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Forex - A negative sum game for losers

  • #81
  • Mar 27, 2017 4:30am Mar 27, 2017 4:30am
Quoting TGS
{quote} Okay, I'll wear the tin foil hat if there's actually an association between the two. But someone with the free time would first have to create a record of both to be analyzed so that it's not superstition.
Better get you tin hat ready and yes I insist on a picture of you in it!!

http://www.socionomics.net/2011/09/a...le-and-stocks/
  • #82
  • Mar 27, 2017 4:32am Mar 27, 2017 4:32am
Quoting guybaker
{quote} Yeah I also find throwing chicken bones into a courner and studying the pattern produced a useful guide to trading
Damm that's crazy shit. The sun happens to be our biggest and closest star responsible for virtually all life on earth. Changes in its output are key in human activity. The Mayans knew it too.
  • #83
  • Mar 27, 2017 4:38am Mar 27, 2017 4:38am
Quoting Hurst
{quote} Damm that's crazy shit. The sun happens to be our biggest and closest star responsible for virtually all life on earth. Changes in its output are key in human activity. The Mayans knew it too.

Oh yeah I was forgetting about those really successful traders the Mayans

Lets assume you are right and sun spots affect human behaviour (so does the weather by the way) what exactly do you propose doing with that information?

I'm sorry I don't want too sound dismissive, but really, these blanket assertions with no scientific basis are worthless in trading and frankly every other aspect of life apart from charlatanism.
I live entirely from the growth of my personal trading account
  • #84
  • Mar 30, 2017 1:49am Mar 30, 2017 1:49am
Watching a training video on a Bond Chart yesterday (which I donīt trade), compared the data with my brokers.ī data and chart.
The video was showing a clear elliot wave 2 on the dayly chart, but my brokerīs data shows the wave 2, going exactly 2 pips below wave 1, which means: any study gets distorted, AND obviously my broker takes the real data from the US futures, manipulatres it,and runs their clients stops...
OK, the broker just needed to skew a few pips (canīt make it too obvious right?), but it was a daly chart.

AND, it is legal!

Itīs like going to the casino, play roulette, your number gets hit, but before they pay you they tilt the table, then YOU PAY.
  • #85
  • Edited 9:12am Apr 4, 2017 8:17am | Edited 9:12am
Quoting brokerhack
The problem is the broker fees. It is not that the 1% are winning what the 99% lose. Check the statistics and scientific publications. http://www.amf-france.org/en_US/Actu...f-7d4700ff37e3
true. even a break even trader produces losses by other traders with 30% of his balance. simple math helps that 85-99% of people have to lose that some people can win and some have breakeven and some have small losses. this cant change, will not change and is nothing something needs to worry. its in this market constructure not possible different way.

but its never ever a negative sum game. always a zero sume game. the broker is a market member too, dont forget this. without this fact you come to wrong results.
money is only changing hands, perfect zero sum market.

if you are in the 1-5% winners, the 10 % breakeven or the 85% loser you decide by your knowledge in math, your experience, your trading strategy (but this is in general more a question of intelligence and math knowledge and experience), diszipline and living in reality/dont dreaming. there are not often businesses that can kill all your money and even more then you invested , if you play it wrong or do one bigger mistake. i have so many seen in many years, people lost all and more they allready had and need to be insolvent or complete hate their trading life by simple using no SL, playing martingale,use a lot of margin in hedge trades ( hedge trade by its own is stupid by math, you only pay a fee and have a higher risk for some more easy visibility to have splitted trades), use to much margin/overtrading, dont calculate how their own trades change market (doesnt matter at starting), concentrate more on going in then going out, play with bad brokers, read to much!, dont stick to systems (allways change systems because they saw one stupid trader with martingale or no SL or high risk trading got some percents more... and they compare it to own results), use profit as calculation for rest and not drawdown as calculation method for rest, speak to many people and are not sure about their own analyses any more, let there money trade by managed accounts (most only using stupid martingals, even in mq5 near all), dont learn basics of math and market, try to be best trader of the world, search a mentor but dont listen to him, dont find the trading time that is good for their health and familiy life, pay any internet coaches or course, belive in stupid people telling dreamings and selling bullshit, dont invest in stable computer and connection, calculate their monthly income as trader or worker (you should only trade full time when you earn 10 times more as a trader then as a worker, only when you dont like your job or you see the possibility that you reach this 10 times target you can break the rule and start earlier but never ever before you get at least double time the working income, dont accept changing markets, ..... its such a endless list, i could do this for many sites. dont compare is one of the most best things you can learn, to be sucessfull and happy with oyur live, dont compare is not only a rule in trading, is to be used for whole life for get very happy. there will be allways one who is faster, stronger, richer,... and so what.... then this person has other areas where he wants to change with you. do your thing, live your life.
  • #86
  • Apr 8, 2017 1:22pm Apr 8, 2017 1:22pm
Quoting brokerhack
{quote} The broker is not a market member You can see the example at poker. Two poker players at the same skill level play against each other. At the long run both player will lose all the money to the casino. (Because of the ante etc.) But I do not want to claim that professional trading or poker is not possible.
it is, your example is not usefull. there is one forex market, its a zero sum market when you put in all market members. there are members who trade and people who connect the traders for you (and get payed for it with money inside this market, you pay for their advantages). you could also go and change your money in real with someone, needs lot of time and you know the rest. if you hide all possible market members you cheat yourself and come to useless result, even to the result there is a negative sume game in forex, what in true is a zero market game.

