Can you honestly earn a good living or even get rich through forex?

So the money of the 95% of losers is just disappearing into a black hole in the Reuters network? Somebody is making the money from the people who are losing it, there's no way to get around that fact. Sure proof is scarce but if you're making bank there really isn't an incentive to go through all the trouble to "prove" it, especially since all the bitter people are just going to hound you, say it's fake, you're a scammer, commercial promotion, etc etc. The negativity that pervades the online trading community is a direct reflection of the percentage of losing players. Moreover, if you were making a killing, would you be spending all day on ForexFactory? The real reason many people visit here is to bum ideas off of other people or to share the misery. I doubt 95% of people here are losers...it's probably 99.9%.

Maybe a casino would be a better option for you if you really believe that. Anybody with a real edge and good risk management is not going to "wake up with nothing" some day.

I usually see this term when mentioning about a (successful) trader and also hedge funds or something.
What is it exactly? Do other people give money so that the trader will trade using their money and earn commission?

Wikipedia has an article over it, but in short you already have a reasonably accurate picture of what they are. Most of them are restricted to certain classes of investors though which enables them to avoid quite a bit of regulatory oversight. Typically the manager will also have his or her own funds involved as well.

more than 95% of brokers make money ...if there were no spreads or swaps we could have had a fair chance.

Oh let's blame it on the brokers now. Really a 1.5 pip (or eve 2.5 pip what I pay on NDD) spread isn't going to derail you if you're not trying to scalp the 1 minute chart. The brokers actually have a really difficult job to do correctly, and today it's not hard to find one that knows what they're doing. Swap goes both ways, just depends on how long you hold. It isn't but a marginal cost of doing business either.

Agreed mate. My long term average transaction cost is 1.05 pips with my primary broker. That's 0.75 pips commission, plus a very long term average 0.3 pips spread.

They are ECN and so there is no "market maker" pip hunting nonsense that could go on.

The guy you quoted has a pathetic gamblers signature to his post.

Your own post signature is one that I live by. I salute that.

Phil

Wow. 0,3 pip spread !!! May I ask who is your broker ?

I am with MBTrading and they have 1 pip or higher spread most of the time these days.

Thanks.

... A German friend who currently resides in marloca spain currently trades $1.4 million of his own money and manages over $6million of clients funds ...

irrelevant... next

There's nothing free about the 0.75 pips commission as well.

I run an indy to constantly report to me on my chart the current/minimum/maximum/average spread component since I last started my MT4. The "average" is always 0.3 with Pepperstone.

I'm just a client, and happy to be one - I love trading at 400:1.

here is again. You cannot make living out of FX. You have to go for rich.

Find 70% win rate at risk reward 1:1, get 10 K, risk 5% and execute 300 trades.

You will multiply original investment 1000 times ~ 10M. Thats it.

Here is one run by random generator.
Trade no Multiple of original inv
50 2
100 8
200 116
300 1,023
400 11,021
500 65,120

The question is why people trade decades with 1000's of trades and claim 75% WIN rate ?

Because market is less scalable for shortterm trades. Once edge leaves, they are out in the streets.

Go for RICH !!!!

Wealthy > Rich!

But good luck getting a 70% win rate. If you can manage that, then with appropriate risk management you'll win with probability approaching 1. Realistically with a win rate ~55-60% and Kelly criterion based position sizing you'll have guaranteed wealth.

http://en.wikipedia.org/wiki/Kelly_criterion

Im with you October88. Read the great autobiography of Victor Neiderhoffer. He DID go from poor to rich over many years, and then to nothing overnight, and blew up a billion dollar hedge fund and if anyone knew how to manage money, it is him. Also, look at the guy who was put in charge of all the billions at Berings bank of England the Oldest bank in existence there. He blew it up and destroyed the whole bank!!!, Also almost overnight.

