I would have to think that a good portion of the losers are those that "swung for the fences" for the competition, and uh, missed : - ) Trader 5of7 @ TheCollectiveFX.com
Above ...I would have to think that a good portion of the losers a ########################################### Competition reflect industry statistic - average account life by retail spot forex -45-60 days Retail operators can risk 1% of capital and have long account life,but not the profit ( use law of great quantities of retail operators) But decisive is -retail have not any advantage ################################ Advantage of very good casino roulette in Mone-Carlo with event game only 51.60 to 48.40 It is enough to make multiple mln $ profit ############################
Well, I firmly believe that there are other influences in the 90% failure number in the real world. Recently we did an experiment and wrote an autotrade routine that was a coin-flip strategy. Low-and-behold it was indeed a 50% 1:1 winner, just as you would expect. Which is better than casino odds which is something like 52:48 in the casino's favor. Here's where the odds begin to bifurcate from the casino/coinflip scenario. Brokers have the right (and we rightly give them permission to) if the market comes within 5 pips of your stop loss, they are allowed to take your stop. What this does is make a gray area. Just like the border between green spots in a roulette wheel, and the normal red-black spots. For traders and system developers this means we have to design systems that do not go into that gray area and design stops that are larger than we would like, or targets that are shallower than we like. A casino is black-and-white in that respect, or red-and-black (in roulette terms). If the ball lands in the red slot next to the green, they are not allowed to move it to the green. Brokers are allowed to do that. So our "green" zone must be wider, and our odds worse. I know there are lots of people that will call me an idiot and deny it all, but the sad fact is that the math is true, and the effects on our strategies are true, and the fact that brokers do it is true. We tracked it by running numerous strategies on differing brokers in demo accounts and live accounts and compared statistics from literally hundreds and hundreds of trades. I don't want to go to deep into it, but rest assured the software is in place, I've been personally offered the software to "install" into our little brokerage. It's not evil, it's a way for brokers to hedge their risk, but the effect on strategies is quite severe. The bottom line, I don't believe 90% of all traders should fail, I believe that number has been influenced by the forex brokers themselves. Trader 5of7 @ TheCollectiveFX.com
It sounds like you're suggesting brokers operate some form of individual pricing software depending on an individual client's position, and the evidence you have to support that allegation is a comparison of demo vs live quotes. Mainstream marketmakers don't operate like that for a number of reasons, not least the fact that quote manipulation on an individual basis would be too obvious and extremely easy to detect, and as MM's rely heavily on reputation the negative publicity would ultimately be counterproductive. Your experiment is unscientific and inconclusive. To have any sort of meaningful analysis you would need to make a clinical comparison of live vs live. It sounds suspiciously like a scaremongering sales pitch for your brokerage firm to me, and that says more about you than it does about your competitors!
Actually the software works from an aggregate perspective, knowing where the clustering of orders is and the market offered to the broker. It's an order balance thing. It's also critical to a broker in order to manage their risk and lay off counterparty risk into liquidity. Again, it's not an "evil" thing, it's critical for them to offer liquidity and reduce risk, it's just something we need to contend with as system traders. If you are a discretionary trader, not-so-much, but in volume as a systemtrader, so-much-so : - ) The individual thing (looking at YOU only) does exist, and isn't as popular, but the aggregate one is common, and is even used by the bank. Watching the bank feeds, why would a single bank drift, even if for a moment. There should be no reason, aside from their order flow and order balancing. No sales pitch, I don't really care in the end who people trade with (it's true we really don't care that much), but it was in fact offered to me. (The aggregate one). As for the scaremongering thing, we have the same debate all the time. It's like the cigarette smoking thing. People know the risks, and understand them, even the short term effects, and yet choose to still smoke. It seems when people cannot directly quantify the effects on themselves, a sort of "it won't happen to me" mentality takes over. Because the effects are unquantifiable and often indirect. Yet few people will drive their car on railroad tracks the wrong way as the effects are direct and quantifiable. There can be no denial of the risks involved. So I made the mistake I was supposed to avoid, which is not to engage in discussion of such things. As such, and as you pointed out, I shall refrain. Especially since there is no proof that smoking increases the risk of your demise. There is no proof that you took losers that didn't belong to you. So I apologize. Trader 5of7 @ TheCollectiveFX.com
Well it's hardly a revelation that marketmakers hedge their exposure on aggregate, I think that's standard business practice in the industry, as is streaming quotes according to their book and their liquidity providers quotes being streamed to them, hence the disparity between brokers quotes. There is nothing unusual or underhand about this, it's a fairly simple and straightforward business model and makes perfect sense when you think about it. The firms that (potential) clients need to worry about are the ones who don't hedge their risk, they are the ones who are more likely to fold and take your cash with them! Scaremongering has become common place because the principle is so simple and the intended targets are so gullible and so easily frightened. Manufacture a problem or danger, blow it out of all proportion, then come up with a solution and you're the best thing since sliced bread immaterial of whether the danger actually existed in the first place. Perfect! Bush and Blair had that routine down to a T! (No apology necessary, these are discussion forums )