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Who is making profit in the forex market?

  • #81
  • Sep 13, 2015 3:41am Sep 13, 2015 3:41am
Quoting Inceptionist
{quote} Great question...The answer is: Forex futures offer lower leverage ( typical leverage is around 1:14 or 1:15 max.), it requires higher margins and maintaining futures margins is like a pain in the ass ( read about maintenance margin in Futures market.) And also futures requires a lot of money to start with...Futures is the big players playground, don't even bother thinking about futures if you have anything less than a 100K, Yes you can still trade with like 20-30k in FX Futures, but you'll be extremely under capitalized and your risk of...
Inceptionist have you looked at some futures brokers because there are ones who offer a day trading margin for currency futures of 1 000$..that is 1:100 leverage right there for day trading. For holding the position overnight the leverage decreases. Also you can trade futures comfortably with a 10 000$ account just as trading spot forex. So no, the futures are not for the big boys only. Where did you got that illusion I don't really know. The only problem with futures I can see is hassle with funding/withdrawing money because of only bank transfer option. No Skrill, Neteller, or other payment processors.

Ultimately futures are great if someone wants to trade commodities, stock Indices, etc.

In futures there are no half contracts so you can't size your position like you can in spot forex where you can have 3.4 lots etc. Other than that everything is the same.

And as I said 5 000 - 10 000 $ accounts are as equally good for futures as for spot forex.
  • #82
  • Sep 13, 2015 3:51am Sep 13, 2015 3:51am
Quoting orabi
{quote}​ Hi Actually i want to justify for losers yes i may some times be or lets say many times be one of them but my systems wins most of time , about futures thier brokers are few more safe you can not compare that to forex spot which brokers are less rules guarded including your money. about my 1000 or couple of thousands if we look to number of the participated traders it will end in millions for sure which make this market big need for big banks and central banks . no one get fooled they are much better and more safe investments out...
For the last time, we the retail traders don't constitute even 1% of the Forex market..we are not even a single drop in the ocean. Get over that. The banks, other institutions don't have a need for our money. They don't hunt our stops, or want to take our money. They are fighting each other. We are just collateral damage.

Go through a Forex market structure. There are plenty of topics on that subject. I've posted in some threads a link which explains how little the retail trader is compared to other market participants.
  • #83
  • Sep 13, 2015 4:18am Sep 13, 2015 4:18am
1.- The Brokers Win Money.
2.- Big Boys Win Money.
3.- For "my point of view" it exist the stoploss hunt.. or well im watching the charts and its funny how u can see how the price do the spikes for touch the SL orders and the pendings orders and then reverse... and do spike reverse for those pendinng orders make their SL and after it going forward in the direction of breakouts and trends... That is funny when u realize that (obviously i just wait for those guys take their SL and after ir enter to the market or just scalp it..)
4.- I start to make some profits when i invest more time in trading live than reading crap in the forums...
5.- And you should ignore me and ignore most of people... because most of them are complete full of lies...

GoodLuck and GreenPips to you.
  • #84
  • Sep 13, 2015 4:21am Sep 13, 2015 4:21am
Quoting orabi
{quote}​ Hi sir yes i can explian lets imagine that the market size is 4 t. (trillion) in size ,this is are the size of equity circulating in a given period . then comes new traders which range from big ones to small one that relocate there funds ,money to trade the market ,every day each moment we have fresh new liquidty that is are added to market venues and we all try to win it so for traders like us it is a positive sum game when we win. if we look at the bigger picture .central banks are printing adding papper which enter market...
Something else about the Zero Sum Game

Yes, probably this is the biggest difference between Forex and a poker tournament. Each moment we have fresh new liquidity added to the markets.
What about the program of the ECB and other central banks? Every month the ECB pumps 60 billions of new euros into the economy. This is fresh new liquidity and the size of euros in the market growths every month. So probabaly traders are able to pocket a few pips from this program and this turns the Zero sum game into a positive sum game?
  • #85
  • Sep 13, 2015 5:05am Sep 13, 2015 5:05am
Quoting Xela
{quote} Yes; this ... if you allow for commissions/dealing-costs, the forex market is a "zero sum game", which means - exactly as you've asked above - that the total for that equation is zero. {quote} If your "broker" is actually a counterparty market-maker (i.e. is only pretending to be a broker, as is the case with most of the "brokers" routinely used by this forum's members), then they lost the 40 pips, albeit while typically gaining that or a little more than that from their other customers. Indirectly you're betting against their other customers,...

can u list out who the counterparty market-maker brokers are vs the real brokers?
  • #86
  • Sep 13, 2015 6:07am Sep 13, 2015 6:07am
Quoting forex_fairy
can u list out who the counterparty market-maker brokers are vs the real brokers?

