A Quitter Contemplates the Conditions for Trying Again...

I used to hang around here a lot in the past and first became a member 10 years ago. I personally never made a success of Forex trading, but I was left convinced that the only route to profitability would involve an understanding of market microstructure and fundamental drivers of currency price changes.

After "quitting" I went on to open an online retail store, completely unrelated to forex or financial markets. Things are going well... we turn over $250,000 a year and I attribute the formation of my sceptical mindset and interest in economics, politics and even philosophy to my time here. The main thing I learned here is that I had lots more to learn about my self and the world before I could be successful at all, in any area of life.

If I were to try trading Forex or any other market again, what knowledge would I have to gain?

This is something I ask myself sometimes, and it applies to physical assets such as gold and real estate too. Now that I have some modest savings, I often ask my self where I can place my money or put it to work for me outside of expanding my current business.

I think my answer is that I would need to have a theory of the world economy, politics and banking that explained the relations of these things and the markets I was interested to trade. Along with an understanding of market structure, these areas of knowledge would in theory allow me to be both a long-term trader and news trader.

My time trading lead me to believe that "because the price did X in the past" is a useless justification for a trade. What I would need is information which shows why a certain outcome is necessary given certain conditions, or I should have information to see that an asset is miss-priced.

Take a look at the recent Brexit and Trump events...
I made bets on both of these political events. What was my logic? Very simply, I had seen the very wide support for both out in the real world, the unconvincing arguments against (particularly against Brexit), and the extent to which supporters of each were shamed into silence and therefore severely underrepresented in the media polls... and most of all the IDIOTIC odds of up to 10:1 offered on bookmaking websites. I also own and operate a Facebook page with 190,000 UK likers... I did my own poll for Brexit and found that about 70% of respondents on there were in favour of leaving the EU

I must have made about £4000 from these bets, I would have made more but I felt that the odds against Hillary swung prematurely and so hedged the position so I would make £2000 no matter who won.

So to sum up - Much of the evidence I had was in favour of Brexit. Not only that but I had odds of 10:1 for what I saw to be the most likely outcome. Similarly for Trump, I suspected the same forces were at work with "shy-voters" and the odds were similarly ridiculous.

Can you be as confident that a particular currency is miss-priced? I personally would need much more information than a dubious chart pattern to make these judgements.

Thanks

(Much of this post was taken from my post in the members lounge, you can find it here... http://www.forexfactory.com/showthread.php?t=620027
I've modified and reposted only the parts relevant to this question in particular)

As detailed in my members lounge thread, I have been doing some research to see what the "old guys" (the traders who were active on FF several years ago) were up to now. In my research I came across Darkstar being under fire for dubious claims of success (according to his detractors). This reminds me of the scepticism that is rightly employed by many of the forums members. In order to stimulate honest discussion in this thread, let me post some screenshots that at least somewhat back up my post, although these could be photoshopped I suppose...