Practicalities and Philosophies of Successful Trading by Goldenmember

Beginner Questions
1

[B]Introduction[/B]

I have been trading since 2009, initially with stocks and shares, and then I advanced onto CFDs in 2010 (fell out of favour of those because of advantages of spreadbetting) and finally onto this babypips forex forum in 2011. I thought that I would provide a guide for traders who were interested in trading successfully. This was the first forex trading forum I came across, and I have to say it has as many pitfalls in it (if not more) as it has good advice. Its not a fault of the forum owners, but the same across any forum - every member has a 10/10 wife, CEOs 10k per day, bench presses 300lbs, drives a ferrari and is extremely well endowed and comes on this forum to provide advice - when the reality is very different.

I hope to provide some actual advice from a profitable trader that will benefit other traders. I realise that many teachers here claim to be profitable and don’t provide any proof, so I decided to have a public track record - it is only from 2011 when I started trading - My Myfxbook is located here for anyone who wants to track my results:

goldenmember’s Profile | Myfxbook
EDIT: Now moved to TigrisEquity’s Profile | Myfxbook

In this thread I’m going to try and provide information and techniques that will help other traders become profitable on a semi daily basis (as time allows during lunch). I’ll go over many of the pitfalls of the retail trader (and there are a lot) and my take on how to read the market and make money.

I would appreciate if people refrained from flaming/trolling on this thread as I hope to keep it instructive.

Many thanks, and I hope that some people find it useful.

2

[B]Looking for unicorns - Trying to trade perfectly[/B]

I am a retail trader, and I also work as well - I am not a full time trader because I quite appreciate working (as I invested quite a lot of time in training for my profession), but I do not regard myself as a “trading professional” or a “city trader” nor do I have any aspirations to do so. I came into trading for one purpose, and that was to make money, and I think that is an important goal to bear in mind.

I read that many traders try to achieve ‘perfect trading’ or some sort of ‘trading nirvana’ by getting the trade exactly right, but I don’t think there is any advantage to be gained. After all if someone earns $200 through a 200 pip trade where he picks the bottom and exits out of the top, its the same as someone who managed to earn $200 through trading 40 pips of that move (in fact I would argue that the person who traded 40 pips of the move had a safer strategy). When you leave the computer as a retail trader you re-enter the real world. You don’t have a trading firm to pat you on the back or give you a bonus for executing a perfect trade. Your $200 from a perfect trade is just as good as $200 from a dirty trade, and no-one in the real world cares. There is an excellent market wizards video where Jack Schwager mentions that no one ever got rich by getting perfect trades that I watched when I first started out. I didn’t get it back then, but I understand it now.

When I first started to read about forex trading early 2011, there was a lot of talk about demo trading until you are perfect, and there was a movement that said the opposite of what I just wrote: that you should learn how to read the market perfectly and not care about the money, then the money would come to you. In fact there was a very high profile forum member we shall call C on forexfactory who claimed that he could predict the price to the pip and used to flame people all the time for not being able to predict the market all the time (he had a tendency to grid trade, and disappeared whenever there was a large trending move).

I used to believe him and others like him, and attempted to trade perfectly, but after a time I realised it was pointless. Trading is not about perfection like sports or any other discipline because it is very chaotic. There is very little point trying to trade a demo account or a micro account of $100 for years trying to get perfect because it will never happen (I’m not saying demo is not useful - on the contrary I think it is useful for testing).

Once I recognised that the point of trading was to make money (duh, right!), then I recognised what Jack Schwager was trying to say: the goal of work/trading is to make money. And your goals in trading should reflect that - by all means trade demo/trade micro accounts until you have a working strategy, but you have to start making money in the end. I recall talking to a retail trader who was planning on trading their $100 000 pension. They were trading a $100 account for about 6 months, and one day he came to me and was incredibly happy that he made 12% one day. He said “If I scaled that up I would have made 12% on $100 000 ($12 000).” I congratulated him, but thought that - but you didn’t make $12 000 - you made $12 in 6 months (a salary of 50 cents per month). Assuming that he was trading $100 000 when he was in fact trading with $100 was like saying that if only he shorted gold at $1900 - its a ‘if only’ fantasy.

