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Much of Forex talk is illusional esoteric talk

  • #21
  • Edited 8:52am May 17, 2015 8:33am | Edited 8:52am
Quoting limzy
HI Myrmica, {quote} numbers and probabilities will give you an edge in poker because you know who/what you're dealing with. however, as a retail forex trader you do not get to see the order flow behind the trades and therefore what's most important is to learn how to read the flow of the market via price action. The market is essentially a dynamic beast so there are probably no repeated market conditions at any point in time, therefore reading the market is more of an art than a science. This takes practice (i wouldnt say that ive mastered it) but...
How do you know what you are saying is true? i.e. the part about "the market is essentially a dynamic beast so there are probably no repeated market conditions at any point in time..."

Personally I used to think that as well, but it's just a belief that's not grounded in reality. I used to believe that no system can work and the only way to succeed is to be use some sort of intuition. It's wrong. Definitely wrong. I've seen and proven to myself that there are profitable systems out there, systems that have been profitable for decades and will continue to be. These are very very simple systems and they can be even identified by machines using SIMPLE data and rules. So we haven't even gone into the area of using human brain processing power and our understanding of the market, the economy, and the world to process data.

IMO, there are systematic patterns in the market because they are traded by algos and humans who behave consistently from day to day. Well, but the reason isn't really important, what's important is whether we can spot these patterns. It's difficult but once you switch the belief to that it is possible and such patterns or edges exist, they may just start popping out for you and then you can come up with a repeatable process instead of relying on fallible human judgment.

Data is King. Facts are king. Rely on the scientific process. Forget everything else.

just my opinion on this. feel free to disagree.

***

Here are some must-reads imo to start opening your eyes to what the market is really about...

Trend
http://www.automated-trading-system....-monkey-style/
http://www.automated-trading-system....on-randomness/
http://intel.harriman-house.com/trad...andom-entries/

Volatility
http://archive.nyu.edu/fda/bitstream...2/wpa99059.pdf
http://en.wikipedia.org/wiki/Autoreg...moving_average

Examples of profitable portfolio trading systems
http://jfec.oxfordjournals.org/conte...9yNqOdYLFhG9cT
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 177 KB

http://www.kellogg.northwestern.edu/.../htm/carry.pdf

The point here is to realise that, profit via systematic methods are POSSIBLE. The market is not some esoteric beast. In fact it's almost IMPOSSIBLE not to make a profit trading if you stay in the game long enough and don't blow yourself up.
Build good relationships with others.
  • #22
  • May 17, 2015 8:56am May 17, 2015 8:56am
Quoting MapleLeaf
Forex = Casinos = Gambling = Betting. Want to make money? Go work. Invest in real things.

100% true
100% agree

(those who do not agree are in a deep sleep or in a deep ignorance it's very hard to awaken them,
we buy and sell imaginary money, it will never be a business, it's a modern and formal way of gambling )
  • #23
  • Edited 9:21am May 17, 2015 9:02am | Edited 9:21am
Questions to ask if you are not profitable:

1) Are you trading with the HTF and MTF trend?
2) Are you taking into account market volatility to size stops and profit targets?
3) Are you using trailing/jumping stops?
4) Are you trading during times of high volatility/high probability of trend moves/directional market movements?
5) Are you using SLs or very very strict mental stops (I personally don't believe it's possible to execute them in real-time)?
6) Are you risking less than 5% per trade?
7) Do you have a consistent go-to set-up you are looking for each day?
8) Are you scaling in?
9) Are you avoiding adding to losers?

If the answer is NO to any of the above, then it may be a large part why you aren't profitable. If you answer YES, and still lose money, then surely it's because you are breaking your own system's rules and not trading with discipline. Just practice more and get good at it and confident with the system.

***

Ofcourse there are more than 1 way to trade... I am aware of that. What I am listing here is what will in general provide profitability. Simple edges really. You will have losing trades, lots of them, but you will come out ahead if you follow these principles closely..

I do trade counter-trend as well, but very selectively, filtering based on TIME of day + special patterns/market behaviour + pair's intraday range/recent movement. So it's complicated, but it's possible. But imo, if the trader can't even get the basics down which is trend trading, then CT is just going to be a lot harder. ANd guess what, I only knew how to take these CT trades when I realised when my system was FAILING.

