Are you in trouble as a trader?

Definitely had my fair share of moments where I was struggling to keep afloat but not because of blowing it all on trading.

I only trade what I can afford to lose and that has helped me a lot. I personally know a guy who took a few thousand dollars out of his credit card and used it on trading even after I advised him not to. That didn't work out too well in the end (when does it ever?).

Without trying to state the obvious, only trade what you can afford to lose. Even if you are only able to afford $200 to trade just trade that and chip away at the account.

Are you in a bit of hardship at the moment mate?

Systems do not fail.
Traders fail.
Do not blame the hammer for your sore thumb
Or the saw for your missing finger.
Instead, find the culprit by looking in the mirror.

There are indicators that aid in the printing of money.
They are deceptively simple.

I've tried a few indicators before and NONE of them worked. Maybe some do but I sure haven't found them.

Indicators are of 2 types , most are based on a function of price itself and the other provide key price levels by formula or price observation.
Both types can be useful, when they are used correctly.

Trading can be simple, once you master your particular method. Doesn't necessarily have to be with indicators.
In my experience, indicators only assist in seeing the picture, ultimately it is your own personal twist that exploits that information.

I have yet to see any indicators that aid in the printing of money. This is where the newbie quest for the magic siver bullet, all-singing , all- dancing indicator begins with a statement like that.

Dunno. The total "indication" from those indicators leads me to think you don't know how to trade, rather than they "don't work".

Your never seeing a BLACK SWAN does not mean they do not exist.
There are also volume indicators.
I agree with you that trading can be simple and on the "personal twist".
Cheers!

Silly argument - not seeing something has nothing to do with it's existence or not.

A Black Swan is not an indicator, it is an unforseen event. Like a broker going bust, earthquake, or someone with a fat finger pushing
the wrong lot size.
Markets can be exploited at the right times with any strategy. You have must "own" your strategy.
What works for you may not work for the next trader using exactly the same method.

As a matter of fact, the losers in forex are not even 95% as stated by the novices. In between 99.95% and 99.99% of all retail traders are net losers. Maybe, the ratio in between the losing and the winning trades, on average, at any given moment is 25% winners and 75% losers, but at the end of the year, not to speak about the end of the second and third years, the retail traders are net losers.

Those working at the LPs are quite well aware of that fact...

And if you wonder why there are events like SBC on 15 Jan 2015 and the pound dive recently, as well as the euro spike few weeks ago, it is because of that! The LPs are b-booking like crazy! Almost everyone, after 6 months of live trading, gets knocked down! They know it and NOT SENDING the losing retail traders money to the market makers! So, it is Capital Punishment for LPs and brokers for stealing money from the bankers.

Recently, they start blaming it on the Asian frequent trading systems. What a joke! If the marker makers want the price to be steady, noone is able to do anything to confront with their desire. And if they were not involved, why the spread was 100-200-300 pips high at the recent GBP flash crash? How about the spread on 15 Jan 2015?

Asian frequncy trading my ass. GBP flash crash my ass.

It is the greedy LPs and brokers that are stealing from the bankers, because 99.99% of all retail traders ARE NET LOSERS... and they b-book them!

Now you can put me into the novice traders team, Mr. dkrock...

I agree.

[quote=cat;9400604]{quote}.....Traders do not lose money because they are gamblers, they lose money because they risk their money before they have learnt the necessary skills needed to profit consistently from the markets. It is that simple. With gambling, you will lose even if you know what you are going, or think you know what you are doing, because it is set up that way. With trading, you will lose if you throw yourself at the markets before you have the knowledge and experience required, and lose everything if you risk more than you can afford. So for me, that questionnaire is meaningless. Trading should never be about putting on a position and praying it will go your way - that is gambling I agree, Trading is putting on a position with certain tried and tested parameters that you know put the odds firmly in your favour....../quote]

I agree for the most part of what you wrote except for the distinction when a position taken is a gamble or not. And that is measured by what the trader knows and does not know, it's a personal thing.

If over a series of transactions it resulted in a net loss that did not fall within the trader's expectation in any dimension, it must mean that this set of transactions executed based of whatever method employed on the prevalent market is out of scope with the trader's current knowledge level which makes these transactions as gambles and this trader gambled.

Every trader knows this about themselves. The point is does he/she acknowledge this lack that he/she is behind the curve ? Majority of the people don't and that is understandable where our ego stands as a huge mental block that prevents this little step to make themselves right with the market. It's a simple "I don't know" or "I don't really know" whichever he/she prefers that mean the same thing.

