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

  • #241
  • Feb 27, 2015 1:53pm Feb 27, 2015 1:53pm
Quoting Slicktick
{quote} FatFortunes isn't really wrong. There is more than one definition of leverage. Well, yes, the broker is offering you the 100:1 leverage. However, if you have $100,000 in your brokerage account and trade 1 lot you are not using any of the offered leverage. So, your real leverage is 1:1. Another link to investopedia (it's called real leverage there): http://www.investopedia.com/articles...x_leverage.asp
If you are trading 1 lot with a 100:1 broker, they are only taking $1,000 out of your free margin to do so. You can take that trade with a $2,000 account or a $100,000 account. Personally, I would keep the other $99,000 in my bank than with the broker. Either way, they are loaning you the other $99,000, regardless of your account balance.
  • #242
  • Feb 27, 2015 2:10pm Feb 27, 2015 2:10pm
If u think trading is gambling then you should quit it ... i mean IF YOU ENTER A TRADE WITHOUT A REASON BEHIND YOU ARE A GAMBLER! let say "my technical bullshit says IF X crosses Y then i should buy/ and pray" totally wrong--- you must have a fundamental reason behind each trade.. if not check my Beer trade explorer with + 95% win rate
  • #243
  • Feb 27, 2015 2:15pm Feb 27, 2015 2:15pm
Quoting palabara
If you ever bring him off the roulette he will bring up the black jack table lol.



My vote goes to Rebel Bingo..

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  • #244
  • Feb 27, 2015 2:19pm Feb 27, 2015 2:19pm
Quoting Profit Daily
[...] Personally, I would keep the other $99,000 in my bank than with the broker. [...]
Exactly! That's why I 'lost' only a relative small amount when two of my brokers went belly up after the SNB thingy.
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  • #245
  • Feb 27, 2015 2:36pm Feb 27, 2015 2:36pm
Quoting Slicktick
However, if you have $100,000 in your brokerage account and trade 1 lot you are not using any of the offered leverage. So, your real leverage is 1:1.
Again, no.

If you have $100, 000 in your account and you buy 1 standard lot with $1,000 margin money, your friendly Forex broker just loaned you $99,000, whether you like it or not and even if you are Bill Gates and just funded your FX account with a 10 billion dollars deposit.

You cannot buy 100,000 units of currency with only 1,000 units of currency unless someone loans you 99,000 units of currency, just like you cannot buy a $100,000 house with only $10,000 down unless your bank loans you $90,000.

Now, if you MUST deposit 100,000 units of currency to buy 100,000 units of currency then in that case your broker is offering you no leverage, or a 1:1 leverage if you prefer (just like in the stock market).

The high leverage offered by Forex brokers (the highest that traders and speculators can obtain anywhere) is what attracts traders in the first place. The possibility of turning a very small account into a fortune is hard to ignore for most people.

I am sick and tired of hearing traders claim that traders lose money because they use "too much" leverage, this is total stupidity. High leverage cannot make you lose, it's impossible. You can trade with a 10,000 to 1 leverage and yet risk only 1% of your capital on each trade.
Each losing trade is an opportunity to learn
  • #246
  • Feb 27, 2015 2:54pm Feb 27, 2015 2:54pm
Quoting EarnPipsNow
{quote} Again, no. If you have $100, 000 in your account and you buy 1 standard lot with $1,000 margin money, your friendly Forex broker just loaned you $99,000, whether you like it or not and even if you are Bill Gates and just funded your FX account with a 10 billion dollars deposit. You cannot buy 100,000 units of currency with only 1,000 units of currency unless someone loans you 99,000 units of currency, just like you cannot buy a $100,000 house with only $10,000 down unless your bank loans you $90,000. Now, if you MUST deposit 100,000 units...
[/b]

Exactly, leverage is what allows you to compound winners into huge gains. Now, if you're trading your entire "roll" with high leverage, of course, that is a completely different scenario. The NFA/CFTC, by lowering leverage IS NOT PROTECTING PEOPLE FROM LOSSES BUT ACTUALLY HINDERING THEIR ABILITY TO MAKE MORE MONEY. I just love coming across intelligent folks on FF.
  • #247
  • Feb 27, 2015 3:07pm Feb 27, 2015 3:07pm
Quoting Profit Daily
Exactly, leverage is what allows you to compound winners into huge gains..
Right on the money again.

