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

  • #541
  • Mar 12, 2015 11:07pm Mar 12, 2015 11:07pm
Quoting EarnPipsNow
{quote} Why? Because in the case of the CHF for example, and peg or no peg, people/corporations/governments still had to buy and sell Swiss Francs for commercial/investment purposes, or simply for tourism.
Of course. I meant from a traders perspective. Someone intraday trading for a living.
  • #542
  • Mar 13, 2015 12:38am Mar 13, 2015 12:38am
Quoting Profit Daily
Like I mentioned earlier, I have just recently started trading CHF again
The only problem with the CHF is that it's a VERY expensive currency to trade at the moment: 10K margin money or more just to open 1 standard USD/CHF lot (and 17K for GBP/CHF), that's pretty stiff.

Leverage in that case is down to 10 to 1 (from 200 to 1 or more just a few years ago, in the US)
Each losing trade is an opportunity to learn
  • #543
  • Mar 13, 2015 6:14am Mar 13, 2015 6:14am
Quoting EarnPipsNow
{quote} The only problem with the CHF is that it's a VERY expensive currency to trade at the moment: 10K margin money or more just to open 1 standard USD/CHF lot (and 17K for GBP/CHF), that's pretty stiff. Leverage in that case is down to 10 to 1 (from 200 to 1 or more just a few years ago, in the US)
Cost me $200 in margin. That is one of the reasons I will not trade with US broker. The NFA/CFTC places MORE RISK on the trader by requiring ridiculous margin. Funds aren't protected in the US, yet, for the benefit of the trader, they lowered leverage.
  • #544
  • Mar 13, 2015 6:26am Mar 13, 2015 6:26am
Quoting Profit Daily
{quote} Cost me $200 in margin. That is one of the reasons I will not trade with US broker. The NFA/CFTC places MORE RISK on the trader by requiring ridiculous margin. Funds aren't protected in the US, yet, for the benefit of the trader, they lowered leverage.

Funny. Usually the guys that make money use 20:1 or lower. Retail FX leverage even at 50:1 is massively higher than the stock market or the futures market. I see it everyday, and was one of those who liked 100:1 when it was still around. Time has taught me that you need money to make money in this business, and leverage is not indicative of your success.

Usually those who do not have enough funds to trade with are attracted to ridiculously high leverage. Hard to hear, but it's a fact.

Requiring more margin for a trade does not increase risk. Yes funds are not protected in the US, but there are capital requirements and they audit you up the ass. I'm not saying there isn't a valid place for leverage in some cases, just that newer traders that might read your post will be very mislead - and the pro's that I deal with are more than happy with lower leverage, while the novice is crying about 200:1, 500:1 and wants a bonus..... fml
  • #545
  • Mar 13, 2015 6:42am Mar 13, 2015 6:42am
Quoting VolTrader23
{quote} Funny. Usually the guys that make money use 20:1 or lower. Retail FX leverage even at 50:1 is massively higher than the stock market or the futures market. I see it everyday, and was one of those who liked 100:1 when it was still around. Time has taught me that you need money to make money in this business, and leverage is not indicative of your success. Usually those who do not have enough funds to trade with are attracted to ridiculously high leverage. Hard to hear, but it's a fact. Requiring more margin for a trade does not increase risk....
Absolutely wrong. I keep my trading capital in my FDIC insured bank account and only transfer over what is required for the trades I have on. My trades are only 2-3% risk of my trading capital. I just refuse to give a broker $10K when I can open the same trade for $200. Of course, this is an extreme example, if I'm using a 50 pip stop, I'd send $500. Why should I give broker $10K for a trade I'm risking $500 on? if they go bankrupt, NFA/CFTC does nothing, I lose ALL OF MY MONEY.
  • #546
  • Mar 13, 2015 6:45am Mar 13, 2015 6:45am
On Jan.15, FXCM clients came within about an hour of losing their entire OVER-FUNDED accounts.
  • #547
  • Mar 13, 2015 6:58am Mar 13, 2015 6:58am
It is true that the amount of leverage a trader uses has absolutely nothing to do with whether that trader is successful or not. If a trader knows how to trade and is confident in what he is doing is the most important. In the us the regulatory agents [nfa, cftc, sec] has repeatedly failed to protect not only the forex traders but futures traders and stock traders. [mfglobal, the repeated fines that they give to well known us forex brokers, etc]

just one of many examples back during the early days to the internet people would come on a tout a stock and then when many sheeple jumped in to buy the stock would suddenly plummet [aka pump and dump]. So the sec went after these people and fined them and shut them down. Half of the money(s) they received went to the us treasury department and the other half went to the sec to pay big bonuses and salaries. Not a dime went to the actual victims who lost money.

