How to Lose Your Money Currency Trading or How Can I Be So Stupid

[Grogy]

Not sure how to title this: “How To Lose Your Money Currency Trading,” or “How Can I Be So Stupid?” Over the past two years or so, I have lost more money than I care to think about by trading currencies with Interbank FX and their new owner/partner TradeStation. By the way, the previous owner of Interbank FX is now heading up currency trading with Tradestation. (the fox moved to a higher-class hen house)
Because of space limitations, I will attempt to use an analogy to illustrate my point. If you go into a casino and play the roulette wheel, you will notice that there are 38 possible slots that the ball can land on. If you play one of the basic 36 numbers; this leaves the house with a 6.3% statistical gain (36/38). This presumably will keep them in business even though they are paying out 93.7% of the bets. Now as you may know, most of the currency traders, such as you and I, have winning trade’s percentages of around 25% (or less). This means that someone is receiving 75% of so of your money. That could the banks, the brokerage firms, discretionary traders, etc.
Now let’s return to the casino table, and you pick any block of numbers (9 or 10 numbers) representing 25% of the 38 possibilities, thereby leaving you with roughly a 75% or so, chance of losing your money ------ would you do it? That’s one chance out of four of winning. Sounds like a pretty dumb bet to me, but that’s what the typical currency trader like me and maybe you, are doing. And remember, these are random bets, no manipulations or skill involved. So if there’s a 75% chance of you losing, let’s face it, you are going to go broke.
Let’s talk about manipulations: trade going against you until it hits your stops, or trade going against you until you are margined out and then immediately changing course. Trade reversing course just as you reverse your trade, re-quotes, internet problems. I’ve had them all happen. Here’s one that really confuses me. When the trade is going against me, it is nothing to see it move 20-30 or more pips in practically no time at all. However, when the trade is moving in my favor, it takes forever to even move 5 pips. Very strange, indeed. I can think of many times that I have been down $100-$150 within 30 minutes or so, but never up $100-$150 in the same time frame. Do these things happen? What do you think?
Let’s talk about skill. If 75% of traders or losing, obviously their skill level leaves much to be desired. The 75% who are winning must know a great deal more about currency trading than the rest of us.
What’s the point of this assessment? To put it bluntly, I believe that for the average Joe, currency trading is nothing but legalized robbery and furthermore, none of the regulatory agencies are doing anything about it. I’m no longer trading currencies, but waiting for a class action suit. Get busy lawyers.

[MoneyNVRSleeps]

try landscaping?

[JDeel]

When the trade is going against me, it is nothing to see it move 20-30 or more pips in practically no time at all. However, when the trade is moving in my favor, it takes forever to even move 5 pips.

I agree with that feeling, but I'm pretty sure this is only our perception. When we lose, we "amplify" things. This is normal and happens in life.

Recently I loaded my account with 50 dollars. One day I was so close to 60... but on the next day everything started to get worse. I was so close to the next margin call... I think there were 5-6 dollars left, if not less. I reject to close my trades. And suddenly, the market reversed itself and in the next maybe two days I was again at my initial 50 dollars.

I think it's too too risky for a broker to make false movements now. And you can always check quotes between two brokers when you are close to next lose. I bet you will see the same movements and you will think that both brokers are trying to manipulate your trade, even when you are using only one of them

[nevergiveupss]

yes, The CFTC has been hammered couple brokers very good!
like other businesses, the FX failing rates are 80 and 90%.

I agree with that feeling, but I'm pretty sure this is only our perception. When we lose, we "amplify" things. This is normal and happens in life.

Recently I loaded my account with 50 dollars. One day I was so close to 60... but on the next day everything started to get worse. I was so close to the next margin call... I think there were 5-6 dollars left, if not less. I reject to close my trades. And suddenly, the market reversed itself and in the next maybe two days I was again at my initial 50 dollars.

I think it's too too risky for a broker to make false movements now. And you can always check quotes between two brokers when you are close to next lose. I bet you will see the same movements and you will think that both brokers are trying to manipulate your trade, even when you are using only one of them

[Jezzode]

Now as you may know, most of the currency traders, such as you and I, have winning trade’s percentages of around 25% (or less). This means that someone is receiving 75% of so of your money. That could the banks, the brokerage firms, discretionary traders, etc.

This is not true, trading is a Zero sum business, less the spread.

Just because a trader has a winning percentage of 25%, it does not mean that they are losing 75% of their own bank roll. Your assuming this on a dollar for dollar ratio.

Now assume on my winning trades which as you said have a 25% win rate are geared to a risk:reward ratio of 1:4.

Lets say I decide to risk 1% per trade to keep the figures simple.

25/100 trades = Win = 4% Gain Each = +100%
75/100 trades = Loss = -1% Loss Each = -75%

Now I have a Net Gain of 25% ROI, and I only have a win rate of 25% as you said previously.

I suppose what im trying to get at here is that the win rate is totally irrelevant on its own merit, it has to be combined with the Risk and Reward ratio that you are using within your trading.

[bobmaninc]

Waiting on Lawyers for what? For the fact you put your money on the table and lost it. Hell why not go to Vegas and sue the casino to while your at it. The way I see it you walked into the lions den with a steak wrapped around your neck expecting not to get bit. Really man why did I have to read this first thing in the morning. Guess it my fault but nice title anyway. I will have to show my trade results from last year to you. I had less than a 30% win ratio but I still made money. How did I do this? Simple money management thats how. I did not jump into a pool of sharks while I was bleeding and blame the sharks for what happened. Its your fault you jumped in. No one pushed you. Go get your lawyers somehow I bet IBFX has bigger and better ones than you.

[MoneyNVRSleeps]

Woof woof woof woof!!!

[sKratch1989]

I use ibfx and although i'm trading small amounts i try to use money management and such and am at a postive 0.5%-2% per week the last 5 weeks. :O
Ibfx isn't the problem I don't think.

[bobmaninc]

IBFX is not the problem. Its people like this that is why the CFTC is the way they are. Want to blame everything but themselves. Want everyone else to pay for there mistakes. I dont try to be mean but there are some things I just cant stand.

[amero]

Grogy, To be completely honest with you - I think the issue is not IBFX - from the little experience I have, I have found that Trading is a culmination of learning and dedication - furthermore, you have to realise there will be times that you will make a loss. Over a 5-6 week period I have seen a growth of 8.15% in my trading account but this is based on me trying several different strategies to suit - and even though I apparently have something that works for me I would still continue to look to refine myself and as Jezzode has pointed out to me - my technique has a big problem in it.

Trading IS about risk and reward ratio but also its about realising that you do need to devote cash to it - small accounts generally wont work which is why i personally started with 4000 in my account (2000 was not enough) - and then find a system that works (like in this forum).

You will find that most platforms are the same regardless of the company name (Ive practised on a number but have actually traded through MFglobal before it went into administration and am now with intertrader).

But you have to remember (I am repeating again sorry) that forex takes time, practise, learning, preparation and also remember it is not a quick money making scheme.

And for the record I entered a trade on a currency pair based on Bollinger Bands and RSI and within 20mins tidied up 50 points at £1 a point.

Remember 5ps - P*** (piddly) poor preparation equals poor performance - IBFX is not the problem.