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  • #301
  • Mar 26, 2012 12:23pm Mar 26, 2012 12:23pm
Quoting micmic
I agree. Most retail traders get results that are similar to gambling, and there is no way in freezing hell that ANY government in the world will restrict gambling any time soon.
thats right,the reason spreadbetting in uk is tax free is because its clasified as gambling,and due to the losses incured,being 90 % across the field it was decided it would actually incur a cost to the goverment as the losses could be set against any gains from non gambling .they wouldnt allow tax free with out good cause,there far to bloody clever
  • #302
  • Mar 26, 2012 1:08pm Mar 26, 2012 1:08pm
Quoting pipmutt
Plenty of other markets to trade, a chart's a chart!
Right, but the leverage is quite low for other markets. 6-12% (my broker is saying gold will probably drop further below 6.25% because of high volatility)

The volatility and leverage makes Forex attractive for short term trading.

Here's a bit more info.

Right now the rules are set to take effect July 21st. But hopefully they'll push it out futher to reach a better agreement. Nothing's written in stone, but UBS and a few other banks are already unwinding their prop desks, so it's an expect the worst, hope for the best scenario at this point.

http://www.bloomberg.com/news/2012-0...es-effect.html

http://www.cnbc.com/id/46851445 Banks Set to Cut $1 Trillion From Balance Sheets

http://dealbreaker.com/2012/03/deuts...n-new-capital/

The Deutsche Bank reclassification is an interesting work around. But JPM, Citi and the rest of the American banks are stuck.
  • #303
  • Mar 26, 2012 1:36pm Mar 26, 2012 1:36pm
Quoting triphop
Fud's post is sobering. A chart may be a chart but all markets are not created equal, and all the details matter.

Better get a monk on.
  • #304
  • Mar 26, 2012 2:09pm Mar 26, 2012 2:09pm
Quoting Fudomyo

The volatility and leverage makes Forex attractive for short term trading
Right, so what are the implications of the Volcker Rule, segregation or restriction of proprietary trading (which in itself probably isn't such a bad idea), less volume, increased volatility? Costs may marginally increase but how else would it affect the average retail trader?

I'm not sure I really understand the legislation, or the options (work arounds) open to the various institutions affected by it.
  • #305
  • Mar 26, 2012 3:09pm Mar 26, 2012 3:09pm
Quoting Fudomyo
Unless something changes dramatically with the roadmap for the new regulations, we have possibly another 18 months before Retail Forex as we know it is finished.
A very sobering comment indeed.
  • #306
  • Mar 26, 2012 3:11pm Mar 26, 2012 3:11pm
Quoting hanover
I'm talking about gaining knowledge and confidence by working with a trader who's already been successful himself for many years.

Of course I'm aware that the vast majority of posts on forums like these amount to the blind leading the blind.
Fortunately, all threads here are not the blind leading the blind. There are a few that are the first kind: traders who are successful and helping others gain knowledge and confidence.

It sometimes takes a lot of reading to distinguish one from the other. But eventually you can tell who is worth paying attention to and who it not.
Luck occurs when preparation meets with opportunity.
  • #307
  • Edited 3:41pm Mar 26, 2012 3:30pm | Edited 3:41pm
The Volcker Rule

Quote
The measure’s aim is to keep highflying traders and other gamblers inside of banks from getting their hands on or putting at risk the old-fashioned savings of average depositors. A main element to the plan would bar banks from making proprietary trades — using their own money to place directional market bets that are unrelated to serving customers. Another change would prevent institutions from investing their own money in hedge funds or private equity operations.
Liquidity problem?, perhaps, but I doubt it and the Volcker Rule To Restrict Banks' Proprietary Trading Contains Loopholes

I dont think the retailer has anything to be concerned about re the Volcker Rule, there are way too many big players, and trillions of dollars resisting the new laws......ensuring the markets will keep functioning as usual.
  • #308
  • Mar 26, 2012 7:33pm Mar 26, 2012 7:33pm
Perhaps. This is what many people are hoping (myself included) but we need to be prepared for any of a number of outcomes. When they discuss limited profitability under the new rules they're discussing deleveraging. If you can trade with smaller leverage or without it, there will always be a market.

In terms of actual liquidity, the banks create the lion's share of the liquidity on the Intrabank, (which is highly leveraged). The smaller funds that are spinning out of the larger banks will still need to meet the new capital requirements, which translates to lowered leverage.

Under normal circumstances (the current/past scenario), we would expect a market with trillions of dollars of liquidity flow. The Volker rule is being put in place to firewall the US banks against any outside shock (such as a Japanese government bond crisis and currency devaluation which could create a repeat of the Asian debt crisis of '97)

Considering there's 230 Trillion USD of outstanding derivatives on the US banks balance sheets, they have good reason to try to prevent a major shock to the system like 2008 produced.

