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It seems impossible to make money in the long run

  • #61
  • Dec 28, 2014 8:56pm Dec 28, 2014 8:56pm
Since I've been told scalping couldn't be profitable, I have decided to lose money with swing strading or a least day-to-day:

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Not sure if my order will be filled but let's see.
  • #62
  • Edited 10:08pm Dec 28, 2014 9:43pm | Edited 10:08pm
It's an interesting thread Unabletrader as it gets the mind whirring. The way I view trading is this.

The price at any point in time is stochastic in nature (uncertain). It varies between end point constraints beyond which everyone or most participants agrees whether the instrument is over or under valued. Think of an auction where bidders are present. As the auction commences all participants take a stab and participate but over time as price increases, fewer and fewer bidders participate. You can use a bell curve to assess the probability of where the price constraints exist. It is the constraints (where all or most participants agree) that are important for traders, rather than price itself.

In day trading, you are trading in the guts of the bell curve where price stochastically moves about and your stops are typically positioned at more distal ends of the bell curve but still in the median range. A simple announcement can exacerbate the price jitters in this median range and push it quickly to either end of the spectrum. You trade according to short term patterns or price movements that may or not be simply random price jitters.

For a longer term trader, the position sizes are far lower and the associated constraints of their system (the entries and exist) are accordingly positioned towards the more distal end of the bell curve which gives price the ability to breathe. The factors that exit you from the trade for the longer term trader are less frequently single announcements, but more often the result of market activities over an extended time duration. You have more time to assess changing market dynamics and also have the ability to allow stochastic price movement within your system constraints . There is a greater likelihood that there is some fundamental reason why market participants are behaving this way on the longer term timeframe, less ability for a single institution (or group of institutions) to play shenanigans with stop hunts etc. and there is less likelihood that it is a single random event that the trend has deteriorated.

Identifying price constraints is the name of the game. Look at the image below. It reflects chaotic behaviour but note the system constraints. To trade this beast look at the system constraint (the parabola associated with the full extension of the double rod pendulum). The probability touches associated with this parabola are greatest here.

Attached Image


The bots and high frequency trading systems used in the marketplace simply compounds the problem for short term traders. Do you really believe you can outperform the algorithms of the high frequency traders? In my opinion you let the sharks infest those waters and you swim with the schools in the deeper waters. :-)
  • #63
  • Dec 28, 2014 10:04pm Dec 28, 2014 10:04pm
BUMP

Quoting CrucialPoint
How to find the GEMS in ForexFactory and sift through all the B***S*** Lets open with a joke: Question: How many Geniuses work at FF? Answer: None. Because they still don't know how to solve a simple "member ranking" system ================================== I hardly read stuff here and any other Forex forum... because let's be honest, 97% of the posts at FF are rubbish. Then I see genuine people seeking help, only to be served by Bullsh*t artists, behind their hidden agenda. (Firstly, don't contact me because I won't contact you...
Please check out my blog at https://from-zero-to-hero . net
  • #64
  • Dec 28, 2014 10:28pm Dec 28, 2014 10:28pm
Quoting Copernicus
It's an interesting thread Unabletrader as it gets the mind whirring. The way I view trading is this. The price at any point in time is stochastic in nature (uncertain). It varies between end point constraints beyond which everyone or most participants agrees whether the instrument is over or under valued. Think of an auction where bidders are present. As the auction commences all participants take a stab and participate but over time as price increases, fewer and fewer bidders participate. You can use a bell curve to assess the probability of where...
Good post and very relevant image.

But yes, one can surely out perform any robots, insider traders or high frequency traders as long as economic and political factors remain major part of market moves. This coin is imbalanced because of these fundamental factors. All one needs is basics of money management. Profit may not be crazy, but at least decent. Everyone talks about money management, have we seen any workable modules? Not yet. But there is one new thread on this topic. Work-in-progress and therefore it will take few weeks to post the first module.
The Thief of Wall Street
  • #65
  • Dec 28, 2014 10:32pm Dec 28, 2014 10:32pm
Unabletrader,

That's a good point. Not handling risk properly causes the downfall of many traders. It's important to always trade with stops. As for scalping, personally, i can't scalp for beans, and don't even try anymore . For me higher TFs work, but I speak only for myself - maybe others are good at scalping.
  • #66
  • Dec 28, 2014 11:53pm Dec 28, 2014 11:53pm
I always see this on the forum most ppl say u can't make money scalping. Well let me tell you can make money as long as u find a trading style that suits your own personality.