Remember the huge volatility in the Forex market during 2008, ProfitDaily?

Hypothetically and with a 400 to 1 leverage, a trader could have turned a mere $2,000 starting capital into....are you ready for this.... a 25 million dollars fortune in 5 months flat by simply pyramiding his/her winning positions, especially with high-flyers like EUR/NZD and GBP/NZD!

Yes I know, it sounds unreal but such is the power of high leverage.
Each losing trade is an opportunity to learn
  • #248
  • Feb 27, 2015 3:17pm Feb 27, 2015 3:17pm
Quoting EarnPipsNow
{quote} Right on the money again. Remember the huge volatility in the Forex market during 2008, ProfitDaily? Hypothetically and with a 400 to 1 leverage, a trader could have turned a mere $2,000 starting capital into....are you ready for this.... a 25 million dollars fortune in 5 months flat by simply pyramiding his/her winning positions, especially with high-flyers like EUR/NZD and GBP/NZD! Yes I know, it sounds unreal but such is the power of high leverage.
Hypothetically with 400 to 1 leverage, a trader could turn a mere $2,000 into $0 in 24 hours flat.
  • #249
  • Feb 27, 2015 3:20pm Feb 27, 2015 3:20pm
Quoting replaced
{quote} Hypothetically with 400 to 1 leverage, a trader could turn a mere $2,000 into $0 in 24 hours flat.
Impossible, if you are risking only 1 or 2% of your capital on each trade.
Each losing trade is an opportunity to learn
  • #250
  • Feb 27, 2015 3:26pm Feb 27, 2015 3:26pm
Quoting EarnPipsNow
{quote} Impossible, if you are risking only 1 or 2% of your capital on each trade.
You should obviously stay far away from Forex if you actually think that. A trader can take out a $400,000 position which decreases to $398,000. According to you, only 1%-2% of equity is at risk because that's the margin requirement.
  • #251
  • Feb 27, 2015 3:30pm Feb 27, 2015 3:30pm
Quoting replaced
{quote} Hypothetically with 400 to 1 leverage, a trader could turn a mere $2,000 into $0 in 24 hours flat.
And that's fine if $2,000 is 3-5% of their trading capital. I've stated numerous times it would be foolish to apply high leverage to your entire roll. My whole point, which you simply refuse to comprehend, is by using high leverage you only need to keep a small % of your capital with broker. Not to mention $2,000 to $25,000,000 seems like a great risk:reward ratio to me. Another point you are failing to understand is once your high leverage position is in profit, you can move stops to break even at any point, same when adding to the winner, so in the $2,000 to $25,000,000 example, I'm sure stops would be moved to b/e rather quickly, In your casino examples, as has been pointed out, you cannot adjust your bet once placed, you cannot get out early, you can't add to a winner, you cannot aim for a greater reward than what the payout is. I think the number one reason you will not make it in trading is your negativity, you simply don't think it can be done. Change your way of thinking and see what happens.
  • #252
  • Feb 27, 2015 3:32pm Feb 27, 2015 3:32pm
Quoting replaced
A trader can take out a $400,000 position which decreases to $398,000. According to you, only 1%-2% of equity is at risk because that's the margin requirement.
Not sure I understand your example.

