When we all look at the chart, we couls see that the price goes 2 ways. Up or Down.
So there are chances 50%/50%. If we will implement 1 or 2 filters which will help us to make chances higher, we will win. Waht do you think about it guys?
I do not think that we complicate trading. Quite the contrary! I’ve been trading binary options for some time now, and like you said, the chances to win/lose are fifty-fifty, because the price of an asset will either increase or decrease. Trading can be as simple as that: there are only two options and only two possible outcomes.
In my opinion trading without a edge is not 50/50, due to two different reasons first, we have a spread, secondly we have to exit the market at any point, this makes it less than 50/50 probably 80/20 to the market, hence so many new traders fail.
However if a trader is to apply an edge, risk management and talent then the odds are in your favour
You are pretty close actually. According to my statistical analysis of Eur/Usd it is a fairly symmetrical distribution. So yes its almost a 50-50 shot to move in any direction. The entire goal of a trader is to figure out some way to determine either a time or a price level or both where there is a higher probability of 1 thing happening over another. however this sounds simple conceptually it may be quite a complex task.
With this simple approach, you will find yourself loosing money or contemplating a flat equity curve.
You have neither infinite money nor infinite time.
Let’s say that you are right about the direction. You may suffer a large drawdown before finally exiting with a profit or get a loss because of an early stop.
The 50/50 on the direction takes you nowhere. A better question should be about the chances to get 1 pip ? 10 pips ? 100 pips ? … etc…
“Market timing” will help you determine when you may enter the market and “Market intelligence” enables you to select entry and exit levels.
Furthermore, many traders consider one order as one one position. They have a gun with one bullet. They cannot build a position.
Good luck on that one.
I have never invested in anything that had a 50-50% chance. I trade only when I’m certain that the odds are a 100% to my favour. Of course, I’m wrong many times, but that’s another thing. Still, every day I’m closer to a perfect success (or so I believe).
What I’m trying to say is, if you start a trade thinking about the odds, you’re kind of missing the point. It’s not about taking the odds, it’s about making the odds!
Let us be more realistic and stop searching the ways to make easy profit from forex trading. Risk is fact of forex business and it shall remain so, we should accept this business as it is with the profit potential and risk. Instead of looking for shortcuts we should engage in gaining trading skills and equipping us with right knowledge and talent, even though not really easy but we shall be making profits in this business.
As Peter posted risk is inherent in any market and more so, when it comes to CFD’s. Looking at the currency market from the 50-50 perspective is more reminiscent of the tables in the casino. With practice, research, and a better strategy, you should be able to increase the odds, in your favor (continuing the 50-50 motif)
Its not that easy when you say that prices can only go up and down, we get several false movements in the market. How ever in a trending market you can go with the trend and can make money but in sideways market its too damn difficult.
Actually I think most traders [B]undercomplicate[/B] trading. I do not think it is just a matter of price bouncing from lines on a chart.
IMO you have to almost “complicate it” to then find a common denominator which is where you can then simplify your trading approach around these common factors. Just jumping in without doing any real work is where I think traders fail - assuming a lightly tested theory will continue to work.
I feel yes, most of the traders complicate their trading by using too many indicators or analyzing methods in their charts and thus fail to perform good trades.
Well they complicate it in the WRONG way. They think more indicators and lines on the chart is going to help. Without understanding market dynamics. Has anyone here done the random line experiment. Which I think fits in the the last part of your statement. Most people think lines on chart = bounce. The random line experiment is draw some random lines on your charts, then a few days later go back and see if they had any “significance” I bet they do. Or you can show them to someone else and see if they see any “significance”. This is one of the reasons its so easy to trick people with indicators. There will always be a few lines that got respected even if picked at random.
Yes, very true. The market dynamics gets completely brushed over, and people focus on hundreds of lines and patterns.
Just adding more variables to the equation…
When I was a newbie I was like after every indicator or trading system I get my hands to. I want to get that perfect combination of indicators that will work for me, but then I realize that price action is the best to trade on.
To be honest, I have almost no idea what I’m doing when it comes to Forex, but sometimes I wonder if indicators and trading systems are needed.
I have very little experience, but what I’ve been doing seems to be working for me in the VERY short term. Basically, I see if the currency pair is on a down/uptrend for AT LEAST a week, and base my trade around not disagreeing with the trend. If I want to optimize it, I will wait until there is a 15m/1h movement in the opposite direction of the trend to squeeze out a little bit more profit, but most of the time I just trade randomly.
Yes we complicate things a lot and one great problem is lack of concentration on any one method. We tend to deviate to any method when we have our hands on it and forget about our current trading method.