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Do you guys find that forex trading sucks?

  • #181
  • Dec 21, 2011 8:34am Dec 21, 2011 8:34am
This is my my 2nd and last post to this thread. It is redundent and just gives off a bad vibe to those that should be trading and learning from our triumphs and defeats. After all this is how one improves. Let me leave you with a quote posted on April 17th 2008 by one erock

"What a great market to trade. This is why Forex is so great the incredible amount of leverge that's involved".

And I do believe this was back before the CFTC lowered the leveerage to 50:1. My advice to those that truly want to have any chance of success. Set your own bar and do not listen to the dribble from those that have clearly had their heart broken by this market and only want to share their grief with others.

Good luck erock and goodbye...
  • #182
  • Dec 21, 2011 8:46am Dec 21, 2011 8:46am
Quoting numbnuts
The main reason that almost nobody can compound small accounts into the millions -

Imagine somebody suddenly handed you half a million dollars. What would you do with that half mil? Would you dump the whole lot in a forex account knowing the risks involved? Of course you wouldn't be that silly, right?

But that is the dilemma faced by successful forex traders. To turn a small account into a million, at some point in time you WILL have $500k in your account. At that time you will face the decision described in the previous paragraph -...
You are not looking at the big picture. Most successful traders I know do not view their trading strategies based on account value but in pips proportional to the account or in percentages. I use percentages. 1% of a 10k account is $100 then convert it into pips which is 100 pips. I use cost averaging positioning so say I short with 12 pips and it goes against (as I hope) and hit the next resistance, I then position 24 pips and do the same thing and use 48 pips. Three positions and I'm still under 1%. Then I ride it down and usually get my daily 2%.

It doesn't matter whether your acount is 1k, 10k, 100k, or whatever. You are still you using the same risk values.

I just recently got back on my feet in trading after losing a ton and figuring out what I did that went wrong. I know it's short (3 months) but I average a 50% increase in the account per month.
Taigen Profit This Month: na
  • #183
  • Dec 21, 2011 8:46am Dec 21, 2011 8:46am
Quoting erock
Forex is not more than currency conversion, that's what it is and what it's designed for. It's HUGE, there is no investor, hedge fund, mutual fund that can impact that market.

Hear me out, you want to make money when you trade, right? You're trading a market that isn't moved by investors it's moved by basically the world currency, which isn't trying make a profit but serve a purpose of currency conversion.

How you make money trading is based of off investor psychology. You trade markets where people all have the same objective as you,...
Now you are talking out of your backside.

If you break it down to the basics, there are 4 main markets, equities, commodities, currencies and bonds. Believe it or not, they are all interrelated and it is all about money flows. Money flows out of the US equities market and the $ strengthens, risk off. Risk on, money flows out of the $ to currencies with higher seeking interest rates. There is more to it than just currency conversion.

I suggest you read the following books because you clearly do not grasp the concept of trading any other markets apart from your LTBH equities trading.

Currency Trading and Intermarket Analysis: How to Profit from the Shifting Currents in Global Markets -
http://www.amazon.com/Currency-Tradi.../dp/0470226234

Intermarket Analysis: Profiting from Global Market Relationships
http://www.amazon.com/Intermarket-An.../dp/0471023299

Now run along, do your homework and then come back with how currency markets aren't tradeable.
  • #184
  • Dec 21, 2011 8:47am Dec 21, 2011 8:47am
Quoting deltatrade
Do you know what this shows? It shows that 30000 us traders make a profit! Don't you fell a little bit stupid to blame the markets rather than blaming yourself when 30000 people only in the us are making a profit from this market?
Ok, the link you're providing actually supports the hypothesis that a very large fraction of the traders fail. I'll tell you why in a minute.

With my academic background, I'm afraid I have to admit that my opinion is tilted towards to that erock. Trading forex profitably is very hard. Note that this is different than stating "making a profit in forex is hard", as with trading profitably I mean "having a positive expectation." I claim that a major source of negative edge in the market comes from the transaction costs (together with wrong incorrect risk management). This is because in an efficient market, the chance of you "being wrong" ~ .5.