I can't, I'm afraid. First, I'm in the UK so my limited knowledge of brokers isn't appropriate to quite a lot of members here; secondly, almost all the brokers regularly mentioned in this forum are counterparty market-makers; thirdly, you can fairly easily identify them from their own websites (genuine brokers explain openly that they execute every trade by every customer in the underlying market, and if they're regulated by the appropriate regulator for their country, this isn't something they can lie about on their site - they wouldn't last long, that way!); fourthly I've already recommended Interactive Brokers (who are very much "the real thing", in every respect, and hugely recommended among professional, non-institutional traders - almost everyone I know uses them, apart from the UK people who use only spreadbetting to keep all their profits tax-free). And on that note, I'm afraid we've probably exhausted my useful input on this subject - sorry!

Really, it's not like there's any "big mystery" about this: either they execute every trade individually in the underlying market (that's what a "broker" is, really - and if they do that, they say so on their site, for sure), or they don't.

They're readily identifiable from their websites (have a look at "Interactive Brokers" and you'll see what I mean ).
  • #87
  • Edited 6:23am Sep 13, 2015 6:08am | Edited 6:23am
Quoting merquise
{quote} Inceptionist have you looked at some futures brokers because there are ones who offer a day trading margin for currency futures of 1 000$..that is 1:100 leverage right there for day trading. For holding the position overnight the leverage decreases. Also you can trade futures comfortably with a 10 000$ account just as trading spot forex. So no, the futures are not for the big boys only. Where did you got that illusion I don't really know. The only problem with futures I can see is hassle with funding/withdrawing money because of only bank...
You can even trade Futures with 5K, but you'll be under capitalized...I don't think Schwab nor ThinkOrSwim would offer 1:100 on Futures, but that's another story for another time...I don't recommend 10K to start trading Futures...Just my 2 cents...Regards
Simplicity is the key to brilliance.
  • #88
  • Sep 13, 2015 6:16am Sep 13, 2015 6:16am
Quoting Xela
{quote} almost everyone I know uses them, apart from the UK people who use only spreadbetting to keep all their profits tax-free.
Care to share which SB company? Ive yet to find one that doesnt offquote, requote and freeze the feed and basically use every underhand tactic they can to dupe the trader out of their cash. So im really interested to know as i dont believe for one second that there's anyone making money with a SB company they're the definition of bucket shop they do not want you winning.
  • #89
  • Sep 13, 2015 6:47am Sep 13, 2015 6:47am
Quoting yorkshirelad
i dont believe for one second that there's anyone making money with a SB company they're the definition of bucket shop they do not want you winning.

I use CapitalSpreads, myself, and have never had any trouble with them at all. I find their customer service professional, fast and pleasant, their sp-reads low, and their approach commendable.

They don't effectively trade against their customers, because they offset their own net liabilities in underlying markets, and therefore have no incentive at all for any individual customers to lose.

These days, spreadbetting companies are a lot better and more actively regulated than they used to be. The days of wide sp-reads and slow order execution are long behind - about a decade behind, according to some people I know. (They wouldn't be able to compete, on that basis, these days).

The difference between profits being tax-free and their being taxable is of course hugely significant to anyone making their living from trading. SB profits are subject to neither income tax nor capital gains tax, even if they're someone's sole income.

Ultimately, though, if your starting-point for discussing it is that you "don't believe there's anyone making money with a SB company", I really can't help you (partly because I know so many people who are doing exactly that, and have been for many years, in some cases). So I hope I won't offend you too much by mentioning that in my opinion, your perspective is frankly a prejudiced one. Sorry.
  • #90
  • Edited 8:30am Sep 13, 2015 7:33am | Edited 8:30am
Quoting mry2001
{quote} Make a few k each year is possible as an income but you will get kicked out if profit too much. I worked with forex.com for 2 years and never had trouble with withdraw. It would be a real scam if profit can not be withdrawn. I think retail brokers will hunt your orders if the lot size is more than 5? There is an article on the internet that shows Forex.com and fxcm delay orders that is bigger than 5 lots on purpose. I have never trade more than 5 lots on a single order and am worried that my broker could play with my stop loss. There is...
WHY should us traders be limited to only making only few K's a year? Trading is a business for us. I don't know any businessmen who will be satisfied with just making few K's a year. Do you? And besides, HOW are we going to live on just few K's of income a year? For many of us, trading is our business, our ONLY income-earning venture. Would you be able to survive on income of just few K's a year? So what are we supposed to do? Take on 2 or 3 more other jobs just to be able to trade? We are supposed to trade to make money NOT make money to trade. Now in this retail forex industry, it's almost like we traders are paying to trade. Does that seem right to you? Maybe if you are a broker, it does but to us traders, it certainly does not.

What those retail brokers are doing to us traders are despicable. They are pocketing all the profit potential that was supposed to be available for us.
Make your losses in demo. Earn your profits live.
  • #91
  • Sep 13, 2015 7:38am Sep 13, 2015 7:38am
There's a little bit of "talking at cross purposes" in this thread.