you dont need to use brokers, you can simple change your money by hand with all people, if you have time. then you dont pay this fee. same like playing poker in private, you dont need to go in a house with rules that there are fees in each round. you simple use a service (broker, casino in your poker example,.....) that you find a bigger market, can trade faster, more easy to do all, more secure,........ and so you pay for it. like in all markets. so simple is the world.

you always need to see the whole picture, not only a part of it, or the result will get wrong. same with math by trading.
  • #87
  • Apr 8, 2017 2:02pm Apr 8, 2017 2:02pm
Quoting dukas_trader
{quote} it is, your example is not usefull. there is one forex market, its a zero sum market when you put in all market members. there are members who trade and people who connect the traders for you (and get payed for it with money inside this market, you pay for their advantages). you could also go and change your money in real with someone, needs lot of time and you know the rest. if you hide all possible market members you cheat yourself and come to useless result, even to the result there is a negative sume game in forex, what in true is a...
"you simple use a service (broker, casino in your poker example,.....) that you find a bigger market, can trade faster, more easy to do all, more secure,........ and so you pay for it."

Great Analogy Dukas_Trader...
  • #88
  • Apr 8, 2017 2:04pm Apr 8, 2017 2:04pm
Quoting dukas_trader
{quote} it is, your example is not usefull. there is one forex market, its a zero sum market when you put in all market members. there are members who trade and people who connect the traders for you (and get payed for it with money inside this market, you pay for their advantages). you could also go and change your money in real with someone, needs lot of time and you know the rest. if you hide all possible market members you cheat yourself and come to useless result, even to the result there is a negative sume game in forex, what in true is a...
"same with math by trading"

I have been meaning to ask many time. You focus on a key theme that trading can be easy if one were to trade it like a game using mathematics.... Could you please elaborate more...


Thanks
  • #89
  • Apr 8, 2017 5:57pm Apr 8, 2017 5:57pm
Quoting dukas_trader
{quote} it is, your example is not usefull. there is one forex market, its a zero sum market when you put in all market members. there are members who trade and people who connect the traders for you (and get payed for it with money inside this market, you pay for their advantages). you could also go and change your money in real with someone, needs lot of time and you know the rest. if you hide all possible market members you cheat yourself and come to useless result, even to the result there is a negative sume game in forex, what in true is a...
Man, you nailed it. I was a professional online poker player until the US took that away. Went to forex and now they are doing the same. Doesn't matter if you're supporting a family with the additional income, if it doesn't benefit the government it's a no go. Anyway, back to your post....the ante in poker, as the commission in forex is part of the cost of doing business. It comes out of your profit, but those with skill will ALWAYS make money at both, and that money will come from those who have a lower skill set.
  • #90
  • Apr 8, 2017 11:43pm Apr 8, 2017 11:43pm
Quoting aaven
{quote} "same with math by trading" I have been meaning to ask many time. You focus on a key theme that trading can be easy if one were to trade it like a game using mathematics.... Could you please elaborate more... Thanks
i cant say where to start and where to end. all is math, nothing is not math in this business.

- there are simple math calculations, like calculating your lot size in ratio to your drawdown parts you calculate in backtest, recalculate to correct drawdow by manually adjustment, your diversification with other strategies,....
- there are more complex math calculations, for example the minimum deviation for trading amounts and behavior of own strategy changed negative by traded this amounts (its not necesarry to do it in the first years most of the time) or market behavior calculation

its really not so easy so to answer this question, this could be an endless article.
if you calculate something wrong or miss some informations inside your equation, you get the wrong result. and wrong results comes often to high risks in trading or high opportunity costs.
  • #91
  • Apr 9, 2017 3:12am Apr 9, 2017 3:12am
Quoting dukas_trader
{quote} i cant say where to start and where to end. all is math, nothing is not math in this business. - there are simple math calculations, like calculating your lot size in ratio to your drawdown parts you calculate in backtest, recalculate to correct drawdow by manually adjustment, your diversification with other strategies,.... - there are more complex math calculations, for example the minimum deviation for trading amounts and behavior of own strategy changed negative by traded this amounts (its not necesarry to do it in the first years most...
Thanks Dukas_Trader for taking the time.

