Forex - A negative sum game for losers

- I'm trying to further reduce risks (lower max drawdown, higher sharpe ratio) while maintaining reasonable profit factor. Besides that, as you've said, we have to constantly learn how to adopt to different market conditions.
- I'm amazed about how much new knowledge you get, when you read the same book (technical or fundamental) again after a few years of trading practice in between. Btw I only read books from people who are/were actual successful traders. There are so many book "trading gurus" out there who have never actually traded, it makes me sick.
- I've found out that most difficult part of trading is trading psychology. You have to become process not profit oriented. Good trade is also a trade that you lose if it was executed according to your trading plan (hell I lose 57 % of trades). This is the only way you can achieve repeatability over the long term. Developing and maintaining trading discipline never ends.
- My real leverage applied is around 3:1 or less. I found that 1 % risk per trade (max 6 % per all open positions-usually much less) is the highest % I'm comfortably willing to take. My equity curve is showing me that 2 % would give me much higher returns but my psych doesn't allow it. I like to trade stress free as I have found out I perform poorly under stress.
-I don't care about trading commissions and swaps (these are costs of doing business), I only look that spreads are not too high when I take a trade. I'm not a day trader. I average 3.4 trades per week, so trading costs are less important to me then safety of my funds (broker/bank reputation).

1. I agree.... the system is designed to make sure that retail traders are suckers.
2. funny to see how many still believe in the fairytales of retail forex brokers and the accompined industries like financial data providers, system sellers, trading gurus, singal providers, trading book writers, etc. etc.
3. but never underestimate the brain washing power of hundreds of millions marketing money to keep the myths alive.
4. this is how the system is intentionally designed, maintained, expanded

Thank you for these details. This is of value for FF readers and helps setting more realistic expectations.
The max leverage values, the risk per trade and trade duration make sense to me, especially because they do not represent an average retail trader with 2500 USD capital base, a gambling attitude and profit expectations of > 1 % a day.

Based on these numbers I think unless you trade with quite a large capital base (six to seven figure) you won't be able to achieve profits big enough to make a living from it. Further more the way you describe your trading style it's clear that your profits are mainly provided by retail traders trading with less capital, higher leverage and less disciplin than you do... they are the very bottom of the food chain.

However, in the waters you are forced to swim to catch these small fishes on a daily basis, there or far bigger sharks than you. They do have a chance to get you one day, because.....

- they know where you are, in which direction you swimm, how much energy you have left and even sell this info to others for additional profit
- they have highly developed, expensive radar systems to see through muddy water
- some have big data about almost everything relavant within the system they hunt
- some are much faster than you and catch the same prey you are hunting riskless by design

So your profitability is limited by design....

forex instruments are limited while equity /stocks are infinite . that's key difference.
why hedge funds keep away from forex ???

Thanks for the info.

Here is your answer why hedge funds pulled out of FX from FX Concepts, once one of the larger hedge funds in FX business:

"They were in an environment where central banking authorities and other policy makers decided to suppress volatility in the aftermath of the global financial crisis. You know vis a vis QE, vis a vis the suspension of mark to market. So we had suppression in vol[alitity]. Currency volatility fell to its lowest levels ever if you look at CVIX a couple of years ago. What ends up happening, you have the markets not moving, so pensions and those types of vehicles that invest in these products didnt see a need to be in FX overlay or FX type of alpha seeking strategies. It just didnt make any sense when you have a realized vol[atility] of 5% in G10. So I think that is what really undid them. Just the fact that vol[atility] just collapsed and stayed that way for a while."

I don't think the problem is with the propaganda machine that promotes Fibonacci, Bollinger Bands, etc., because in actuality, nearly all, if not all, of these tools are useful to some degree. I think the problem is that the majority of unsuccessful traders are using systems designed by others and, the user bloodpoodle says it best with his signature: "The only system that will work is one designed by and for yourself."

Dear Tom
Hi
it is clear that you are a good fellow and a nice man, but you are ignoring major rule in the forex space, this market is from outside a random and from inside is a well controlled market by the market makers.
who cares if average Joe is losing ? i will answer you, his family will being under pressure, he is trying to get extra money for his kids, but the people who are playing dirty in the forex market are f....king his trades to put food on his table.