It isn't necessary to trade forex futures rather than spot forex, in order to use a real broker who executes your trades in the interbank market and has no financial involvement or incentive at all in the outcomes of your trades (i.e. other than earning the same commission, either way, when you order a trade).
  • #92
  • Edited 8:28am Sep 13, 2015 8:02am | Edited 8:28am
Quoting merquise
{quote} Inceptionist have you looked at some futures brokers because there are ones who offer a day trading margin for currency futures of 1 000$..that is 1:100 leverage right there for day trading. For holding the position overnight the leverage decreases. Also you can trade futures comfortably with a 10 000$ account just as trading spot forex. So no, the futures are not for the big boys only. Where did you got that illusion I don't really know. The only problem with futures I can see is hassle with funding/withdrawing money because of only bank...
You can but the way that the futures market is structured is you either don't make much money on the quiet days or you lose money very quickly, far quicker than in forex thus requiring you to invest LOT more if you don't want to blow your account all the time. The futures market can be very volatile but yet with lot less volume. So on volatile days what happens is you get HUGE price swings in a very short time sometimes with minute so with a very small account of like 5K, you could blow your account within minutes. Inception is right. In order to trade futures safely, you do need at least $100K to weather through those price swings.

But on quieter days, due to the market being less active, you are stuck only making peanuts with the relatively flat price curves while having hundred's K's of funds sitting in the account with the broker earning zero interest and don't forget in U.S., funds with any futures brokers is NOT protected by the financial compensation scheme, SIPC. Once a firm goes down, ALL your money is GONE! The only time when you do make a bit of money is when the market is trending and you happen to be on the right side of the trend and you ride the entire trend all the way til the end.

So in futures market, it's basically a waiting game. You wait and wait and wait and wait with your hundred's of K's funds sitting in the broker's account for that ONE trending day after weathering through days and days of volatile price swings and pray that you will be on the right side of the trend. And when that trending day FINALLY arrives, you might have already lost 10's and thousands of $$'s on those volatile days. Would riding the big trend (provided you were on the right side) be enough to offset all the losses will still be the big question.

The end result you end up with very insufficient usage of funds because of the large amount of investment required with futures. For the same amount of profit you make, you need 10X the funds invested with futures. We are caught with the paradox, retail forex could've allowed us to make limitless profit with relatively less funds and yet due to the brokers' manipulation, we end up watching all those profit potential taken away (more like stolen) from us. In futures, with the central exchange structure and price transparency, all the profit potential are there with less stealing (unless brokers decide to cheat on the commissions), but we don't have the money to do it.
Make your losses in demo. Earn your profits live.
  • #93
  • Sep 13, 2015 8:25am Sep 13, 2015 8:25am
Quoting TwFXtrader
The only thing i saw from this thread is.There is no broker out there that we can use because all of the brokers are scammers. So we should never ever trade Forex? When we discuss something about money and asking people did you ever profit from Forex.There will always be someone talking about brokers. I mean is really useless for some how. I don't really know what to say ' 90% of people loose money is because of the bad brokers ?Maybe this is true. Or maybe 80% of people are good traders that did profit from Forex trading but fail to withdraw...
Well you can trade forex still BUT you just have to be VERY CAREFUL with your broker and you REALLY need to make sure you have chosen a broker that genuinely tries to align their interest with yours instead of acting against you.

And if you look at trader profitability report at various brokers, it is very clear that brokers choice REALLY do make a difference.
Make your losses in demo. Earn your profits live.
  • #94
  • Sep 13, 2015 8:55am Sep 13, 2015 8:55am
Quoting Pipsalon
{quote} Something else about the Zero Sum Game Yes, probably this is the biggest difference between Forex and a poker tournament. Each moment we have fresh new liquidity added to the markets.
Yes but the game itself is STILL zero-sum. It's a game theory. The new liquidity added is NOT part of the game; it just determines HOW much of the reward there is when the game ends. The liquidity added or taken away does NOT affect how the game is played. The player does NOT all of sudden win just because more money is added to the table. If he/she is having a losing hand, he/she will still lose; he/she won't have access to the new liquidity. Whoever wins at the end will still get everything, with the added liquidity, he/she will just win more.

