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Go against it

  • #21
  • Aug 22, 2012 12:14pm Aug 22, 2012 12:14pm
I'll also toss my hat in with the posters who've said it's a psychological difference, not a system difference.

People say 'trend is your friend', 'always trade with stops' and such for a reason.. because it's to remind them when they break the rules and get hurt.

Some common reasons why new traders bust out:

Expecting too much while under-capitalized - anyone who thinks 300%+ a month is realistic is going to get destroyed eventually. Some find examples of people online who've managed to double an account a few months in a row, and think that's evidence enough that they'll do the same.. but they fail to consider how many others try to do the same and bust out. Or even worse, they might get a win streak and assume it's because of their own talent and expect it to continue forever (this false sense of confidence kills accounts all the time.)

Over-leveraged -Even systems with a positive expectancy have a random distribution of winners and losers. Good systems can have a hand full of losers in a row and still have a positive expectancy. If you're leveraged high enough so 3-5 losers in your account cuts you right down, you'll never last in the long run. Losers are going to happen, and a string of them is an eventuality.

Not accepting a loss - this could be hopeful thinking that the trade will eventually turn profitable (in which case you are no longer trading with a plan, but are subject to the will of the market, and the market does not care if you make money,) or it could be averaging down as it goes against you hoping for just enough of a pullback to get out at a small profit. The reality is, your trade is wrong the moment it stops doing what you expect or have planned to manage.. the only thing worse than being wrong, is staying wrong as it continues to hurt you. Plus, holding losers ties up your capital that you now can't use to trade better setups.

Not planning trades - Impulse or gut trading without any action plan or reason. Some traders, after many years of trading and screen time, might be able to 'gut' trade without double checking price levels or technical setups, but for a new trader this is death. Plan each trade as it fits your system and risk profile, if you don't have a system or understand what's appropriate for risk, you gotta take a step back and do that first before trading.


There are many more reasons.. these are just a few streaming from my thoughts as I look to kill a bit of time on my lunch break. heh...
FXGears.com
  • #22
  • Aug 22, 2012 6:18pm Aug 22, 2012 6:18pm
Quoting mahanxiong
English is not my mother language so sorry for my english if it looks strange.

It's said more than 95% people lose their money in FX market.In another word 5% people win.
So,how to be the 5%?

We can confiently belive that:
1:the 95% and the 5% behave differently
2:all the 95% themselves behave the same
So if we go against what the 95% always do we can hopefully become the 5%.

I think what the 95% always do is what we always say.For example:
ALWAYS TRADE WITH A STOPLOSS.
A GOOD WIN:LOSS RATE IS IMPORTANT.
TREND IS YOUR FRIEND.
so on...

What...

Forex is exceedingly complex. Either you find a few good signals you stick with, get an instinct for momentum or understand the complexity (which has to be understood to be appreciated.)

Theres no easy way around it. And yes, the trend is irrelevant when you overcome the complexity. But you can still make money by one or both of the other two methods in the meantime as the complexity curve is steep and will take time ascending.
The road to pipland is arduous and fraught with challenge.
  • #23
  • Aug 24, 2012 4:13am Aug 24, 2012 4:13am
Quoting traider
Forex is exceedingly complex. Either you find a few good signals you stick with, get an instinct for momentum or understand the complexity (which has to be understood to be appreciated.)

Theres no easy way around it. And yes, the trend is irrelevant when you overcome the complexity. But you can still make money by one or both of the other two methods in the meantime as the complexity curve is steep and will take time ascending.
What do you mean exactly with Complexity?

Can you explain? I don't understand what do you mean with "complexity".
The Black Swan: The Impact of the Highly Improbable
  • #24
  • Aug 24, 2012 4:29am Aug 24, 2012 4:29am
Quoting duyk20
People lose because of their mind, not the system.
You're not alone. A lot of folk say that the system doesn't matter, and that it's all about MM and psychology.

I could write an EA (I've already written several of them) that makes simulated coin-toss entries (because "the system doesn't matter"), cuts losses quickly (employs a tight SL), lets profits run (by trailing the SL), and adheres to strict MM rules (1% risk per trade). An EA eliminates all psychology issues. Moreover, it will trade 24/7, executing a plan flawlessly, consistently, tirelessly, emotionlessly. It removes the trader, his mindset, and any lack of self-mastery, from the equation altogether. And an EA automatically guarantees all of the following: Adherence to strict MM rules. Perfect accuracy of execution. Endless patience. Unwavering discipline. No fear, greed or hesitation. Immunity from hunches, guesswork, or outside ‘noise’. Around-the-clock trading that’s unaffected by tiredness, illness, stress, negative attitudes. No data entry errors. Automatic placement and monitoring of trades, giving the ‘trader’ recreational time away from his computer.

Hence an EA has got to be the perfect solution for everybody. Heck, it's the American dream: completely passive, exponentially growing, income. Everybody runs the same EA, and because it's using the exact same rules, and therefore taking the exact same trades, we're ALL guaranteed to win. We all quit our day jobs and and let our computers generate gobs of money for us. Utopia!

