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I've figured out why so many people lose money in Forex

  • #21
  • Feb 21, 2015 1:54pm Feb 21, 2015 1:54pm
Quoting Tom_D_Trader
{quote} Thx for asking, am having a pretty bad weekend coz lost about 2% this week on my Yen bets . Shit happens. Btw, ofc gambler can manage initial risk, especially in things like gambling with life. You always can do a good decision to split universe in your favour. But mate, you are talking to professional poker player and also a guy who often calls himself bachelor of chaos . I totally dont believe anything in our life is granted. I have lost quite lots already, no matter what decision I have made - and not talking forex here. It resulted...
Yes Tom, life itself is a gamble full of risk and thus, everything within it is as well. Just the odds are more controllable in some areas than in others. Not exactly new to gambling myself and everyone can see it the way they wish. I don't relate trading to gambling or visa versa. That's the way I wish it.
Ghost Rider - WWTBMD?
  • #22
  • Feb 21, 2015 1:55pm Feb 21, 2015 1:55pm
Quoting Tom_D_Trader
{quote} Coz you wrote it wrong. You have based your views on market beeing random. According to your calculation, no strategy is profitable, no matter leverage. You have 50/50 without commission, with it, you are below 50. If random, long term you always loose. All you did is you counted, that if someone knows total shit and invests random, the higher leverage, the sooner he looses. Or thats how I understand your *.xls sheet.
Correct, so now you need to determine just how much you would have to beat the market by just to break even. How much you need to be right changes based on how many pips each trade is. If you're making Forex trades purely based on price action, then I don't see how it's not random. HFT should be removing any possibility of making money based on price action, just like HFT removes the possibility of making money by triangular arbitrage.

Quoting Tom_D_Trader
{quote}
There go this theory of effective markets, which could be applied to FX, as is one of the most effective markets in the world. Basically theory is saying all informations available are instantly absorbed by price, so no matter how you analyze, it is already priced in, so you lost from start and is random. However, back to philosophy, you simply cant be saying all informations in universe are available to everyone. Life is not effective and neither is market. There are always holes.
That's all different than making up a system that could make money. Whether or not a coin lands on heads/tails depends on hard I throw it in the air etc. However the information needed to determine what that coin flip will be is impossible to access as a trader. So a coin flip is in essence random even though the results could be determined if the information could be accessed. Just as you can't make a system to determine what the next coin flip will be so you can't make a system that determines in what order the next buy/sell of a currency will be.
  • #23
  • Feb 21, 2015 1:59pm Feb 21, 2015 1:59pm
Quoting redgreen
{quote} Incorrect. There are professional "gamblers" out there who not only make a living out of it but they actually made millions with it. They approach every bet wether it's poker, trading, stock buying, blackjack with cards counting etcfrom the mathematical concept of edge/expected value. They use mathematical approaches to estimate probabilities and their edge and bet according to that. You can have an edge in trading with TA or FA but if you don't understand the concept of edge... It's like you are lurking with no visibility in a dark room...
Read my post again. I was referring a "single" bet versus a "single" trade. You're averaging over many. I have more control over a "single" trade than you'll ever have over a "single" bet. You can ... bet ... on it.

Have a great weekend folks.
Ghost Rider - WWTBMD?
  • #24
  • Feb 21, 2015 2:26pm Feb 21, 2015 2:26pm
Quoting albchr
{quote} Read my post again. I was referring a "single" bet versus a "single" trade. You're averaging over many. I have more control over a "single" trade than you'll ever have over a "single" bet. You can ... bet ... on it. Have a great weekend folks.
The control you are talking about is useless if you don't have an edge. Do you know the expectancy of your trades? Do you know your expected value if you close your trade now or later? The control you have does not guarantee you a positive profit factor. If you don't know your expectancy it's just gambling no matter how dressed up as sophisticated investing is.

Your post seems very naive to me especially because there are professional speculators out there in the financial world that bet on options which are similar to bets. These guys have sophisticated mathematical approaches to the speculation they do on financial markets and they don't need to control their bets to make money in the long run. All they need is to do their homework (calculating and estimating probabilities and edge) before they "bet".
  • #25
  • Feb 21, 2015 3:20pm Feb 21, 2015 3:20pm
Quoting redgreen
{quote} The control you are talking about is useless if you don't have an edge. Do you know the expectancy of your trades? Do you know your expected value if you close your trade now or later? The control you have does not guarantee you a positive profit factor. If you don't know your expectancy it's just gambling no matter how dressed up as sophisticated investing is. Your post seems very naive to me especially because there are professional speculators out there in the financial world that bet on options which are similar to bets. These guys have...
Yes, I'm very naïve with no expectations for my trades.

Good "luck" with your trading ... or gambling or whatever.
Ghost Rider - WWTBMD?
  • #26
  • Feb 21, 2015 3:32pm Feb 21, 2015 3:32pm
Most people lose money because they don't know what they are doing, they are bullshitted how to trade by these self appointed guru's. They talk the same old bullshit, that doesn't even come close to teaching how to trade.

It takes years to learn how to trade and become profitable, not a 4 hour course or a webonaire on the Internet.

