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Is Forex trading worth it? If so, why?

  • #401
  • Jan 11, 2016 12:37am Jan 11, 2016 12:37am
Quoting orabi
{quote} some enter big net worth thats why i said 90% have a nice day sir please

Just to clarify, big net worth doesn't matter.
You can have a $10m account at a retail broker. Your trades are still not sent to the true market.

What we see on the charts is a price feed representing the interbank market. Even if we use a market maker broker who takes the other side of the trade, we are still not participating in the price feed we see
Wealth comes from what you keep, not what you earn
  • #402
  • Jan 11, 2016 12:58am Jan 11, 2016 12:58am
Quoting trader34
{quote} I think the point nubcake is making is that the number of retail traders in the market has absolutely no bearing on the way the market runs. The volumes we put through are grains of sand on a beach compared to the institutional transactions. Latest figures suggest that the average daily foreign exchange volume is around $5.3 trillion. The total combined retail portion of that is purported to be approximately $330 billion. So, the entire combined retail Fx volume makes up only 6% of the average daily volume. At this level, it wouldn't matter...
well said. I think this is the best comment i red so far about this post keep it up .
  • #403
  • Jan 11, 2016 3:01am Jan 11, 2016 3:01am
Quoting trader34
{quote} I think the point nubcake is making is that the number of retail traders in the market has absolutely no bearing on the way the market runs. The volumes we put through are grains of sand on a beach compared to the institutional transactions. Latest figures suggest that the average daily foreign exchange volume is around $5.3 trillion. The total combined retail portion of that is purported to be approximately $330 billion. So, the entire combined retail Fx volume makes up only 6% of the average daily volume. At this level, it wouldn't matter...
No one said we are players. All I said was 90+ of all traders lose, will always lose, will continue to lose. That never changes. It is a constant. If anyone wants to start winning you need to consider that in your thinking. Think about it for a minute. Why does that number remain constant. That was my point.

And the market is well aware that retail traders are here. To you 6% of 5 trillion is chump change. To the brokers, market makers and banks who get paid from it everyday it is a nice payday.
  • #404
  • Jan 11, 2016 4:11am Jan 11, 2016 4:11am
Quoting hanover
@Atokys: I see exits as part of the trading method, and MM as the science of position sizing. If ill-use of terminology makes me a cretin, then I'm happy to be one, just so long as I'm profitable.
Quote what you are responding to so you dont come off as completely random. And don't you dare say my use of star charts is crazy. Im happy to be crazy as long as im profitable.
  • #405
  • Jan 11, 2016 4:42am Jan 11, 2016 4:42am
Quoting Giganntor
{quote}... And the market is well aware that retail traders are here. To you 6% of 5 trillion is chump change. To the brokers, market makers and banks who get paid from it everyday it is a nice payday.
Yes, the broker's entire business is based on us playing with "chump change" as you put it.
But, from institutional point of view they don't make big bucks from us.

Our tiny order clusters which are skimmed by brokers and LP's don't make the banks much money, if at all.

At best, all retail Fx provides the true institutions is a little less slippage when putting through the smaller orders demanded by day to day business.

Think about it; that 6% is the COMBINED input of all the retail Fx business across the world, with the various LP's and clearing houses each broker uses. How many brokers are there? How many LP's?
If IBM wants to move $500m into euros via Deutsche Bank, do you think any part of that order is fed into a retail Fx broker? No. It's pure interdealer.
But, if the small enterprise in the US needs to convert $20k into Euro's, that type of order is not worth putting through such a medium.
Wealth comes from what you keep, not what you earn
  • #406
  • Jan 11, 2016 5:48am Jan 11, 2016 5:48am
Quoting Cubbybgood
Now lets talk a bit about why 95% of people lose in trading. What are the biggest mistakes that are made? Why do only 5% of traders profit? What needs to change and how can this number grow?
I take that you are part of the 5% now. If so, why would you want to help the 95%?! The more they lose, the more you earn And yes, I know how it sounds... I'm really not that kind of selfish guy.
But last time I've tried to help people - by sharing the way I trade - was on Reddit; that site sucks, by the way. People there immediately started to bash me and even insult me because I wrote that I am not using a classic SL, instead I hedge. I even got banned there and after that the mean comments still didn't stop. Idiots kept sending me replies like "enjoy your ban" and so, like I couldn't open another account in 30 seconds.

