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

  • #61
  • Feb 22, 2015 7:47pm Feb 22, 2015 7:47pm
The OP makes a good point that if you always use max leverage, your odds will be against you as your losses will always be at a higher leverage than your previous win. The solution is simple. Use the same trade size until you have a net win streak of 3-4, then up your leverage slightly.

Ideally though you will eventually reach a point where youre not always pushing the envelope when it comes to leverage. Dont get greedy guys

Be smart about stop losses. If your next trade is going to last 4-6 hours, dont make the SL 100+ pips. And as a general rule your price target should always be larger than your SL

These are just common sense things that make a big difference
  • #62
  • Feb 22, 2015 9:26pm Feb 22, 2015 9:26pm
Quoting dkrock
{quote} You responded to me because apparently your life is about posting on FF (6175 posts). I have absolutely no problem forgetting all about you.
Well, I got 6K posts, coz am trading for five years and like to discuss analysis with traders. Think no trader would insist so hard like you there is no such thing as time and probability though. I have never encountered anyone so stubborn, so have lost some time with you as found it interesting. But it was weekend and I was trying to help. As I always do. I really dont see what is your problem and why you insist so hard there is no probability. You must know it makes no sence, and prolly just like to argue and play smartass. So I appreciate you are about to forget about me. Thanks.

Edit: Oh, you deleted whole conversation where you behaved like a smartass fatalist kiddo? Eh, pretty suitable. Well, sir, you just proved not only you cant behave, need to prove something to yourself, but you dont even stand by your words. So seems I dont need to read em right? Welcome to ignore list genious .
"I know one thing, that I know nothing." Sokrates
  • #63
  • Feb 22, 2015 9:59pm Feb 22, 2015 9:59pm
you want to be successful do it for a very long time, eventually all your nerves die and it turns into a dull marriage. Most people fail in forex, because they count their winnings they lose and they feel bad, and look for something else to blame or someone else. Then they try and fail and try and fail and give up pout and say its impossible, because being part of the 95% sucks.. Forex is never for the weak hearted, and the emotionally reckless people you either get your S*** together or you don't, its as simple as that. What do i know, I'll be roaming this threads 10 years from and it will be the same threads forex is impossible look at my spreadsheet or whatever it is will have in the future..
There are those who know, and there are those who don't know.
  • #64
  • Edited 2:53am Feb 23, 2015 2:20am | Edited 2:53am
Quoting RobertCorey
The OP makes a good point that if you always use max leverage, your odds will be against you as your losses will always be at a higher leverage than your previous win. The solution is simple. Use the same trade size until you have a net win streak of 3-4, then up your leverage slightly. Ideally though you will eventually reach a point where youre not always pushing the envelope when it comes to leverage. Dont get greedy guys Be smart about stop losses. If your next trade is going to last 4-6 hours, dont make the SL 100+ pips. And as a general...
All incorrect. It doesn't matter if your price target is larger than your SL. If your price target is 100 pips and your SL is 50 pips, what will happen is that the SL will trigger 66.6~% of the time while your price target is hit 33.3% of the time. The only solution to lowering loses is to stop placing trades based on price action, TA, or any kind of system based on price and reduce leverage and deleverage if a trade goes against you a lot. SL is not needed, only the deleveraging is needed. Why buy high and sell low?

Price targets should be no less than 1,000 pips or until the asset becomes fairly valued IMHO. You might be able to get away with 2x leverage. Anymore than that and you're likely going to lose.

If your stop loss is 10 pips and your price target is 100 pips, your SL will trigger 9/10 times for every price target hit. It doesn't matter if you trade the opposite of what you do, you'll still lose money.


Quoting palabara
you want to be successful do it for a very long time, eventually all your nerves die and it turns into a dull marriage. Most people fail in forex, because they count their winnings they lose and they feel bad, and look for something else to blame or someone else. Then they try and fail and try and fail and give up pout and say its impossible, because being part of the 95% sucks.. Forex is never for the weak hearted, and the emotionally reckless people you either get your S*** together or you don't, its as simple as that. What do i know, I'll be roaming this threads 10 years from and it will be the same threads forex is impossible look at my spreadsheet or whatever it is will have in the future..
Most people fail in forex because of those reasons that I've just outlined. A person placing 20:1 leverage random trades should lose their pants and more after 1000 trades no matter what. It has nothing to do with emotions. It doesn't matter if you shut down the computer, placed trades opposite of what you would have done, or used a system. Even if you had a system that worked and had a positive ROI, you're still extremely likely to lose everything with high leverage. Even with SL.
  • #65
  • Feb 23, 2015 2:46am Feb 23, 2015 2:46am
So a person using 400:1 leverage should bust his account in ... how many trades?
  • #66
  • Feb 23, 2015 2:52am Feb 23, 2015 2:52am
Quoting IndigoPingvi
So a person using 400:1 leverage should bust his account in ... how many trades?
I don't know since you've omitted the volatility of the trades. The higher the volatility per trade, the faster the account will bust. However an account making 400x equity positions shouldn't last longer than 100 roundtrip trades in most cases.
  • #67
  • Feb 23, 2015 2:53am Feb 23, 2015 2:53am
Quoting IndigoPingvi
So a person using 400:1 leverage should bust his account in ... how many trades?
How about 500:1? ...