I will post a trade explorer here of a very successful scalper I came across. I will just let his trade explorer do the taking. Hope this helps.

Myfxbook account link: http://www.myfxbook.com/members/FXVi...account/616112
  • #67
  • Dec 29, 2014 1:13am Dec 29, 2014 1:13am
Quoting nafis
I always see this on the forum most ppl say u can't make money scalping. Well let me tell you can make money as long as u find a trading style that suits your own personality. I will post a trade explorer here of a very successful scalper I came across. I will just let his trade explorer do the taking. Hope this helps. Myfxbook account link: http://www.myfxbook.com/members/FXVi...account/616112
Quote
Pips: -2437.2

It spoke. No thanks. That's not scalping. That's holding onto a big fat fucking loser until you can keep upping your size on shorter trades hoping for the rebound to break-even plus some coins. I.e. looks like averaging down.

The next time you post from myfxbook pick something better.
Congratulations ScalaFX for coming out of the closet!
  • #68
  • Dec 29, 2014 1:23am Dec 29, 2014 1:23am
Quoting Unabletrader
Since I've been told scalping couldn't be profitable, I have decided to lose money with swing strading or a least day-to-day: {image} Not sure if my order will be filled but let's see.
Why do you even trade when, you dont believe in the business of Trading? - Dont you think its better if you find another hobby/work?


Happy Holidays!
MY SITTING, NEVER MY THINKING!
  • #69
  • Edited 3:58am Dec 29, 2014 2:06am | Edited 3:58am
It seems impossible to make money in the long run... indeed that is a fact.

It's obvious that at any given time you will have a percentage of losers and winners. Anyone can claim or show a record of a winning account as proof. But what does it really mean? On further investigation it's clear these stats are meaningless and cannot be trusted. There is no doubt that a few players can make a few pips ... for a while. Unfortunately, being profitable during any given quarter does not mean it's sustainable for any particular individual.What most fail to understand is that from period to period you are not looking at the same losers and the same winners. The winners of today become the losers of tomorrow and ever fewer losers may become winners to replace the defunct winners that have joined the rank of the losers. A requirement is that new traders have to constantly join the game. They are the fuel of the dwindling spiral. It will continue to spin downward as long as new players come in-- incidentally this explains why the not so ethical but ever so commercial calls to come and swim with the sharks - "the water is fine" - is always loud and clear.
Who does really profit long term?; it's the "house" - brokers and anyone "selling shovels to the gold diggers"
Long term, spot retail forex trading is simply a wealth redistribution system temporarily to some players but eventually all to the "casino".
This is not all bad if you know how to play the game within these constraints; it's possible to have a bit of fun - for a while..
  • #70
  • Dec 29, 2014 3:18am Dec 29, 2014 3:18am
Quoting Mingary
It seems impossible to make money in the long run...
by "long run" do you mean "forever" ? ... or just the rest of our lives ? ... or just 20 years from now ... ? it's different from person to person.

in my opinion, its very possible to survive in the "long run" with scalping/intraday strategies, but its much more easier to survive in the "long run" with longer tf trading.
my logic is pretty simple, ex; its already well known that certain (mechanical) strategies only work for certain conditions/ times.
lets say we have 1000 profitable trades before "system failure".
if we take 5 trades a day = we have 200 days of profitable period (only seven months)
if we take 5 trades a week = we have 200 weeks of profitable period
if we take 5 trades a month = we have 200 months of profitable period (... 17 Years)

my point is, "long run" is a subjective word, survive in the "long run" with scalping/intraday is very possible but longer tf will make this task much more easier.