You had $400,000 in your account and you know have $398,000, so you lost 2K or 0.5% of your capital. So what is your point exactly, as far as leverage is concerned, Replaced?
Each losing trade is an opportunity to learn
  • #253
  • Feb 27, 2015 3:40pm Feb 27, 2015 3:40pm
Quoting EarnPipsNow
{quote} Not sure I understand your example. You had $400,000 in your account and you know have $398,000, so you lost 2K or 0.5% of your capital. So what is your point exactly, as far as leverage is concerned, Replaced?
The problem is that you don't have $400,000 in your account. You only have $2,000 for your entire life savings.

Trading anything more than 1x leverage leads to lower ROI. So having the broker place a limit on your account makes sure you don't go overleveraged.
  • #254
  • Feb 27, 2015 3:47pm Feb 27, 2015 3:47pm
Quoting EarnPipsNow
{quote} Right on the money again. Remember the huge volatility in the Forex market during 2008, ProfitDaily? Hypothetically and with a 400 to 1 leverage, a trader could have turned a mere $2,000 starting capital into....are you ready for this.... a 25 million dollars fortune in 5 months flat by simply pyramiding his/her winning positions, especially with high-flyers like EUR/NZD and GBP/NZD! Yes I know, it sounds unreal but such is the power of high leverage.
Hypothetically, I could marry Janet Yellen.
..
  • #255
  • Feb 27, 2015 3:47pm Feb 27, 2015 3:47pm
Quoting replaced
{quote} The problem is that you don't have $400,000 in your account. You only have $2,000 for your entire life savings. Trading anything more than 1x leverage leads to lower ROI. So having the broker place a limit on your account makes sure you don't go overleveraged.
I really, really do not understand what you are trying to say.

If the trader has only $2,000 in his Forex account then he should be trading micro lots with a $20 or $40 stop (1 to 2% of trading capital), regardless of the leverage offered by his broker.

Where is the problem, as far as the leverage is concerned? Please be very clear as I have a hard time understanding you.
Each losing trade is an opportunity to learn
  • #256
  • Feb 27, 2015 3:52pm Feb 27, 2015 3:52pm
Quoting Slicktick
{quote} Hypothetically, I could marry Janet Yellen.


Only with no sex appeal!
There are those who know, and there are those who don't know.
  • #257
  • Feb 27, 2015 3:52pm Feb 27, 2015 3:52pm
Quoting replaced
{quote} The problem is that you don't have $400,000 in your account. You only have $2,000 for your entire life savings. Trading anything more than 1x leverage leads to lower ROI. So having the broker place a limit on your account makes sure you don't go overleveraged.

No, having the broker place on limit on your account inhibits your ability to make money.
  • #258
  • Feb 27, 2015 3:54pm Feb 27, 2015 3:54pm
Quoting Slicktick
{quote} Hypothetically, I could marry Janet Yellen.
With 25 million dollars Forex profits you could even invite Claudia Schiffer to the weeding
Each losing trade is an opportunity to learn
  • #259
  • Feb 27, 2015 4:01pm Feb 27, 2015 4:01pm
Quoting EarnPipsNow
{quote} I really, really do not understand what you are trying to say. If the trader has only $2,000 in his Forex account then he should be trading micro lots with a $20 or $40 stop (1 to 2% of trading capital), regardless of the leverage offered by his broker. Where is the problem, as far as the leverage is concerned? Please be very clear as I have a hard time understanding you.
Stops would increase trading costs. You would have to deposit money in the brokerage account again and pay commission and spread just to have the same position while someone with 1x leverage doesn't have to do that. Stops are worse than deleveraging.

Quoting Profit Daily
{quote} No, having the broker place on limit on your account inhibits your ability to make money.
Having a broker placing a limit on your account increases ROI.
  • #260
  • Feb 27, 2015 4:02pm Feb 27, 2015 4:02pm
everything has a bearing on your long term profitability ,

if you can trade you will overcome this

most of us are governed by exterior solutions to solve ,

we have no choice but to take higher risk.

i say this sincerely ,for 95 % of us ,are exterior solution solving hinders a possibility of ones goal.

so i say ,take a chance and be more riskea on your belief.
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