Top 5 bank account for about 50% of the trading market share.
Top 10 banks accounts for about 80% of the trading market share:

http://www.euromoney.com/Article/355...-rankings.html

Basically even if you trade with a retail broker ( small or large, ECN or market maker ), your broker will place your trades or hedge ( in case of market maker ) with one of the liquidity providers like LMAX, Currenex or FXCM. The liquidity providers are connected to the top banks mentioned above.
So when you make a trade with your retail broker, it might be matched internally with another trader like you, or go to Currenex and matched with a trade from another retail broker, but most likely end up with Citibank or another from top 10 as the counterparty. If you win the bank will lose money.

Now let's see what banks do to make sure they don't lose money:

https://www.ft.com/content/23fa681c-...f-00144feabdc0
https://www.bloomberg.com/news/artic...-investigation
http://www.reuters.com/article/brazi...-idUSL1N1E30N3
http://fortune.com/2016/11/25/austra...aysia-ringgit/
https://dealbook.nytimes.com/2014/11...-scandal/?_r=0

That's just a few from dozens of cases when banks have been caught manipulating the market.

A more in depths analisys of how and why this happens:
Bankis are usually involved in forex trading in 2 ways:
-exchanging money for clients
-their own trading departments trading bank's money
Banks are forced by regulators to keep these 2 departments separate and not exchange information.
Case 1:
Let's imagine I am head of trading department at Citi working on the 15th floor. My colegue from the 17th floor, who is also my friend, I play golf with him every weekend, go to clubs and pick up women together, just receive an order to exchange 5 billions USD to JPY from Toyota, but he is not allowed to tell me that. However both him and me are paid by the bank depending on the profits we bring to the bank. Banks ussually exchange money for clients depending on the FIX rate ( rate of the day ).
So if I knew Toyota will buy on a certain day a lot of JPY which will drive the JPY up I will start buying JPY in advance, bringing the FIX up, and when Toyota start to buy I will start selling it all my JPY. This is WIN WIN for the 2 departments of the bank and LOSE LOSE for Toyota and average Joe trading with his retail broker that does not understand the sudden spike on USD JPY that go against the news.
Case 2:
Same situation from above but we don't have any large order from a corporation but we still want to make money for the bank
Remember top 10 banks accounts for 80% of market share in trading. This time I am on chat group with my friends who are traders for other banks like JP Morgan, UBS, Deutsche Bank, HSBC, PNB, etc. These traders are most likely former college friends, former collegues at other banks, we meet regullary at financial events and we probably play golf together every few months. Their goal is the same to make money for their bank. The more money they make, the larger their sallary.
If we put together our data we have a picture of 80% of orders on the market. And from here the manipulation of the market is open to wipe out all the money of retail traders with sudden spikes up and down with no apparent reason, or sustained races hitting all our stop losses, while all market indicators and news shows it should go the other way.
You think this not happen just google it:

https://www.ft.com/content/68c26cf6-...e-00144feabdc0
https://www.bloomberg.com/news/artic...king-fx-market

Again they have been cought a lot of times.

After such a market manipulation and unnexpected move, a trader from JP morgan or UBS will give an interview at CNN Money saying they were surprised too, but bla bla bla .... investors are not confident in economy of.... bla bla bla.

O course this does not mean you can't make money trading but is a lot harder. Is like playing poker while the adversary can see your cards but you don't see his.

You can end up with negative account too - many times bigger than ur positive account and broker will get lawyers to go after you- everyone should understand that.
Example you had 1k and you holding positions- market crashed - you owe 10k to ur broker

this was in reference to hedge funds in general, have minimal exposure to forex, compared to other asset class. that in fact should be clue.
"fools rush in where angels fear to tread'.

After many years of fights with the Forex space and straggling to survive in its dark shadows, I would like to say that, it was a real pleasure to trade Forex in all means as it is a very nice world of tears and joy, of fun and sadness and of fears and happiness.