And if — inexplicably — the EA doesn't win, then in keeping with the thread topic, we simply reverse the process. Take the opposite entries, let losses grow, and cut profits. So we have a guaranteed back-up plan. Given that it's possible to be profitable in forex, one of the two opposing EAs MUST work.

Next, we sell the working EA to all of the major banks and funds. They will happily pay millions for the EA, because they'll be able to dismiss all of their analyst and trading personnel, saving them many times this amount, every year. All they need to do is simply run the same EA.

So undercapitalization is no longer a problem. We now have millions with which to fund our account.............



Of course I'm being facetious.

But hopefully there are some REALLY OBVIOUS lessons to be learned from this facile illustration:

 

  1. Is psychology important? Of course it is: Ill-discipline will likely ruin your account more quickly than anything else. But trading with perfect discipline — like every EA does — is, by itself, apparently not enough.

  1. Is MM important? Of course it is: Size too aggressively and (as Jack points out) a 'freak' series of losses will ruin you. Vary your sizes haphazardly and you run the risk that one loss will wipe out several hard earned wins. But sizing consistently and conservatively — like the proposed EA does — is, by itself, apparently not enough.

  1. Can cutting losses quickly, and letting profits run, be incorporated into a winning strategy? Yes it can, but — as the EA illustration demonstrates — by itself, it's not enough.

So what is the missing ingredient? Find that (another clue: you can eliminate all of this from consideration, also), and you'll discover the edge that the 5% (or whatever the number is) have, to make themselves profitable.

And that, Jim, is your mission, should you choose to accept it.

  • #25
  • Aug 24, 2012 7:29am Aug 24, 2012 7:29am
Quoting hanover
You're not alone. A lot of folk say that the system doesn't matter, and that it's all about MM and psychology.

I could write an EA (I've already written several of them) that makes simulated coin-toss entries (because "the system doesn't matter"), cuts losses quickly (employs a tight SL), lets profits run (by trailing the SL), and adheres to strict MM rules (1% risk per trade). An EA eliminates all psychology issues.


Of course I'm being facetious.
Coin toss entry system will never work because there are many times in which you really shouldn't trade at all.

Reversing the orders of a losing system? Depends on why those trades are losers, if you have a tight SL they will be losers even if you reverse them.

Widen the SL.... take bigger losses and lower your RRS (risk reward spectrum)... in the long run big fat loser.

If you wanted a brain dead easy way to make money stop trading forex and put your money in a no load mutual fund / index fund... certainly no guarantee of success there either, but it's brain dead easy.

  • #26
  • Aug 24, 2012 12:28pm Aug 24, 2012 12:28pm
To "go against it", i.e. be a contrarian, you first need to know what the real trend is. Most people don't, and those who do usually don't need to resort to contrarianism to make money.
  • #27
  • Aug 24, 2012 5:30pm Aug 24, 2012 5:30pm
Trading is a waiting game.

any system do work. however, you have wait for your chance.

if you wait for your chance and still not profitable then it should be a bad system.
  • #28
  • Aug 24, 2012 8:37pm Aug 24, 2012 8:37pm
Quoting mtuppers
Trading is a waiting game.

any system do work. however, you have wait for your chance.

if you wait for your chance and still not profitable then it should be a bad system.
Now, the last part just made me laugh out loud..unfortunately, as traders, we do not have the patience to wait for that "chance" but guess that is part of what makes this market tick.
  • #29
  • Aug 24, 2012 8:49pm Aug 24, 2012 8:49pm
Quoting hanover
So what is the missing ingredient? Find that (another clue: you can eliminate all of this from consideration, also), and you'll discover the edge that the 5% (or whatever the number is) have, to make themselves profitable.


I've give you a hint... the secret if you will on a platter. You know the things that FF is good for. The one little nugget you've been looking for all your life. The secret to the holy grail....

You ready for it?

It is summed up in one word. :nerd:

"WHEN"


Know when to go long.
Know when to go short.
Know when to take profit.
Know when to take loss.
Know when to do nothing.

There you have it... the Holy Grail summed up in 5 sentences.... and for the low, low, low price of FREE.

What a bargain!
  • #30
  • Aug 24, 2012 9:22pm Aug 24, 2012 9:22pm
Quoting pip_seeker
There you have it... the Holy Grail summed up in 5 sentences.... and for the low, low, low price of FREE.

What a bargain!

http://media.tumblr.com/tumblr_m3thrqqYOo1qfssyl.jpg
  • #31
  • Aug 24, 2012 11:35pm Aug 24, 2012 11:35pm
Quoting MapleLeaf
What do you mean exactly with Complexity?

Can you explain? I don't understand what do you mean with "complexity".
It is highly discretionary for consistent success.
The road to pipland is arduous and fraught with challenge.
  • #32
  • Aug 26, 2012 5:45am Aug 26, 2012 5:45am
Study your charts and find a system that fails 95% of the time and trade it in reverse.
  • #33
  • Edited 2:02am Sep 1, 2012 12:42am | Edited 2:02am
Quoting Paris13
Study your charts and find a system that fails 95% of the time and trade it in reverse.
This idea has been posted many times before. However, see myth #1 here.