I think that people are focused mistakenly focused perfect trading because they assume that their trading and prediction will get better and better with time like in sports or another game. If you look at fund managers though, their trading does not get better year by year. Trading involves a lot more outside factors that will influence performance, so I would strongly advise against trying to be perfect.

3

[B]Equity Goals in trading (and other goals)[/B]

Trading for me is about making money. The hours you spend at trading are very much like spending hours at work. Of course, the main difference with salaried work is that you cannot lose money - hence trading is a bit worse than work because of the unreliability if they paid the same dollar value.

When you are considering trading, you should compare it the value you are getting out of it to what you would get at work. The average American monthly salary was $3769 in 2011 for standard work - minimum wage would around $2000 per month. If you are a full time forex trader, then you should be making $3700. If you are working a minimum wage job you should be earning at least $3000 per month if you are going to dump your minimum wage job.

In fact, a lot of retail traders do not make near this amount per month, and yet still spend their working hours at the computer trading - a lot of them lose money. One typical reason I hear is that “this is just a learning phase” - however there are people in the learning phase for years and who never leave.

This is especially relevant for people who are trading micro accounts or $100, $200, $500 accounts. These people are in fact losing valuable time, and potentially money by refusing to look for work. The great thing about trading is the accessibility. You can trade at any time, and it will always be there, unlike work. As a boss, trading is incredibly forgiving if you want to take an unpaid vacation - it will always let you come back in the same position no matter what. Many retail traders have the wrong priorities and quit their $3700 per month job for a terrible paying job (trading).

When you decide to trade you should set equity goals for yourself. Money management is not just about 1% risk, but managing your income in the most efficient way. Don’t quit your $3000/month job for trading if you cannot make $3000 per month doing it. Don’t refuse to apply for jobs because you want to spend months battling away with a $200 account. You can always reduce your time commitments at work when you start to make $3000-5000 per month trading. If you love looking after animals, fixing cars, doing gardening, hanging out at nightclubs as a bartender, then its better to spend some time working than spending it crouched in front of your computer - you might even appreciate the extra income.

I would say that $50 000 is really the minimum equity you need to start earning a comparable salary to the standard American wage. Obviously if you are from Indonesia you can look at lower equities, but do yourself a service and value your time by setting a minimal equity goal and achieve that whether it be from working a job or trading.

4

Hello Goldmember,

Well congratulations on your new thread. But you haven’t explained your trading method style here.

By the way nice results on the MYfxbook. Good luck

5

Hi Perryfx - I am trying to explain the “why” before I explain the “how.” Lots of traders trade a stochastic or a pivot or a fibonacchi without knowing why, whereas I think its really important to learn the why if you are going to be successful. The thread is not going to be as popular as a “follow my method and make money” but I think that having an underlying understanding of trading, of the economy, markets, methods is important and is the underlying factor of how I trade and can’t be explained without it.

6

That’s right. Always establish a motive first!

Perry, You needed to firstly pose a question "Why is ICT wanting to teach me his “profitable” methods of trading for free and then ask how :smiley:

7

Would just like to chime in that I appreciate your approach, particularly for the psychology of things. I feel that the forex market is a perfect example of “know yourself and know your enemy if you want to win the battle”. So +1 from me.

8

Interesting reading…keep it up!

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[B]Trading is not a competition[/B]

Nassim Taleb in his book Fooled by Randomness writes about this relationship between two neighbours who are traders. One is a young, successful trader who is somewhat naive but foolhardy in the markets but has made a lot of money for themselves in a bull market and has the biggest house in the street. The other is a conservative trader who is producing returns at a safer rate who lives in a modest house. The conservative trader is jealous of the richer neighbour because he feels that he has just got lucky by buying in the right market. The successful trader eventually blows up when the Russian bond markets collapse, while the other continues to make money and he feels vindicated that he has stuck to his strategy.