No one is really worried about Greece. Japan is the elephant in the room.

With a modest rise in rates to 2.0%, the interest payments on Japanese debt alone will exceed their entire yearly tax base of 42T yen. Japan needs to devalue the Yen around 30-50% to reinvigorate their GDP. But this will have a destabilizing effects on Korea, China, and other overleveraged economies in the region, and the ripple effect will be global. (like the last time it happened in 1997)

Post election America, we could see the second leg of the global recession kick in, and in that scenario, liquidity will become even more sparce.

Either way, change is coming. How big that change is remains to be seen. I'm not an alarmist, I'm a pragmatist. So, I need to work within the variables presented to create the proper solution. (like working my ass off while we still have good liquidity just in case)


Quoting PeterE
The Volcker Rule

Liquidity problem?, perhaps, but I doubt it and the Volcker Rule To Restrict Banks' Proprietary Trading Contains Loopholes
[font=Verdana][size=2][size=2]...
  • #309
  • Mar 26, 2012 7:33pm Mar 26, 2012 7:33pm
Quote
Unless something changes dramatically with the roadmap for the new regulations, we have possibly another 18 months before Retail Forex as we know it is finished.

"As we know it"

Means what?

EDIT: didn't see your last post.

Quote
some of the best traders occasionally experience unprofitable weeks, even months.

Who? names please. How do you define "best traders"?

Quotes from market wizards and other book/interviews of traders:

Quote
"Well, let's put it this way: What was your worst single trading month? I haven't had any losing months. You have made money in every single month since 1980!"

Quote
"My records were just evaluated for a money management deal. Over my entire career as a full-time trader, based on month-end data, my biggest drawdown was 3 percent. I had my worst two months around the birth of my two children, because I was worried about whether I was going to get the tennis ball in the right place in Lamaze class.

My philosophy has always been to try to be profitable every single month. I even try to be profitable every single day. And I’ve had some extraordinary runs – over 90 percent of my months have been profitable."...

Quote
"During the five years he has traded, Lescarbeau has realized an average annual compounded return of over 70 percent. As impressive as this may be, what is truly remarkable about his track record is that this high return has been achieved with extraordinary risk control: His worst equity decline from a month-end peak to a subsequent month-end low was a minuscule 3 percent. His consistency is also astounding: He has been profitable in 91 percent of all months, and his annual return has exceeded 50 percent every year."

Quote
During his three and a half years as a floor trader, he witnessed only one losing month.Perhaps
most important, he has done what many thought impossible: combine five consecutive, triple-digit
return years with very low equity retracements. (I am fudging slightly; in 1986, Paul's fund realized only a 99.2 percent gain!)

Quote
When I interviewed Gil Blake, he had had a 12-year track record with an average annual return of about 45 percent and returns that ranged fairly narrowly between about 35 and 55 percent annually. His worst peak-to-trough drawdown in the entire 12 years was 5 percent. He had only 5 losing months in those 12 years.

Quote
As another example, Steve Cohen has compiled a nine-year track record with gross returns near 100% and only a handful of losing months, all very small.



On the other hand check the returns of those guys, now think about some unknown dude on a forum boasting about 75% ROI a month.



Have a nice day
  • #310
  • Mar 26, 2012 7:44pm Mar 26, 2012 7:44pm
It would have been sweet to be a trader in the Go Go 80's.

It was a completely different market back then. Reagan and Thatcher just opened the credit floodgate, so the party was in full swing and making money was a hell of a lot easier. "Market Wizards" is more a historical document than a roadmap for the future.

Those guys had it made completely.

Quoting RRRulio
"As we know it"

Means what?

EDIT: didn't see your last post.
  • #311
  • Mar 26, 2012 7:50pm Mar 26, 2012 7:50pm
Quoting Fudomyo
It would have been sweet to be a trader in the Go Go 80's.

It was a completely different market back then. Reagan and Thatcher just opened the credit floodgate, so the party was in full swing and making money was a hell of a lot easier. "Market Wizards" is more a historical document than a roadmap for the future.

Those guys had it made completely.
Couple of those comes from more recent books/interviews but you are right.

Still:

Quote
On the other hand check the returns of those guys, now think about some unknown dude on a forum boasting about 75% ROI a month.


Is he trading in the 80's? Back to the future extreme TMA ?
  • #312
  • Edited 10:11pm Mar 26, 2012 8:44pm | Edited 10:11pm
One last thought.

As the global currency situation erodes, the natural response will be to blame speculation for the poor performance of sovereigns. So, gauging from the language that's cropping up, they may use Forex as a political tool to pass the buck for the misdeeds of the governments. I don't know how this will translate in terms of re-regulation, but we might see some sort of backlash, besides the Volker rules, in 2012-2013. (similar to how they re-regulated mom and pop hedge fund investments in 2008)

I wouldn't give much thought to the TMA thread. Yesterday was telling. The OP had his flock short the market based on a repainting trendline just before a major Fed announcement. Given the poor housing starts, a dovish response from Bernanke was expected by the market (thus the pullback in Asia beforehand).