The magic is, once you start using a system, OVER TIME YOU WILL IMPROVE. You will start seeing additional edges that can complement your system. And slowly, you'll test them and add them to your arsenal. It's a magical process. Just have to start somewhere with a working prototype... Don't keep searching for the grail, there isn't one.
Build good relationships with others.
  • #24
  • May 17, 2015 9:31am May 17, 2015 9:31am
Quoting shellsnail
{quote} How do you know what you are saying is true? i.e. the part about "the market is essentially a dynamic beast so there are probably no repeated market conditions at any point in time..." Personally I used to think that as well, but it's just a belief that's not grounded in reality. I used to believe that no system can work and the only way to succeed is to be use some sort of intuition. It's wrong. Definitely wrong. I've seen and proven to myself that there are profitable systems out there, systems that have been profitable for decades and...
Hi Shellsnail,

Thanks for the informative links.

I agree that the market is not entirely random walk (dynamic) since there are patterns that appear time and again which can be exploited by systems you speak of. However, my point was that such patterns form in different lengths of time and magnitudes and that being able to read the "flow" of price action is more crucial in getting a "feel" for the market instead of relying on just statistics. Being more selective of trades (taken at ones discretion) will probably improve probability of success.
  • #25
  • May 17, 2015 9:34am May 17, 2015 9:34am
Quoting limzy
{quote} Hi Shellsnail, Thanks for the informative links. I agree that the market is not entirely random walk (dynamic) since there are patterns that appear time and again which can be exploited by systems you speak of. However, my point was that such patterns form in different lengths of time and magnitudes and that being able to read the "flow" of price action is more crucial in getting a "feel" for the market instead of relying on just statistics.
But my issue with relying on "feel" or flow is that these things can break down. The weakest link is human psychology in this whole endeavour. Sure we can strengthen our decision making skills and resolve etc. but they tend to break down when we increase our size of trading. Say we go from trading 1k account to 50k account, I really doubt anyone relying on such "feel" can still perform at the same level whereas a person doing a more mechanical/rule-based discretionary approach will probably perform much better.

Moreover, such 'feel' can often be quantified. It's just that sometimes we are lazy to do so or to think about what this 'feel' actually means. Usually it just means seeing certain patterns which can actually be codified into clear written rules... (even if it means the velocity of the ticks or acceleration of price etc..) This will make things a lot easier for us as we scale up in size and gain success.

Statistics doesn't necessarily mean pure numbers. It can be the occurrence of a codified pattern in a specific set of contexts/filters. These things can be coded/quantified into a statistical model and tested. Whatever feel it is, as long as you can describe it, it can be tested. The lack of vocabulary to do so imo is our limitation as traders, not limitation of science or statistics, and it makes one question whether there is an edge in the first place? If after all such 'feel' cannot be described, then how do we know it actually works/exists and wouldn't break down?
Build good relationships with others.
  • #26
  • May 17, 2015 1:22pm May 17, 2015 1:22pm
Hello,

I come from an online poker background as well and am in a similar situation. I've also suffered personal/financial losses and have had a plethora of experience in "overtrading, greed, impatience and fear." I agree that it is much easier to control emotions in poker knowing that you have an edge and the ability to make +EV decisions, and that any particular downswing is just variance. I'm also in agreement that it is much more difficult to believe that the possibility of making +EV decisions in FOREX exists, and because of this it is hard to be motivated and put in the time (especially if you have a day job and would have to sacrifice other aspects of your life...for example, a lot of days I wake up at 3am EST to trade the London open before my 9-5 EST day job which in turn means I go to sleep around 7pm EST... this is rough).

However, we differ in the sense that I feel when switching off the "overtrading, greed, impatience and fear," the edge exists. I think it is there and that it is worth the effort of obtaining it. I also know that I am in no position to make this call, and saying these things should not mean anything to other people.

Regardless, I am going to proceed in forex as if that edge is out there. Over the years I've lost a lot and there's been many instances of spewmonkey tilt (example: flipping basically full margin 3+ times in one, 5 minute, mothrfking candle) and straight up gambling (taking a huge position and closing my eyes). During this time (which hopefully has ended) I did not use stops and was prone to adding to positions. Luckily, I still have a good amount of capital to work with. I plan to take some time off to clear my head, but when I return, the stops will be used.

In terms of strategy and where the edge exists, I'm with you on the expert advisors (or any rigid rule system) in the sense that it is hard to believe in them. People have probably told you "you have to follow the system for awhile for it to work" without realizing that as a poker player this is the easiest thing in the world to do, however, you first need to believe that it actually works and has an edge. The problem for us poker players believing that it works is because the "following" of that system is the easy part, so if the system is truly profitable, there should be tons of profitable followers, and the system should be a money making machine. There doesn't seem to be any of those out there (when I say "system" here I'm talking about expert advisors really, or a completely non-discretionary trader).

