Where have you been??? It’s been very quiet on the Gold/Crypto/Broker Complaints front??? LOL!!!
Gearing up towards going for a prop trader account…still trying to instill the discipline in myself to only take strong setups, and not go tinkering with all the middling opportunities that the market presents, which are mostly the Market Makers setting traps for retail day traders who don’t see the bigger picture cos they are so focused on the LTF charts and following widely taught and distributed hair brained trade setups.
Unlike other endeavours, football, gaming, golf, or whatever, where you can easily shake off your ‘bad days’. In trading, ‘bad days’ really do count and can undo all your good days very swiftly, and then some.
…however work calls (probably)…2 months floating in the sea on a boat off the Comorros Islands 
…this trading malarkey is my plan to dispense with going on seismic boats for good…but it will have to wait.
I use 1:100 leverage for swing trading and 1:500 leverage for trading news on Hotforex, also make sure you use floating spread and fixed spread account for different leverages because it matters during execution (affects its speed)
1 Like
Not more than 1:100! In addition, new traders shouldn’t open more than one trade at a single time!
You took really a great decision; keep learning & gathering Forex information’s! Besides, use a demo to practice!
I don’t know how this sounds but I use InstaForex Demo Account
I set my account to a 200 Leverage, I trade 0.1 Lots always(on Instaforex its 1 lot), margin for most trades is between 50$-67$, I’ve been able to earn 227 pips in 3 weeks
I am forced to agree with you on the capital part. I mean if I have $100k capital, why would I need to use a ridiculously high leverage. Sad to say, high leverage is appealing to traders with little capital. Sometimes it works for them, sometimes it kills.
I usually risk 1 percent of my account per trade. Think of trading a trading system something like counting cards at a casino. Everyone at casinos always lose all their money they risk eventually. But, not card counters. I do realize that you can’t really get away with counting cards at casinos anymore. But, running a trading system is similar. We develop a trading system of rigid rules that we use to enter and manage trades. This system has given probabilities around lots of different factors. Over time, this system may win 60 percent of my trades over hundreds of trades. That means that over a 100 trades, I will lose 40. Many traders run systems that only win 50 percent of their trades. My system has fixed risk per trade and targets to make more on my wins than I lose on my losses. When I lose my 40 trades, that will cause a given level of probabilistic drawdown. Since the losses are somewhat random, hopefully, often times, they end up separated from each other. But, let’s say that I lose 10 in a row. I draw down by 10 percent. I need to make back 11 percent to back at breakeven. If I were to risk more, and I drew down my account by 50 percent, I would need to make back 100 percent to be back at breakeven. So, the 1 percent risk level is a very nice risk level to trade on systems and can make for a smooth profit curves. If I risked 25 percent, I might win for a little while. But, eventually, I am guaranteed to break my account, no matter what system I trade. No system is good enough to prevent it. Now, doesn’t that sound like what happens to most people at casinos?
2 Likes
I wanted to elaborate a little more on the idea of consistency. Here is the reality. No matter what you do, there will always be a degree of randomness about how the market works. There are repetitive patterns that do occur, but the outcome of those patterns can’t be guaranteed. That means that no matter what we do, we are working with a degree of random probability. The only way that trading could be done any other way is if you really could understand the institutional order flow. That is impossible in Forex since there is no real volume. In futures, it is more possible. If you want to learn more about it, search for order flow in futures on the internet. It is pretty interesting how the market really works. One of the big issues is that, institutional traders go to great lengths to try to cover their tracks these days. A long time ago, traders like Jesse Livermore used to read the tape, and the tape read pretty much like it was. These days, this is the type of thing that goes on. The big institutional trader has a monstrous buy order to fill. He sets up some auto trading robot to make the trade. This robot makes small increment buy trades at different times, seeking to fill the large order. The trader does not want anyone to be able to figure out what he is doing, and so he strives to confuse everyone as much as possible. There are tools out there that try to reconstruct the tape so that it is more valid. Now, if you are trading Forex, none of this stuff is anything you can use. You must develop a system of trading that has a probabilistic edge over time. Let’s say that you create a system that has rigid rules for entry and management of your trades. You run that over a period of time with consistent position sizing, let’s say one percent of your account. Over a hundred trades, if you were completely consistent, you can now calculate more what the real probability of your system is over time. Over a thousand trades, you get a much better idea. If you were not consistent with everything, and your position sizes are all over the place, you could not have any idea what your probabilities are. You essentially would have no idea what your doing, or whether your system actually works. The more variance you have in your trading over time, the more problems you will have in your trading.
