Forex is eventually a scam, a losing gamble, not trade

Beginner Questions
1

Hi All,

I am not quite a newbie, in short I started GBP/USD forex last Oct, made £7k by mid January and so was “really unlucky”. Lost that 7K plus 12k by end of Jan. restarted with tiny deals then lost 2k on Brexit, another 2k on Pound flash crash, finally moved to EUR/USD and lost another 2.5k last week after a patient waiting of 3 months of open mixed hedged deals.

My conclusion is this: depending on span of time you eventually lose. If 5% people win first year that drops to zero eventually.

I don’t think there is any winning strategy because if there was there would have been a winning robot but such robot would not be sold obviously. Since there are many robots on the market it means there is no strategy.

We tend to grab profit early but leave losses too late or never close them.If you hedge them you enter a mess of false wins.

Any thoughts welcome. I am actively resisting the addictive nature of this scam so called trade (gambling in fact).

Regards

2

Might sound rough but the only conclusion I can draw from your posts is that you have been trading ridiculously large positions whilst you still have hardly the first clue what you are actually doing.

You wrote last November:

“I understand that exchange rates follow supply/demand but how and who physically decides the chart at any moment.”

Whilst that is a perfectly valid question from a Newbie on a site dedicated to helping beginners, it also shows that you are right at the beginning of your forex learning curve - but then in your post above you are telling how you are making and losing [I][B]thousands [/B][/I]only a few months later - when other Newbies would still be trading small lots on a demo account and studying…and then you blame the markets for your losses and predict that no one makes any money after their first year???

I think the most appropriate word in your post is “addictive”. But you are not addicted to the foreign exchange business such that you want to study it and be a professional class participant in it, no, you are addicted to the idea of making a million very quickly and driving around in your expensive car without even knowing what you are doing.

There are many posters on this site who have been trading many, many years and are giving sound guidance to people like you (you have already “met” some of them on your other threads). Ask yourself, would they still be here if they were not earning from their trade? But also ask yourself would they be here if they were multi-millionaires from their trading?

Although I have no evidence for it, I do suspect you are right about robots. Markets are not homogenous or regular in their movements and characteristics and for that reason I do not see how a robot can be programmed to perform at all times in all market conditions and to self-adapt to the gradual structural changes in the way markets move. But I have no experience in these things.

I think you have to decide are you only trading for the lure of the big money or are you genuinely interested in foreign exchange and wanting to learn about it in a professional manner? If it is the former then find something else to do. If it is the latter then prepare yourself for a long and gradual learning curve which will incrementally reward you both in job satisfaction and financially, and maybe one day reach a stage where your earnings are actually a source of pride and satisfaction to you, especially being the result of your own dedication and efforts.

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3

Kadhiem,
If I got into my car and drove around with my eyes closed, eventually I would have a serious accident.
This doesn’t mean its a dangerous car, or that all car drivers will eventually have serious accidents, it means I dont know how to drive safely.
A bit like your trading style

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Sadly numerous forex traders treat their forex trading exercises precisely like a gambler would. Numerous forex traders get to be distinctly dependent on the sentiment hope, basically they get to be distinctly dependent on the sentiment getting rich. This psychology makes them behave like a casino gambler and it causes scam in the forex market. If anyone has the proper education of forex trading, he or she definitely believe that it is not a losing gamble, it is a trade. I personally disagree with those who think that forex trading is a gambling. Having long experience and proper education, I am able to make profit from forex market. Don’t trust your friend who is supposed to gamble in forex market. Try to learn and believe that forex is not a gamble it is a business.

5

First, I’m sorry about your losses.

Well, I hope that mine won’t offend, but I agree with the posts of Manxx and Carlos, above.

My conclusion is different from yours.

Mine is that you eventually lose, [B]if you don’t master position-sizing and probability basics[/B] (and incidentally learn that “hedging” isn’t relevant to retail forex traders).

This assertion is just factually mistaken, pure and simple. Sorry.

6

Just spent money that afford to lose, I am always using this quotation to investing in forex account trading, because in my experience also still hard to making consistent profit sometime I can increasing profit more than one hundred percent a month, but also often next month decreased and loss again

7

Can high LEV be the problem maybe?

Im to new to trade to give you any advice but i have already understood something :

  • Market owes you nothing.

Im sorry for your story, hope you will give it another try with clear mind.