Anyways, long story short. From time to time good decent people part of the 5% are sharing their ideas, genuinely trying to help. What happens? NOBODY LISTENS. Even more, sometimes the others (you guessed, the 95%) start to make fun of them, like they know better.

My advice is:

  1. Either leave the 95% alone - they'll soon figure it out whether they're made for this game or not. However, it will not be your headache (my favorite).
  2. Or sell your ideas - I know it sounds selfish again but trust me when I say that many people are plain idiots. They truly believe that good things are never free. I guarantee that you'll manage to help much more people if you charge for whatever you plan to use to help: webinars, selling strategies, expert advisors etc.

Either way, good luck to everyone!

Using the RobotFX EAs for a while https://www.robotfx.org/
  • #407
  • Jan 11, 2016 6:07am Jan 11, 2016 6:07am
Quoting wattaman
{quote} I take that you are part of the 5% now. If so, why would you want to help the 95%?! The more they lose, the more you earn And yes, I know how it sounds... I'm really not that kind of selfish guy. But last time I've tried to help people - by sharing the way I trade - was on Reddit; that site sucks, by the way. People there immediately started to bash me and even insult me because I wrote that I am not using a classic SL, instead I hedge. I even got banned there and even after that the mean comments didn't stop. Idiots kept sending me replies...
Interesting post. 90-95% of traders in all markets lose. It was always that way and it will continue. Without the 90% losing there would be no market. Thank God for the 90-95% so the market survives to trade another day.

Most traders lose because they don't work at it enough, they don't use rules, they are not that serious about trading. Only those that take trading seriously have any chance of making a profit over the long haul.
  • #408
  • Jan 11, 2016 6:20am Jan 11, 2016 6:20am
Thank you for sharing your personal experience and for being real. This was insightful. What I have learned from your story as a new trader is not to prioritise trading of the important aspects of our lives, our loved ones. Also, not to invest more than what I can afford, which that means making sure I have enough to survive excluding the money i invest.
To answer your question, I view trading as a hobby so far which if i master it can get me an extra income. I find it interesting and I like it but I haven't fallen in love yet, I guess is too early I think I will target small continuous profits rather than risking to much.
I wish you continue learning and being profitable!
  • #409
  • Edited 1:51pm Jan 11, 2016 9:20am | Edited 1:51pm
Quoting wattaman
{quote} I take that you are part of the 5% now. If so, why would you want to help the 95%?! The more they lose, the more you earn And yes, I know how it sounds... I'm really not that kind of selfish guy. But last time I've tried to help people - by sharing the way I trade - was on Reddit; that site sucks, by the way. People there immediately started to bash me and even insult me because I wrote that I am not using a classic SL, instead I hedge. I even got banned there and after that the mean comments still didn't stop. Idiots kept sending me...
Interesting perspective....

I started this thread to help get traders thinking in a new REAL way. I'm not trying to cure cancer. Just trying to get a conversation going that will POSSIBLY help traders start a new path towards becoming profitable.

People don't realize how important a controlled mindset is in this industry. The trading system is important but in my opinion the correct mindset is even more so. I may have said it before but I trained a brother of a best friend in everything I know. After his training he ended up losing 100% of his account in just 1 day. That same day I made 2%. We were even using my same system! The only reason he lost big was because he was careless and greedy. It was nothing I did. He took full responsibility for his loss.

That was the moment I realized....Very few people are fit for trading. It doesn't matter how much they want it. They may just never get there. All I can do is help push other traders into thinking differently so their chances of success is higher. It's not my responsibility but It's something I wish I had years and years ago.

Bottom line is the best system in the world is not going to save you in the trading world.
  • #410
  • Jan 11, 2016 1:08pm Jan 11, 2016 1:08pm
Quoting Giganntor
{quote} Interesting post. 90-95% of traders in all markets lose. It was always that way and it will continue. Without the 90% losing there would be no market. Thank God for the 90-95% so the market survives to trade another day. Most traders lose because they don't work at it enough, they don't use rules, they are not that serious about trading. Only those that take trading seriously have any chance of making a profit over the long haul.
And there you go with the same story again. Wow.
Congratulations ScalaFX for coming out of the closet!
  • #411
  • Jan 11, 2016 7:32pm Jan 11, 2016 7:32pm
Quoting Giganntor
{quote} Interesting post. 90-95% of traders in all markets lose. It was always that way and it will continue. Without the 90% losing there would be no market. Thank God for the 90-95% so the market survives to trade another day.
I thought you understood that this is wrong, but seems not.
Once again...the market is not contingent on "x" % of traders (especially retail) losing!