So long as the trader is in this state of "I don't know" the transaction he/she executes is based on hope and this makes them gamblers no matter the trade finishes in profit or otherwise

Otoh a trader executes a transaction with parameters within the scope of his knowledge and does not exceed it's boundary. He exits his trade whenever the prevalent market condition is outside of his scope. That's a trader who does not gamble. My $0.02.

I'm in trouble as a trader?

Oh yeah, absolutely! But it's not just me, WE are all in trouble! Let me tell you why.

(You know the saying? - On a long enough time line, the survival rate for everyone drops to zero. ) Guess what? It's true! Statistics, probability theory and academic research confirms this. No one can win in a negative sum game for an extended period of time..

That's why the bucketshops today are popping everywhere like mushrooms after the rain.

Don't get me wrong, there is money to be made with trading (still), but definitely not the way 99% traders (try to) do it.

Do you know why and how the big guys made money? You know, the guys who traded on the floors (many years ago). The guys described in books like "Market wizards" and so on....They made so much money because they had real edges! Unlike us!

First of all, they pay very small or no commissions most of the time, and they didn't pay the spread - they earn it!
Because they acted as market makers at least 50% of the time they buy at bid or sell at offer!
Also, back then the spreads were a lot higher.... so you could make a living by just earning a few spreads per day.

Second, they had huge speed advantage! Because they were at the floor, before electronic trading even existed, all trading had to go through the trading pits on the floor. So when new information was available, they (the locals) were the fist to act on it. The outsiders didn't have a chance.

Third, they had huge information advantage!

I mean, just think about it! Can you imagine, having in front of you all this information?
To be able to see all the big orders(coming from outsiders) and hitting the market, to know where the stops are, to be able to see what the traders around you are doing...... you know who is winning , who is losing....

With this information you can front-run the market all day long. And that's what they did!

These guys have not even heard about technical analysis! Because technical analysis is meaningless when you have insider info in your hands.

Now, can you guess how many of these floor traders (and market legends) , continued to make money when(after) electronic trading became popular?
Almost none of them! Because with electronic trading they lost their edge and became outsiders like everyone else.

Electronic trading over the internet essentially killed the floor traders and the telephone and gave birth to the new the batch of "Market wizards"!
The screen based traders! (like us)
We had the advantage for a while ( by reading patterns previously not seen by anyone), but this is coming to an end now.
The advancements in software in the last few years, essentially make the manual screen based trading obsolete.

The new kids on the block are the HFT guys!
The HFT guys today, do exactly what the floor traders did manually in the past, however today they do it with the speed of light, thousands of times per day, 100% automated.

But the competition today is very high, the technologies are evolving super fast, and as a result, the days of the HFT guys are numbered!

The next new kids on the block are going to be AI (artificial intelligence) guys!

It's not far the day when extracting real alfa from the market will become impossible.
The market eventually will become almost impossible to trade profitably manually. Academic research have confirmed that market efficiency is increasing over time.
This is changing the structure of the market!
What this means?

It means that the random component in the price action begins to approach 99%, and the technical patterns have no statistical value anymore.
Technical analysis begins to lose its effectiveness!

The AI bots in the near future will exploit all market inefficiencies faster than you can blink.

Do you want to know what the market of the future will look like?
The market will swing between two extremes.

1. 99% of the time - Very low volatility and slow movements + very high liquidity (practically impossible to trade profitably in such environment).
2. 1% of the time - Very high volatility and super fast movements + very low liquidity (practically impossible to trade profitably in such environment).

This it the market of the not so distant future! You mark my words!

So, yes! We are in trouble! The natural evolution is going to kill us, just like it did with the floor traders, just like it's going to kill the HFT guys.

One of my wife's friends works for a gambling anonymous government body and she told me more and more retail forex traders are seeking help.

Dear Alphaomega

Let us see things from a different perspective.
Markets of course change and so should we.
My goal in the markets is to make money. I dont care if I do it by trading EU or Coffee, M1 or MN diagrams and so on.
Below is the monthly diagram of my favorite stock Micron technologies, MU. (It was the first stock I ever bought in US markets).
I follow your posts and I am sure you are a very proficient trader.
Can you trade this diagram profitably?
I bet you can!
I can also and I use nothing. NOTHING! No indis, no formulas, just what you see in the attached picture.
I want to point out that I am not a Micron (MU) investor. I am trading the diagram below both sides, long and short.