8

SOrry for your losses…

THis quote from legendary trader Livermore shows that in certain markets with huge personal capital you CAN

move price… however if this does not apply to you then you are at the mercy of bigger players (banks) who

can and do make price move around in the currency markets through the sheer amount of capital as well as

all the sophisticated systems and checks they have to be ‘on the right side’.

But I know little of this - Manxx has worked in that environment and would be better qualified to comment.

Here is the LIvermore quote:

Screenshot 2017-02-13 at 14.59.21.jpg700×358 37.7 KB

Given that we are the smallest fish in the pond - a 100000 position won’t even tickle the price of, say, EUR/USD -

we are indeed at the mercy of markets, seeing our profits build and just as quickly taken away just when we feel

(based on performance) that we are having a positive build-up of good trades…

Problem is: you are alone in this… Just like running a one-person freelance business, you have to make all the

decisions… But when you open a shop there are lots of organisations that can help you with business advice for

that kind of trading… When you open a Forex account, there is hardly anyone that you can call on for advice…

So you come to Babypips and there is a symphony/cacophony of voices, tips, and advice, which can be utterly

confusing: who do you listen to, and to whom do you turn for good advice?

My experience is similar to yours, only I lost a fraction of your money - also in the Pound flash crash last October -

and after almost five years I am back to demo… but it can get pretty low and you may never recover.

My advice to you and to myself is that in this business in order to succeed you need to know the market, what

the opportunities are, how to set up a business (i.e. what you starting capital should be), what your goals are,

and get trained up.

To give you an idea - take it or leave it - I now run my own teaching business for music pupils and I am paying

a mortgage, taxes, studio hire, and all manners of expenses and am just about breaking even, but I took the

plunge from working as a full-time music teacher employed by a large organisation and it has paid off. How could

I have done this without the years at university, practising my music skills that I now teach and get paid for?

The amount of investment I put into my music business in terms of previous training far exceeds the famous

10000 hours and the money that went into it is in the thousands or tens of thousands… Compare this to how

little training I had in Forex before I tried trading it live and you can see exactly where the problem lies.

Manxx says that time is not an issue if you are interested in something and passionate about it: I disagree,

because time IS money, especially as time is a commodity that is finite and the older you get the more valuable

it becomes. Well, I don’t think anyone could argue that time is valuable… the question is: how do we want to

spend our time? If spending it on a pursuit such as learning to trade is definitely worthwhile, then so be it, but

it has to pay off at some point, perhaps not immediately but maybe further down the line…

You cannot just treat it like a hobby and be content with that if you are intending to make money out of it,

because making money from a business is different from making money as a hobby., Okay, i mean that

you can go to the casino to take your chance at the roulette to make some quick money, but that is not

what you had in mind, is it!?

So if you want to make trading work for you it will take more than funding an account and taking the Babypips school: it

will need proper training, proper tools, lots of practise/study BEFORE risking real capital (and then there should be

enough of it to pay off for your time).

So it is tough, and it can feel like a losing game, but it does not have to be…

9

I could write something, but Manxx has already said what I would have said.

Forex is not a scam, nor is it a casino. It’s a business, a tough business.

10

As a retail trader, this is absolutely right. No matter how much you talk with others, and with how many, when it comes to the entry and exit, you are alone. Of course, if you “trade” someone’s mechanical or automated system then there are no such decisions to make, but then that is not really trading on a personal level.

Regarding advice, there is plenty of good advice in the quality reference books regularly posted in various threads but this is mainly useful in understanding the backbone of risk control and managing funds and various trading techniques. But one is still alone when putting it all together and formulating a comprehensive trading strategy …and then [I]implementing [/I]it in the market place!

Apart from that, the industry is stuffed with junk material and “advice” from sources that are only after your business and are only concerned with their own best interests at the expense of your’s. How can one evaluate and differentiate the wheat from the chaff? In the end one is left to trial and error and the “school of hard knocks”.
I guess one of the biggest problems is the sheer unpredictability of what is going to happen next. Nothing about price movement is constantly and consistently smooth and regular or rhythmic or cyclical. It is intensely difficult to incorporate an allowance for the totally unexpected within one’s trading parameters - and, of course, it is precisely the unexpected that does the damage, both financially and psychlogically.