Let me sketch a highly abstract scenario. Lets assume the average trader places 100 trades per quarter. Lets set trading costs are .5%. For simplicity we assume a binomial experiment: ~Bin(100, .495). The probability for an end-of-quarter profit then is P(k>=51) is approximately .42. This means, that 42 out of 100 traders will make a profit, despite their inherent negative edge (which we gave them by construction). The larger we let the sample (N) get, the smaller P(k>(N/2)+1) becomes, which eventually converges to zero.

Quarterly traders' performance figures give a skewed representation of the truth, which many people fail to understand. The fact that within a quarter, over 60% loses, is evidence for a negative edge for the average trader, and not evidence for a significant population having a consistent edge.
The nail that sticks out gets hammered back in
  • #185
  • Dec 21, 2011 8:54am Dec 21, 2011 8:54am
Quoting Taigen

It doesn't matter whether your acount is 1k, 10k, 100k, or whatever. You are still you using the same risk values.
That's true...a 1% risk is the same no matter what amount you start with.

But I contend that most people just spout lots of stuff they perceive as conventional wisdom without experiencing it themself.

Trust me on this...when your 1% is worth $50 it's one thing. When it's worth $5,000 it's another.
  • #186
  • Dec 21, 2011 8:59am Dec 21, 2011 8:59am
I have traded stocks, stock options and commodities as well as the fx. Each market has its own behavioural characteristics. Personally, I do better in the fx than I do with stocks or commodities. I think the reason is that I have been trading fx for over 6 years, whereas my time trading the others is considerably shorter. You have to spend the time to learn each market. There is a lot of money to be made in every market. I like the fx because it does move so much and there is enough volume that statisitical studies begin to achieve a higher level of reliability.

I suggest you get a demo account and trade it until you become profitablem, or do your trading on a micro-account. Work at it, but it may well be that the trading dynamics of the fx market simply don't suit your trading methodology or trading psychology. That doesn't mean that fx trading "sucks".
  • #187
  • Dec 21, 2011 9:01am Dec 21, 2011 9:01am
Quoting deltatrade
If there is someone who heard on the news or seems some idiot that says forex market is a very risky environment then let me show you some interesting stuff.
First this:
http://forexmagnates.com/us-forex-br...fitability-up/
Do you know what this shows? It shows that 30000 us traders make a profit! Don't you fell a little bit stupid to blame the markets rather than blaming yourself when 30000 people only in the us are making a profit from this market?

second this

"dukascopy...
Brokers profitability report does not account for inactive accounts. These accounts are inactive mainly for a reason...they are eliminated.
  • #188
  • Dec 21, 2011 9:04am Dec 21, 2011 9:04am
Quoting erock
Forex is not more than currency conversion, that's what it is and what it's designed for. It's HUGE, there is no investor, hedge fund, mutual fund that can impact that market.

Hear me out, you want to make money when you trade, right? You're trading a market that isn't moved by investors it's moved by basically the world currency, which isn't trying make a profit but serve a purpose of currency conversion.

How you make money trading is based of off investor psychology. You trade markets where people all have the same objective as you, to make...
Hi Erock,
I can see your whole points, believe me trading FX is difficult, however, it can be achievable. For me, I have studied it for 3 years, on demo for one year and go live on August 11. I Start out at $2600 and right now is $3170 so I'm up about 21% for about 3.5 months.
FX market is the bigest market in the world! it's totally different than futures and stocks or options. I'm slowly to master this market and for me it's achievable!

cheers,
  • #189
  • Dec 21, 2011 9:13am Dec 21, 2011 9:13am
Hi All,

Nice thread, good initial point made by erock. In the last 2-3 years, I have been developing a self-adapting mathematical system, applied mainly to forex instruments. Two things I learned from that years:

1, you could adapt a strategy much easier to stock market than any forex instrument. The results are consistent across several market (european, us). It means you have more repetiting patterns on stock market, its easier to find them and trade them.

2, forex market have a huge amount of randomness. You can of course create nice looking strategies for the past, but I have not yet find any statistically relevant correlation beetween a "nice looking" strategy in the past, and its outcome in the future. By "nice looking", I mean it wins every month in the past 2 years, have super low drawdown, low negative floating profit, low MAE, everything a trader dreams about... and when you forward test them, some strategy wins for 6-9 months, some kill your account instantly, some kill it slowly, some made good initial profits and later turns into losing, etc. Yes, the past has pattens, and yes, to some degree patterns are repetiting in the future. Or not. Or maybe a little. Maybe more :-) If you look into it deep enough, the same doubts arise that erock posted.