The same situation occurs in retail trading - in fact it is much worse because retail traders are fond of telling tall tales and they don’t need a big house to prove that their success (in fact, they often don’t have any proof at all). Retail traders post up their (unverified) trading performances to champion how good they are when they have a winning streak, and it can encourage jealousy. Others post up single screenshots of a trade or mention a trade that they did take, and I know I feel like kicking myself because I missed out.

In the end, all of these facts make you want to compete, and its an influence that you have to ignore if you want to be successful. If you succumb, it make you change your successful strategy for a unproven losing one. You could switch strategies and never settle on a successful one. You have to remember that traders only ever post up their winning trades - the same happens in stock trading forums, or any other forum. The losing trades never get mentioned, and the 100% winners on myfxbook delete their profiles or make them private when they drawdown.

I am sure that retail traders would benefit from not having access to the internet and succumbing to competing with others. In fact, competition is worse on the internet than how Taleb described it because at least Taleb could see the other persons actual success. Competition does not just exist in terms of percentage gain or money gained. One of my biggest pet hates is when people on Wednesday or Thursday say “Just made 200 pips, done for the week.” It reminds me of being back at school when people would compete in an exam to stand up and walk out of the exam early. Of course, the smart pupil would check his/her answers until the end of the exam to be sure of getting the best marks, and the people who stood up and left early received poor marks.

The reality is that if a prime set up occurs on Friday, that trader who stood up, left the exam hall to sit in the common room and “was done for the week” has missed the opportunity to make money. This is unforgivable for someone who wants to make their living trading (unless they have to pick up their mum at the airport etc). You might feel a bit of a loser sitting at your trading desk when others are saying “they are done for the week” but if you stick to your plan, you will be the one getting good grades or making real money, not the ones who stand up and leave.

The internet and forums are powerful distractions that can foster harmful competition. Its vital to be able to ignore the call for bravado and unrealistic competition (perhaps this is why women are more successful traders) and concentrate on what you do.

10

Great piece! Thanks!

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[B]Learning why is as important as learning how[/B]

“I don’t care why, I just want to make money.” This thinking is common to many people coming to trading, and its why a college professor has as much chance of success as a high school drop out. Following a rote system without knowing why because you don’t care to learn about trading as a profession negates any intellectual advantage you may have and is why smart people are just as bad traders as dumb people. When you learn it is really important to ask why instead of just learning by rote.

Some examples of learning by rote are buying and selling at pivot points, or at the 61.8% fibonacchi. Does anyone ask why? Success and failure here are dictated by not being smart, but by just following a ‘system’ without knowing what it means - this is a sure recipe for failure. Another example is the risk/reward ratio. This term is used so often by forum posters, forex teachers and well renowned forex analysts. The standard rule is that you should aim for a 1:2 risk/reward ratio +. Meaning you should place a take profit at least twice the stop loss. This has been used to justify trades, but if you ask why and the mechanics behind it - it is a ludicrous guideline. Also, if you examine myfxbooks top performing 10 accounts and compare it with the worst 10 accounts there is not much difference between the “risk/reward”, and mostly the “risk reward” is <1.

For example, if EURUSD is 1.3000. If I place a long order at 1.3000, a stop loss at 1.2995, and a take profit at 1.8000 - its GREAT risk reward according to traditional dogma. In fact its 1:1000 risk/reward - so I am only risking 5 pips to make 5000 pips! What a pay off! Of course, what risk/reward merchants forget to mention is that there is a probability factor assigned to every trade. 1.3000 to 1.8000 is highly improbable, and even if given enough time, the swap that you will pay will probably eat many of the profits. For some reason, people have forgotten to assign probability to risk reward. Whereas the traditionally taught dogma is risk/reward =

[B]Risk (pips stood to lose): Reward (pips stood to gain)[/B]