Another thing about Forex is the kind of data your getting with these retail brokers. If you went and got Ninjatrader, you can get institutional level Forex data from Kinetick. This the data that the bank traders are using. Retail level data is something different. I don’t trade Forex, (I trade futures), but my guess is that institutional traders have an edge just with their data, (and they might even get order flow data), over retail traders. You can probably tell how much I don’t like Forex. I tend to think it is a mechanism created by banks to cover their tracks, so no one can know what their doing.
1 Like
Yeah CFD contracts are basically traded on OTC market and there are no reliable sources of volume traded on them. But what I like about trading CFDs is 24/5 operation hours, very nice spreads and other costs and of course very good liquidity! Execution is great even during news.
@brmicha invaluable tips, But does that mean no one makes money from Forex? How could it be? There must be a certain criteria to win a zero sum game with repeated edge, patience, 1% risk & money management. I don’t know does not mean other successful trader does not know. Your feedback needed. Thanks.
I do not know why anyone would want to trade in Forex. Why don’t you look at trading futures. They have even come out with micro index futures now, so you can trade with less risk. Futures have volume information, and the capability to look at order flow information. In Forex, that information is hidden. I have always thought it is a market created by banks so they can hide what they are doing. They lure in retail traders into their game. Now, as for whether you can make money at Forex. I am sure that you can. But, I feel like it would be easier to make money in futures. In any kind of trading, consistency is key. The better your consistency in entry and management, the more it will allow you to really tell whether what you are doing is high probability. Most people are all over the place with their consistency, and so, so are their results. Perfectly consistent position sizing is part of that equation. Consistent management that allows you to produce a somewhat consistent risk to reward ratio. It seems like it is so easy to overlook consistency and start to think you can be successful without. Generally, I would say, that you can’t be successful without it. It will be measure of your success. The greater your consistency, the more successful you can become.
I’m also pretty leary about Forex brokers. Most of them do a lot of advertising trying to pull in new traders all the time. This is because of the nature of their business. Most of the traders that trade with them go broke. So, they constantly need a new influx of new traders. This means that their business is not oriented toward you if you are a successful trader. They have two lists for their traders. If you are unsuccessful, they do their best for you. If you are successful, you are kind of a thorn in their side. They put on on a list where you get worse execution, and so on. To trade Forex, you likely need a 100000 dollar account, and then, be able to get an actual institutional level account. However, Interactive brokers might provide an ok experience. They require a larger account size, but they show stats on their website showing that a fairly good percentage of their traders make money.
One of the cool things these brokers do, is, they know that 90 to 95 percent of their traders will run themselves broke. So, these traders go on a list for the broker to take the other side of their trades. The broker can consistently trade against these traders, and they have a 90 to 95 percent chance of winning. It is the ultimate trading strategy. It makes them the best traders in the world.
This is a very casino like activity, where the broker has a very high probability of raking in lots of cash over time.
Maybe you are starting to see how much I loath Forex. It smells of bank corruption to me.
To me, if you can find a good Forex broker where you can be successful, or one goes and trades futures, which from my experience is a nice experience for trading, it is extremely difficult, in reality to have the capability to have complete consistency when intra-day trading. You have to make very fast decisions of entry and management. If your stop loss is different from trade to trade, that means that you have to be able to quickly calculate the proper position size for your trade, and make sure that your trade is dead on your entry criteria. The difficulty of this often causes people to discount the importance of consistency. This, of course, causes them to lose, because the probability is not the same for each and every one of their trades. Instead, the probability of their trades is all over the place, and that creates a chaotic result for their trading. Some professional traders these days use some kind of computerized help to help them attain better consistency.
@brmicha you said 'no system is a good enough to prevent it(loss).'