So where does that leave the edge? Again, my opinion is worthless, but I believe it is in reading of the price action. Sure, there can be some rules and factors in play (and for myself there will be), but in terms of entry/exit, price reading will be king for me, not math (for example, an expert advisor may say "short if the price hits the high of the previous day" whereas I may say "looking to short at the high of the previous day but will look at the price action first and foremost").

Unfortunately, I realize this doesn't help you, as I believe my edge exists from looking at live charts for countless hours and being able to spot opportunities based on price action. I also realize that thinking I have an edge doesn't mean I have one. So how am I going to figure it out if I have one? I'm going to trade what I see and when closed, I'm going to analyze each trade mathematically and see if I'm making +EV decisions over the long run.

Of course, the problem you are concerned with will arise because, even if profitable over a certain time period, I cannot be sure that I actually have an edge. I don't think there is any way around this, and it's just that the longer you go on being profitable, the more your edge would be confirmed, and that is the best you can hope for.

Then again, if one were to trade rigidly by using a set size, set SL, and set TP of say ____ pips per trade, I would think it would be easier to tell if they had an edge, as the sample size would just have to be high enough. This type of thinking seems popular on forexfactory (taking R:R ratio and percentage of winning/losing trades and mathematically figuring out if you're trading profitably), and as a poker player, I admit this sounds appealing as it would be easy to see if I am a +EV trader and would allow me to brush off any losing trades as easily as a losing session in poker. I haven't investigated these forums that much, but from what I could tell, the highly respected trades do not trade this rigidly. If anyone reading this is profitable and trades this way, or is aware of a FF member that is profitable and trades this way, please let me know.

Anyway, I don't want to say "don't give up" because I know for myself giving up might be the best option. But I'm not going to give up. The appeal is too great, and frankly, I enjoy trading when I'm not donking off my roll with insane mistakes. I think what makes it so much more appealing than poker is that you can rise in stakes without the game changing, as the market behaves the same regardless of the sizes you are trading. Imagine being able to play 100/200 NL HU vs a complete fish as opposed to jungleman or Durrrr. In poker, this option doesn't exist anymore (maybe in Partypoker days but not now), because if you play that high, you'll be playing the junglemans, the Durrrr's, etc. But in trading, you can play the fish that high. It's just a matter of finding the fish.
  • #27
  • May 17, 2015 1:22pm May 17, 2015 1:22pm
Quoting tablet8
{quote} 100% true 100% agree (those who do not agree are in a deep sleep or in a deep ignorance it's very hard to awaken them, we buy and sell imaginary money, it will never be a business, it's a modern and formal way of gambling )
You joined this forum in 2014. I assume that you haven't traded for a long time........

Forex trading will take you through emotional dips second to none in this life. Fact is that these markets are highly tradable and there are many ways to conquer it.

IF

If you think you are beaten, you are.
If you think you dare not, you don't.
If you'd like to win, but think you can't,
It's almost certain you won't.
If you think you'll lose, you've lost.
For out of the world we find
Success begins with a fellows will.
It's all in the state of mind.
If you think you're outclassed, you are.
You've got to think high to rise.
You've got to be sure of yourself before
You can ever win a prize.
Life's battles don't always go
To the stronger or faster person.
But sooner or later the person who wins
Is the one who thinks they can.

Anonymous

The difference between success and failure is YOU!
Never Ever Give Up!
  • #28
  • Edited 4:26pm May 17, 2015 3:28pm | Edited 4:26pm
Quoting Myrmica
"Much of Forex talk is illusional esoteric talk"
And on-topic of esoteric talk ...:

Well is anyone here disagreeing this this really. Much of the traders talking are demo traders etc. If there's esoteric talk from real traders it's because they atleast understand that edge known to everyone is no longer an edge, by definition!

I would say it's amazing how often I find something that looks like an edge and then later I read about it on forums. If you want to keep your sanity and get ahead and live a life, stop researching markets once you have basics handled - then find some other way to make money and use the basics to stay ahead. While I consider edge a trade secret I don't think I have anything that hasn't been mentioned few times around the web. There's just no getting around that once enough money piles up to trade some specific profitable anomaly/edge, it stops being an edge. The most paranoid stuff I've read is that most brokers (trading-promoters) are after traders edge so they can first use it themselves and/or share it in free lectures to lure in more people they can make commissions/interest etc from. (=selling hope and dreams)