The actual equation should read

[B]Risk (pips stood to lose x chance of losing particular setup): Reward (pips x chance of winning setup) - (Swaps + Spread + Slippage)[/B]

Thus when some analyst is blindly talking about risk rewards of 1:2 when the are risking 20 pips for 40 pips they are talking absolute nonsense because risk/reward is meaningless without the probability of the set up. Risking 20 pips for 20 pips is traditionally known as a 1:1 risk/reward and thus shunned BUT if the set up has a 66.6% chance of success then you have your 1:2 risk reward when you risk 20 pips for 20 pips. Traders who blindly talk about risk/ratio without actually knowing what it means (and there are a lot of them) would benefit from knowing why they are trading what they are trading.

This is just one of the examples where blindly following traditionally dogma without asking questions and asking why, what, as well as how leaves you with a broken system of doing things. If you think and ask while you learn then your actual intelligence and talent will reap rewards.

12

Hum. I actually have a point of contention with your previous example.

I think when people talk about their risk:reward ratio they are taking into account the edge their strategy provides. Even a novice should know you don’t just throw your money into the market without a reason. Every strategy I looked at while learning had some variation of “stick to the system to increase your odds”; which makes sense given that’s the whole point of having a strategy.

I don’t feel like saying “I aim for at least a 1:2 ratio” is meaningless because my strategy has specific rules for setting SL, TP, and entering a trade. If those circumstances aren’t met; I don’t trade. I haven’t had problems with slippage/swaps but I can say that I don’t worry about calculating the spread into that final figure either. I just lump it into the 1:2 as a cost of doing business; like a retailer would assume their electrical bill is going to come out of their sales.

I get where you’re coming from but I don’t feel it is very consistent with the way people look at the R:R ratio or the way it’s presented in developed strategies. Anyone that’s read one isn’t going to look at 1:1000 and think it’s a good ratio because they will recognize it as completely impossible to attain.

Anyhow- I agree with your statement that the why is just as/more important than the how. I just disagree with your assessment of the R:R ratio; which I do use in helping to decide what trades to take. It is assumed I’m going to have a higher probability of a successful trade by following my trading strategy for entry/exit criteria since that’s the entire point of having one.

14

Thanks for the reply, and I always welcome a discussion.

I don’t disagree- the difference is that you know the probability and edge of your system. I am talking about the retail traders who do not know the edge of a system and scour forexfactory/babypips/the web for a ready made system or suggestion on how to get winning trades. These traders have no idea of what edge the system provides, yet choose to trade a suggestion listed based purely on a SL:TP ratio. Believe it or not I have spoken to people on skype who have decided to take a trade off a 5 minute pinbar after a huge 200-300 pip drop or rally, place their stop loss at the bottom of that 5 min pinbar (for about 10 pips SL) and believe that the 200-300 pip entire drop or rally will reverse because of that 5 minute pin bar and assume that they are trading a “great risk:reward ratio.”

15

This is a good thread, goldenmember. :slight_smile:

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[B]The never ending retail trading cycle[/B]

I have seen a lot of people compare trading to an apprenticeship or university course, and the figure of ‘it takes 3-4 years to become profitable’ is the most common one I have heard. It also happens to fit nicely with the length of a degree, and in many ways justifies to traders that they can happily not make money for 3 years. Even if they lose money, they compare the cost of that to education. After all, the price of a college degree in the USA in 2010-2011 was $13 600 per year, or for a 3-4 year degree $40-50 000. Thus a retail trader can happily lose $50 000 over 3-4 years convincing himself that he is getting the equivalent of a college degree in trading. I don’t have figures on how many are profitable after 3-4 years, but I expect because of the large failure rate of traders, that even after 3-4 years traders who are unprofitable remain unprofitable unless they start learning a way to trade profitably.