I see it all in between ...
  • #71
  • Dec 29, 2014 3:49am Dec 29, 2014 3:49am
Quoting Thx
{quote} by "long run" do you mean "forever" ? ... or just the rest of our lives ? ... or just 20 years from now ... ? it's different from person to person. in my opinion, its very possible to survive in the "long run" with scalping/intraday strategies, but its much more easier to survive in the "long run" with longer tf trading. my logic is pretty simple, ex; its already well known that certain (mechanical) strategies only work for certain conditions/ times. lets say we have 1000 profitable trades before "system failure". if we take 5 trades a day...
Hi,
"Long run" is indeed subjective.
However, if you follow your example "ad absurdum" if you only place 1 trade per year (and then only every 10 years!) a trader can survive a very long time.
Then if no trades are placed at all the survival rate goes to infinity.
It means that "Long run" in terms of time is irrelevant. (it matters to the individual but not to the model I described)
  • #72
  • Dec 29, 2014 4:14am Dec 29, 2014 4:14am
Quoting Mingary
{quote}Then if no trades are placed at all the survival rate goes to infinity.
Hi,

If no trades are placed, then that person is not a trader so you cannot use that example above.
and human have 'age/life ' limit ... dont you agree ...

I see it all in between ...
  • #73
  • Dec 29, 2014 4:22am Dec 29, 2014 4:22am
Quoting Thx
{quote} Hi, If no trades are placed, then that person is not a trader so you cannot use that example above. and human have 'age/life ' limit ... dont you agree ...
I agree. (I was being facetious)

The conclusion is that the length of time that makes up the "long run" is irrelevant.
  • #74
  • Dec 29, 2014 4:26am Dec 29, 2014 4:26am
Most people won't do the work. Some are under capitalised. Some will never make money because they are not clever enough. Some are too scared. Some won't adapt to changing markets by staying out when it's no good. Some get addicted to gambling. Some realise they can make more money from other careers. The list goes on.
Gone to a better place
  • #75
  • Dec 29, 2014 4:41am Dec 29, 2014 4:41am
Quoting Copernicus
It's an interesting thread Unabletrader as it gets the mind whirring. The way I view trading is this. The price at any point in time is stochastic in nature (uncertain). It varies between end point constraints beyond which everyone or most participants agrees whether the instrument is over or under valued. Think of an auction where bidders are present. As the auction commences all participants take a stab and participate but over time as price increases, fewer and fewer bidders participate. You can use a bell curve to assess the probability of where...
Bravo !