I believe it's actually entirely possible that 100% of traders are losers given long enough time horizon and active participation (not knowing when to stay out). In such situation brokers and market makers have most to gain. They do not need edge to make money. This "no edge" trade became so popular that one broker implemented new fees to stop it. The more popular a market becomes, the more likely it is that this "no edge trade" gets implemented, it's essentially skimming money from everyone to market makers/internalizers pockets on top of the commissions, spreads, interest, adverse selection etc. All this (and various spread, margin etc manipulations) pretty much ensures that the brokers/market makers win. Making money trading is actually super easy if there is no internalizing brokers and market makers present. That's why I say that internalizing brokers and "market makers" are really just sophisticated traders that have many ways to siphon the money of less sophisticated traders. Of course they may also create some 3rd party entity or route trades in some way to create appearance of no conflict of interest but if it's some popular retail broker that has any marketing expenses, you can be certain they are sophisticated traders despite whatever claims they make. The basic fees and such from commissions etc are only enough to keep lights up and basic service*. Of course profitable traders don't really want to make lot of noise about these facts because they hope to get some "crumbs" of the pie.

If you stick to "buy rumor, sell news" and boring dividend paying stocks, then all that "edge talk" and skimming etc doesn't really amount to much, but trade more frequently and it amount to a lot more than I suspect most can even begin to realize. (I'm referring to most of retail buying lottery tickets/insurance in hopes of an award) - the only issue is when buying rumors is that sometimes markets can go wrong way quite big time before the rumors realize into profits, so spreading the trade over both time and price is probably best approach unless you are good in "feeling out" the top/bottom. I would say I can say the bottom/top is about to be in weeks before it actually happens as usually there has been some big trending going on and then it just doesn't look right and there fear/hope/rumors/news around (I've made all my correct long term top/bottom predictions based on something I noticed on various public sites that didn't even have any registration. It's always something that makes you go either "wow, really" or feel in some kind of way different than before - if you are feeling different, so are others, but few will pull the trigger and also know enough about price action or plain chart reading to notice something has changed. - I haven't made any incorrect predictions but these long term easy predictions are very rare - perhaps as I only follow 2-3 markets broadly enough to get a good feel over time)


Various trader lectures and trading forums are *full* of edges that atleast worked once. They may still work but may need combining few things, you have to figure them out and build them up into a complete system. You should research the market you trade. Is it only traded at one place or various places etc. There's so many ways to trade FX that it takes lot of work to get a good understanding of it but that understanding may also help you to find edges later. At one point I was bored with FX so I developed things for other markets but the forward tests weren't satisfying enough so I'm back to fx. I keep collecting information that may be of use for as many markets as I can just incase I need to develop another edge. It's important to collect and timestamp things properly and suitably for future research and execution and back when I was still on MT4 I was like "no way will I write my stuff in MT4 as you have to be insane to enter trade secrets in a free proprietary platform courtesy of your broker" - however once you start trading the broker/mm/clearing can still try to reverse engineer your edge out - they got the money to get naive/failed traders to do it that don't understand the basics or are just looking to get some safe salary to cover their losses at expense of few profitable traders out there.

*(this may sound amazing to some hft/scalper etc types who have larger expenses - that's why brokers/exchanges love them enough to implement whatever skimming tricks they come up with, because it's really the broker/exchange getting what amounts to "kickback" without written agreement of such!)
  • #29
  • May 17, 2015 3:48pm May 17, 2015 3:48pm
Over the last ten years or so there has been a lot of research into order flow and findings strongly support that predictable outcomes can be achieved from such study and understanding.

theres plenty of papers out there ,and lots of extremely useful information.unfortunately it takes a lot of reading and searching.
  • #30
  • May 17, 2015 4:58pm May 17, 2015 4:58pm
Quoting Myrmica
Hi guys, I am not trying to offend anyone personally and I hope someone can convince me my opinion is wrong but at the moment I dont know what of all these things, I am reading here is really from people who have an idea of what they are talking about. Here is my story: I have tried for many years to be successfull in forex trading. I suffered personal and financial losses due to this. I know I have made mistakes like overtrading, greed, impatience and fear. But after all. Switching all those things off, the main problem stays that I dont have a...
All languages and symbols are self refferential if enlocsed within their own context. I think you have noticed this, only you dont use those words to describe it. If for an example i speak of "A lion", its pretty hard to describe it if i cant use words like "Predator", "Yellow", "Teeth" and so on. If i DO use words like that to desribe the lion, well then the person im talking to needs to have some kind of idea of these words i use to describe the lion.

Wittgenstein wrote in "Philsophical investigations" about this. He called it a language game. All language takes place within a game or setting. You need to sort of get into the game to see what all the words mean.

Its impossible to come outside of words by using words. I cant desribe something in words without using words if it is words i need to choose.