Regardless the results I might have gotten through all these years of trading the Forex different markets, there is one thing I am sure of it now and I want to share it with you, that the Forex market is never ever a random one and yes there are forces are ruling and controlling its behavior and also directing the pairs prices to move either upside or downside and it will be a big lie that no one can control it, I am sure that there are different forces (joined or separated) are acting to develop a force to move it in their benefits..

Many Forex Guru Writers are showing the concept of neutral attitude regarding the Forex market and they are all writing in all fields regarding the Forex that it is at the end will aim to one point that it is random market.

Well, no it is not a random market.

i will prove it to you

many times the GBP pairs are moving while the traders are sleeping by x-men who are capable to move all GBP pairs 6000 points in 1 hour and on next day OMG many broken hearts and many zero balances account triggered by the margin call for retail traders.

i recall one case before few months back, the German ind. number.

all retaisl traders of the 90% were hoping that this figure will support their trades, as the expectations were showing 0.4 and the previous month reading measures were showing 0.3 ................. yammy good income will happen.

and all traders who are 90% retail were trying to push the pair all night by their small accumulated trading volumes of EUR/USD and they were trying and adding and trying....

but the 10% of the market makers were holding their breathes for the rally, and once the number is revealed , OMG it was -3.... yes minus 3 -------- WOW, the 10% players entered with 400 times volumes of the 90% traders .........and the market of EUR/USD moved 3000 to 4000 points to south in few minutes and i still remember ( as i was not trading bcz i had heart attack before few days from this incident ) that most of my friends lost their accounts or lost huge amounts of money due to the stop loss and due to this case.

It is a well established market that there are some real market players who are capable to move the market in some point to their side to gain.
Nevertheless, I decided to return back to Forex as a trader again to gain some cash for my kids schools and to pay some extra bills, instead of writing about Forex.

I saw before long time one software that it was being published by one market maker to trade its way, and this nice software will inform you that the Forex broker let’s say its name is x is pumping into the market in one shot some millions in a certain specific time from his traders savings in their accounts to push the market to its well fair benefits, the self-pushing mechanism found then is self destructing towards that direction for many small retail traders who will suffer huge losses and it will be also hurting some of his clients and we can tell simply on behalf of that broker that it was collateral damage for his clients…… all what I mean to say here, once this broker pumped the money in one deal, the other three or four brokers noticed his act through this software and may be they have stronger experts to sense the flow of money, and I saw it by my own eyes in the moment of truth that the other four brokers pumped near to trillions of dollars into the market in the same direction and wow, the market reacted by more than 5 to 6 trillion in their direction as a reaction ( each action has a reaction in the opposite direction ) but in the Forex market it was really against the gravity rules, the market moved with them many times….
To make story short, I lost in somehow that software as I was ignorant and I could not understand at that time the importance of such software and recently I have tried to download the same, but the broker has blocked this software from being downloaded by outsiders.

I decided to begin with small account balance and to see if I am still good, well yes truly speaking, I am still in my full strength to trade again in Forex market, but this time I have decided to use the support and resistance method in trading.

I have tried many types of trading strategies and most of them failed after sometime of success, but still the support and resistance theory acting well with me.
And I have decided to learn from my mistakes by adding the guru players into my new strategy, but I do not have the software, so I decided to use simple stochastic indicator as if it is my support and resistance guide.

Again, overbought and oversold are the levels to be watched out in this manner:

Overbought will be my resistance level to sell

Oversold will be my support level to buy

But, is not this what we all do? yes true, it is, but I have introduced more non indicator system I used it with the guru theory, that is only sell if the swap-short id greater than the swap-long, and vice versa, buy only when the swap-long is greater than the swap-short.

And I have said here only.

So, the time frame is 15 minutes and 5 minutes only…. Kidding, you can use any time frame.

The swap will show you the guru direction to sell or to buy.

I will show here an example:

ERU/TRY pair has positive swap on sell only, so I will sell only when the level of the indicator is above the overbought level area, I will not even think to buy.
Further, if the price goes against my trades, I know that at night the swap will make some profits in positive, while I am sure that the price will go back to touch the support level in the over-sold area.