"for example the minimum deviation for trading amounts and behavior of own strategy changed negative by traded this amounts or market behavior calculation ......"

How are changes in market behavior, strategy affected by changes in Trading Amounts?

Could you please elaborate more on the above if possible with an example.

Thanks
  • #92
  • Apr 9, 2017 7:41am Apr 9, 2017 7:41am
Quoting medici
{image}
As she went away, the fox remarked, 'Oh, you aren't even ripe yet! I don't need any sour grapes!
  • #93
  • Apr 9, 2017 8:07am Apr 9, 2017 8:07am
Quoting aaven
{quote} Thanks Dukas_Trader for taking the time. "for example the minimum deviation for trading amounts and behavior of own strategy changed negative by traded this amounts or market behavior calculation ......" How are changes in market behavior, strategy affected by changes in Trading Amounts? Could you please elaborate more on the above if possible with an example. Thanks

market behavior calculation was listed as second example for a more difficult math calculation. it is for analyse the market whats special in this market and will come often in this market.

strategy affected by changes in Trading Amounts:
if you create a strategy by an chart formation or anything calculated from price (chart, indicator,....) this strategy is created by prices that was without your trades in the market. when you trade you are important for this price of this currency in 2 points: time you go in, time you go out (by SL or takeprofit or opposite position for netting). you are not inside this strategy you trade when you created the strategy or backtest but you are when you use it and you need to calculate your effect to this strategy (if neccesary only, for small trading amounts or longer timeframes it is often not if you dont trade very small exotic pairs).
if you trade high volume (and its different from currency to currency what is "high") or if you would trade public and people follow you (its same like trading very high volume) you change the price and so your strategy will change because its calculated to the price. its a circle. you need to calculated out of the price your own effect or when its to much reduce it to best working deviation between strategy starts working less good and trading amount possible. its really not easy calculation, because you need many data for this. but for most it is not many important. it will be much more important when you start trading many years with good results, when you trade many smaller currencies or exotics, trade with many followers, trade short timeframes........
  • #94
  • Apr 10, 2017 1:24am Apr 10, 2017 1:24am
Quoting dukas_trader
{quote} market behavior calculation was listed as second example for a more difficult math calculation. it is for analyse the market whats special in this market and will come often in this market. strategy affected by changes in Trading Amounts: if you create a strategy by an chart formation or anything calculated from price (chart, indicator,....) this strategy is created by prices that was without your trades in the market. when you trade you are important for this price of this currency in 2 points: time you go in, time you go out (by SL or...
Dukas_Trader

Really Thanks for a great explanation....

1. Just to confirm:

Even if the system is based on Fundamentals or Price/Chart Formation or Indicator Based, We can minimize or eliminate the effects of price deviation that occurs due to the trading amounts by Trading Longer Time Frames. Correct?

2. Traders have a some way to go before their trading size/amounts is such that it can effect prices. Out of curiosity, what would be a rough figure in terms of lots that price does actually starts showing deviation (or) there could be liquidity problem using say a reference of longer time frame like 4HR,Daily etc...


Thanks
  • #95
  • Apr 10, 2017 7:45am Apr 10, 2017 7:45am
Quoting aaven
{quote} Dukas_Trader Really Thanks for a great explanation.... 1. Just to confirm: Even if the system is based on Fundamentals or Price/Chart Formation or Indicator Based, We can minimize or eliminate the effects of price deviation that occurs due to the trading amounts by Trading Longer Time Frames. Correct? 2. Traders have a some way to go before their trading size/amounts is such that it can effect prices. Out of curiosity, what would be a rough figure in terms of lots that price does actually starts showing deviation (or) there could...
1. trading in longer timeframes reduces the effect a lot, because you have much more time to come in the market, only the going out the market can get the problem in fast moves.