Then who gives a s@#t about HFT!
As long as markets exist, nothing remains still and from the little corner of our own world, we can find ways to take our tinny share of the huge meals served every day.

Well for me at least it hasn't happened yet, my TA gives me the signals to enter and exit trades just as it has been doing for the past few years. My advice to anyone is forget what may happen tomorrow and concentrate on the here and now. No one has signed themselves into contract to trade the markets, and if the markets do somehow become untradeable in our lifetime, which I very much doubt, then we can just move on, as with any venture in life. If we all allowed hypothesizing to influence our actions of today, we'd never get anywhere.

So does this all mean that people who attempt retail forex are really bad at investing?

Im not surprised by the guys who have a go, fail and then go do something else. What surprises me are the people who spend every day on forums like this talking about how impossible it is.
They are the real losers in my opinion.

Have a go at something, business, property, stocks, forex, whatever. If it works out great. If not, forget it an dont on with life or your next project. Why dedicate your life to complaining about it?

The success rate of business too is very small, same with becoming a pro athlete. But for the ones who dont succeed i doubt they then spend the rest of their lives on blogs complaining about how its impossible and a waste of time and money (Yes Ｉm sure there are some).

Anyway, what im trying to say is to try something and fail and admit defeat is fine and in a way heroic. But to fail and then spend your time and energy on complaining about how everyone else too will fail is a true loser in my opinion.

This is exactly my point!
In the previous post i said : "Don't get me wrong, there is money to be made with trading (still), but definitely not the way 99% traders (try to) do it."
What i mean by that?

There are opportunities! (And you can always find new ones) But not where most people search for them.
The most popular markets (like fx) will dry up eventually! This is inevitable.......
The more market participants there are in a specific market, the more serious the competition becomes.
More competition = higher percentage of professional participants who are better then me and you in terms of skill, information, tech. equipment.....!
The consequence ==> all inefficiencies are eventually exploited in this specific market.

We will have to look beyond the popular global markets.
In the future, all professional individual traders(at least the ones who are smart enough) are going to leave markets like FX and commodities...... in search for new opportunities in the periphery.

Mostly stock markets in the small countries.
I am talking about places you've never heard of. Unknown, new companies, new startups.... ipo's..... This is the future for individual traders. This is where true market alpha will be found. All this just becomes possible now (and in the next few years). Thanks to technology we can access some very interesting markets which were previously not available to small traders.

Forex already is a dead end game for the most part......well, almost!
----------------------------------------
I personally already started this transition. (It's never a bad decision to be ahead of the crowd!)

You know what is amazing?

After 10 years trading forex (which is probably the hardest market in the world) i now find stocks to be very easy trade.
FX acted as the perfect training ground for me.
Some of my older strategies (they no longer work in fx at all) but work amazingly well in the stock market (especially with small cap stocks).

I still trade fx, but with much smaller size.
FX was a great market for day trading 5-10 years ago..... today it's very close to random.
Almost all of my previously profitable strategies no longer work.
The ones which still work, all have diminishing expectation per trade.
And it's getting progressively harder to find new profitable patterns....

The successful traders not only know how to make money,....but they also know when to quit !(before it''s too late)
When the time comes, the professional just moves on to better and greener pastures.

"I still trade fx, but with much smaller size.
FX was a great market for day trading 5-10 years ago..... today it's very close to random.
Almost all of my previously profitable strategies no longer work.
The ones which still work, all have diminishing expectation per trade.
And it's getting progressively harder to find new profitable patterns...." Alphaomega.

Then you are on Mars and I am on Pluto, because that's not what I see, experience or find. The patterns are still there, still identifiable, and the price, whether on forex or any other, still responds to my expectations enough of the time for me to be able to make a living at it. Week in week out, nothing has changed, so you are obviously doing something fundamentally wrong. Whether this holds true in the future is of no concern to me, neither should it be for anyone new coming into trading.

A snapshot of the Last 10 years EU Daily chart. 2016 has seen the market ranging, but this doesn't mean it has been any more difficult to trade as an intra-day retail trader. What worked in 2007 still works today, which is not to say that one doesn't have to constantly adapt to changing volatility etc, but the markets can be traded in exactly the same way as 10 years ago and I am sure that the same will apply in ten years from now. So whatever Alphomega is talking about, I for one disagree with his thesis, which is to say that forex is becoming more and more random and will soon be impossible for retail traders to trade. Poppycock!!