[EDIT] I'll try to explain further using a roulette analogy. Suppose I play roulette for several hours, betting on black every time, and I end up in significant loss. Does that mean that, if I bet on red every time in the future, that I'm more likely to win? No, it doesn't. The more often I play, my winnings/losses will eventually approach -5.26 cents for every dollar wagered, namely the house edge. No matter what strategy I use, the house edge remains the same; wins and losses in the short term merely represent statistical fluctuation from that figure. The roulette wheel is a random signal generator, and simply inverting a losing strategy has no long term effect. Trading parallel: the spread operates analogously to the house edge.

But suppose I find a roulette table that has a defective (biased) wheel, so that red gets spun more often than black. Now I have found a real inefficiency that provides me with an edge. If that edge exceeds -5.26%, then I can win at roulette by simply betting on red. Trading parallel: a system of entries and exits that exploits price inefficiencies to the point of overcoming the spread provides a winning edge.

Here's another gambling analogy, involving horse racing: The savvy punter knows that studying factors like the track condition, weight carried, barrier draw, and jockey's experience can give him a real edge. The uninformed punter might (for example) run a historical test based on saddle blanket color, and over a large data sample discover that the horse that wears a yellow saddle blanket wins more often on Thursdays, while one wearing a green saddle blanket wins more often on Tuesdays. The results of the test, whatever the statistical error, are irrelevant, simply because the underlying premise has no real bearing on the outcome. The same applies to the markets: unless your strategy embraces an underlying inefficiency in the way that prices move, and one that's demonstrably robust, then it's effectively generating random signals, and will have no edge, regardless of whether you trade the strategy, or its inverse.

One final point: staking systems (money management) can not provide a mathematical edge, in either casino games, or trading, either — see here for the evidence.

The above (indirectly) reflects some of the difficulties in becoming a profitable forex trader. If doing something as obvious as simply inverting the signals in a losing strategy was a surefire way of making you a winner, then surely everybody would do it, and the 95% (or whatever it is) failure rate would become a 5% failure rate. But this has never happened; ask yourself why.
  • #34
  • Sep 1, 2012 7:08am Sep 1, 2012 7:08am
Quoting hanover
This idea has been posted many times before. However, see myth #1 here.


But suppose I find a roulette table that has a defective (biased) wheel, so that red gets spun more often than black. Now I have found a real inefficiency that provides me with an edge. If that edge exceeds -5.26%, then I can win at roulette by simply betting on red. Trading parallel: a system of entries and exits that exploits price inefficiencies to the point of overcoming the spread provides a winning...
Ah ha, thanks for that little nugget. I wondered why I kept seeing you at the same roulette wheel every night...

  • #35
  • Sep 1, 2012 7:59pm Sep 1, 2012 7:59pm
Quoting pip_seeker
Ah ha, thanks for that little nugget. I wondered why I kept seeing you at the same roulette wheel every night...

.... the casino personnel might be reading this thread ..... LOL

Re the link in your signature: too bad the 'SL v no SL' thread got binned, there was some great discussion in it, both trading-wise, and also some material that was completely off-topic.....
  • #36
  • Sep 2, 2012 8:06am Sep 2, 2012 8:06am
Quoting hanover
.... the casino personnel might be reading this thread ..... LOL

Re the link in your signature: too bad the 'SL v no SL' thread got binned, there was some great discussion in it, both trading-wise, and also some material that was completely off-topic.....

Hopefully you've upgraded the knee caps to titanium...

SL vs no SL seems like a life time ago... there was an awful lot of crap in that thread and alot of it much ado about nothing.

You have to dig pretty hard to see anything constructive. I really didn't expect a whole lot from what examples I showed in that thread. People are mostly caught up in their own psychological struggles.

Of course with all the scams in the world today I can rightly understand the skepticism of anything positive.

In the end people are people and the vast majority believe in the "get rich quick" scheme which is nothing more than fuel for the scammers.

There's a sucker born every minute and it doesn't look like the supply will let up anytime soon. Why someone can believe in "easy money" and not "their own ability" is beyond me.

The FX industry as a whole is probably mostly to blame... plastering ads all over the place as to how easy it is to trade Forex. LOL. <That's a good one!

The FX market can be traded successfully, but forget the notion that it's easy.
  • #37
  • Last Post: Sep 2, 2012 4:20pm Sep 2, 2012 4:20pm
Quoting pip_seeker
Of course with all the scams in the world today I can rightly understand the skepticism of anything positive.

In the end people are people and the vast majority believe in the "get rich quick" scheme which is nothing more than fuel for the scammers.

There's a sucker born every minute and it doesn't look like the supply will let up anytime soon. Why someone can believe in "easy money" and not "their own ability" is beyond me.

The FX industry as a whole is probably mostly to blame... plastering ads all over the place as to how easy it is to trade Forex. LOL. <That's a good one!

The FX market can be traded successfully, but forget the notion that it's easy.

Truth.

SL vs no SL thread was fun though. Too bad all the good stuff got deleted.
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