Zero-sum means when you add the winning to the losses, the total sum is zero so it essentially means the winner cannot win unless somebody loses and whatever that person lost is exactly how much the winner will win, with new liquidity or not.
Make your losses in demo. Earn your profits live.
  • #95
  • Sep 13, 2015 9:05am Sep 13, 2015 9:05am
Quoting Forexia
{quote} You can but the way that the futures market is structured is you either don't make much money on the quiet days or you lose money very quickly, far quicker than in forex thus requiring you to invest LOT more if you don't want to blow your account all the time. The futures market can be very volatile but yet with lot less volume. So on volatile days what happens is you get HUGE price swings in a very short time sometimes with minute so with a very small account of like 5K, you could blow your account within minutes. Inception is right. In...
Are we looking at the same futures markets because I have opened a futures demo account and no where have I seen those huge swings you are talking about unless there were some news ahead.. The price on futures follows closely the spot price and the candle patterns are exactly the same.. I have posted a chart a couple of posts above and you can see that on GBP USD futures everything is the same as in spot. As I said the only difference is that you can not size your positions that well as you can do in forex.

The strategy I used for spot works the same on futures. The only difference are news report days for grains markets, for oil and natural gas markets when the price can swing drastically.

Huge swings happen in every market when there are news coming up ahead. You can see that in forex too. Problem for me is I want to use Skrill and Neteller and no futures broker allows them. Only god forsaken wire transfers like we are still in the 90-ies.

Trading One GBP USD contract on a 5k account is the same as trading One Lot on a 5k account in Forex..That is 20x leveraged account. I assume we all know what is leverage and how it is used. The trouble with futures starts when you get into holding contracts overnight as maintenance margin is increased per contract.

So yeah 5k might be a little bit under capitalized for one contract, but 10k is perfectly fine for me.
  • #96
  • Sep 13, 2015 9:07am Sep 13, 2015 9:07am
Quoting Forexia
{quote} Yes but the game itself is STILL zero-sum. It's a game theory. The new liquidity added is NOT part of the game; it just determines HOW much of the reward there is when the game ends. The liquidity added or taken away does NOT affect how the game is played. The player does NOT all of sudden win just because more money is added to the table. If he/she is having a losing hand, he/she will still lose; he/she won't have access to the new liquidity. Whoever wins at the end will still get everything, with the added liquidity, he/she will just win...
The game may actually be a positive sum game from a utility standpoint.

- Hedgers protect their business interests.
- Gamblers get their thrill.
- Speculators make their money.
  • #97
  • Sep 13, 2015 9:09am Sep 13, 2015 9:09am
Quoting Forexia
you REALLY need to make sure you have chosen a broker that genuinely tries to align their interest with yours instead of acting against you.

Just so.

Among all the chat in this thread, that sentence is kind of "the one that says everything that really needed to be said", here. Sure, you still need to know how to do that (which isn't difficult, as observed above), but that sentence, right there, is very much the key concept.


Quoting Forexia
And if you look at trader profitability report at various brokers, it is very clear that brokers choice REALLY do make a difference.

Clearly. There's even independently audited published information about the proportions of accounts at various types of brokerage that are in profit/in loss.

I don't have it at my fingertips now, but I remember commenting here, in another thread, some months ago, where some of it was posted/linked-to, that it was no surprise at all that IB had a significantly higher proportion of net-profitable traders than a certain other well-known "broker" did.

The point I was making, in that post, is that the causality involved in that correlation works both ways.

It isn't just (as people traditionally observe and comment) that "more serious, more professional traders" are more likely to be trading somewhere like IB in the first place because a higher proportion of them have more money: it's also true that they're more likely, overall, to have more money because they trade with a real broker rather than with a counterparty market-maker.
  • #98
  • Sep 13, 2015 9:10am Sep 13, 2015 9:10am
Quoting merquise
{quote} Are we looking at the same futures markets because I have opened a futures demo account and no where have I seen those huge swings you are talking about unless there were some news ahead.. The price on futures follows closely the spot price and the candle patterns are exactly the same.. I have posted a chart a couple of posts above and you can see that on GBP USD futures everything is the same as in spot. As I said the only difference is that you can not size your positions that well as you can do in forex. The strategy I used for spot works...
yeah but with $10K, even with the capped leverage by CFTC, you can control more than just 1 standard lot in spot forex and yet in futures, you can only control 1 contract which is equivalent of 1 lot.
Make your losses in demo. Earn your profits live.
  • #99
  • Sep 13, 2015 9:12am Sep 13, 2015 9:12am
@Xela

You are also forgetting that IB and similar brokers offer more than one financial instrument. They offer Forex, Futures, Equities, Options, Bonds, Indexes. You can trade what ever you have on your mind with those kind of brokers.

Forex brokers are only oriented to, well Forex
  • #100
  • Sep 13, 2015 9:14am Sep 13, 2015 9:14am
Quoting Atokys
{quote} The game may actually be a positive sum game from a utility standpoint. - Hedgers protect their business interests. - Gamblers get their thrill. - Speculators make their money.
The utility is NOT what we are talking about here. Who cares who uses the market for what purposes? At the end, if you aggregate all the winnings and the losses, the result is still zero.

I don't understand what your comment is doing here.
Make your losses in demo. Earn your profits live.
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