In general i do agree with your sentiments that statements like "use MM", "dont overtrade", "cut loosers short let winners run" are very general. I would think that someone using those words to try to describe something are a beginner, a n00b, a greenhorn. I would think those terms ARE ridiculously general, if not given at least some kind of defenition. Otherwise you might as well substitute them in this manner:

Use MM = Think about your money and do stuff that makes you profitable.
Dont overtrade = Dont place a bunch of positions that will make you loose your money.
Cut loosers short let winners run = Dont loose.

Since these statements are so general they are pretty much useless. So i might as well substitute them like this:

Use MM = Win, dont loose
Dont overtrade = Win, dont loose
Cut loosers short let winners run = Win, dont loose

And thats just ridiculous.

My advice to you is either you quit trading or you find people who arent only spewing totally worthless crap like that. If you want to know how to think about price as you see it in the charts, why dont you look at the charts? And maybe find out what people are writing that are looking at the charts?

Also, you touched on the subject of usefull statistics in poker contra usefull statistics in trading. Well there are hundreds of thousands of people and computers trying to do that kind of thing in forex. If you have 10-1.000 scientists on your payroll and a few million lying around, maybe thats a good idea, if you can loose all those millions without flinching. Otherwise i dont really see much use in that kind of approach. From what i know, sucessfull trading as a retail trader means to make intelligent decisions at important levels of price.

Poker is a whole other thing. I dont really see why you would compare the two. Its like comparing a car to a feeling of adventure and asking which one is the best. I guess i could go into this subject a bit more if you are interested, but right now im will leave it at that.
My signature is: "Classified".
  • #31
  • Edited May 18, 2015 8:18am May 17, 2015 7:29pm | Edited May 18, 2015 8:18am
That's true...Most advices here on FF or any other forum are just generic vague statements that won't add anything new to your trading success...Shitty statements like " Buy Low, Sell High." well good luck with that, bro..If anyone knows the top and bottom he'd be the wealthiest person in history in no time..So stop that bullshit, please!! Another shitty statement is " The trend is your friend." The trend was never and will never be your friend!! Wanna know why? Because by the time you arrive at the conclusion that there's a current trend in play -whether using indicators or any type of analysis- it will be already too late or the best case scenario is you'll be in the middle of the trend and that's a very dangerous place to be; draw downs could be huge if you're in the middle of a trend!! Another shitty advice is " Trend is your friend till it bends." Well, no one on earth knows if's it's a reversal or just another retracement, so no one actually knows when the trend is gonna bend...Another shitty thing is" buy at support and sell at resistance" that would only work if the market is ranging or swinging, but in trending mode or break-outs, you'll get a margin call for sure...I've been in this business for many years now, and let me tell you something new that no one else ever talks about despite being the essence of successful trading...You can call it a trading philosophy...In Financial markets or any other business, there are always 2 opposing forces in play..or you can say 2 choices...Consistency VS. Profitability...You have to choose one of them.. Are you gonna be profitable or consistent? But always remember that you can't have both at the same time!! Profitability is the opposite of Consistency...I won't go into too much explanations here; I will just go thru some examples to illustrate the point clearly...Let's talk about the american stock market for instance...Both Warren Buffett and Dan Zanger trade/invest in the american stock market, but there's a huge difference between Buffett's style and Zanger's; Warren Buffett is extremely consistent...He makes stable consistent returns on his equity year after year.. For over 50 years he was able to make around 29% average annual return!! So.. that's what I call consistency...Because he's very consistent with his results, he was able to compound returns on his equity and re-invest...Starting with an equity near a 100 Grands, he's now worth 65 Billion dollars...Now, let's move to Dan Zanger, the world's record holder for the biggest gain ever on a stock portfolio in one single year...Dan started with 10000 dollars and turned them into 42 million dollars in 18 months...so that's a gigantic return on equity in just one single year or even 2 years..He's the best example for a profitable trader, but he's the opposite of consistent...He was never able to duplicate his results again in the following years..He just took advantage of the tech/dot com bubble, and when the bubble was over, he was never ever able to do this again!! His net worth is in millions and he's not even a billionaire and is no where near Warren Buffett...Do you see where I am coming from? Unfortunately, most traders here focus on how to be like Dan Zanger, they just wanna be profitable in the shortest amount of time, and that will always lead to their doom...Because markets won't let you be profitable for a long period of time, But you can be consistent for as long as you wish...So bottom line is...Do you wanna be a consistent player like Warren Buffett and make a fortune? Or, do you wanna be a profitable trader, making alot of money in a short time, but risk losing it all anytime? If you liked what I said here, I can explain more on how you can find your edge and what to look for in your strategy and how to make a plan that would suit your trading style and personality...If interested let me know...Best of luck, bro.

