Giving up the pipe dream of making a living in Forex

Trading Discussion
1

I have seen a recent shift in the attitude of several of the posters here at BabyPips which I had to comment on. A handful of people coming to realize that making it big in the Forex market amounts to a pipe dream. That they will not see the day when they get to stick it to their boss and make $50k or more per year trading from home in their PJ’s.

People coming to realize the stark contrast between the two pictures being painted:

One, Internet forums where a sizable percentage of the members claim to be net profitable.

Two, the reality of Forex brokerage data releases - showing that almost nobody is making a consistent profit over a significant time frame of 3+ years. That the chances for success are much worse than the oft-quoted 5%.

Yet, the amazing similarity between the few net-profitable trading accounts is that most of them carry at least a six-figure balance. Furthermore, they are not treated like trading accounts at all! Make no mistake, the folks in control of these accounts are [I]investors[/I]. Their accounts are used to collect carry interest, diversify investment portfolios, and hedge currency risk. They are not trying to call tops and bottoms or generate absurd returns every year. They are not drowning in leverage up to their eyeballs. Yet, their accounts steadily grow by 3-7% on average every year.

There is no such thing as a long-term successful retail speculator. The only way to win is to have an information advantage. Or a whole lot of luck - even the roulette wheel creates a millionaire every once in a while. It takes a lot of humility to admit that we are not unique and special snowflakes. That all the hard work and motivation in the world won’t change the negative expectancy of the retail speculator. That the forum hotshots we have looked to for advice are not net profitable, but just addicted gamblers and/or pathological liars with nothing to show for all of the time they have invested in Forex speculation and forum posting.

You are not going to turn your $10,000 account into an income that allows you to quit your job. Not in five years. Not in ten or twenty years. You will just see your money and your time flushed away. Invest your time in something worthwhile. Something that improves your quality of life, makes you happy, or helps others.

2

There is a lot of common sense in what you say…and under-capitalisation of accounts is
what make newbies over-trade / over-leverage their way into the traders’ graveyard…

However, people like SimonTemplar, PipNRoll, and Emeraldorc are using Forex to invest some cash that they are making good returns with…

We should celebrate the fact that they are here among us…rather than flaming them (as some have been doing)…

Keep it real…but keep it nice too…we are all friends, here :))

1 Like
3

Allegedly.
But have you actually seen any concrete evidence of these good returns PipMeHappy?

There’s always an awful lot of impressive talk, fancy looking analysis & bluster doing the rounds on these boards, but rarely any proof or evidence that any of this activity translates into consistent profit.

One or two members are beginning to probe & prod some of these high profile posters to start stepping up & validating this impressive looking activity, but as yet its not forthcoming & until it is all this showboating has to be taken with an extremely large dose of salt.

4

I have, but I am tired of defending friends from faceless accusers who have nothing but bile.

Sorry, but I am not their solicitor and if people choose to think that they are fraudsters then it is their choice, as is my choice to trust some people and not others.

It’s a free world, but the difference is that my forum friends and I do not go around accusing others…

I am here by free choice; myFxBook account is public, and so is that of those who stand accused, allegedly, of the worst crimes.

It is like a Beckett play: the theatre of the absurd…

Time to ignore the bullies and get on with being civil to each other - and leave witch trials to the Middle Ages, where they belong.

Cheers!

5

I’m not trying to change your mind one way or the other. But this is what I found since starting to trade.

  1. You must be a master at measuring risk. From the time you sit down until the time you leave, 1st concern and only concern should be measuring risk.

I agree with you about trying to pick tops and bottoms, purchase of just about anything Including buying a lot of programs and services from my friends on this site, coaching, mentoring, subscriptions, tech analysis, fund analysis or marketers returns etc. (in case I missed anything). What you have to learn and apply consistently is risk measurement. Whatever you’re doing, trying, or want to do or try with regard to your trading method, the overriding factor has to be first; protection of your account balance and second try to add to your balance.

I agree with you about turning any amount into a full time earnings in whatever time. What ever your plan or goal is, the overriding factor has to be firstly protecting your account balance and secondly adding to your balance. Whether someone calls themselves: investor, speculator, marketer, retail trader, institutional trader, scalper, day trader, position trader, swing trader or anything else. to have any chance at your definition of success, will depend on how well you measure risk, protect your capital and add to your balance.

When any retail trader intends to make trading their career or business, they will be up against other people, algorithms, banks and just about anything you can imagine with one mission, cost you money; and make their profit at your expense. Forex is no difference than any other business. You invest in products that you expect to make a profit on and just like any other business sometimes it works, sometimes it doesn’t. Your are right when you say diversify, the same as if you opened any type of retail business, you have to have to diversify. If you opened a coffee shop, because there is a big profit on a cup of coffee, still diversify and purchase donuts, sandwiches etc., in case you have a slow coffee day. Any one who has a business or been in business everything is about measuring risk. And just like any other business failure is what happens when you try to operate under capitalized and don’t measure risk.

The people who hand out free advice and those that charge for it on this site are again the same thing any business person deals with on a daily basis with people who enter their place of business. You should offer this, advertise that, place this here, add this or get rid of that etc. You can and should listen but before you invest time or money measure the risk involved.