George Soros made a billion dollars in one day shorting the GBP. You are going to tell me someone cant be on the other side of the trade and lose that much? First of all gentlemen, lets pause and realize one thing.................we all know less than 1/2 of what we really think on trading.....or any subject! The human mind imagines lots of things.

Secondly, the greatest most disciplined traders, even a George Soros can suddenly "lose it" one day and chase something with huge leverage that "has to turn around and get me even any minute now" and destroy years of trading capital "overnight." Yeah...the demon or gambler thats in every person can jump out anytime. Just that certain people are more prone to it. George Soros admits that even being called the most successful speculator in the world , he still could have "lost it all" in his earlier less capitalized days if he was in the wrong place at the wrong time.

I as a professional poker dealer and sometimes player in Las Vegas since the 80's can tell you with no doubt, you will never hear 1% of all the stories of professipnal gamblers and poker players who made a fortune playing,especially poker and never had a losing year in 30 years suddenly found dead in their hotel room from suicide because they were playing against a much weaker player who they should have beaten easily but on the wrong night this "sucker" kept getting lucky and jacking up the stakes and the "pro" knew he'd never get another chance to get his money back and so didnt quit when his luck was awful and he started steaming(which always causes bad judgement). Traders are doing teh same thing as professional gamblers. Just exploiting a mathematical edge that is certain over and over. But every gambler and every trader is going to havce a black swan day or even a black swan month where everything they do turns to ashes. And I make this bold claim:

Not 2% of us on this thread could have a dime left in his trading acct, if he had a family to feed and a mortgage and college tuitions to pay off every month and now he was losing for 2 months straight. Most of us would never even last thru 2 losing months unless we were soooo far successful we had managed to sock away a few million so it didn't put pressure on us. But if losing 2 months in a row would make you go into your savings or accts you never would touch, you are dead when that black swan period comes. And you never know how long it will last. I personally can vouch for a guy who claimed he lost at poker for 12 losing months straight after beating much better caliber of players for 7-10 years previously. How is that possible? Its possible because anything is possible. Why do you think even casinos have a house limit on what they will let you bet? They cant take the chance that one rich sucker gets super lucky and breaks the bank. And I bet all of you money that every few weeks a broker quietly folds that we never hear about because they thought the broker never loses and they took too much action. Anyone remember Kitco? There have been many, many more we will never hear about as well as "market wizards" who walk away from trading broke and in shame after winning for 5,10,15 yrs or more.

Over 10 yrs ago, I myself spent over a year paper trading stocks before I quit my job to make sure I could earn enough trading without working. For one year I did it. Then I quit my job and bang! You all know the rest of the story.......

I will prove my point...on this thread right now, if there are 10 of you out of 200 that have been profitable for the last 12 months, I dare any of you to come back here in 5 years and show us your tax returns from trading. I will wager maybe 1 or 2 at best will still be profitable. Anyone disagree? OK, i will see you all back here in 5 yrs(seriously) and lets find out. To me, the most successful traders are those with the wind at their backs. Meaning you have to be lucky "and" very skilled to do more than make some extra vacation money at the Forex game. So I would bet that the happiest traders are those who get rich in a few good years of market timing, their patterns hold up, and they don't make the foolish assumption they are as smart as they look. So they take the money, retire and run....and go live a real life with all that cash before the "BLACK SWAN" appears. Me? Id rather run out, before I burn out. And I say traders do burn out and that's when they are vulnerable to make that one week of stupid mistakes they can never undo.



IF YOU CANT SAVE HALF OF WHAT YOU WIN EACH YEAR, YOU HAVE A HIGH PROBABILITY OF GOING BROKE AT SOME POINT. YOU MAY STILL BE AHEAD OVERALL, BUT YOU'LL GO BROKE. YOU ALL CAN CLAIM YOU WOULD TAKE A BREAK AND TAKE A FEW WEEKS OFF, BUT WHEN YOUR WIFE AND KIDS NEED A CERTAIN AMOUNT FROM YOU EVERY MONTH AND YOU DON'T WANT TO TOUCH YOUR TRADING ACCT. MONEY, YOU KEEP PLAYING....I MEAN TRADING. -)