Honestly if you believe this then I really think you need to actually study how a market works. I suggest you start here: http://www.forexfactory.com/showthread.php?t=486128
Not a comprehensive resource, but should give you some insight as to why your assertion is so wrong.

Actually what you're saying, and what wattaman said above:
Quote
If so, why would you want to help the 95%?! The more they lose, the more you earn
shows that the biggest myth in the trading world is still alive and well.

Contrary to what you may think, trading is NOT a zero sum game. When you close a trade for a win, it doesn't mean someone else has closed for a loss. You didn't take out someone's stop loss, and you didn't "beat" anyone.
This egocentric attitude is not only wrong, it's dangerous because if you think at any point you are "beating" the market or it's participants then you won't have a very long career in trading.

Why is trading not zero sum? A simple illustration:

So, you buy 1 lot EU at 1.07. You sell at 1.08 for a nice profit. Congratulations!

But...did you "win" anything?
The party you bought from, bought 1 lot EU at 1.05. They sold to you for a profit.
The party you sold your 1 lot to is buying at 1.08 because they have a buy and hold system on a huge account and will sell out at 1.09.
And, the broker is happy, because he charged all 3 of you for each transaction.

So, who "won" in this scenario? Everyone.
Who lost??

Some people make money in markets, some people lose money, but the market doesn't care which way that goes.
The market is contingent on the transaction which arises from the differences in perceived value of an instrument, not the outcome for any individual.
Wealth comes from what you keep, not what you earn
  • #412
  • Jan 12, 2016 12:56am Jan 12, 2016 12:56am
Quoting trader34
{quote} I thought you understood that this is wrong, but seems not. Once again...the market is not contingent on "x" % of traders (especially retail) losing! Honestly if you believe this then I really think you need to actually study how a market works. I suggest you start here: http://www.forexfactory.com/showthread.php?t=486128 Not a comprehensive resource, but should give you some insight as to why your assertion is so wrong. Actually what you're saying, and what wattaman said above: {quote} shows that the biggest myth in the trading...
Excellent post!
People should start listening/reading Mark Douglas - and stop reading/listening "the hateful 95%".
  • #413
  • Jan 12, 2016 6:20am Jan 12, 2016 6:20am
Quoting trader34
Some people make money in markets, some people lose money, but the market doesn't care which way that goes. The market is contingent on the transaction which arises from the differences in perceived value of an instrument, not the outcome for any individual.
Indeed. I would go even further and say that participating in the markets is a positive sum game from a utility standpoint.

Results arise from intention and everybody gets exactly what they want from the markets.
  • #414
  • Jan 12, 2016 7:19am Jan 12, 2016 7:19am
Quoting Atokys
{quote} Indeed. I would go even further and say that participating in the markets is a positive sum game from a utility standpoint. Results arise from intention and everybody gets exactly what they want from the markets.

I would say that's true. The market makers are certainly not losing out in their participation with retail Fx. It is very plausible that in many cases, everyone can get what they want from a price movement.
Wealth comes from what you keep, not what you earn
  • #415
  • Jan 12, 2016 7:30am Jan 12, 2016 7:30am
Quoting trader34
{quote} I would say that's true. The market makers are certainly not losing out in their participation with retail Fx. It is very plausible that in many cases, everyone can get what they want from a price movement.
The idea goes even beyond isolated price swings. Everyone gets to freely choose to participate or not participate in the same markets. If two traders trading the same markets get different results they are each getting what they desire.
  • #416
  • Edited 9:37am Jan 12, 2016 9:22am | Edited 9:37am
Quoting trader34
So, who "won" in this scenario? Everyone. Who lost??
The guy who sold to your guy who bought at 1.05. Of course it could be argued that he will win when price falls to 1.04, but then there must be another counterparty involved, and so on and so on.........