Then when you do learn, the criminal brokers are there to throw all the tricks at you to relieve you of your cash.

I'll also guarantee there is no way you can make money day trading using M15, H1 or H4 charts, what you make today, the criminals will get back the next day and more.


Asw
  • #27
  • Feb 21, 2015 3:36pm Feb 21, 2015 3:36pm
Quoting albchr
{quote} Yes, I'm very nave with no expectations for my trades. Good "luck" with your trading ... or gambling or whatever.

Possibly a language thingy? :-)
  • #28
  • Feb 21, 2015 3:43pm Feb 21, 2015 3:43pm
Quoting srt
{quote} Possibly a language thingy? :-)
.... ...

How'd you make out in Friday's fun brother? Haven't had a good freaky one like that in some time.
Ghost Rider - WWTBMD?
  • #29
  • Feb 21, 2015 3:45pm Feb 21, 2015 3:45pm
Quoting Asw
Then when you do learn, the criminal brokers are there to throw all the tricks at you to relieve you of your cash. I'll also guarantee there is no way you can make money day trading using M15, H1 or H4 charts, what you make today, the criminals will get back the next day and more. Asw
Too funny.
I personally know a millionaire who'll consistently double a $50K account in less than 6 weeks trading futures charts 1H & lower.
  • #30
  • Feb 21, 2015 3:51pm Feb 21, 2015 3:51pm
Quoting albchr
{quote} .... ... How'd you make out in Friday's fun brother? Haven't had a good freaky one like that in some time.
Uncle & aunt in town from Nebraska so had to visit.
Missed all the excitement. Plenty more to come I'm sure :-)
  • #31
  • Feb 21, 2015 3:57pm Feb 21, 2015 3:57pm
Quoting srt
{quote} Too funny. I personally know a millionaire who'll consistently double a $50K account in less than 6 weeks trading futures charts 1H & lower.


I personally know a millionaire who'll consistently double a $50K account in less than 6 weeks trading.

Another bullshitter.
  • #32
  • Feb 21, 2015 4:03pm Feb 21, 2015 4:03pm
Quoting Asw
{quote} I personally know a millionaire who'll consistently double a $50K account in less than 6 weeks trading. Another bullshitter.

As a church-going Catholic, I only have one last statement, "Blessed are those who have not seen and yet have believed."

Have a good weekend.
***Church is @ 7:45AM tomorrow if you want to join.
  • #33
  • Feb 21, 2015 4:14pm Feb 21, 2015 4:14pm
Quoting srt
{quote} Uncle & aunt in town from Nebraska so had to visit. Missed all the excitement. Plenty more to come I'm sure :-)
Great reason to miss it. No doubt there's plenty more to come. Anyway, we should leave the OP's thread alone. Not a place to chit chat.
Ghost Rider - WWTBMD?
  • #34
  • Feb 21, 2015 8:25pm Feb 21, 2015 8:25pm
Quoting replaced
I think I've figured out why so many people lose money in Forex. I think that there are three main factors involved. They would be commissions, leverage, and volatility. The first factor is commissions. If a commission is 0.2, on 10k that's just 20 cents. Not bad, right? Wrong. You'll obviously need to close the trade so that's 0.4 pips roundtrip. Then if leverage is involved, such as 20x. You're paying commissions on 20x your money which means 20x the cost. So that 40 cents roundtrip just turned into 8 dollars per round trip trade, or 0.08% of...

Very nice post, replaced. Very few will truly understand the implications of the points you've made and even fewer will put them to practice.


Quoting redgreen
{quote} The control you are talking about is useless if you don't have an edge. Do you know the expectancy of your trades? Do you know your expected value if you close your trade now or later? The control you have does not guarantee you a positive profit factor. If you don't know your expectancy it's just gambling no matter how dressed up as sophisticated investing is. Your post seems very naive to me especially because there are professional speculators out there in the financial world that bet on options which are similar to bets. These guys have...
Exactly.

I suggest you guys not waste much time giving explanations to certain charlatans. They're not here to learn anything but only put down those who don't agree with their ignorant views.
  • #35
  • Feb 21, 2015 10:24pm Feb 21, 2015 10:24pm
To Replaced:

It would be much better for you if you could figure out how some people make money trading Forex.

What a shmack!
  • #36
  • Feb 21, 2015 11:46pm Feb 21, 2015 11:46pm
Quoting redgreen
{quote} The control you are talking about is useless if you don't have an edge. Do you know the expectancy of your trades? Do you know your expected value if you close your trade now or later? The control you have does not guarantee you a positive profit factor. If you don't know your expectancy it's just gambling no matter how dressed up as sophisticated investing is. Your post seems very naive to me especially because there are professional speculators out there in the financial world that bet on options which are similar to bets. These guys have...
Thats pretty rude.

Quoting Trenderer
Exactly. I suggest you guys not waste much time giving explanations to certain charlatans. They're not here to learn anything but only put down those who don't agree with their ignorant views.
Now thats very rude. I suspect you must be either idiot, or rude kid. Anyway, welcome to ignore.

