i have been trading forex for 3 years. i have lost about 10k USD. i am slowly picking up where i came from though. however, i start to feel that forex trading is a form of gambling for the educated. it’s no difference from casino gambling. i foresee that eventually long run, forex traders will still lose money. you may be able to win now but it’s no guarantee of future success. i have mastered all forms of trading methods from technical to fundamental, in the end, it’s still guesswork that matters. although, it’s high probability but you still need to guess the market sentiment on the pairs that you are trading, double whammy. even if you combine fundamental and technical before going into a trade, your percentage of success is till 50 to 50. there is no way as i see it that there is someone who is able to master this forex trading at all. if there is, there won’t be many gurus out there trying to sell you their forex seminars.
feel free to add-on if you think otherwise. cheers!
The markets are a bit random but I don’t understand why you can’t pick and test a strategy that has a > 50% winrate and then be smart with money management to grow the account.
What exactly happens that causes you to lose 10k?
The most profitable strategies are those that you discover yourself… The more people know a strategy the bigger and more ‘viable’ it gets. The bigger and more viable it gets the more it lures investment bankers to notice the liquidity and take advantage of it, and if your going balls deep leverage and not 2% when that happens you will lose everything.
There are two steps to improve your trading (assuming your money and risk management are effective)
1-keep trying different strategies till you find one that you are comfortable with
2-stick to that one, and keep fine tuning it, as the markets shifts behavior.
If you do not make the jump from 1 to 2 it will be very hard to perform well. This is a bit similar to trying 12 different sports for a period of just one year. You can learn the basics yes, but it will be hard to compete against one who has been practicing and focusing on 1 sport, for a whole year.
There is a really good thread that I sought out for you, where there are lots of contributions (including a few FX-Honorary members) around the central question of whether forex trading tantamounts to gambling:
I think it is important to sometimes stand back and remember what Forex actually is. It is actually NOT just a grand battlefield where institutional traders battle it out with retail speculators just to see who is the smartest and who gets the richest. Speculators did NOT “invent” Forex as some kind of “gentleman sport” for the rich and educated.
Essentially, at it’s core, foreign exchange is the flow of funds from one nation to another based on underlying real transactions such as business sales/purchases and investments, and which both have different currency units. These flows are in both directions and it is (simplistically put) the net balance of these flows that gradually shift the exchange rate in one direction or another. Therefore rate movements are NOT, at their core level, a form of gambling.
However, most national authorities favour a free market rather than tied exchange rates and that inevitably allows speculation in its many forms and at many levels. This is an entirely separate layer on top of the underlying core foreign exchange market and THIS is the layer that generates the volatility, fluctuation and clutter in price action, and it is in THIS layer that most retail speculators are trading - and trading with money that does not even exist through leverage.
It is the very nature of risk/reward that bigger rewards usually entail bigger risks and therefore it is so easy to lose substantial amounts because positions are usually based on personal subjective and/or historical analysis, and usually on time frames that have no real relationship to the underlying true market whatsoever! Real underlying foreign exchange values between nations do not change in hours and minutes, not even in days or weeks come to that!
So one has to recognise what one is really dealing with in our trading market. It is a market where price action can zoom up and then immediately down and generally deviate beyond our normal logic in either direction due purely to speculative trading. However, there generally IS sufficient follow-through to generate profits on most TF’s if one has a method that is accurate both of entry AND exit (both target and stop-loss). It demands intense concentration and strict methodogy and (as someone mentioned already) regular tweaking to match changing market conditions.
How do you think the people who are successfully making their livings by trading forex, some of them very consistently for decades, are managing it, then?
Respectfully, and with no intention of rudeness or hostility at all, I strongly suspect that your real trading education may [I]begin[/I] only on the day you appreciate that that [B]isn’t[/B] actually so at all, Krafty. It’s going to be pretty hard for someone who imagines that he’s already [I]mastered[/I] everything to move forward.
I hope it’s not a mistake to jump in here, because I shudder at the thought of resurrecting that zombie thread on gambling. If that happens, I’m gonna blame it on you, Francesco!
Anyway, here goes —
Back in August, I saw an interesting article in [I][B]Futures[/B] magazine [/I] titled [I]Where Gambling Meets Trading,[/I] and I copied an excerpt from the article with the idea of posting it here in the forum. Then, I sat on it, dreading the return of the zombie thread.
But, now I’m going to throw caution to the wind, and post the excerpt, along with a link to the article —
Excerpt:
"…selling wheat futures is not a complex financial transaction to the manager of a large farm. The purpose it serves is to reduce the farm’s risk by selling a future wheat crop at a particular price today, thereby locking in a known price today.
The buyers wanting to purchase wheat in the future (e.g., bakeries that regularly purchase wheat from a grain elevator) also are reducing their risk of fluctuating wheat prices by buying the wheat today. Yet, because these futures contracts are tradable, they are often bought by people who will neither have any wheat nor want delivery of wheat when the contract comes due. [B]Most of these people are merely speculating on wheat prices, and their behavior is not discernible from gambling."[/B]
Just to weigh in on this topic, I agree with what most of the forum folks said on calculating the probabilities and managing your risk properly. Majority of forex traders DO NOT make it, possibly a result of a number of factors, but you can get an edge by conducting technical and fundamental analysis, working on your expectancy and going for good R:R trades, and managing your risk. This also involves reacting to market developments, pressing your advantage, being able to cut your losses, etc. At the end of the day, I think it’s a continuous learning process and that you have to keep building your educational/psychological skills along the way.
Its been almost more than 5 years of trading experience for me and i also have lost considerable amount of money like you. But this is not really gambling. If one follows proper money management rules in their each and every trade then even with 50% winning probability you can achieve success provided you follow a risk : reward ratio of 1:2 and higher.
Do not be disheartened, as quoted by great Dr. Abdul Kalam “suffering is the essence of success”.
i am a trend trader, normally coupled with fundamental to get into a trade, via traditional support and resistance, sometimes ema for dynamic resistance and support as well. there is only one leading indicator which i used is RSI. and i find that is still not fool proof enough. the toughest pairs to trade are eur and gbp pairs, these 2 are very erratic and indulging in them is like purely gambling imo.
i know of pple who break even and got out of forex, most i know lost money but they kept quiet. so if you think you are the elites in forex trading, you can try. i doubt so…
Losing $10k is a lot, but it still depends what percentage of your account it was. if it was 10%, then no big deal, but if it was 100% then that means that despite your vast trading knowledge there is something missing (either good MM or good emotion control). Many traders lost large portion of their money, especially due to the EUR/CHF crash (and any other such spike in history) because they thought it was free money, but Forex doesn’t care about anyone, and they will certainly not give someone free money. If a trader used small leverage it would’ve saved a lot of pain.
Very much true, it is the traders sole responsibility to either make or break the money in this highly potential forex trading business. Thus, we need to extra cautious while trading with our hard earned money.
my risk management profile, i trade about 2% to 5% of my account. i think this is reasonable. why i lost 10k, was i over trade in pairs like eur and gbp, which are highly risky. if you notice, there is no trend so to speak in these pairs. even if trend is up, it may turn around and put you at a stop loss. after few times, i decided not to trade these pairs. i feel that trading eur and gbp pairs is really gambling.
You can say that again but if you are a good trader then forex trading is the best place to invest your money. First master one strategy that gives you consistent profit, only then your money is safe in a trading account.