You're right when you say that "When you close a trade for a win, it doesn't mean someone else has closed for a loss. You didn't take out someone's stop loss, and you didn't "beat" anyone." But spot forex is zero sum IF, at any given moment, you also include the P/L in currently open trades across the market as a whole (and also money made by br0kers, LPs, etc). (See myth #7 here). With stock markets, the total market capitalization (and hence paper wealth) fluctuates all the time, but my understanding is that forex, in contrast, is purely exchange: no additional paper money is being created, or existing money destroyed.

Somebody please correct me if I'm wrong, but if FX is positive sum, please explain where the additional money is coming from. **

For whatever my opinion is worth, I believe that the rest of your comments are spot on.
_____________________

**[EDIT] I did some reading. Here is Boris Schlossberg's view, which is similar to mine. I also learned that there are reasons why FX is not necessarily zero sum, but these are very different to what has been discussed in this thread. For example:

1. Markets are not independent and there is constant regulation/intervention by central banks who also issue that currency. The central banks are players in the market as well, but don't really pocket losses.

2. Businesses that trade goods or services across borders, and so need forex to settle the deal, will sometimes accept a small loss on the forex transaction if they can make a bigger profit on the thing they're trading. In other words, in non-speculative transactions, if we include the 'external' P/L being made on the goods being sold, the whole transaction is not strictly zero sum.

3. While the values of different currencies move against each other, purchasing power of these currencies are constantly eroded by inflation. Forex traders can continue to gain units of currencies through trading as monetary bases are expanded through debt created throughout economies. The units of currencies gained by traders represent value taken from the global economy, which is continuously generated by other economic activities such as manufacturing.
  • #417
  • Jan 12, 2016 9:25am Jan 12, 2016 9:25am
Quoting hanover
{quote} The guy who sold to your guy who bought at 1.05. Of course it could be argued that he will win when price falls to 1.04, but then there must be another counterparty involved, and so on and so on......... You're right when you say that "When you close a trade for a win, it doesn't mean someone else has closed for a loss. You didn't take out someone's stop loss, and you didn't "beat" anyone." But spot forex is zero sum, IF you also include the P/L in currently open trades across the entire market (and money made by br0kers, LPs, etc). (See...
Was just about to say the stuff in your edit.

there are situations where it isn't zero sum. Carry trade isn't zero sum either
  • #418
  • Edited 1:48pm Jan 12, 2016 10:00am | Edited 1:48pm
Quoting verv
Was just about to say the stuff in your edit. there are situations where it isn't zero sum. Carry trade isn't zero sum either
Agreed, but that's a very different argument to what was being presented earlier, namely that forex isn't zero sum for the reason that if traders hold onto their trades for long enough, they can all profit.
  • #419
  • Jan 12, 2016 2:08pm Jan 12, 2016 2:08pm
Quoting hanover
{quote} The guy who sold to your guy who bought at 1.05. Of course it could be argued that he will win when price falls to 1.04, but then there must be another counterparty involved, and so on and so on......... You're right when you say that "When you close a trade for a win, it doesn't mean someone else has closed for a loss. You didn't take out someone's stop loss, and you didn't "beat" anyone." But spot forex is zero sum IF, at any given moment, you also include the P/L in currently open trades across the market as a whole...
The example I gave was an oversimplified and isolated one, not a generalisation about the market as a whole, but the one transaction of a winning trade because the intended recipient seemed to struggle understanding that no one necessarily needed to lose in a given scenario. In this case I just used the immediate counterparts to the one transaction. I should have clarified that, so I understand your point.But, as we're discussing it, I would say that, the fx market, as a decentralised and unregulated market is not zero sum, at least not all the time. The 3 points in your edit are excellent, thank you.
Wealth comes from what you keep, not what you earn
  • #420
  • Edited 5:28pm Jan 12, 2016 2:13pm | Edited 5:28pm
http://www.fxstreet.com/education/fo...me/2012/10/31/

Another interesting perspective

Also..having read Schlossberg's article in a bit more depth, I disagree on one key aspect.
The FX market is not purely speculative.
It also provides a function of genuine exchange. The value of that exchange fluctuates according to speculation, but the exchange still takes place.
Wealth comes from what you keep, not what you earn
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