Note: There's nothing wrong with choosing the second option/style (like Dan Zanger)...But you need to know the consequences of your choice; Huge drawdowns and large risks..I respect Zanger as one of the best stock traders ever. He's still making money and achieving nice returns, but it's no where near to his old glory days (the late 90's).
Simplicity is the key to brilliance.
  • #32
  • May 18, 2015 1:46am May 18, 2015 1:46am
Your words concerning language are very interesting. However this is probably the most useful thing you have written.
Quoting yaed
My advice to you is either you quit trading or you find people who arent only spewing totally worthless crap like that. If you want to know how to think about price as you see it in the charts, why dont you look at the charts? And maybe find out what people are writing that are looking at the charts?
You should read again the words of some who have tried for more than a few minutes with poker. As written above by aposteriori the advantage a trader might gain is to be in control of their senses at moments of extreme pressure. Such wisdom is that a player will know what to do for the best, even if that should be to walk away for a few hours.
Quote
Poker is a whole other thing. I dont really see why you would compare the two. Its like comparing a car to a feeling of adventure and asking which one is the best. I guess i could go into this subject a bit more if you are interested, but right now im will leave it at that.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #33
  • May 18, 2015 1:57am May 18, 2015 1:57am
Quoting Myrmica
{quote} Meat and potatoes is Indicators and PA. At least that is what I am trying.
A lot has been written about indicators and whether they are any use for trading. After a lot of screen time I arrived at this conclusion: if they help you in any way then they are valuable, otherwise forget them. As an extension I must also say that an indicator is not a money-gift, because otherwise everybody.....

Therefore you must learn how to use an indicator, and that is another bunch of screen time.

For PA I recommend the James16 thread, a long established thread by a respected contributor.
The other links posted by others above are also useful. A kind-of huge mountain when you look at it all.

Best wishes for your personal fortune.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #34
  • May 18, 2015 8:54am May 18, 2015 8:54am
Quoting shellsnail
{quote} But my issue with relying on "feel" or flow is that these things can break down. The weakest link is human psychology in this whole endeavour. Sure we can strengthen our decision making skills and resolve etc. but they tend to break down when we increase our size of trading. Say we go from trading 1k account to 50k account, I really doubt anyone relying on such "feel" can still perform at the same level whereas a person doing a more mechanical/rule-based discretionary approach will probably perform much better. Moreover, such 'feel' can...
agree with you here. some times the "feel" can be described in terms that can be statistically tested. 5 years ago you could say you cant program "feel" but now given advances in deep learning, even tasks such as object identification (which was very difficult for computers) can be accurately done by algos. However we have to note that it is not easy to do (quick overview of how things have progressed in this sapce http://singularityhub.com/2015/05/17...-wheres-waldo/).

Most of the time the issue is that the "feel" is not clear even to the owner of that feel. much like you cant describe how you know a dog is a dog - very difficult to describe but kids learn to recognize easily. So it is not like we need someone of describe the "feel" so that we can program and test - instead we have to teach algo to derive its own "feel" by using large sample of data. The limitation is availability of data and enough of it. At an extreme, if we knew all economic events of the world (i.e. everything anybody is doing that touches money) then a large system could model it and easily determine the future moves - but obviously this level of data will never be available.
Think : Trade : Live Life
  • #35
  • May 18, 2015 10:28am May 18, 2015 10:28am
Quoting Rabid Leper
Hello, I come from an online poker background as well and am in a similar situation. I've also suffered personal/financial losses and have had a plethora of experience in "overtrading, greed, impatience and fear." I agree that it is much easier to control emotions in poker knowing that you have an edge and the ability to make +EV decisions, and that any particular downswing is just variance. I'm also in agreement that it is much more difficult to believe that the possibility of making +EV decisions in FOREX exists, and because of this it is hard...
My comment is not just on your response but applies in general. Just like you said you can never be sure about the edge.
The problem of testing if the system has edge (weather EA, discretionary based on "Feel" etc) by trying it out for sometime and see if it is profitable is that you are running into data mining bias/lucky factor bias. If enough people test enough systems, the chances are some of them will turn out positive at the end but it may be just because of luck and not because of real edge of the system. So this testing is somewhat limited as well in finding if the system has an edge.. There are two main papers about this issue published last year (see this presentation http://jacobslevycenter.wharton.upen...ell-Harvey.pdf). Camp harvery also suggest a way to see if the system's performance is by chance or there is really some outperformance - most of the published factors became lucky factors (i.e. disqualified) when tested using his method).
Think : Trade : Live Life
  • #36
  • May 18, 2015 1:09pm May 18, 2015 1:09pm
Quoting Exodus
Your words concerning language are very interesting. However this is probably the most useful thing you have written. {quote} You should read again the words of some who have tried for more than a few minutes with poker. As written above by aposteriori the advantage a trader might gain is to be in control of their senses at moments of extreme pressure. Such wisdom is that a player will know what to do for the best, even if that should be to walk away for a few hours.{quote}
Ok. I still think poker is a whole other thing. I do agree with you that they are both a matter of self control, sure. But still its a whole other thing. If you are playing texas hold em with noobs or average players you can use only statistics and win, no problem. There was lots of swedish people who did that when the US players where still allowed to play. Now that the US players are not allowed, its much more difficult because most of the crappy players are gone.

