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  • #81
  • Oct 20, 2016 9:08am Oct 20, 2016 9:08am
Quoting Calculus
{quote} Going lower solves in my opinion the number one reason most traders struggle - their profits are not much larger than their losses. This is because the nastiest stat/equation in trading. Risk 5 and to make (say 3:1) you've got to make 15. Double the risk to 10 and the profit potential has to double as well to 30 (to make 3:1 just using that as an example). Increase the stop to 50 ticks and the profit needed is now 150 ticks (some crosses struggle to do that in a week). Increase that to 100 and it's a 300 ticks. So the more the stop increases...
That is true, but the hit rate will also lower. Its much more easy to win a 100:300 than a 5:15 ...
  • #82
  • Edited 2:12pm Oct 20, 2016 11:01am | Edited 2:12pm
Quoting Calculus
{quote} Going lower solves in my opinion the number one reason most traders struggle - their profits are not much larger than their losses. This is because the nastiest stat/equation in trading. Risk 5 and to make (say 3:1) you've got to make 15. Double the risk to 10 and the profit potential has to double as well to 30 (to make 3:1 just using that as an example). Increase the stop to 50 ticks and the profit needed is now 150 ticks (some crosses struggle to do that in a week). Increase that to 100 and it's a 300 ticks. So the...
You are absolutely right. Good points and very important!

Most retail traders have no idea about this.
They are basically blind to the reality and the mathematical laws which drive the prices.

This "nasty" math problem is a direct consequence from sqrt(t) - the rule called "Square root of time".
explanation - http://www.macroption.com/why-is-vol...-root-of-time/

The bigger the target price - the more unlikely to be reached!
The average time necessary to reach the target grows EXPONENTIALLY as you increase the target distance.
So very large targets are virtually impossible to reach. (The market just hits the SL before the target)

This is how options are priced, and why they decay over time. They are calculated according to the more complicated BlackScholes model.....but the end result is correlated to the sqrt(t).

What are the consequences for us - the traders??

Basically it means that purely technical strategies which rely on high risk-reward and longer timeframes are pretty much fucked! (especialy in forex where prices are known to have tendency to revert to the mean more often in comparison with other markets)

These longer term trend following strategies were originally designed for the stock market. This is where they perform best. (Or at least they were profitable in the past ) In essence, trend followers rely on fat tails. But fat tails are rare events. Too rare to build reliable and consistent strategy on them.

FX on the other hand is (and always was) a primarily short term speculative market. Almost all of the big players trade intraday and rarely hold positions overnight. In fact the average holding time is less than 60 min. (If you do not count the retail traders and commercial traders/hedgers).
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Bottom line?
Just follow the strategies and principles which I gave you in the previous posts and you will do fine in the long run.
I didn't invent my strategy. It is not based on my opinions and beliefs. I just copied other traders who are much bigger and more successful than me.
Realise, that there is no need to reinvent the wheel. There are many other smart people who have already done that and have proven what works and what doesn't .
  • #83
  • Edited 11:53am Oct 20, 2016 11:38am | Edited 11:53am
Regarding the black swans:

Almost all of the big "black swans" in FX in the last years are not real black swans!
They have been predicted in advance. The problem is that most retail traders are uninformed.

The only REAL black swan as far as I can remember was the earthquake/tsunami disaster in 2011 in Japan. ( JPY was up over 1000 pips in minutes.)
For all other "black swan" crashes, we saw signs and rumors all over the place for days weeks and even months before the actual event.

JPY and CHF bank interventions were expected!
GBP crash was expected!
EUR short squeeze in 2015 and 2016 was expected.

The problem is that most people do not pay attention to the news flow and the information.(despide the fact that the danger signs are everywhere) As a result even some brokers and banks went bust. Because their unifomed clients were on the wrong side of the market, totally ignoring the danger warnings and many of them even pyramiding down on the way to total bankruptcy.

This is the sad reality!
  • #84
  • Oct 20, 2016 1:11pm Oct 20, 2016 1:11pm
Quoting Zemanel
I assume that scalpers point of view in this matter doesn really matter because their risk to a Black Event is almost null . The topic is only for the trend followers or daily time frame .
More risk, more reward. Scalpers have to over stress themselves just to collect few pips from the vast market; paying spread here and there and get hooked with computers. Anything that makes money doesn't have to be so stressful
Make all mistakes in demo and rain in pips in live account
9jatrader All Time Return: -66.1%
  • #85
  • Oct 20, 2016 2:01pm Oct 20, 2016 2:01pm
Quoting 9jatrader
{quote} More risk, more reward. Scalpers have to over stress themselves just to collect few pips from the vast market; paying spread here and there and get hooked with computers. Anything that makes money doesn't have to be so stressful
There is no such thing as stress-free trading! If you do not experience any stress during trading, chances are :

a) You trade on a demo account
b) You trade very very small live account (too small to make or lose any real money)
c) You trade with EA or fixed rule based system. (which automatically means you will not make any money in the long run)
d) You are real pro who trades under the influence of some magic drugs. (if this is the case, please let me know what are these drugs )


And by the way, most traders who are strugling to make profits on FX even after years of practice may eventually find that stocks are alot easier to trade.