what is a tax return

If you can manage to blow up a billion dollar hedge fund overnight you deserve an award similar to the Razzie for films. The only way you should be able to do such a thing is if you're trying to manipulate the market all-in like the BoE did and other big players call you on your bullshit. If you're going with the flow and limiting your risk appropriately, there's no excuse to take a sudden catastrophic loss, even if your position is large and you suffer disgusting amounts of slippage. Some of these bigshots who lost it all suddenly, I'm almost certain they didn't practice good risk management. Maybe they were like that rogue African trader at UBS who was actually running a martingale system with billions of Euros. You think they'd know better but they don't or greed gets to their head.

So let me summarize that - you believe that eventually everybody is going to blow up their account just because they're unlucky. That's called drawdown and it's why you don't trade 5% a trade, especially without a longer term analysis on your trading stats to give you an idea of what to expect. Outside of that, sure, people can get screwed by bad fortune, but it's a rare occurrence. I could have been one of those poor people in the minivan smashed up by some gangster driving 90 down the wrong way on the interstate highway trying to evade the police a few days ago. I could be attacked by a sudden swarm of aggressive bees and die from that. I could be sucked into the sky by a thunderstorm tomorrow. You don't know what's coming but the reality of it is you can't avoid it, so why worry so much over the remote possibilities? What's possible with trading if you keep your emotions and numbers in check is worth enough that the marginal risk of some major black swan wiping me out at some point is entirely worth it. But if a minimum wage job in today's economy is worth it to you because you're scared of probability, that's your choice I guess. Nothing in life is risk free, ever.

I think you underestimate what the term "risk" includes at an institutional level. These guys have to juggle many more balls than we. It goes far beyond slippage or unintentionally cornering the market / misjudging market depth. There are operational risks (as you mentioned, one of your traders might decide to go rogue overnight because he thinks he deserves a bigger paycheck), liquidity risks (being doubly exposed to a certain market without even knowing it b/c you´re too big), you can take a hit because your prime broker suddenly goes bust (how do you hedge against counterparty failure?), systemic risks, your traders might mismeasure the worth of their portfolio (it happens all the time), there´s risk hidden inside 1000s of new pages of legal framework coming out each month (regulatory risk: a new law is supposed to make the industry safer but it does the opposite - people only realize when it´s too late) and much, much, much more. ZOMG - SO MUCH RISK. So much that can go wrong. And these guys are a lot smarter than we and it happens anyway. Most people here automatically assume that because they can trade an account up, they´re qualified to run a Hedge Fund. Even using HF returns as a benchmark for your own performance is totally odd. Trader and portfolio manager are two completely different jobs.

I can agree with that I guess. I maintain that some of the bigger, famous losses were exceptional circumstances though, especially Soros' story. My point of view is pretty strictly from the retail side so none of that really matters to me I guess.

[quote=Silat50;6580623]Im with you October88. Read the great autobiography of Victor Neiderhoffer. He DID go from poor to rich over many years, and then to nothing overnight, and blew up a billion dollar hedge fund

you make some interesting points, But with that attitude man would not of landed on the moon, the americas would not of been discovered no getting to the south pole etc etc....
i think a big problem lies with people just getting greedy. A couple of years ago i was trading and making money (still do) so i bought a house refurbished it and rented it out, this brings in a good income and now i do not have to trade as much. If you trade in the same direction as the way the market is going you will not lose, just keep it simple and dont think where you think the market will go. On the other hand these mega wealthy traders are a different story all together and i honestly think they are lucky, be good

Simple answer... YES! Just have to know what youre doing.

Silat, I gotta say your posts are a little depressing. Take a break bro. Clear your head. Come back with a fresh mind.

There has been a lot of interesting and useful discussions since I started this thread.

But I still haven't asked this question yet:

Is there anyone here in this forum who becomes a millionaire purely from trading forex?