I mean that poker and currency trading is very different. Self control is a also important when studying science, when meditating, when shopping for groceries and so on. And i wouldnt normally compare studying or shopping for groceries with currency trading.

I do agree walking away from it takes self control though. But its sort of the same with walking away from a bottle of whisky i guess. Everything takes self control to be done well.
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  • #37
  • May 18, 2015 3:54pm May 18, 2015 3:54pm
Quoting yaed
{quote} Ok. I still think poker is a whole other thing. I do agree with you that they are both a matter of self control, sure. But still its a whole other thing. If you are playing texas hold em with noobs or average players you can use only statistics and win, no problem. There was lots of swedish people who did that when the US players where still allowed to play. Now that the US players are not allowed, its much more difficult because most of the crappy players are gone. I mean that poker and currency trading is very different. Self control is...
If I understand his posts correctly, I think this is myrmica's point, that poker and trading are different, and that it is easier to be certain of your edge in poker. This is his dilemma. He is not certain that an edge in forex exists, which in turn limits his motivation and patience in trading and makes accepting losses and putting in the time/energy difficult.

In general, to analyze a poker hand and determine the highest possible expectation on every decision you make (the goal), you take into consideration all available variables and as the hand progresses, you will narrow your opponent's hand down to a "range" of hands. Based upon this estimated range, you can mathematically figure out the most profitable play at the time and act accordingly. In game you won't be doing all of the math, but afterwards you can use it to see if you are playing optimally.

So, in poker you are taking in multiple variables (player, history, cards, bet size, position, psychology, stack sizes, etc.) and making an educated guess as to what hands your opponent could have, then acting accordingly. This should sound familiar because this is essentially what trading is, taking variables, guessing as to market direction, then placing/managing trades based on that guess. Both are based off incomplete information (what the market will do vs. what your opponent's poker hand is). The difference is in poker the estimated portion, the hand range, is finite, whereas the market is not. Additionally, the opponent in poker is, usually, a human being, whereas the market is not. What I mean is you can narrow the opponent's range down based on their actions (actions meaning bets in relation to the cards - I don't mean "tells," that is for the movies) because they are not random. So it's much easier to figure out the right move from analysis, regardless of how the actual hand worked out at the end. In trading, this is harder. If you short and the market plummets right after, it doesn't mean you made a good trade. To think that way would be "results oriented," as we say in poker. The same can happen in poker. You can shove your stack with 23 preflop heads up and then get called by AA and still win, but that doesn't mean the shove was the correct play. The problem with trading is it's harder to see that the short was a mistake upon analysis. Still, I do think trading and poker are very similar and any comparisons should not be dismissed, especially since original poster is a poker player.

I believe the edge myrmica is referring to is strictly the edge of selling at a price higher than the buy price, so comments about money mangement and psychology are probably irrelevant. To him I would say the only way to find out if someone has an edge (or that the market offers an edge) in this manner is through sample size and analysis of the trades by looking at the entry, exit, SL, TP and then doing the math. I think this type of analysis will only work if a pre-defined SL is in play when the trade is entered.
  • #38
  • May 18, 2015 10:05pm May 18, 2015 10:05pm
Quoting MapleLeaf
Forex = Casinos = Gambling = Betting. Want to make money? Go work. Invest in real things.
wow i read some of your post history, you need to take some xanax and lay around on a sunny beach for awhile.. i think the computer is hurting your psyche. it's acting as a black hole for all of your rage and hatred, and you can give the internet infinite amounts and it will still have room for more, the result is your mind becomes tuned to anger and hate, and that leads to nothing good. please take a vacation from posting, do some meditation perhaps, you have to let that inner anger go. love and peace my friend
  • #39
  • May 19, 2015 12:41am May 19, 2015 12:41am
Quoting Myrmica
But the more important part are the statistics and numbers how you should act in certain situations. Such concrete statistical based numbers I never read in forex? Why? Is there no statistical edge because then an expert advisor would work? Vague advice dont work. They just help you if you have a strategy you KNOW it has an edge. Who here knows that he has such a strategy?
There are some people on this planet that trade the markets for a living so this is the ultimate proof it is possible to be profitable.