D.P.
Hunting High and Low
  • #76
  • Dec 29, 2014 5:28am Dec 29, 2014 5:28am
Quoting Copernicus
{quote} A trend trader would be the more appropriate for my technique. I am uncertain as to your use of the word chaotic to describe price moves over long timeframes in a particular trending direction with low volatility. That price movement would be fairly orderly and predictable. Chaotic movement describes unpredictable movement. Yes, there are times when price movement can be chaotic (in all timeframes), but there are also long periods of time when price moves are orderly moving between thresholds of overbought and oversold conditions whether...
These type of conversations tend to be one of bone of contention. So Iīll simply say that what you see on the higher TF is simply an extended candle of those you see on the lower tf. When you look at the h4, and you see the price bouncing around, you have the same movement on the lower tf correct? So why not simply look at the lower tf to gain you entry based on engulf or extension patterns, and use your higher tf bias to get you out of the position. As for the hedge funds, and magic men of forex, have you ever seen their trade history? Do you know how long they are opening or closing their positions for? How do you TRULY know they are swing trading? The reality is you DONīT because that information isnīt given to the public. Much how the classic pump and dump scam works in stocks. If we simply broke down a chart, looked at the patterns, you would never be able to tell what TF I am looking at based on the candles which you see. Why? Well because the market is fractal as the teachers claim. So if that is indeed true, and if you donīt believe that anyone could ever guess the price of a reversal then that would make the higher tf less useful to gain profit over the long term, as you are taking an educated guess (guesses which would later be corrected) based on your misinterpretation of how the market works.
  • #77
  • Dec 29, 2014 5:34am Dec 29, 2014 5:34am
Quoting nafis
I always see this on the forum most ppl say u can't make money scalping. Well let me tell you can make money as long as u find a trading style that suits your own personality. I will post a trade explorer here of a very successful scalper I came across. I will just let his trade explorer do the taking. Hope this helps. Myfxbook account link: http://www.myfxbook.com/members/FXVi...account/616112
At last less words, and more charts which reveals that someone can make money. I find it amazing that a scalper has had such a long run, compared to the swing traders who insist that they can predict the future by looking at what the price has done in the past, or by following news events. Scalpers ( if scalping the most basic and constant form of price action) should always be able to gain profit no matter the market conditions. Someone previously posted that todays winners, could be tomorrows loser, which makes forex seem as if it was the lotto. Forex is not random, and not because of current events, but because of price action. Price action has a set of given rules, which are as simple as IF THIS OCCURS, then the price will do THIS up until this price. Trading anything other wise will result in massive losses over a long period time, which appears to make swing traders happy.
  • #78
  • Dec 29, 2014 5:46am Dec 29, 2014 5:46am
Quoting Unabletrader
Since I've been told scalping couldn't be profitable, I have decided to lose money with swing strading or a least day-to-day: {image} Not sure if my order will be filled but let's see.
For get what you have been told about scalping my friend. Simply give it a look, try to pick apart what it is, and you will see why and how it works. Many people will use big words, and well pieced paragraphs together to sway you into what they believe, but should you understand the most simply forms of trading you will understand swingers are only taking guesses, which typically goes against the low of price action. At times they place trades which goes with price action, which ends up with a green position, and most times they enter only to never spend more then 60 seconds in green. Understanding why they spend their time so much in red, is the key to realizing that their something FUNDAMENTALLY wrong with swing trading. Simply look at a word which we use commonly in a day. ĻWILLĻ... A word which not only mentions to someone or several people what you have planned to do, but something which in your MIND will occur. As if you are 100% as to what the future willl hold. In essence a prediction. Now swingers take positions based on PREDICTIONS, and they justify it with so much FLUFF, compared to only taking positions on RULES based on what price action is doing. Most look at the higher tf and say WHOA, the price had dropped 600 pips for x amount of time, and after this first green candle it reversed for a 500 pips. So what swingers try to do is pick the bottom, instead of looking at the lower tf to find the engulf which happens BEFORE that green candle is closed on the h4 h1 etc. My intention here is not to be a mentor or a teacher, but simply the devils advocate. EU has had this massive drop, and people have still lost wagering on the short. Ask yourself why and the simple answer is PRICE ACTION.
  • #79
  • Dec 29, 2014 5:55am Dec 29, 2014 5:55am
Quoting KmBioDmoneda
{quote} Price action has a set of given rules, which are as simple as IF THIS OCCURS, then the price will do THIS up until this price. Trading anything other wise will result in massive losses over a long period time, which appears to make swing traders happy.

Absurd comment. Price action has no rules, What it has is a range of movement determined by the laws of supply and demand which can be predicted by the individual trader enough to give him or her an edge. The only rules that exist are those that must be obeyed by the traders themselves.
  • #80
  • Dec 29, 2014 6:02am Dec 29, 2014 6:02am
Quoting KmBioDmoneda
{quote} As for the hedge funds, and magic men of forex, have you ever seen their trade history? Do you know how long they are opening or closing their positions for? How do you TRULY know they are swing trading? The reality is you DONīT because that information isnīt given to the public. Much how the classic pump and dump scam works in stocks. If we simply broke down a chart, looked at the patterns, you would never be able to tell what TF I am looking at based on the candles which you see. Why? Well because the market is fractal as the teachers...
Just a heads up mate. Between 2000 and 2010 I worked in the managed funds industry as a compliance manager for a Responsible Entity (Trustee) and Custodian of managed funds. In that capacity it was my job to assess the risk management activities of each FUM. I had access to a large number of successful investment managers in Australia and was privvy to their trading strategies as well as heavy duty research in areas of risk management. In the majority of schemes (but certainly not all), their trading techniques (whilst mainly being based on fundamentals) utilised long term and simple trend following techniques. We are not talking about market makers or institutional trading desks of the banking system, but fund managers tasked with the job of delivering returns to wholesale and retail investors. There is no educated guessing in my statements but simply a long history of direct experience in the industry.
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