There was a very good post I read in 2011 from forexfactory which stated the standard journey of a retail trader - I will summarise it below:

  1. Phase 1: novice phase - trades are placed at random, because of survivorship bias, the winning traders become enamored with the easy money since they made $100/200/1000 in a short space of time and decide to carry on trading, expecting the next day that they will make $100/200/1000. The losing traders fade off and look elsewhere (<1 month).

  2. Phase 2: The winning cohort from phase 1 learns that their random trading technique is not consistent, or they attempt to match their previous efforts success and cannot manage it. They realise that a more systematic approach is required (0-3 months).

  3. Phase 3: The traders stumble across a simple system they found on the internet/paid for on a course and think that this is the missing piece to their trading and learn it (1 month).

  4. Phase 4: The trader executes the system, yet finds it is not providing the results they are looking for (2-6 months)

  5. Phase 5: The trader goes back to the course tutor/forum where he found the strategy and seeks to improve the system (1-3 months)

  6. Phase 6: The trader executes the system, with new suggestions/improvements yet still cannot get the results they are looking for (1-3 months). Depending on the character of the trader, he returns to phase 5, or advances to phase 7.

  7. Phase 7: The trader tires of the system, takes a break and looks for a new system as in phase 3 (1 month)

Many people are locked into this cycle (lasting from 4 months to a year for a single cycle) for years because the systems that they try out are not successful. Because of the market for trading systems, there is a lot of fluff - most of the information I have read has serious holes in the logic, and most importantly does not work. A trader can lock themselves into this cycle for years and never come out until he actually happens to find a system that works, which may be never. Given how many ‘rubbish’ systems there are out there, the chances of an individual trader finding the ‘right system’ is very low. Lets say there are 99 bad systems out there for every 1 good one. The chances for a trader to go through the cycle to find a winning system at random is slim, and we do not have infinite time to find one. What makes it harder is that “social proof and testimonials” for systems are frequently posted by the system creator themselves, naive traders, or traders that have invested too much time to let go.

The solution to break out of the cycle is to understand the system itself, understand why the market moves the way it does, why it is difficult to make money (and it is difficult), and why it is easy to lose. Again, this is more of the same from me about not blindly following a system or a teacher, but its important to emphasise the point.

1 Like
17

[B]Spending your time wisely[/B]

Some new retail traders work assume that working hard at a trading system is spending 12 hours at live charts working for 3 months as part of the retail cycle which is the most time consuming activity. All the time spent cumulatively reading trading books, watching trading videos, even posting on forums pales in comparison to the time spent by some traders attempting to learn by watching charts. I have heard people say they want to watch charts until they have seen every market eventuality. In my opinion, this is a waste of time - for instance, someone might not have seen the GBPUSD drop 200 pips in a minute before, or see the RSI 15 minute hit 6 before, but you might have to spend 12 hours a day, for months to actually see it, and if it happens when you are asleep then you missed it. If you are attempting to learn by chart watching ask yourself: what have you learned this week that you did not know last week by watching the chart? If you can write 2 or 3 new points that you did not know the previous week I would be amazed. There was a trader I spoke to who claimed that he had learned a lot in his first year of non profitable trading by watching charts - I asked him what he learned in ONE YEAR, and his learning consisted of 1) always use a stop loss, 2) don’t be emotional, 3) let profits run. Three points that he could have learned in an hour, he took a year.

Once you have a general idea about the charts the most efficient way to spend time learning trading is:

a) backtesting purely technical set ups using forex testing software (V hands is a free one) if you are a technical trader,
b) learning about economic triggers if you want to learn fundamental trading not watching the forex calendar tick away
c) learning how to program if you are an EA trader instead of watching how your EAs perform live.

In my opinion, there comes a time quite quickly that staring at a chart is wasted. If you trade technically on a discretionary basis, you should just be alerting your levels. If you trade fundamentally there should be fundamental news that you look out for and you can have your newsfeeds alert you. If you trade arbitrage or pure technical, then you should have EAs that you audit and update. Chart staring and ‘getting a feel’ for the markets in my opinion is one of the biggest wastes of time you can do. Trying to watch charts to develop a sixth sense for the markets I believe is like sleeping with a French dictionary under your pillow and hoping to learn French - you have to spend your time learning in the right way to learn anything.