It is a time battle with the Forex against the Forex Gurus. Step by step to develop some good balance to gain some compounding profits.
The system goes like this, once you open the trade, the profit should be equal to few pipes as per the time frame used to open the trade, if the trade was being opened by using the one hour time frame, then the profit would be larger than if it was being opened by 5 minutes time frame.

My advice trade on demo untill you you master it

That's exactly the case.

this thread is great , Forex - A negative sum game for losers - who are the losers, they are our friends and brothers and normal people are trying to get some extra cash to put good on their tables.

well, to use demo account.... .. come on man, you did not get the idea.

the effective strategy you will use today, it will not be effective on next day as the randomness of the market created by the gurus who are market makers will move the market in their favor.

so even if you use demo account, one day you will decide to go for real account and what is so ever your experience built in the demo account, it will be demolished on the real account....

all what i am trying to say is that, there will be losers on daily basis in the forex market and mainly these losers are people trying to get some extra cash not to become rich but to close some bills and some extra debts.

the real traders who have a lot of money in their accounts will not lose as much as you think, because they have the power to hire the best minds to work for them, they are having the most complicated software and the best fast servers to do the job for them in forex market ... not like you and me still straggling to build one strategy to keep gaining, and by the way, it happens that i know a real profitable trader working for financial company and as i do believe that he is making 10% to 15% daily of his account.

but he has the fastest server in the area, the internet connection is the fastest compared to our home lines, and he has 5 spare internet lines for emergency and he has at least 5 IT engineers and programmers to design and upgrade their built in software .

and as he told me, yes and i do trust his words, his company has at least 3 staff personal , and their main aim is to search the internet for any new ideas for trading the forex market and they translate these ideas to real sub-accounts with real money to trade these ideas on the real time... and FF is one of their targeted sites to absorb ideas and they develop these simple ideas of people like you and me to real trading strategies...

this is true, while you and i are trying to reach to one strategy to make some money, they are having hundreds of strategies built in thier systems and shifting in milliseconds between these systems to get the best trade signals...

but are they losing

wow, yes they are losing some trades, but they are making more profits from the other side trades.

the account of 10 million dollars can have 10% daily profit only from hedging hog strategy of one pair that is equal to 1 million daily... so if this acocunt is losing some trades here and their, the system is still making 1 million daily.

this is a real example of how the 10% gurus are moving the market while the 90% retail traders could not do the same

area A..... many red and green bars are meaning that there is a fight between the buyers and the sellers. the volumes are still small and there are not clear direction, but the PSAR indicator is still showing that the sellers is littler stronger. it took the pair more than 30 bars to move only 310 points

on zone area B, wow, the buyers now moved before the market to close bcz the retail traders now will close their devices and will go to sleep. it took the pair only 17 bars to move 500 points....

now, area C, is the common intersection between both, as you can see it has mostly very strong green bars bcz suddenly the PSAR changed its direction and this is meaning that the trend is changed.

do not forget that the PSAR is designed in the area of trend measurement.

this case will not happen as the brokers are not ignorant , all of them are writing in their websites and in their FAQ and in their advertisement blocks that, your account is well protected from negative balance...

if you lose you lose what you have offered only in your real account......

So much bullshit on this forum it is just out of control. Why do a bunch of losers have to tell if making money with forex is possible or not? I agree with the statistics, surely >99% of traders are failure in the longterm. So to get this straight - losers are paying the winners. If the 1% made 1 billion today, that billion comes from millions of losers that lost their money, not directly, but that is the end conclusion. Trading is representation of life in general. 90 out of 100 dont have the capacity to make it at the first place. The other 10 - 5 started well, but failed at some point, because of laziness, other problems, lack of motivation, intelligence, interest or whatever, really doesnt matter. The last 5 think they are starting to make it well, but bad luck comes at some point, or they walk with head in the clouds, plays a bad effect. Only 1 person finishes being successful in the longterm. Same thing in any field, probably in any part of the world. And in speculation it is even harder, because the competition is enormous and the rewards are larger than in many other fields. More money possible = more effort, less chance to make it and sustain it. If you dont like it, no one is stopping you from doing your day job, and letting someone else determine how much you can make this year, which will rarely compensate your true efforts.