Yes,I agree with you entirely. That is why I have often written about the dangers of trying to trade forex for a living. The pressures are huge and the need to perform consistently will draw you into making rash and risky trades - and when they inevitably fail they only increase the pressure to perform even more to recover from them. It is almost impossible without serious study and experience and a healthy capital balance - and even then it is not a very desirable way to make a living for many reasons.

I don’t think we disagree over this much at all, actually! Of course you cannot treat trading as a hobby if you intend to make significant money. But there is a world of difference between trying to be a professional trader and trading alongside one’s main income with a view to building capital and even the occasional “treat” out it! :slight_smile:

All I have said is that if one wants to spend one’s spare time on learning and practicing trading then this time does not have to be quantified in money terms because it is not a business, it is a hobby. Kids’ parents here spend a fortune on kitting out the kids to play ice hockey and devote hours running them around from place to place, match to match, the value of that time is the way it is spent with their family. It is all about priorities and ambitions in one’s life. And what is right for one person is not necessarily right for everyone else - and vice versa. It is surely a totally personal decision how we spend our time (and money)?

Having said that, I am not advocating that trading as a hobby is should be approach in a sloppy and haphazard manner! The ultimate objective of trading is a net profit and that requires work. But that work is in the same manner as an amateur artist, author, car renovator, musician, and so on. If it is what we want to do and we have the resources to do it, then the time we devote to it is not valued in terms of money at all, it is a question of satisfaction and personal achievement.

I do know what you are getting at, though. I too have been (and still am) self-employed. In my earlier business, you never said “no” to a customer even if it meant working through the night to get it done. It was not just about money, but about customer satisfaction, reputation and repeat business. It that environment, time was certainly money. If one is to devote time and capital resources to trading part-time then it certainly has to be considered from an “opportunity cost” perspective - resources can only be used once.

Yep, I guess that just about wraps it up! :slight_smile:

11

Thanks all for your time and advice.
Apologies I meant I started Oct 2015 (not last Oct as I am a bit a disoriented, working pensioner).

I do feel there might be a safer way to lose small amounts (ok to win as well depending on time span).
I am, however, angry why brokers allow clients to drive their car so fast and blind folded. They have moral duty not to behave like sharks. I was allowed maximum half deals for 2 weeks or so but could have opened as many deals as I wanted anyway. I was aware of possibility of loss but not that steep.
The prediction surveys of various brokers varied and contradicted each other, reports were misleading but all were saying - for example- that Brexit effect had already been absorbed into the current market. Eventually and due to stress I just closed all deals of that black January 2016

The brokers attitude doesn’t look honest, their spread tactics(for new deals and high spikes) are dubious and their legally imposed warning is not enough to protect people from quickly losing money they earned over several years of hard work.

12

Hi Kadhiem,
That is a very sad situation and you have my deepest sympathy for your experiences. You are really learning the hard way!

But my overall assessment is that foreign exchange trading is not for you at all. It is very demanding at ALL levels, there is no easy or safe way to trade it.

Regarding brokers, they recognise the requirements of the regulatory authorities (and not always even that much!) as the limit of their moral duty to their clients. Your suitability is left pretty much for you to decide. They will only advise you that trading forex involves risks and that you should only risk what you can afford.

In some ways, it is correct that traders take responsibility for their own actions, but I agree that there could be more specific warnings about the possible extent of risk - but ultimately it is like smoking, how far should governments and companies go in deterring people from doing so without infringing their freedom to make their own decisions.

I would guess from your interest in trading GBP that you are based in the UK. This is a demanding currency to trade even under normal conditions, but for a novice to trade it during Brexit year and beyond is truly high risk even for professional traders and veterans in the retail trading sector - personally, I think you should not risk your retirement capital in such verntures. Sorry, but that is my view!

13

I hear you there.

Some are unregulated; some are inadequately regulated.

The ones most accessible and attractive-looking to neophyte traders do tend to be the worst (strictly speaking, they’re not “brokers” at all, though they’re allowed to present and promote themselves as “brokers”: they’re actually counterparty market-makers whose own business model typically depends on their clients losing money). Appreciating the differences between these operations and genuine brokers often requires some experience … in some cases expensive experience.

However, this may [I]not[/I] be what underlies your own losses at all, of course.