Good to see you Indigo
Ghost Rider - WWTBMD?
  • #68
  • Feb 23, 2015 3:11am Feb 23, 2015 3:11am
Quoting replaced
{quote} I don't know since you've omitted the volatility of the trades. The higher the volatility per trade, the faster the account will bust. However an account making 400x equity positions shouldn't last longer than 100 roundtrip trades in most cases.
How do you calculate volatility of the trades? Anyway, if I prove to you that account can make 100% profit in 100 trades, would you reconsider your oppinion?
  • #69
  • Feb 23, 2015 3:12am Feb 23, 2015 3:12am
Quoting albchr
{quote} How about 500:1? ... Good to see you Indigo
Thanks. Just having fun
  • #70
  • Feb 23, 2015 3:59am Feb 23, 2015 3:59am
Quoting IndigoPingvi
{quote} Thanks. Just having fun
Me too pretty much. Sometimes I just can't help myself when I see interesting claims.
Ghost Rider - WWTBMD?
  • #71
  • Feb 23, 2015 4:09am Feb 23, 2015 4:09am
Quoting dkrock
Hello. By your analysis, should I conclude you have not made a Forex trade yet? It seems to me that commission is commission, and is not applied against the leverage, but against position size.
+1

Quoting dkrock
By the way, the main reason people lose is emotional response. Once real money is used in the market, your anxiety level increases.
On the button! Under-capitalized, over-leveraged or simply trading with amounts of money that are large 'to you' make rationality an elusive facet.

Quoting dkrock
If it is not controlled, the result is panic mode which causes rational thought to stop. Think of someone who is afraid of swimming and panics in 4 feet of water. Rather than merely standing up, they drown. .... Market makers realize most people stare at the candles, so they cause them to jump all over the place to enhance your emotional response. This is why .... However, it is a learned skill. Until you learn to do it, you will most likely fail because the "motion of the ocean" is purposely designed to make you fail. .... Everyone must experience...
I was reminded recently of the effects of over-leverage. I nearly wiped out a small account.

On a general basis I am not sure how one could teach what you wrote in a manner which would be believed by a novice.
It is a bit like hunting tigers with only a spear.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #72
  • Edited 8:21am Feb 23, 2015 8:00am | Edited 8:21am
Quoting replaced
{quote} Most people fail in forex because of those reasons that I've just outlined. A person placing 20:1 leverage random trades should lose their pants and more after 1000 trades no matter what. It has nothing to do with emotions. It doesn't matter if you shut down the computer, placed trades opposite of what you would have done, or used a system. Even if you had a system that worked and had a positive ROI, you're still extremely likely to lose everything with high leverage. Even with SL
Random trades yeah.. if you just randomly trade in the long run you will lose maybe someone will get lucky, but randomly trading is just like gambling which also falls under an emotional category being to impulsive. Trading a psychological game, and no matter how its quantified broken down explained or shown.. It always comes down to a human emotion. When eliminating the emotion and being rational and using proper quantification to assume risk then most traders would not lose. Psychology primarily only has 2 steps to everything.. and most people never even manage to go as far as 2 steps because it requires to much "energy". As I stated if you stick long enough with it, and replace all the bad habits into good once, learn from your mistakes, control your raging hormones. Its just like running a business.. and I heard a trader say on BBC the other day the veteran traders who have been at this for a long while count how much they can lose while the new traders count how much they can make. Even with leverage its possible, anything is possible as long as its properly done.

Just going to add that.. No matter how many times it will be "generalized" 5% will make it and 95% will fail.. Most people blame leverage fine whatever, systems, the banks, whoever whatever anyone decides to blame understand it quantify it, or whatever is the ability to understand why they are failing by calculating commissions, volatility pips trades leverage risk etc.. The fact is being profitable is possible and I can argue till I'm blue in the face nor do I really care.. not my problem most people tend to fail. I've been doing this for 14 years.. I've seen it and done it more times then I care to count. I've eventually "got it" it took me a while, not going to lie. Once you get it, you realize just how it was always so easy if you would stop doing 99% of the stuff that is done here on Forexfactory.. including starting threads like this, and that's the simple truth!

Like I said, this thread like many more going back since the start of FF is going to eventually die and new one will start and the process will rinse and repeat and people will come and go and blame leverage like they have been since the start retail Forex. Very few will stay, and the once who stay are the once who still are working their asses off in order to be able to succeed and those who work hard enough eventually will! and no spreadsheet is going to change that.
So, I wish everyone on here luck, and if your doing it keep doing it, and if you gave up. Good luck on the 9-5!
There are those who know, and there are those who don't know.
  • #73
  • Feb 23, 2015 8:38am Feb 23, 2015 8:38am
Quoting palabara
{quote} Random trades yeah.. ... Good luck on the 9-5!
Well said!
In my opinion, this person failed in trading miserably. Now he is trying to establish his superiority in explaining other traders that trading Forex is a pure matter of luck and chance!
  • #74
  • Feb 23, 2015 8:53am Feb 23, 2015 8:53am
Quoting palabara
{quote} Random trades yeah.. . Good luck on the 9-5!