If you can trade with minimizing your chart time then you are spending your time more efficiently. We have all I am sure spent an overnight session battling to get our round figure for the day/week/month. After doing that a few times early on in my trading, I realised that I was spending 4-5 hours earning $40-50 - a minimum wage for an overnight session. I could sign up to the lowest paid overnight job and earn more - you wouldn’t accept a $10/hour job under these conditions so don’t accept it in trading.

18

Excellent thread. Count me in. The forum needs more such wisdom.

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The importance of realistic benchmarks for the retail trader

There was a famous trader when I first started who claimed that he was a professional trader and made a fortune every year trading. He produced numerous teaching posts, videos and webinars and had hundreds of followers. Eventually he made a myfxbook and started a signal service and lost 90% of his live account in 3 months. There was also a trader who had their own paid for forum with over 100+ private members who extolled his wisdom. He opened a zulutrader account which crashed in 3 months.

One of the greatest innovations for me in trading was the discovery of myfxbook, fxstat and mt4i. This gave for the first time a look into how other people were trading and what was a lie and what was actually possible. Internet forums are full of blaggers. If you go to bodybuilding.com you find that everyone claims they bench 350lbs, yet go to a gym and find that perhaps 1 person lifts 3 plates. In trading many people aspire to make these make believe figures offered by penny stock traders or forex gurus who have no proof behind them. This is akin to the average guy thinking that everyone can bench 350lbs easily and actually end up getting crushed when he loads up three plates.

When you trade its important to have benchmarks so you do not end up aspiring to unrealistic figures and doing yourself a injury. Myfxbook, mt4i, fxstat give actual results so you know what you should be doing so you do not risk getting crushed by excessive risk and expectations.

I have done a lot of research on what successful traders manage to achieve - no matter what timeframe they use, what strategy they use, the figures of 4-8% per month for the most elite traders is consistent. This is disregarding accounts that have traded less than a year or have excessive drawdown. I therefore do not try and over leverage myself and go for 20% per month. If we take the bench press as an example again - if you knew that the biggest, strongest guys in the gym were lifting 300 lbs for repetitions and you had just started training, you would be a fool to overreach and go for 350lbs because someone on an internet forum had told you that was what he lifted. It does not means you can’t lift 300lbs or gain 20% - it just means that you will risk injury (by cheating the bar and bouncing off your chest and arching your back) and you won’t gain anything long term from it.

In fact, the average guy would benefit from lifting 160 lbs for repetitions and working his way up. In the same way, I do not reach for the 350lbs or 20% because I know that no one achieves it, and that I am happy making gains lifting 5-6% per month since I know that is the realistic for what I want to achieve.

If you want 20% a month plus then you should study all the 20% month systems and see what drawdown they achieve. I do not think I am ‘the best trader in the world’ - I am a realist and if 20% a month for the best traders causes excessive drawdown, then I will probably have to take excessive drawdown to achieve it.

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[B]Identifying the good from the bad[/B]

The ability to be able to process good data and filter out the bad is an important quality in any job. This goes for trading – not only in learning how to trade, but during your trades as well. If you recall your studies of history back and school, I can still remember having to study the Romans and the Second World War. Obviously this differs from where you live, but learning history was about sourcing the right information and filtering out what was bad. As history students sitting exams or writing essays we had to write compelling and accurate prose on Roman History. We all had the same textbooks and sources, but some people were able to produce good essays, while others would produce bad ones. Good essays focused on what was learned from good, accurate source material. Bad, biased, poorly researched information from unreliable sources was disregarded while accurate, legitimate sources were written about. In the same way, you would also disregard biased, propaganda about the Second World War and focus on neutral, first hand sources for your information. When writing about how the war was regarded by Germany, a propaganda leaflet from the Reich official was far less important than a personal diary entry of a common German soldier.