From your expertise & experience is there an edge to win without draw down, either technical or fundamental? Some investors certainly make money, so the brokerhouse is working, or no one would play forex/etf/stock/futures etc. In casino we rely on luck, either head or tail will appear. In trade is it like casino to reply upon random luck? How to get that edge?
I am under the impression that, everyone is losing trades, even the best traders in the world. In fact, I believe that many professional traders may lose up to 50 percent of their trades over their trading career. On the other hand, I also believe that it is possible to attain a higher win percentage than that. I believe that the reality is that there has to be an element of randomness in the markets. However, there are also repetitive patterns that also occur. Most traders out there have a natural tendency to cut off their winners early and let their losers run. This causes them to have very small wins and very large losses. So, do the math. This factor makes it almost impossible for them to make money unless they have a very high win percentage, which is higher than any trader can attain. Today, I have made 2 trades in the mini Nasdaq futures. The first was a loss of 8 dollars. The second was a win of 14.00. There seems to be up trend activity in place today. The first I took on a rejection of resistance, so it was counter trend. The second I took after that with the trend. I like trading with the trend. However, when the trend has been going up for a long time, it can get a little stretched, and a rejection at resistance can often be a good trade. So, at a casino, someone goes in there to play, and the odds are stacked against them. The casino has set up their games such that they have a slight edge in the probabilities. For instance, they add two numbers to the roulette wheel in order to give them the probabilistic edge. At any one time, the guy who went in their to play could make a big win. But, over time, if he keeps playing, the casino knows that they have the probabilistic edge. They just need to wait and they will make money. They have, let’s say, just a 2 percent chance of making money. That’s an edge they have over time. Each role, spin or whatever has a certain given probability for the casino. It is always the same, over and over. And over time, they make money. Good trading is similar. You find what you believe is a high probability type of entry. You focus in on it. You learn a good way of managing your trades. You create absolute consistency around that particular entry and management. You see if it does have an edge over time. I would do that either on simulation, or using very small risk so that I don’t lose much money. You can do this on say 1 micro futures contract. Let’s say you do it for a month. You do an analysis of your stats. Let’s say these are your stats: you wan 60 percent. You risk to reward ratio was 1 to 2. That is some darn good trading. Now, let’s see what happens over the course of the year. You have total consistency in everything you are doing. You make the same entry, and the same management. You find out whether you are right that you have the probabilistic edge. I don’t tend to think of it as luck, even though, the idea of luck is probably really an idea of probability. Let’s say you leave where you live every day. You always do the same thing at the same time You go to the store. You pick up groceries. You come back. You have complete consistency. Now, usually you don’t think of probabilities. But, probabilities are in action all the time. Your probability of having a car accident are 1 in 1000000. Now, it’s hard to know what those probabilities really are, so I’m making up a number. So, you might have a car accident on the 1000000th time, or the 1st time. There is no way to know. But, somehow, you know that over 10000000 times, you will have 10 accidents. They will be spread out in a distribution. Now, the probability of you getting hit by a rogue asteroid is, 1 to 10000000000000000000000. So, it is very unlikely that you will ever get hit in the head by a rogue asteroid on your car trip. Take this kind of idea and think of the markets working in a similar way, and you learning to take advantage of it, by learning to take advantage of certain types of entries that have a particular probability over time. Without complete consistency, you can never know what entries and management actually do have good enough probabilities for you to actually make money. If you take that car trip everyday to the grocery store. But, you do things different every day. Now, the probability of your car accident is different every day. You have created something where you can never know what the probabilities are. You have created chaos. As for brokers, also take a look at Ninjatrader. You have to buy data on the platform, but you can buy Forex or Futures data. Most professional traders pay quite a bit for data. It might be an ok thing to trade Forex on. Getting into the idea of order flow in futures can help to more stack the odds on your favor, but it also can add more complexity. Under the hood, the market is really a game of buying and selling. The order flow shows what’s happening with that. Supposedly, there are traders out there who don’t look at charts, and just look at the order flow. Unfortunately, the order flow is sort of, messed up these days. Large trades are broken up into small ones and entered with an algorithmic computer program to make it hard to follow the tracks of the large traders.