The stock market is alot better place for the hobby/small trader anyway. It is better regulated, it is relatively safer, and alot more suitable for the lower frequency traders and trend followers. You can actualy find real value in stocks. While FX is just pure speculation. (And very tough game).

Always keep in mind that FX is very dangerous market and not suitable for amateurs! Why do you think new fx bucket shops appear left and right all the time? Their business model is entirely based on the fact that over 90% of traders have absolutely ZERO chance for survival in the long run. The brokers just come here to collect your deposit.(it is easy money for them).
Can you guess what is the typical ratio between net deposits and net withdrawals in most fx shops? 10:1 in the BEST CASE! And this is not because FX is impossible to beat, but because it attracts thousands of amateurs who do not understand the true nature of this game.
  • #86
  • Oct 21, 2016 1:45am Oct 21, 2016 1:45am
Quoting Zemanel
{quote} It doesnt make any difference... Stops will not be triggered because of slippage Small risk = small profit Black swan is impredictable In my case, i only make 30% a year because i am afraid of black swans. If i suffer 1000/1200 pips sudden spike, my account almost suffer a margin call.
Your reference to slippage on stops combined with the statement about limited earnings because of fear of black swans tell me that you really should investigate brokers who offer guaranteed stops. ie no slippage.
Sorry if already been mentioned in the thread.
Hope for the best, prepare for the worst.
  • #87
  • Oct 21, 2016 1:52am Oct 21, 2016 1:52am
Quoting PayTheLimit
{quote} I agree with all your points. I must however point out that I had no open positions in EUR/CHF, but still lost access to my funds for a considerable time. And lets be honest, had that GU spike been larger, there may have been more problems with firms
Curious as to why lost access? who are you with?
Hope for the best, prepare for the worst.
  • #88
  • Oct 21, 2016 2:13am Oct 21, 2016 2:13am
Quoting dab
{quote} Your reference to slippage on stops combined with the statement about limited earnings because of fear of black swans tell me that you really should investigate brokers who offer guaranteed stops. ie no slippage. Sorry if already been mentioned in the thread.

But one needs to read the fine printing of "guaranteed stops", cause they are designed only to protect you from "normal news slippage"...
The point is the brokers work under the bigger banks, if there is nobody on the other side of your stop, do you really think any broker will absorb your loss from their own pocket?
  • #89
  • Oct 21, 2016 2:14am Oct 21, 2016 2:14am
Quoting dab
{quote} Curious as to why lost access? who are you with?

Alpari, there was a little technical problem....the firm went bankrupt....
Look Sharp/Trade Tight
  • #90
  • Oct 21, 2016 2:24am Oct 21, 2016 2:24am
surprisingly I told them I was a scalper, but they told me to get in line anyway....
Look Sharp/Trade Tight
  • #91
  • Oct 21, 2016 2:46am Oct 21, 2016 2:46am
Quoting Zemanel
{quote} It doesnt make any difference... Stops will not be triggered because of slippage Small risk = small profit Black swan is impredictable In my case, i only make 30% a year because i am afraid of black swans. If i suffer 1000/1200 pips sudden spike, my account almost suffer a margin call.
If that would get you a margin call you're not using proper risk management.
  • #92
  • Oct 21, 2016 3:33am Oct 21, 2016 3:33am
Quoting AntiVi
{quote} If that would get you a margin call you're not using proper risk management.
I already said that i am not a scalper. Anyone who is not a scalper has trouble with 1000 pips slippage. That is certain !

Anyway , to make this topic objective, let´s see what CONCRETE AND OBJECTIVE measures you guys ( and me ) have told so far :

- Diversify - The chance of being at the wrong side of the trade is lesser if you trade more than 1 pair
- Set positions to survive a 1000 pip spike. This one limits your profit.
- Be a scalper . If you are less time in the trade, the chances of being in a middle of a 1000 pip spike is much lesser.

In my case, i have never been caught in a black swan. I never traded CHF, Cable rarely, i only traded EUR/USD.
I am consistent profitable, but , since i am afraid of that 1000 pip spikes , i set my positions to survive that spike. But doing this, i only can afford to make 30% a year.
I am starting now to diversify to more 3 pairs .
I never looked in to scalping since i always thought it was so difficult because of the little pips ...
I am going to give scalping a try !
I apreciate any tips you guys can give me !
  • #93
  • Oct 21, 2016 9:28am Oct 21, 2016 9:28am
Not trying to convince anyone here but ...