This is very much similar to trading. Instead of writing good essays and getting good grades, we are focused on learning good information and making good trades. This means that we should focus on being able to identify good sources of trading information, and avoid bad sources of information. There are many ways to do this for different types of information. Just as in history, you should seek out first hand material as often as possible. Information can be deleted the further it goes down the line. For example, an internet marketer trying to sell a trading course might offer similar information that he gleaned from a trading book. However, it is infinitely preferable to go to the original information rather than the trading course unless the internet marketer provides sufficient additional value.

The same goes for trading advice. Not too long ago someone on a forum advised me that USDCAD was going to drop to 0.8 because the USD was going to be repriced in the next month because of a new currency from the Middle East. The month elapsed and of course USDCAD went up to 1.05. The information that this guy had received was second /third/fourth hand garbage. What makes traders good, and intelligent traders shine through is the ability to take useful information and process it. This is the same intelligence that gets you good grades at school. If you are unable to identify sources of good information and differentiate it from the bad then you will struggle. If you need help then set firm criteria for what you regard as being good information. It goes without saying you should not accept trading lessons and advice from someone who is unsuccessful at trading or has no track record. Doing so is just is just the same as trying to write a history book about what the Battle of Dunkirk was like by talking to someone who had never been there or reading diary extracts from someone who has played Call of Duty rather than actual diary extracts of the men involved. You should also have similar criteria for what news and blogs you read, and what fundamental events you act on.

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Thanks for the likes stonecoldmichael - I’m glad someone is reading (or at least clicking the like button :))

[B]Fooled By Randomness[/B]

This is one of the most important concepts that I read in Talebs book. I think that Taleb takes it a bit far by saying that everything is just random, but certainly randomness has a lot to do with performance. For instance, flipping a coin is 50/50. However, 1 person can be expected to guess 5 correct answers/5 wrong answers at random out of 10 coin flips. A person who guesses 10 coin flips correct is awarded the title of master coin flipper, and is given a lucrative job at an investment bank. Given enough people, at least a few out of millions can be expected to be expert coin flippers despite pure luck just playing a part. With 10 game coin flipping, one in 1000 players (roughly) can be expected to be given this award. These expert coin flippers swan around with their 100% win rates and live the high life guessing coin flips for their investment bank, however they are no more talented at guessing coin flips than anyone else.

Myfxbook (before the metaquotes argument) had over 100 000 traders on its books (which is why I prefer it to trade explorer which has just a few hundred, and MT4i which has a few thousand). If they were a site that catered to coin flipping instead of trading, they would have at least 100 expert coin flippers on their books purely out of chance. These people get all the kudos, but eventually they have losing runs, and the more they coin flip (as well as for their investment bank) the more the mythos wears off, and eventually they are sacked from their position as expert coin flipper (except the lucky ones who has guessed another 10 in a row who is awarded the title of master coin flipper and a $10 million bonus).

Trading in the same way has a lot of chance associated with it. However, the more you coin flip, the more you can say that luck has less of an effect, and skill comes into it. Someone asked me whether I thought that a 300% account in a month was impressive - yes, but I stated that I had not seen it being sustainable. ie: A 300% gain in a month might be a master coin flipper, but unless there is performance over time, this might just be due to survivorship bias. I would also like to see several people achieve these gains over a time to consider the gains realistic, otherwise we might just be looking at a master coin flipper, or even a grand master coin flipper.

What I have seen and marked as realistic gains is what a significant cohort of traders can achieve over a long time period. I am less interested in an isolated incident where a single trader makes a significant percentage higher than anyone else - statistically this is known as an outlier. For anyone who is interested in statistics (and they do play an important role in risk management and equity management) I would suggest that they read up on permutations and combinations. I won’t post on permutations and combinations further unless requested since it would be considered boring plus there are better mathematical sites where you can learn how to do these maths.