So the simple fact is that the regulators are only looking after themselves.
This 50 to 1 leverage is a joke and just requires placing large sums with brokers who often go bankrupt or who are simply guilty of fraud [pfg futures].
All trends begin with the smallest time frame
  • #548
  • Mar 13, 2015 7:02am Mar 13, 2015 7:02am
Quoting qiktrader954
It is true that the amount of leverage a trader uses has absolutely nothing to do with whether that trader is successful or not. If a trader knows how to trade and is confident in what he is doing is the most important. In the us the regulatory agents [nfa, cftc, sec] has repeatedly failed to protect not only the forex traders but futures traders and stock traders. [mfglobal, the repeated fines that they give to well known us forex brokers, etc] just one of many examples back during the early days to the internet people would come on a tout a stock...
I love when people "get it". So many naive folks thinking if I trade with an NFA broker and make a big deposit, I'm safe and I'll make money. I see price spikes with US brokers that are 100 pips larger than anything I see at any of my brokers. Nothing is done about it.
  • #549
  • Mar 13, 2015 7:12am Mar 13, 2015 7:12am
Quoting Profit Daily
{quote} Absolutely wrong. I keep my trading capital in my FDIC insured bank account and only transfer over what is required for the trades I have on. My trades are only 2-3% risk of my trading capital. I just refuse to give a broker $10K when I can open the same trade for $200. Of course, this is an extreme example, if I'm using a 50 pip stop, I'd send $500. Why should I give broker $10K for a trade I'm risking $500 on? if they go bankrupt, NFA/CFTC does nothing, I lose ALL OF MY MONEY.
Futures and stock traders must be nuts.. right? There will be a lot of traders here that think the same way. Personally, I've talked to hundreds of traders who have horror stories dealing with offshore brokers, and because they aren't in the US, under the NFA - you never hear about them. Of course the US brokers who went under are the poster children for US broker bashing. Think about when min capital requirements were implemented for brokers, and how many brokers had to close up shop and leave - these vastly under-capitalized brokers are now those offering you 500:1 leverage, and your bonus.

The real difference here is with account size, if you're a small account, you are attracted to more leverage, because you are lacking the funds, and the offshore brokers seem to cater to that. Any serious trader with a larger account is very concerned about regulations. Am I saying that the NFA is doing a perfect job? Absolutely not, but I assure you, you are far more at risk of losing your account or having your funds frozen with an offshore unregulated broker.

A simple option for some traders is to open separate accounts with their broker. Some brokers allow you to segregate your funds internally.

This is not an opinion, but what I've found by dealing with many many traders.
  • #550
  • Mar 13, 2015 7:18am Mar 13, 2015 7:18am
Quoting Profit Daily
{quote} I love when people "get it". So many naive folks thinking if I trade with an NFA broker and make a big deposit, I'm safe and I'll make money. I see price spikes with US brokers that are 100 pips larger than anything I see at any of my brokers. Nothing is done about it.
hi profitdaily, agree with you that NFA does nothing to protect the funds you have at the broker. In US it is all upto client to choose sound broker and manage their excess currency risk well. it is PIA to keep moving money in and out of broker accounts also as it waste 1-3 days. for larger accounts, that is why i think there is no option to going to likes to FXCM - IB and citifx seems best from soundness of broker perspective.

one question : which broker do you use? also how quick the bank to broker transfers are when you need to send money for the trade you put on? TIA
Think : Trade : Live Life
  • #551
  • Mar 13, 2015 7:22am Mar 13, 2015 7:22am
What is nuts is thinking that just because you use a us forex broker that you are safe.

With futures in the us there are many brokers who offer day trading margins.

You should just keep enough in your brokerage account [whether it be forex, futures, stocks etc] to trade.

When you make money always with draw and put in a FDIC insured bank.

It is a quick process to send money to your broker using wire transfers or [in usa, direct deposit]
All trends begin with the smallest time frame
  • #552
  • Mar 13, 2015 7:24am Mar 13, 2015 7:24am
Quoting VolTrader23
{quote} Futures and stock traders must be nuts.. right? There will be a lot of traders here that think the same way. Personally, I've talked to hundreds of traders who have horror stories dealing with offshore brokers, and because they aren't in the US, under the NFA - you never hear about them. Of course the US brokers who went under are the poster children for US broker bashing. Think about when min capital requirements were implemented for brokers, and how many brokers had to close up shop and leave - these vastly under-capitalized brokers are...
The capitalization requirements do nothing to protect MY FUNDS. The brokers in the US have price spikes, platform freezes, etc. that I simply do not experience. Bottom line is you have to trust your broker and I do not trust any US broker. They have all been fined numerous times and are allowed to continue their unethical practices. Sure there are some horrible unregulated brokers, just as there are horrible regulated brokers. Not being regulated does not mean they are a bad broker. The ones I use CHOOSE not to be as that would prevent them from US business because for some reason the CFTC thinks they can police the ENTIRE forex world. Why can't I trade with a regulated broker offshore? Or better yet, a regulated bank where my funds are protected?

Here is the bottom line, let's say we are both trading 1 lot USD CHF with a 50 pip stop. You have to put up $10,000 with your NFA regulated broker, I need $200, but like I said we're using a 50 pip stop, so I have $500 with them. Both brokers go bankrupt. You have now lost $9,500 more than I did.
  • #553
  • Mar 13, 2015 7:49am Mar 13, 2015 7:49am
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...