2. yes, you dont have to think about this fact in the first years. you can get this level fast if you trade some smaller markets like futures in currencies (fx spot is so much more volume then future market), you trade very small timeframes, you trade very protitable, you trade in very small exotic currencies (fastest will be all together of course). also it is not possible to say, when your trading amount will have a effect in what dimension to your strategy in a special market with special trading amount, because it depends also to a big part to your strategy. dont do this kind of calculation until you really need it, its really not easy. it was only an example for difficult math calculation in comparing to an easy.
  • #96
  • Apr 10, 2017 9:53am Apr 10, 2017 9:53am
Quoting dukas_trader
{quote} 1. trading in longer timeframes reduces the effect a lot, because you have much more time to come in the market, only the going out the market can get the problem in fast moves. 2. yes, you dont have to think about this fact in the first years. you can get this level fast if you trade some smaller markets like futures in currencies (fx spot is so much more volume then future market), you trade very small timeframes, you trade very protitable, you trade in very small exotic currencies (fastest will be all together of course). also it is not...
Thanks Dukas for the great guidance. It is really helpful to know what to expect...
  • #97
  • May 18, 2017 7:49am May 18, 2017 7:49am
As usual some wannebe traders distracting the real picture... so to set it straight again:

http://www.amf-france.org/en_US/Actu...angSwitch=true

France / 2014 / CFD Retail Trading / 13224 Traders

89% of all traders lost money over a 4 year period
They lost a total of 175 Mio Euro
The average loss was about 11000 Euros
Most of the accounts were gone within 4 months

Only 1575 traders made a profit / total combined profit was just 13.8 Mio Euro
In the view of a retail customer this means 92% of your loss goes into the brokers pocket - 8% in those of successful customers

Additional thoughts:
Keep in mind this group includes all real business hedgers with no underlying speculative motiv too...
The number of successful retail speculators with a regular trading activity is most likely much smaller!
After a five year periode of active speculative retail trading on a regular basis, only about 1% is in profit
0.2% survival rate can be explained just by pure luck even if everything is purely random

That is the reason regulators do take action to prevent the public from forex retail brokers. The financial harm they cause is clearly visible in these numbers.

BAFIN 2017:
https://www.bafin.de/SharedDocs/Down...20F5E.1_cid298

A global negative balance protection would be very useful. Nobody should be able to gamble away something he does not have in the account or be ruined in case of a black swan like the SNB event. Brokers would have an interest to make sure their systems work, liquidity is sufficient compared to leverage they offer or otherwise they are out of business very fast. A good consequence of that would be that leverage is dramatically reduced < 10, even better < 5.

More countries will follow and furter restrict CFD's and binary options.
That's a good thing, because it can only get better for retailers, if regualtions are much stricter than today.
  • #98
  • Dec 8, 2017 10:37am Dec 8, 2017 10:37am
and here we go .... another nail in the coffin.

Canada bans binary options

https://www.timesofisrael.com/canada...o-follow-suit/

The same will happen to retail forex. Probably not with a complete ban but with a drastic reduction in regards to leverage. More an more regulators will adress that problem, despite all the lobbying and marketing money spent globally.

To all regualtors.... a leverage of 5 is far enough, above it's just gambling.

So gamblers, enjoy the last years of CFD forex gambling.... why not with betting on BTC, the mother of all bubbles, where the worst of this industry is now all gathered for an epic rip off.....once again. Watch out for your stopp losses getting triggerd by nice spread widenings, wash trades, your brokers getting hacked and maybe your BTC's getting even outlawed and you watch that sh...t plunge to it's intrinsic value - Zero - while your broker plattforms are getting freezed and you can't do nothing about it than just stare at your screen and wait for your brokers call to cover your negative account balance.
  • #99
  • Edited 10:41am Jan 29, 2018 10:20am | Edited 10:41am
Allways the same essential questions pop up:
- How effective is the forex market?
- To what extent is price random, very close to random or even from time to time non random and therefore predictable
- Is skill and knowledge the reason why some traders outperform others and to what extent can this be attributed to luck.

To keep the dream alive, the forex retail industry deploys huge amounts of money to convince newbies that it is a question of skill and knowledge that will enable you to become one of the very few "consistently profitable" traders. The evidence is showing the same picture year after year that such spieces are extremly rare with only anectotal evidence that they even exist if they regulary trade over a periode longer than 5 years.

The following paper provides insights into this topic. I question some of their data quality, because some of the data he uses is from myfxbook. I analysed such data myself and found with very little effort several suspicious live accounts with trading data that can't be real if you check it on a trade by trade basis. Some guys seem to have found ways to fake data and hijack the plattform as a shady marketing tool to lure in new victims. Wheter they found a way cheating directly the data interface between the broker and myfxbook or whether they are collaborating with shady brokers or within PAMM accounts couldn't be evaluated. Some of them even admitted openly when confronted with the evidence that the stats are wrong and called that "frustrating", while they where still promoting their system with these faulty results.....