There is no point for seeking for PROOF for millionaire and profitable traders. In any other business, I have yet to see even a single person to brag about his profits, go post it on forums with charts,statements and stuff and seeking the approval of people that are less successful. While there may be some way to know the profit of corporations or salary for a particular individual position and therefore guess about how much money a certain person has, in trading things are held anonymous for a reason, because a lot of money is involved. Big speculators hold it that way, small speculators like it that way, I also enjoy it that way. Regardless how much I make this year, what will be my first job, to come on FF and post my bank account statement to fuel further discussion with some unknown complainers that have forum nicknames?. If I make really large amounts, I probably wont be posting here at all, will have enough care to protect identity and my family and money. People are getting kidnapped and murderd for few grands , othersr are jealous when you have 50% higher than the average salary in town, so what do you expect, that someone is just going to spread information about his wealth, he will carefully prepare a real PROOF for some stupid haters and make a thread to post it? If you really think that way, I am no surprised that you cant make anything from those charts. In order to understand trading, you need to first understand other aspects of life.
There are many good opportunities that trading gives (to those small "1%ers"). You can make substantial money without having to make accounting, have employees, be wrapped in legal bullshit and business meetings from day to night.

At the end - you are perfectly right about the forex industry. It is fueled by losers, specifically marketed to losers, because they keep it alive! There are new suckers everyday, I was one of those suckers for many years, have made some small complaints here and there about brokers, when I didnt undertand shit, but I havent constantly bitched how unfair it is, just because I dont have a fckin clue how to really profit. Most here have the need to get a confirmation from others that

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yeaah, for real this forex tading is a scam! They promised us a lot of money, but somehow we just cant make it even after trying a lot, and the worst part is we are losing what we already have.

Yes you are, that is exactly what you are supposed to do until you eventually learn it.
In other professional fields, there is something very stupid called unpaid internship. In forex trading, things are one step further into the shit (of course ), you actually lose money to get experience. And to make it even worse, chances are that you are not going to survive longterm. Same goes for me. No one put a gun to your head forcing you to bet money at the markets, right?

People approach fx with the need and attitude for easy money, if they make it, they would be perfectly happy and say that everything is fair and others are losers, fx is the best, but because it happens to be hard and unachievable, the easiest path is to bitch about it for years. Wether or not profitable trading is possible, if you are losing in trading, the problem is within you, so do not look outside. Brokers, funds, teachers, scammers, all the players are here with the EXACT same reason you and I came - to make a lot of money.

TRUE
people are getting ripped off by manipulation, mostly in the form of stop hunting,either "hidden", stealth, or spread widening, news.

The smaller the time frame the more frequent.Areas where retailers have their stops work like "attractors", like the old pac man game.Almost every significant swing begins "fueled" by "retailer meat"being stop run...(they call it "liquidity pools").

Forex is indeed a money transfer, from the retailers , to the 5 big banks that control 70% of volume (you can Google the exact fugure).In between is the broker, who will get another small, but constant chunk.

Best chances are are a 100% disciplined, deeply studied, and backtested system, on higher time frames (preferably)...which keeps on adapting and correcting to new variables.
AND it must be ready to "absorb" even dayly and weekly spikes.

AND it´s true that the Big Boys have the best tools, algos, PLUS they have the privilege/advantage of seeing where are all the orders stacked.ALSO they have huge pockets to swing markets down or up to their advantage.The bigger the move, the more expensive f, that is why it´s easy for them to manipulate every 5 minute swing.

Know your enemy (massive), and understand your odds (very thin), before you even waist time..That is another thing, you not only loose money, but also time, which is much more precious.

Happy weekend to everybody, and thanks for this very usefull thread.

BTW: if the chances on every trade are 50/50, add spread, and Bingo, you have a negative sum game.

Samer1970
0-20% per month - very good result - above that you playing with fire.
If You get this consistantly with low dd- sell your signals - you dont have even invest ur money - you ll have hundreds of subscribers