You have a lot to learn! keep on it matey!
"...Look for 5:1 RR. I can be wrong 8/10 time yet I'm not gonna lose" PTJ
  • #554
  • Mar 13, 2015 9:15am Mar 13, 2015 9:15am
Quoting Profit Daily
You have to put up $10,000 with your NFA regulated broker, I need $200, but like I said we're using a 50 pip stop, so I have $500 with them. Both brokers go bankrupt. You have now lost $9,500 more than I did.
Couldn't you still owe a negative balance on your account? IE you had a leveraged account with only a few hundred in it. Something bad like what happens with the CHF happens and dislocates the market against you skipping any potential stops. Couldn't you still be on the hook for a negative balance? this is one reason why I am reluctant to commit any more here at the moment.
  • #555
  • Mar 13, 2015 11:26am Mar 13, 2015 11:26am
Quoting Profit Daily
{quote} let's say we are both trading 1 lot USD CHF with a 50 pip stop. You have to put up $10,000 with your NFA regulated broker, I need $200, but like I said we're using a 50 pip stop, so I have $500 with them. Both brokers go bankrupt. You have now lost $9,500 more than I did.
Then use IB or CITI FX PRO if you're so concerned about your broker going BK. Citigroup is a 162 Billion dollar company that's too big to fail, I don't think worrying about your broker going bankrupt is a very big issue. The vast majority of traders have lost money not from their brokers going bankrupt. I think that people go offshore to try and make back what they've lost because they've lost all of their money through higher leverage.
  • #556
  • Mar 13, 2015 11:39am Mar 13, 2015 11:39am
any company can go bankrupt to use citi bank pro you have to have at least 50k. One of the things to look for with any broker [forex, futures, stocks] is if you have ANY problem with a withdrawal request.

i do not use forex brokers in usa. I do use futures and stock and options brokers.

just because the broker has large amount of money means nothing as if their is fraud going on a trader will not know about it until it is too lat
All trends begin with the smallest time frame
  • #557
  • Mar 13, 2015 11:47am Mar 13, 2015 11:47am
Quoting VolTrader23
.. Yes funds are not protected in the US, but there are capital requirements and they audit you up the ass. I'm not saying there isn't a valid place for leverage in some cases, just that newer traders that might read your post will be very mislead - and the pro's that I deal with are more than happy with lower leverage, while the novice is crying about 200:1, 500:1 and wants a bonus..... fml
That's just BS, had an account with PFG, NFA registered US broker..they went bancrupt and then regulators realized that they just made up numbers for 20 years, having just 50% of the customers money in the back then they claimed!
In a way regulators caused that bancrupcy as they lately started to smell the rat and started to investigate them and then PFG had to come up with the truth.. But what's good it is when it's too late?

Strangely not even the bank noticed any wrong doing. Not even the regulators..and they said they made up numbers for some 20! years..wow. Segregated accounts where the money is held separate? Good one. They couldn't even take care of that. Useless regulations..even CFTC didn't see anything wrong.

I waited some 3 years to recover 30% of my FX account, while the future accounts for some strange reason recovered 40% in about 1.5 years. The best protection/regulation there is..is you. And there's where high leverage can help as you don't need to have much of money with the broker. Who can just walk away with them..and obviously nobody is able to prevent that no matter what the regulators claims. At least in the US. "Nobody" foresaw it..yeah, sure!
Markets wispers, just tune in.
  • #558
  • Mar 13, 2015 12:09pm Mar 13, 2015 12:09pm
Quoting replaced
{quote} Then use IB or CITI FX PRO if you're so concerned about your broker going BK. Citigroup is a 162 Billion dollar company that's too big to fail, I don't think worrying about your broker going bankrupt is a very big issue. The vast majority of traders have lost money not from their brokers going bankrupt. I think that people go offshore to try and make back what they've lost because they've lost all of their money through higher leverage.
Man, you are just full of assumptions. Everyone who has posted in this thread has stated you have no idea what you are talking about. The fact still remains if I want to risk $500 on a trade, I am not giving ANY BROKER $10,000 in margin to place that trade. Period. IB is the ONLY broker I'd consider in the US, however, I'm still under the ridiculous regulations of the US. The UK regulates their brokers, ASIC in Australia regulates their brokers. Client funds are fully protected and insured and guess what? They offer leverage of 300:1 and up.
  • #559
  • Mar 13, 2015 12:10pm Mar 13, 2015 12:10pm
Not to mention, on Jan.15, FXCM clients came within about an hour of losing their entire OVER FUNDED accounts.
  • #560
  • Mar 13, 2015 12:12pm Mar 13, 2015 12:12pm
Quoting plukin
{quote} That's just BS, had an account with PFG, NFA registered US broker..they went bancrupt and then regulators realized that they just made up numbers for 20 years, having just 50% of the customers money in the back then they claimed! In a way regulators caused that bancrupcy as they lately started to smell the rat and started to investigate them and then PFG had to come up with the truth.. But what's good it is when it's too late? Strangely not even the bank noticed any wrong doing. Not even the regulators..and they said they made up numbers...
Dead on. Couldn't have said it better myself.
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