As far as leverage goes, it's simply a tool. No different than a hammer. In the right hands it builds beautiful homes. In the wrong hands it smashes fingers. In either case, the hammer doesn't get the credit.
Ghost Rider - WWTBMD?
  • #75
  • Feb 23, 2015 9:27am Feb 23, 2015 9:27am
couldn't of said it better...

The hammer gets the blame sometimes. It's amazing how many post like these are started on FF. This isn't the first and won't be the last. Many continue to always blame the hammer for their failure.

Quoting albchr
{quote} As far as leverage goes, it's simply a tool. No different than a hammer. In the right hands it builds beautiful homes. In the wrong hands it smashes fingers. In either case, the hammer doesn't get the credit.
SPC * Swollen PocketZ Crew!
  • #76
  • Feb 23, 2015 9:44am Feb 23, 2015 9:44am
Quoting JoeNY
couldn't of said it better... The hammer gets the blame sometimes. It's amazing how many post like these are started on FF. This isn't the first and won't be the last. Many continue to always blame the hammer for their failure. {quote}
Yeah it's pretty remarkable really Joe. Roughly 90% of humans can't accept responsibility for their own actions. Hmmmm ... 90% ... ... Coincidence? ..

Anyway, gotta run. Enjoy the day brother.
Ghost Rider - WWTBMD?
  • #77
  • Feb 23, 2015 10:22am Feb 23, 2015 10:22am
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...

mine looks like this!
it's forex below and graton cash casino!!
Profit
18.29
12.83
-1.22
10.89
-2.04
-2.36
0.13
-0.13
5.63
6.47
5.55
5.76
16.54
14.78
8.92
10.69
5.25
1.13
1.25
-0.17
0.17
0.63
4.68
3.92
0.49
1.1
1.85
-2.15
0.23
-0.23
0.69
5.81
3.62
1.1
1.9
5.47
24.96
0.22
-1.88
-1.89
-2.28
-2.24
0.27
-2.21
0.07
0.44
0.06
-0.06
3.14
4.27
-3.72
-0.15
0.15
Daytrader
  • #78
  • Feb 23, 2015 3:51pm Feb 23, 2015 3:51pm
Quoting albchr
{quote} As far as leverage goes, it's simply a tool. No different than a hammer. In the right hands it builds beautiful homes. In the wrong hands it smashes fingers. In either case, the hammer doesn't get the credit.
Indeed, but people need to find a cause of fault. Someone is responsible for their reasons of not profiting. So leverage must be the cause because by rationing the fact that you are allowed to trade beyond your means must be the fault similar to the 2007 housing crash peoples response was that well the bankers lent us money so that means they knew what they were doing not maybe I shouldn't have bought a house when I know I'm unemployed, that's not the reason. I mean its the bankers who gave me money to buy a house when I was unemployed means they knew what they were doing they knew I can handle/afford/ be able to manage with a Balloon Rate Loan.. cause I like Balloons I don't know what it means in terms of loans. Same reasoning here in Forex, people blame leverage for their fault because they trade with ALL and lose and its the leverage that was at fault.

Problem with most people who get into Forex see it as "get rich quick" Not going to lie, when I first got into it was my exact expectation. I was planning all the things ill buy before I even made my 1st trade. Then reality hit, and I understood that its not get rich and then depression and anxiety and sleepless nights and why am I always losing, and more depression, but I knew the fault is not with leverage maybe a little with the brokers If I wanted to get good at it, I need to learn and every time I fail its my fault, and I suck and back to depression lol. Its not an easy path, but looking for a scapegoat someone/something to blame its just so.. Lazy.
There are those who know, and there are those who don't know.
  • #79
  • Feb 23, 2015 3:53pm Feb 23, 2015 3:53pm
Quoting JoeNY
couldn't of said it better... The hammer gets the blame sometimes. It's amazing how many post like these are started on FF. This isn't the first and won't be the last. Many continue to always blame the hammer for their failure. {quote}
10 years from now this posts will still be around.. that's the sad part.. but mainly not so much from the U.S cause Forex is becoming extinct here. So maybe in 10 years will be a little less posts
There are those who know, and there are those who don't know.
  • #80
  • Feb 23, 2015 4:07pm Feb 23, 2015 4:07pm
Quoting palabara
{quote} Indeed, but people need to find a cause of fault. Someone is responsible for their reasons of not profiting. So leverage must be the cause because by rationing the fact that you are allowed to trade beyond your means must be the fault similar to the 2007 housing crash peoples response was that well the bankers lent us money so that means they knew what they were doing not maybe I shouldn't have bought a house when I know I'm unemployed, that's not the reason. I mean its the bankers who gave me money to buy a house when I was unemployed means...
LOL ... maybe a tad long winded but very true and quite humorous as well.

Perhaps I had a small advantage going into Forex. (and my own business at age 16) My folks raised me on this simple notion. Your day starts with you looking in the mirror. It ends the same way. Nothing changes in between.
Ghost Rider - WWTBMD?
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