It’s probably not what you want to hear at all, but I’m afraid I agree with Manxx’s post, and his conclusion, just above. :8:

15

Thanks for your post, Keith (Manxx),

and I should add that all of my opinions are

really shaped by my recent experiences, so

they really only reflect my own weltanschaaung,

my vision of the world, from an inevitably narrow

window of what trading is: had I experienced what

others here have experienced, I may think entirely

differently. I am guilty of having made some broad

generalisations where really I should stress that these

are not applicable to all people, obviously.

In my heart of hearts I wish I had a mentor that I

could work with face to face and who could show

me how ‘proper’ trading is done… I know that it could

make all the difference, but that kind of mentorship

is precious and rare, so unfortunately I cannot have

it.

16

That is totally understandable and entirely natural! :slight_smile:

But, you know, it is surprisingly just a difficult on the other side of the fence! It is one thing to be responsible for one’s own trading, but entirely something else to manage others! It is a huge challenge to guide others but simultaneously granting them sufficient room to grow individually and at the same time restricting their risk of damage. A simple limit on position exposure is never sufficient.

I think you have shown very many talents in your trading journey so far and you already possess enormous experience and knowledge about trading.

I think, if anything, you may be too early in placing so much importance on results. Results wont produce the method, but the method will produce the results.

Everyone starts somewhere and most people start from small beginnings. It is only once the knowledge and experience can be combined with confidence and the beautiful expression: a “positive expectancy” that one should start to focus on the reality of the possible returns.

There are so many factors that make up one’s trading profile and they need to be logically identified and arranged and quantified. For example, trading style (fundamental v. technical or a hybrid of the two), time frame (weeks, days, hours, etc) position size, risk per trade, which markets, etc, etc.

You already possess the knowledge to create all that. Personally, all I think you need to add is a model that tells you if the rest of the trading community is currently thinking the same way. If not, bow to the greater knowledge. if so, then just “go with the flow” :slight_smile: Typically things like 200 SMA etc,etc.

Interestingly, this is precisely what I am currently doing with Turbo’s high 5. It is an attractive idea but I am not at all familiar with longer term, breakout methods and I am looking at how I can make it work for me within my own criteria. You have the talent and the intelligence - just don’t look for results before the process. Just a personal opinion, as always, friend! :slight_smile:

17

Nobody can call Donchian breakouts “unsound” in principle, anyway - this much is for sure. It appears that Turbo has come up with an interesting “take” on them. :cool:

18

I agree that there are many brokers who trick their clients but cannot agree that Forex is gambling. It is a tough business, yes, and it’s not for everyone. It takes years, lots of practice, analysis and research to eventually be able to make significant profits. But not everyone have the time and patience to do that as in the end, you really need to commit to it. Otherwise you might indeed lose too much. And I am really sorry that you had such a tough experience. Perhaps it would be better if you take a small break and give yourself some time to decide whether you really want to continue trading and if it’ll be worth it for you. And if you feel that your broker hasn’t been honest with you, withdraw your money and close the account, there is no point on losing even more.

19

No, all of trading strategies are not unprofitable actually; here money management is very important issue! But it’s true; there is nothing like 100% in Forex business! Even, if you get only 70% success by your strategy, till now you have a chance to become a successful Forex trader, it’s all about money management and risk management knowledge!

20

Well I wouldn’t say it is[I][B] ALL [/B][/I]about money and risk management. But you are right that without this then even the best of trading strategies may not actually succeed.

But, of course, all trading has to be based on a sound approach to actual position-taking that has a track record of consistently producing the risk/reward parameters on which the risk/money management criteria are based.

Without that, the best that your money management can do is ensure that your account disappears extremely gracefully in a series of well-planned, smoothly executed, and beautifully homogenous losses, 2% at a time… :slight_smile:

21

There’s no discrimination whatsoever between institutional & retail environments as far as those terms & labels are concerned.

Politely, to their face & in any correspondence, they are of course clients or customers, but in reality & in-house, they’re all punters whether they’re transacting via institutional brokers or retail bookies.

They all simply place bets on the movement of financial instruments but generally the only crowd that gets sniffy about these labels & what it is they’re [B]actually[/B] involved in, is the retail sector. The vast majority of professional players really could care less & quite often refer to themselves as punters/gamblers.

They’re simply industry terms that get bandied about every day of every week & which just so happen to accurately describe the endeavor that’s being undertaken.

Underfunded & ill-prepared retail punters are by no means the exclusive donors of broker profits. Professional punters swell the satchels too on a very regular basis.