Anyone with that poor a handle on market basics has proven his lack of skill as a trader or mentor with flying colors. There's not much to really add.


As far as the market party was concerned, it started in the 80's but didn't end until 2007, so it wasn't limited to just that decade, although the 80's were a high flying time!


Peace guys. I'm outta here.


Quoting RRRulio
Couple of those comes from more recent books/interviews but you are right.

Still:



Is he trading in the 80's? Back to the future extreme TMA ?
  • #313
  • Mar 26, 2012 10:43pm Mar 26, 2012 10:43pm
Quoting PeterE

I dont think the retailer has anything to be concerned about re the Volcker Rule
I don't either. It wasn't long ago when people were saying reducing leverage for retail traders was going to be the end of forex trading in the US!
  • #314
  • Mar 26, 2012 10:53pm Mar 26, 2012 10:53pm
Indeed. Nobody's going to mess with the retail trader's constitutional right to lose his money anyway he chooses!
  • #315
  • Mar 26, 2012 11:51pm Mar 26, 2012 11:51pm
Quoting pipmutt
I don't either. It wasn't long ago when people were saying reducing leverage for retail traders was going to be the end of forex trading in the US!
You should read Dodd-Frank to see what's in it. If it goes through in it's current form, the personal capital requirements for US traders is 300K yearly income or $1M in liquid assets (not home equity) which is similar to the requirements they put through for hedge fund trading in 2008.

The current leverage reduction to 40% in the US didn't kill Forex trading. Neither will a drop to 7-12%, which is the target area I've heard discussed.

Anyway, we'll cross that bridge when we get to it. My only point in bringing it up was about kicking out some wholesome profits in the meantime.
  • #316
  • Mar 27, 2012 12:29am Mar 27, 2012 12:29am
Quoting Fudomyo

My only point in bringing it up was about kicking out some wholesome profits in the meantime.
No it was a good point, 'make hay while the sun shines' as my grandma used to say!

  • #317
  • Mar 27, 2012 3:03am Mar 27, 2012 3:03am
Quoting Fudomyo
You should read Dodd-Frank to see what's in it. If it goes through in it's current form, the personal capital requirements for US traders is 300K yearly income or $1M in liquid assets (not home equity) which is similar to the requirements they put through for hedge fund trading in 2008.
for "accredited investors", not for all traders....

http://www.complinet.com/dodd-frank/...igibility.html

still, i'm looking forward to getting offshore, unless the tobin tax takes hold, in which case its back to growin dope.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #318
  • Mar 27, 2012 3:17pm Mar 27, 2012 3:17pm
Quoting The Fool

unless the tobin tax takes hold, in which case its back to growin dope.
lol
  • #319
  • Mar 27, 2012 5:09pm Mar 27, 2012 5:09pm
Wow, I am shocked. Alorente's trading system is bogus?!

My world has collapsed. Now, I wasn't really using his system or even thinking about testing it. I did stumble into his thread and when I saw his avatar I was psyched. He looked like the cool rich uncle I never had, a man whose trading skills are only surpassed by his impeccable sense of style. After reading his posts I didn't understand the why or how behind the indicator. I figured that at this point I was too stupid to understand and would return after increasing my trading knowledge to reap the rewards. After learning from the master himself, me and Al (because being his honorary nephew would allow me to simply call him "Al") would retire to a tropical island and spend the rest of our lives sipping those drinks with the little pink umbrella's in them while being massaged by hot ethnic women with coconut bikini tops.
  • #320
  • Mar 27, 2012 5:36pm Mar 27, 2012 5:36pm
Quoting LazyPawn
I became a member of the forum 7 years ago. As a beginner I spent most of the first 2 years studying various trading systems posted here, using some of them on demo accounts and (unfortunately) a few on my live account. Eventually I created two of my own which I still use with little modifications up to this day. However, the old hobby is not dead. I still test almost everything. Occasionally I find a new idea, an interesting indicator, even a good system that can be made profitable with some adjustments.

But the really fun part is to follow...
The OP's first post is a true classic! Sums up individual and group psychology and group think from a forum perspective better than I've seen. Nice job!

It is interesting how poorly individuals (as a rule) actually understand or deal with probabilities, and in particular market probabilities which approach randomness. A few losses is all it takes to start calling for changes to rules that may throw a strategy that supposedly has a long-term edge into the no edge category. It is only after years of strategy development that it sinks in how a minor change in rules/filters can cause a very large change in both short term and long term outcome of a strategy.
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