Hello there guys, I've posted this same thread nearly a year ago in the Forex forum, but wanted to post it here again to get opinions from a wider trading audience. Id like to get some discussion on some various points of trading ( not exclusively forex ). -Profitabilty , terms of actual edge, spread/commisions , who you are up against. -How to tell if you have an edge, and do things such as Trend following, Price action, Key levels actually give you an edge. -Two conflicting types of Strategies 1. Automated / Objective : - I've read it aims to remove subjectivity/emotions from your trade - Eg. Use of back testing etc. To find a statistical edge. - Setups and whatnot. 2. Use of instinct or feel : - Argues, that trying to find a system is over simplifying trading for what it is, and hence those who search for the perfect system with out proper understanding end up in loss. Note: Two above are not mutually exclusive. -Market hours -Spot or futures -Comparison to other instruments -Hedging or outright Catalyst for this post is that it seems, most 'professional' and heavy hitters are in the futures market. Is FX no good, is retail trading a scam?
one will follow the other.....if more pros are in futures, spot will follow the futures....arbitrage will ensure that
that it does also with forex 24 hours it can trade all 24 hours which no Human can do. the disadvantage may be that trading is highly subjective and automation may not be able to make the judgment call as it were. both are obviously good
After being a very succesfull options market maker for years but couldn't do that anymore I gave daytrading forex more than quite of a try for over a decade. It never worked out over a decent amount of time. Neither did it for the other people I was trading in chat with that started with me around the same time. My options market making was almost a science where I was garantueed to make money almost every single day ... compared to that my forex trading looking back was just plain and pure gambling.
if it ain't broke do not fix it option trading is done in an exchange but in forex there is no exchange so the market makers can do anything and i mean anything to the market.
I can't add much to what I said here (which I know you've seen ). My perspective: it's an exaggeration to dismiss retail forex trading as a "scam", and there are (some) people making a living from it ... but by comparison with many other types of trading it's a slightly scammy industry. But what you have to be aware of, too, is that retail forex traders are mostly the least trading-wise, least trading-educated participants, that most of them are hugely undercapitalized for trading, and don't really understand what a "broker" is and imagine that their counterparty is actually a broker, they typically have very little idea how the markts work (including the one in which they typically imagine they're trading). There are really no entry-barriers at all. And for all these and a few other reasons, their overall success-rates are going to be very, very low. That doesn't in itself prove that it's a "scam". But undeniably, it's much easier for people to make money in that "market" by being a vendor than it is by trading, which means that a lot of the "information" people get and use and depend on is nonsense that arises from and for marketing purposes. (And forums like Babypips and ForexFactory also collectively do some damage to newbies' prospects, in my opinion, by being full of a bizarre mixture of stealth marketers and ignorant self-aggrandizers.) The participants in the counterparty market-making world of "spot forex brokerages" are characteristically and representatively in business to fleece their typically undercapitalized, typically relatively ill-informed, typically naive, typically gullible victims ... excuse me - of course I meant to say "customers" ... who also typically have wildly unrealistic expectations of what they can achieve and within what kind of timeframe, combined with (you guessed it: "typically") a very distorted perspective of what the word "broker" means. And that does all tend to make for a pretty "scammy industry" ... and to that extent, there's something in what you say.
Just my 2c on removing emotions using automated trading: After I went through a lot of podcast and read a lot of threads on the subject, I became sure that it actually doesn't solve the problem. You still need to decide whether something "does work" or "doesn't work". You still need to adjust algorithms which is highly subjective by itself. Yes, it removes some pressure but not to the point of freedom.
you need a multi dimensional technique for forex. I added VPA to my technique and my trading improved hugely. You need some fundamental knowledge also: here it differs from stocks or commodities. Day trading forex is the most challenging but after 10 years i am getting better. the other thing is leverage:i used to get what i thought was huge leverage and that itself was dangerous, in stocks and it was 8:1 in forex i am using like most retail, 500:1 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! and most retail including me have no idea what trading is all about. Not surprisingly we are thought of, and look like a, sitting duck to most market makers
It may be interesting to find the source of this problem. I feel that it comes from a low barrier to entry. Countries that banned undercapitalized/unprofessional trading immediately jumped on the list of percentage of profitable Forex traders. If somebody eventually lower this barrier for stocks, adding 1000:1 leverage as well, you will immediately find people banishing stock trading.
I completely agree: there are really no entry barriers to retail spot forex trading, and the leverage widely offered lends itself to "get rich quick" marketing and mentalities.