The Retail FX Trader: Random Trading and the Negative Sum Game.
Christopher J. Davison
Nottingham Trent University, UK
January 5th 2016

The following points are of interest:

  1. the percentage between winning an losing traders over relativly short periods of time is approx 20/80
  2. within a 3 month periode it is already about 35/65, not including accounts that have been closed during prior quaters (CFTC data is haevily distorted pro brokers). If these are included, the ratio drops to about 20/80 as seen in the other sources
  3. Are profits due to the knowledge and skills edge that some traders have? If you were to hypothesise the premise that circa 20% of traders have the requisite edge in skills, then the profile of results you would see should include a small group of profitable ‘knowledgeable winners’, a larger group of unprofitable ‘less skilled’ traders and a final group, so poorly skilled, that have lost all of their trading funds. Whilst we do see this three way split when analysing the trader profitability data, we also see a similar profile when looking the random trading scenarios.
  4. The striking similarity in average trade profitability between the results in the two year Heimer – Simon study and those from the random simulation and mathematical modelling
  5. A random trading model with a binominal distribution including the effect of spread (risk/reward ratio of 1:1, probabilty for each trade 50%) does replicate the broker data amazingly well.
  6. It cannot be concluded that the FX market is a random walk and there is no edge to be found, only that, for the retail trader, the market is a negative sum game and that random trading or the trading of a random market would produce similar results to those observed (in the skilled and knowledgeable group)
  7. Overall the results are consistent with a random trading model, within which might be hidden a small element of ‘skilled – knowledgeable’ trading, however the models suggest that random distribution effect is far greater than this ‘skilled – knowledgeable’ impact. Whether the ‘random’ effect is due to the nature of the FX market (the random-walk theory) or the net effectiveness of the retail trader would require further research to establish.


With this findings the final conclusion in the paper is:

  1. This research highlights the risk of a significant (greater than 80%) overall account loss is around double that of achieving (even small) profitability (within a period of just 2 years).
  2. A new trader should therefor ask themselves where they are going to acquire this edge from given that demonstrably the vast majority of retail market participants would appear not to be able to benefit from it.

  • #100
  • Edited 11:59am Jan 29, 2018 11:05am | Edited 11:59am
Quoting HudithePfupf
Allways the same essential questions pop up: - How effective is the forex market? - To what extent is price random, very close to random or even from time to time non random and therefore predictable - Is skill and knowledge the reason why some traders outperform others and to what extent can this be attributed to luck. To keep the dream alive, the forex retail industry deploys huge amounts of money to convince newbies that it is a question of skill and knowledge that will enable you to become one of the very few "consistently profitable" traders....
i would say the most reason why traders fail, is not learning the trading step by step.
you can lose in the market by doing so many things wrong, even with correct strategy you can still lose, when only one important point is not correct done, that can let you fail on the end. so learning this basics is the most important point, and then of of course using it and build up experience in the market. step 1 and 2 need to be done. there are no shortcuts.

and basics are so much, not only build a strategy.

you are correct, in myfxbook you can cheat a lot, in many other places too, to produce a extrem good result. there extrem many ways to do so, most are not because of myfxbook,it is because the trader is a cheater and designs (trades) it this way or choose broker this way.

and you are correct, the broker industry is putting in money to let people trade more and teach them basics (unfortunatley only bascis of bascis of basics, so not even enough for survive, just for start trading). but broker dont need money for doing it. you will not know, how many broker and personla from it write in forums threads like "use this xxx strategy", "in xxx bar is this xxxxx percentage chance of price coming back/ in this xxx bars chance price will not close near open... ...",...... and and and.......all what bring people to think about something total easy (best describe it in total difficult way so it sounds not this easy what it is)... you simple need to spread out some ideas and often not even good ideas (total useless with not a chance to use are even enough), even stupid ideas, and people start thinking about and you want people start creating systems and trade. you dont invest much time, some post from time to time, bring maybe some pictures with win, you dont have to do much..... you can also invest time and create whole trading strategy that people follow, all what let people trade more and you dont have any risk with as broker.simple to do, because many people dont learn any basics and cant judge so and simple believe and really want believe. trading is for more a religion then math. you need people that they think they have missed this one good strategy, they did not found and they search thatswhy in forums... most dont know how to create and find own system and why only this works good).
but thats same like in any other business, since internet the marketing is so extrem easy and without costs in forums and rating pages.....
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