that the distribution of such a large number of trading accounts will be a random distribution.
  • #156
  • Feb 1, 2011 11:38pm Feb 1, 2011 11:38pm
Quoting Marv
Your understanding of probability distribution as it applies to the performance of the masses of traders seems a little faulted here.

The plot shows the distribution in terms of standard deviations around the mean (expectation), not around break even point as I suspect you have assumed. "Almost everybody loses" because that's what the mean is: Loss, due to transaction costs (spreads & commissions).

Winners and losers (be it traders or individual trades for that matter) are randomly distributed around expectancy. You can verify this...
The distribution will be random if there are no non-random causes for the distribution. But it seems perfectly clear to me that there are non-random causes to people losing. And to that extent, at least, I would not expect a random distribution.

Also, you seem to expect a gaussian distribution to the results. Without a huge amount of data, and that is data that no-one has obtained at this point, I see absolutely no reason for assuming that the distribution, even if it random, would end up being gaussian. It could still be random, in some sense, and have fat tails.
  • #157
  • Feb 1, 2011 11:54pm Feb 1, 2011 11:54pm
Quoting duffypratt
But it seems perfectly clear to me that there are non-random causes to people losing.
What do you mean by this and how exactly does it make the distribution of winners vs losers around expectation a non-random one?
  • #158
  • Feb 2, 2011 12:13am Feb 2, 2011 12:13am
Quoting Marv
What do you mean by this and how exactly does it make the distribution of winners vs losers around expectation a non-random one?
There are stong psychological tendencies that cause people to make the wrong choices while trading. The two main ones are to hold on to losers in the hope that they will reverse, and to get out to early on winners because they are afraid of losing profits. There are other systematic errors that traders make as well.

If, in a group of people, you have a large number who gravitate towards these errors, then they will lose even more than the expectancy of their systems would predict. They lose because they have a natural skill for losing. Thus, the random distribution that you would find around a certain expectancy will fail. You end up with more losers than your back testing would predict.
  • #159
  • Feb 2, 2011 1:00am Feb 2, 2011 1:00am
Quoting duffypratt
How much evidence would you need before you would stop ascribing success to luck. Richard Dennis took $400 on the CME, and using only technicals, he grew it to over a million in five years. Later, he made a bet with his partner that he could teach anyone to trade successfully. Using a relatively small group of trainees (in all about 30 people, I think), he taught them to trade technically. Over a five year period they made about $175 million in profit. Just luck?

By the way, Warren Buffett is almost purely a fundamental investor. In Fooled by Randomness, Nassim Taleb makes a pretty strong argument that Buffett's success may have been just luck too.
But you don't mention that he made an aggregated loss of 50 million $ in 1987/88 forcing him to stop managing capital of clients.
Also the turtle system which was very successful and made this 175 millions till 1986, then had drastic drops in performance making huge losses... and till 2010 it never became a winning system again.
There is always a little luck involved to find the right system in the right time ... because market changes but a strict system never changes.
consistency wins
  • #160
  • Edited 12:38pm Feb 2, 2011 12:20pm | Edited 12:38pm
duffypratt, thanks for clarifying.

I disagree then.

Quoting duffypratt
it seems perfectly clear to me that there are non-random causes to people losing. And to that extent, at least, I would not expect a random distribution.
Until you can mathematically prove otherwise, winners and losers are randomly distributed. The "psychological errors" that the losing traders may make don't skew the overall long-term distribution nor make it "non-random".

Oh and just a side-note: A "random distribution" is not necessarily Gaussian (many seem to assume that random = Gaussian). Here's Wolfram's definition:

"Random distribution: A statistical distribution in which the variates occur with probabilities asymptotically matching their "true" underlying statistical distribution is said to be random."

I chose the Gaussian plot because it's the simplest way of saying "probability distribution". The latter does explains a lot of things in life, but like Nassim Taleb said: It does not exclude the role of skill (or lack thereof) or anything like that! That, I believe, would be a misunderstanding.
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