Moral of the story is: you can find tradable patterns for the past, but it is very unlikely that you can trade a single pattern succesfully for a long time.


And some notes on the thread:
I'm suprised about the self-blindness of the many commenters in this thread. erock made a simple statement about the basic nature of the forex market, yet nobody tries to think about it. He has a different approach, came from a different background, and sometimes its good to hear a point of an "outsider". We, forex traders try fanatically find the best method, style, knowledge, whatever we think of make us wealthy, and forget about the disturbing nature of forex: randomness. Sarkozy farts, and the eurusd will swing up and down....

And no, I have no negative feelings about the forex market, nor I plan to end up with fx trading. Its just I like to be honest with myself. I belive that the forex can be traded successfully, but thats not a reason to think that this market is not a big clusterf**k in general.

Cheers,
  • #190
  • Dec 21, 2011 9:17am Dec 21, 2011 9:17am
Quoting Dopey
That's true...a 1% risk is the same no matter what amount you start with.

But I contend that most people just spout lots of stuff they perceive as conventional wisdom without experiencing it themself.

Trust me on this...when your 1% is worth $50 it's one thing. When it's worth $5,000 it's another.
I don't disagree with that. It took me a couple years of monitor staring before I got that concept. Until you see $50 and $5000 is, in essence, the same, you will never psychologically adjust to the higher numbers. That is why I recommend people new to forex to start off with a small account of say 1k (your going to lose it anyway). I actually figured it out when my account went down to a $1,000 and stayed there. I set my goals on being 2% daily in a 20 day trading month. For a $1,000 account the challenge is to make $20. To me that seems a reasonable goal and so far I have managed (on average) to maintain that.
Taigen Profit This Month: na
  • #191
  • Dec 21, 2011 9:21am Dec 21, 2011 9:21am
one more thing guys I'm on my way of 14th week!

Happy FX trading guys!
  • #192
  • Dec 21, 2011 9:24am Dec 21, 2011 9:24am
Quoting traider
.... I tend to catch the whole move within a days direction....
Anything is possible but I find that hard to believe.

I use scalping how most use it, incorrectly these days, to mean trading short timeframes, i.e. multiple of minutes.

It is a losers game, in the end, for a overwhelming amount of traders.

The term used to mean buying on the bid selling on the offer, or vice versa, in the pits.
  • #193
  • Dec 21, 2011 9:32am Dec 21, 2011 9:32am
Quoting Noloqy
Ok, the link you're providing actually supports the hypothesis that a very large fraction of the traders fail. I'll tell you why in a minute.

With my academic background, I'm afraid I have to admit that my opinion is tilted towards to that erock. Trading forex profitably is very hard. Note that this is different than stating "making a profit in forex is hard", as with trading profitably I mean "having a positive expectation." I claim that a major source of negative edge in the market comes from the transaction costs (together with wrong incorrect...
In my view, you are setting your probability scenario in the wrong market. I can see your formula working in a casino where the house does have a 51% advantage but not in the markets, particularly the forex market. In the financial markets you are dealing in a two-front war so to speak--technicals and fundamentals. Both have weight in determining price action. Albeit there is a type of 'rhythm' in the market, it can often be upset by world events, announcements, a prime minister looking cross-eyed, a two-bit dictator dying and such.

Your formula is nice and academic and all that but it really doesn't apply at all in the market.

You need to explain your formula: To me, it shows an expansion into infinity not a convergence.
Taigen Profit This Month: na
  • #194
  • Dec 21, 2011 9:43am Dec 21, 2011 9:43am
Quoting SunTrader
Anything is possible but I find that hard to believe.

I use scalping how most use it, incorrectly these days, to mean trading short timeframes, i.e. multiple of minutes.

It is a losers game, in the end, for a overwhelming amount of traders.