Am very sorry for you guys. Sick :/
"I know one thing, that I know nothing." Sokrates
  • #37
  • Feb 21, 2015 11:55pm Feb 21, 2015 11:55pm
Quoting MZen
To Replaced: It would be much better for you if you could figure out how some people make money trading Forex. What a shmack!
For short term traders, they make money due to random chance.

If a trader makes 550 good trades out of 1000 total, with an average gain and loss both the same pip wise. Does that prove that the system that the trader was using actually works? No, it definitely does not and I'll explain why.

The odds that a coin will flip heads more than 549 times after 1000 flips is 11.28%. This can be analyzed by using a 1 tailed 2x2 chi-square test. So seeing someone out there with 10% winning trades out of 1,000 should be common just due to sheer odds. If there are 1,000 people that go on this forum, you should easily have 100 or so that seem to have possible winning systems based on their performance.

Even if a trader boasts about having 1,650 winning trades out of 3,000 with gains and loses the same pip wise (55% win rate) still doesn't mean that it's a winner. A 1 tailed 2x2 chi-square test will determine that there is a 1.61% chance that the system the trader is using is nothing more than a 50/50 coin flip. Out of the thousands of people on here, there are bound to be the lucky ones.

There are 2 strategies that I know of that actually work. One strategy involves building racks of computers with fiber optic connections and thousands of algorithms analyzing the past 20 years worth of tick data for HFT. The other strategy involves 1:1 leverage and a couple months/years per trade. Personally, I would prefer stocks over Forex.

If you could gain just an average of 0.05% per trade or 1/2,000th of position size. You would have billions by the 3,000th trade with 1:5 leverage according to the calculator. Yet we haven't read any news about someone turning $10,000 into a billion through Forex.
  • #38
  • Feb 22, 2015 1:44am Feb 22, 2015 1:44am
I see an confusion here leverage don't affect probably of winnings anyway. too much leverage only reduce number of losing traders you could have in row before you blow up account, and you pay spread only once per trade not twice and you pay spread plus commission for some brokers. And you missed money management and risk to reward ratio they are very important in spot forex. Add them to your calculator and things will change good luck

Mm
  • #39
  • Feb 22, 2015 3:24am Feb 22, 2015 3:24am
Quoting Trenderer
{quote} Very nice post, replaced. Very few will truly understand the implications of the points you've made and even fewer will put them to practice. {quote} Exactly. I suggest you guys not waste much time giving explanations to certain charlatans. They're not here to learn anything but only put down those who don't agree with their ignorant views.
LOL ... Clueless. Guess that makes #23 ignored.
Ghost Rider - WWTBMD?
  • #40
  • Feb 22, 2015 6:08am Feb 22, 2015 6:08am
For me understanding the probabilities are important. Spending countless hours going back through price charts until your eyes are bleeding and understanding the probabilities of price movements can give you both a psychological and statistical edge. I think it is this kind of hard work that helps in making a trader successful by understanding and having confidence in the probabilities and expected outcome of their trades.

For instance understanding some probabilities (that are not just random chance is important) as an example:

If Asian session trades a wide range up or down what are the probabilities that this session will be closed on London session
If New York closes away from London close what are the probabilities we need top see the London close next session prior to moving in a direction
If London session breaks away placing your stop above Tokyo close gives you what probabilities of success for not being stopped out
If London trades so many ticks away from the open what is the probability that it has runs it's range for the day
What are the probabilities of better price movements on Tue, Wed and Thursday.
If trading runs away from London close and does not return back in so many days how important is that the trend is reversing
What are the probabilities of a pattern you trade based on how price ran to that level.

These are a few examples that I ran through a long time ago and continue to update and add and benefited me greatly in trading but mean nothing unless you have the more important areas sorted out such as your Psychology and Money Management skills. I could not agree more with Chris and Drock the psychology is the biggest part of trading as you can adjust and move your position once you have placed a trade. This can mean good Money Management and Psychology (to your benefit) or lack of Patience or to much Greed and Fear (to your detriment).

There are no point of references to Random chance and there are reasons why the above style probabilities happen in the market and why they work. Markets are a place of business with both Hedges, Speculators and everyday transactions taking place. Both Speculators and Hedges need each other, Hedgers need speculators to provide a liquid and efficient market and Speculators need Hedgers and long term transactions to provide the market place.

In the currency market understanding how the flow of order takes place such as what happens when a bank wants to transact a yard, i.e Its not a one click process. Because banks get paid and make money on the spread they are obviously trying to get the orders filled at the most efficient price. So they need to cut up large orders into blocks and run them into the market trying to find liquidity in all sessions into the best price. These are important functions or processes of the market and reasonings why open and closes of markets such as Tokyo, London and New York are so important. The markets are a place of business with predictable Functions, Process and Physiology and as in Game Theory it a Strategic Decision Making Process based on ones experience and knowledge which effects the way we enter orders, manage those orders and overall behave when the the orders are in the market.

It's not the same as a roulette table but has some similarities with say Poker such as Psychology, Money Management and probabilities (built on Random chance) but again once you place your bet you can add or fold you can't exit in profit if you see the scenario change.

Anyway its a great subject.
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