This place has gotten really tired. Every thread is the same thing. One guy makes an inquiry and there's a bunch of people who, incidentally on a trading forum, will try to convince you why trading success is next to impossible. This place is utterly useless now except to discourage would-be traders.
^ I couldn't agree more. Granted, too many people get into trading for the wrong reasons. When you have low barriers of entry with the potential of 'making it big', it's a given that the failure rate will be very high (e.g. film, music) and the default answer should be "stay away". But if you really want something bad, you will do what it takes to make it work. The important thing is not just to work hard, but to work smart. The lazy people won't work hard, so they're never going to make it. The rest have to learn to work smart, that is focus your energy where it needs to be focused. Have no edge? Get an edge (probably most people have this problem). Have no discipline? Work on discipline, learn to be accountable. (most people have this problem + no edge). And so on and so forth. If OP is interested in systems development, no system is going to work perpetually. They all have hot and cold periods. The scary thing is that even random systems will have good profitability runs. Just try randomly slapping pre-made strategies in TradeStation - it's a great exercise. Now you know how some 'systems' get created and sold - somebody was tinkering and they created some curve fitted idea that perfectly describes what happened in the past 10 years. Tweak one or two parameters just a little bit, vary the slippage, or try it on a different stock/commodity/FX pair and the whole thing falls apart. Trading systems is sort of like investing in stocks, you do your homework, diversify, and then hope for the best. IMHO, if you want to buy someone else's system maybe it's better to simply invest your money with a CTA who runs their own black boxes. A legit CTA has a vested interest in developing/finding a good system because they want repeat business. Once you've done your homework and found someone who is reliable and puts up decent numbers, you're free to do what you want with your time.
Forex is fine. Trades the same as anything else. More trendy in my experience. Pullbacks more sloppy. Requires a longer term approach. Gauge trend off hourlies etc. Forex is great for two reasons. Leverage. And ability to hold overnight with no margin penalty. This game is all about letttin winners run. So if ur in stocks and futures the overnight margins can be problematic for greater then a daily hold period. Which in my experience is essiential to successful trading.
I also wanted to say I really hate it when people say stuff like "You can't make money in Forex, it's rigged, the big boys will eat you alive". I've heard that said about EVERY market there is, and yet there always seems to be somebody who can make money in those markets - that is somebody who's not a quant, who doesn't work at a major investment bank with connections to information, etc. So whenever you hear somebody say "You can't make money in market X because (of circumstances beyond your control)." that only means that THEY can't make money. Of course, there are different 'market regimes' where certain strategies are useless (e.g. trending vs ranging markets, or slow creeper pullback-less trends vs stair-step trends vs quick bursts), and markets with no volume are a waste of time save for options writers, but that is different than saying "it's rigged".
Guys, currency market is no different than other markets, of course it has its particularities but every market is special in its own way. Be it OTC or not there are pros and cons. What I don't like here is the leverage that some brokers are advertising. It is so insane and stupid to brag with 100 leverage! Depending on the risk profile I would say that a leverage of 10 should be well more than enough. The real issue is not the market itself but how much work you put in it. Of course is not enough to drop a few lines on the chart, add a few indicators, read on twitter some "fundamentals" and have a vanilla no more than 2% risk/trade and then call yourself... a "trader". You really have to flood your brain with information to have a chance at this. - If your system can be automated or semi-automated, how many of you learned or hired a programmer to code the system and then calibrate the parameters and stress it out of sample/new market regimes or generate new market prices based on a given model(even if it is a naive model) ? - How many of you use a complex enough approach to calculate your risk? Calculate that incremental Conditional Value at Risk figure for every asset in your portfolio to get a feeling about your exposure/diversification effect. Maybe scale it to a monthly portfolio figure and then adjust your nominal exposure to fit your risk profile. Forget about having more winning trades than losing trades. It is perfect fine to have 1% winning and 99% losing trades, but that 1% will cover all the loses and add a profit on top of it. No, not the spread is the issue. The retail spreads are more than fair. Regarding informational disadvantage, almost every bank issue some sort of daily/weekly/monthly report regarding their view on the market. Of course that they could be wrong but after reading a lot of macro(usually when you trade fx you need macro info) reports, you get a feeling. Also the economic calendar and the central bank press release are the same for everyone and for free. Of course you need to master their key words used by every CB governor to get a feeling about their monetary policy. Bottom line is that if you want to succeed as a retailer, you need to become a one man army or partner with other people and combine the knowledge. In terms of technology and access, the playing field is even enough for everyone. You can have API access to the market at almost no cost, this is a huge thing!
Well, it's obviously not untradable, but ... The realities of the market, and the available brokers, and the companies pretending to be brokers, and the way they do business and attract gamblers, the inexperienced, the uninitiated and the gullible, rather than "decent traders", predicate that there are an awful lot of losers. Counterparty market-makers who are pretending to be forex "brokers" (and have large numbers of customers who don't really understand the difference between the two - many of whom post regularly both here and in other trading forums) have learned, from long and successful experience, that the type of customer attracted by very high leverage is also typically one who has a gambling mentality, is seriously undercapitalised, has a delusional impression of how quickly he can become steadily profitable and to what extent, and is exactly the right fodder for a business model which depends on having a large turnover of customers who lose. Genuine brokers, on the other hand, obviously prefer customers who regularly win, as that tends both to secure their custom and to maximise the brokers' long-term commission incomes ... but the inexperienced majority of retail forex traders often don't use them, partly because they require far bigger deposits and don't offer the same leverage as all the scammy ones. In other words, the "untradable" part is broadly speaking a reflection on many of the retail participants rather than on the market itself. I don't think it's a lot more compicated than that, really.
There was a recent item about UK Regulators imposing limits on leverage for CFDs, too many were losing their shirts apparently. The problem is not the limits, it's that the dumb shits don't understand leverage and risk management. Protecting them from themselves is not the same as educating them.
Indeed, but "protecting them from themselves" is more or less the regulators' job-description, while "educating them" isn't?