The term used to mean buying on the bid selling on the offer, or vice versa, in the pits.
Yea, in that sense scalping never existed in the retail market.
The nail that sticks out gets hammered back in
  • #195
  • Dec 21, 2011 9:48am Dec 21, 2011 9:48am
Quoting erock
It just seems like the forex markets fluctuate wildly and in order to profit you just need luck. It just seems like it's a huge gamble rather than investing.

Forex markets really don't follow that at all. You'll be in a trend and the market will just swing back against you.

Usually when I trade equities and futures I can profit 10 to 15% annually. I recently incorporated forex and it screwed up my track record, I was up .5% because of the forex positions.
hi erock, were you actually screwed yourself up by EURCHF on 6th of september?
  • #196
  • Dec 21, 2011 9:51am Dec 21, 2011 9:51am
Cheesus Crisp. Johnny, I don't think the word 'gambling' would be a swear word. I'm wiping millionaires' asses during the day, I need a bit of excitement and that's what the market gives me - pissing away some money, yes, gambling if you like.

Why would you draw brownian on a chart? Why not? They say you should try everything in life except folk dance and syphilis. Just careful! Seeing random candles cannot be unseen. LOL

laters

Quoting JohnnyBSmart
Hello spekitox,

To answer Cindy's question of where have you been I think it's obvious you've been in an educational vacuum.

I can have a monkey draw lines on a piece of paper and some of those lines may resemble chart patterns but so what does that prove. Maybe he's the next George Soros?

The Forex is not randomness and if you think it is then every one of your trades must be gambling. Why in the hell would I draw a Brownian movement on a chart? That's strictly Newb talk so don't quit your day job.

Johnny
forget about tomorrow, just steal away into the night
  • #197
  • Dec 21, 2011 9:57am Dec 21, 2011 9:57am
FX trading is not gamble! it's all about analysis and confirmation base on your trading setup!.

Also, money management is a key to be a profitable trader in this market.

Casino is gambling.

Happy trading!
I'm on my way of 14th winning week!
  • #198
  • Dec 21, 2011 10:01am Dec 21, 2011 10:01am
Quoting Taigen
I don't disagree with that. It took me a couple years of monitor staring before I got that concept. Until you see $50 and $5000 is, in essence, the same, you will never psychologically adjust to the higher numbers. That is why I recommend people new to forex to start off with a small account of say 1k (your going to lose it anyway). I actually figured it out when my account went down to a $1,000 and stayed there. I set my goals on being 2% daily in a 20 day trading month. For a $1,000 account the challenge is to make $20. To me that...
Another trading fallacy.

I lost a bit when I first started out but only maybe 15% of my account at it's worst ebb. It took me over two years of ebb and flow above and below break even to begin making good returns but if you're sensible with you approach, your learning curve and your money management, there's no reason at all that a new trader should lose their whole starting balance.

Most will of course but that certainly doesn't mean that they all will.
  • #199
  • Dec 21, 2011 10:02am Dec 21, 2011 10:02am
Quoting Sherab
...We, forex traders try fanatically find the best method, style, knowledge, whatever we think of make us wealthy, and forget about the disturbing nature of forex: randomness. Sarkozy farts, and the eurusd will swing up and down....
Randomness??? It is not random at all. It is the herd trying to decipher the fundamental news that comes out, to predict where price is going that is random. It is all in the chart. Look at price, the answer is right there. Forget news, detach yourself from it, just stay out of the market before news releases and let price show you the way. Price is everything!
  • #200
  • Dec 21, 2011 10:11am Dec 21, 2011 10:11am
Quoting Trotty
Another trading fallacy.

I lost a bit when I first started out but only maybe 15% of my account at it's worst ebb. It took me over two years of ebb and flow above and below break even to begin making good returns but if you're sensible with you approach, your learning curve and your money management, there's no reason at all that a new trader should lose their whole starting balance.

Most will of course but that certainly doesn't mean that they all will.
I was being a little snarky when I stated that. Yes of course some will not lose. More importantly is to learn why you are where you are at. If the safe trader is content with profits barely over cd's or 15-20% a year, then great. If you learn risk management, you will lose in the process. There are some that learn quickly. A friend of mine only margined once in his forex career. He learned the lesson early on and is now a multiple millionaire. Me, I started late and I need to get beat up pretty bad before I start to figure things it out.
Taigen Profit This Month: na
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