Quoting 9jatrader
Scalpers have to over stress themselves just to collect few pips from the vast market; paying spread here and there and get hooked with computers. Anything that makes money doesn't have to be so stressful
everyone's different. It may be too much stress FOR YOU but that doesn't mean it's equally stressful to other people. As a business owner I couldn't sleep sometimes because of things being in limbo, as the business grew there were more and more things in limbo (these were essentially long-term "trades"). I'm very happy to just work 2-3 hours a day now just "scalping" the currency market. Pulling the trigger even 20 times a day with over 4 million per trade (40 lots for you metatraders) doesn't stress me a single bit. Going long term would kill me (sleepless nights, bigger gaps in the market [call that a black swan or black swine or crossing thomas jordan event, I don't give a rats arse] and so on).
  • #94
  • Oct 22, 2016 3:09am Oct 22, 2016 3:09am
Quoting cuchuflito
{quote} But one needs to read the fine printing of "guaranteed stops", cause they are designed only to protect you from "normal news slippage"... The point is the brokers work under the bigger banks, if there is nobody on the other side of your stop, do you really think any broker will absorb your loss from their own pocket?
"A Guaranteed Stop is a type of closing stop order that protects entirely against the risk of slippage on the closure of a trade. In the event of a Guaranteed Stop triggering, your position cannot be closed at a worse level than the stop level selected, even in volatile market conditions." http://portal.ig.com/support/HelpSolution?SolNumber=00034557&searchType=&Search=guaranteed+stop&webSiteId=aum&webSiteLocale=

If there is fine print I'm not seeing it. I expect that they are professional enough to use margins and risk managment tools like options to cover themselves and stay afloat, but if they go belly up I expect they honour their contracts and have abided by their stated segregation of client funds so I'm not unduly screwed. All that failing I generally only have a portion of my funds on deposit (currently only my trading profits).
Hope for the best, prepare for the worst.
  • #95
  • Edited 4:32pm Oct 22, 2016 3:10am | Edited 4:32pm
Quoting PayTheLimit
{quote} Alpari, there was a little technical problem....the firm went bankrupt....
Ouch. Did they have segregated accounts for client funds?

Edit, sorry hadn't seen your post 73 reference to segregated funds when I posted that question. I'm guessing the answer was no or is there another issue with seg funds?
Hope for the best, prepare for the worst.
  • #96
  • Oct 28, 2016 1:31pm Oct 28, 2016 1:31pm
While dollar bull celebrity its victory, FBI reopened Clinton's email case and send UJ down for 100 pips in the opposite direction.
Attached Image

Typically black swan event sample you spot here and there throughout the week.

Enjoy your weekend and keep your eyes on these swans.



--------------------------------------------
Trade Idea on TradingView @FXSayWhat
Trade Tweet on Twitter @MidnightLambada
If u luv happiness, start w/ discomfort, make friends w/ pain and failure.
100 Hits 0 Miss All Time Return: 35.8%
  • #97
  • Edited 7:13pm Oct 28, 2016 2:58pm | Edited 7:13pm
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those so call institutional trader mast be sampling skin cigar .. so hiii ...

subscribe mon ....

shalom



Inserted Video
  • #98
  • Oct 29, 2016 1:02am Oct 29, 2016 1:02am
Quoting alphaomega
{quote}This "nasty" math problem is a direct consequence from sqrt(t) - the rule called "Square root of time". explanation - http://www.macroption.com/why-is-vol...-root-of-time/ The bigger the target price - the more unlikely to be reached! The average time necessary to reach the target grows EXPONENTIALLY as you increase the target distance.
But, Volatility is not normal distributed, so standard deviation is not a proper way to measure volatility hence sqrt(t) is not a proper way to measure price target.
No Highs? No Lows? Must be Bose!
  • #99
  • Oct 29, 2016 1:36am Oct 29, 2016 1:36am
I have only 1 weapon agains black swan:

1. Use low leverage. I recommend using for all of your life trading: 1:10 or maximum 1:30
2. Not using Stop loss. Yes! Not using stop loss. Please cut order by manually.

You still there in tomorrow and the market is the same there. Why need so hurry ?
  • #100
  • Oct 29, 2016 2:43am Oct 29, 2016 2:43am
Quoting FXSayWhat
While dollar bull celebrity its victory, FBI reopened Clinton's email case and send UJ down for 100 pips in the opposite direction. {image} Typically black swan event sample you spot here and there throughout the week. Enjoy your weekend and keep your eyes on these swans. -------------------------------------------- Trade Idea on TradingView @FXSayWhat Trade Tweet on Twitter @MidnightLambada

That was EASY to predict Mate.... I had no idea about the FBI Probe....

But, I saw that setup since Thursday Night.... First Trade got stopped out at the end of Frankfurt/LondonOpen, and
I re-entered maybe 10 minutes before the USD News report (Advance GDP ).....When the dust settled, I knew this
pair won't go any further than 105.500ish, and decided to take a nap......

I was in a deep sleep when PA dropped. HAHAH

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot 2016-10-29 02.21.28.png Size: 109 KB


Like you said, these events happen throughout the week.....

GBP/USD had a massive drop early Tuesday, I failed to take advantage of it cause my TP was way below that and I wasn't
in front of my computer and lastly USD/CAD had a massive drop as well on Monday (End of Day ) after Gov. Poloz re-adjusted
his previous statement from a 2:30pm Speech... I did miss that as well, cause I was 20 pips below that move.....
Have an INVESTOR Mindset, but Trade like an ENTREPRENEUR
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