The question is: can you be profitable, at least for enough to pile a good profit?

I agree most of the people here on FF are people who doesn't have a clue about what they are really doing. The trading world is flooded with misconception and vague rules that seems to sound logical but most of the time they are not. Saying "buy low, sell high" helps a trader like saying to a blind man to "turn right, turn left, at the right moment" prior to a F1 race. It sounds logical, but it is an useless advice because we still have no clue exactly where to turn or where to buy/sell. The main problem is that spotting a market inefficiency is extremely difficult and profiting from it is even more difficult, and it is almost impossible to know if something works before you see it worked. Moreover, most people get struck in helpless theories and methods that have nothing to do with the real market behaviour.

The main difference between the markets and poker is complexity. In poker, it is fairly "easy" to calculate your chance of profit in a given table or on a given hand, if you are experienced enough. In trading things gets much more complicated because there are many many factors to take into account that contributes to someone's trading success. You might spot a good inefficiency (pattern) in the market but being unable to profit from it because you do not approach it with the right risk management, or because you are not taking into account some exceptions that invalidate your pattern (in other words, you are not picky enough in deciding your trades). Maybe your strategy is good but you are not adapting to every different market situation and so you are unable to squeeze your profit out of it on a long enough number of trades (you are not adapting to market as it moves). Most of the time you find something you think it may work but you discover it doesn't, but you have to test every endless combination of factors to ultimately say it doesn't.

I can tell how I personally see it. Who has an edge won't exactly explain it to you, not only because he wants to keep it for himself, but also because it would be probably hard to actually explain it to someone else. That's because the real level of complexity needed to succeed is really high, you need to develop a strategy, or trade, taking into account many factors and monitor them once your trade is on adapting to every new situation. I do believe that with extensive experience and looking for the right stuff, you might one day develop a strategy that suits you. One of the biggest error many traders do is trading the market using indicators, methods or parameters that have no real correlation to the nature of the markets. Another huge error is not managing correctly their open trades, not adapting to every new information the market gives.

So not only is it hard to spot an inefficiency, it is even harder to adapt to the market in every different situation and being able to profit from it.

In addiction to every said above, many fails simply because they do not follow their rules, overtrade, drop out, etc....
  • #40
  • May 19, 2015 1:38am May 19, 2015 1:38am
Quoting Rabid Leper
{quote} If I understand his posts correctly, I think this is myrmica's point, that poker and trading are different, and that it is easier to be certain of your edge in poker. This is his dilemma. He is not certain that an edge in forex exists, which in turn limits his motivation and patience in trading and makes accepting losses and putting in the time/energy difficult. In general, to analyze a poker hand and determine the highest possible expectation on every decision you make (the goal), you take into consideration all available variables and...
Fair enough, you seem like a pretty reasonable human. Well, talking about "an edge" is also a very unprecise thing to talk about. The meaning of it seem to vary greatly. So lets say "What makes you profitable" is the same as "Edge". Maybe i could prove such a thing exists. The question is what would it take to prove it? Will somebody pay me 5.000.000 $ if i prove it? Cause thats what its worth to me right now if i had it, and im not saying i do and im not saying i dont. So if you are after someones edge, you gotta be prepared to "BUY IT" from them, if there is such a thing and im not saying there is and im not saying there isnt. Anyway, some of the banks already know the edge, of that i am quite certain. They dont want to tell theyre own traders about it, because they would quit. Its quite easy once you get it... errh and im not saying you will or wont...

I know people who just look at price and then they just do their positions and close and what ever. They dont KNOW what they are doing, they cant explain it, but it works. And then there are people who CAN explain what they do and it works. But really, you think people like that are going to explain it for free so the hedge funds and the all the rest of it gets all that knowledge? People like that are really smart, they dont go sprinkle that info over public forums like candy corn!

The edge in poker can be statistics, but not if you are playing against people who know that.

I dont agree that trading is based on incomplete information. I think price is ALL you need and there is not much need to guess. You only need to know what to do with it. No wonder people cant trade for shit if they go around all day thinking they dont have the info they need to do it. Maybe you get a looser here and there, but thats irrelevant. Its the bottom line after youre X amount of time: day, week, month or year that matters.
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