Like I said not trying to change your mind, just sharing my take while I’m handing out candy on Halloween. Good Luck with what ever you do.
Gp

6

PipMeHappy,

You do not need to attend on every “meeting” you are invited too…:wink: There are meetings that is worth attending and some meetings that will take your energy out and waste all of your time. Besides, these topic have been address numerous times and its not worth the battle to address it again. Its nothing new…

We all know (I assume we all know) that not everyone can be a successful trader but everyone are welcome to try. …Not everyone wants to be full time trader and not working on a 9-5 jobs. There are some folks who love/like what they do on their regular jobs and because they love what they do , its hard for them to give that up. However, they know they can do better and much more and they still looking to invest for themselves by learning how to trade to eventually add it into their retirement accounts or whatever financial goals they might have while still holding on to their careers.

It is not difficult to earn 1% a month. If you can just do that, you already separate yourself from anyone else and not being part of the highest percentage of what they claim are failing traders…

7

That’s barely more than the average annual return of an index fund. Factoring in short-term capital gains tax and you are now likely far below an index depending on where you live. So why bother? That’s not even counting the significant time investment that you spent, or the much higher risk incurred.

“It is not difficult”? Give me a break. It’s not difficult because anybody can Martingale their way to 1% per month for a couple years until they blow out. It’s not difficult because anybody can 3x leverage an AUD/USD long and collect the carry interest.

Difficulty and sustainability are two different things. I guarantee you do not have the latter.

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How right you are, my friend!

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Jolly, for a completely new member who’s only contribution has been this thread you seem to be well versed in the subject at hand

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I frequented other trading forums under a different name, and I’ve been lurking on this one for a while. I like what I have been seeing here lately.

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Yes, why bother? Exactly that is the answer I am looking from you.

You are right 1% is nothing to you but maybe to some , like me, its worth the effort and hard work. 1% every month , initial gain, when starting out… its worth celebrating and it is way better than a losing year. 1% a month I am already ahead of the game. I will just do a little bit more next year and the years to come. Every penny counts 1% a month is a great starting point. I am not planning to run a hedge fund company nor I am planning to quit my job ( I love what I do)…

Even you, yourself you mention about why not doing something worth while… I am doing something worth while… but probably not to you because apparently, 1% a month it seems its difficult thing to do and its “Just” 1% a month…with the attitude and mind-set like this… I am not surprise there are a lot of failing traders…

No offense… but this is how I look at it :slight_smile:

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We can throw around numbers all day. I already agreed with you. 1% per month is easy. Easy and sustainable are not the same thing. It is not worth it when there are proper investments with a much better Sharpe ratio and higher real return (15% tax rate versus 45% tax rate) elsewhere. It is simple mathematics.

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Right. Of course, you can find a better or higher rate of return if you do not want to do all the work. Its up to you and it is your own choice. Investment takes a while to grow. To me, it is no different when someone is starting out and learning how to trade. Like other investments, it takes time to grow. The difference is that, in trading, you invest more into yourself more than anything. The more you invest into yourself, the more chances you can grow. Like any other investments, you have to cut your losses short and get rid of the investment that is not profitable. In trading, you have to focus on your progress, improvement, and you are on your own… you either reap the rewards or you suffer from your losses but you cannot get rid of yourself (unfortunately lol)… It is a commitment and responsibility of what you are willing to give to yourself . If you do not want that then by all means look for other investments and let other people do it for you…but I would preferred both (to trade even if 1 % a month and other people invest for me)

14

You are right. There is no consistent short term edge in forex. The most consistent way to make money here is to bank on divergent central bank policies and this could take 5-6 months and a 300pip drawdown before fruition and this is how the big players do.

Now, are you going to quit or keep trying?

15

I agree with PipNRoll… I wrote a post, a while ago, where I was differentiating between the idea of ‘success’ as the stereotypical macho Ferrari-driving millionaire, and that of personal success: the latter is all about achieving your own, real-life goals. If achieving a +1% R.O.I. is what you set out to do, then you will have been successful…

16

pipmehappy, i think it is a bit harsh to call those “bullies” who ask thread vendors if they would supply a myfxbook.

perhaps you are too trusting by nature. but people do lie and stretch the truth out by alot. i have been duped once in the past by someone on here who seemed profitable …
my experience is likely not unique. now many users have grown more wary about just jumping into topics attempting to teach and guide others.

pipmehappy. i am going to use metaphors here …but what you tend to get on forums such as these is a load of yellow belts masquerading as 5th dan black belts claiming that they can teach others how to become black belts

if you don’t ask the right questions to some of these people you will end up being trained to yellow belt standard when in order to be making profits you need to be black belt.

then you go out into the big wide world as a yellow belt who thinks he’s a black belt, …thinking you can hold your own to other black belts [Anton Kreil, Al brooks, …etc] , but when the push comes to shove and the sh1t starts to get real you find you can’t hold your own and ultimately time and time and again find yourself beaten up in the alley requiring urgent medical attention [account top up]

the black belts wait for you to heal up [replenish your account], then over the next few months you get into a few more scrapes with them until again you are needing urgent medical attention…

and the cycle just keeps repeating itself, even if you give up and never come back, because there is always a fresh wave of other new yellow belts coming in thinking they are black belts…

I get that you don’t like seeing “friends” being suspected of lying and wish to defend them but i hope you are not letting any friendships cloud your judgement. Just because i get talking to a guy named harry whilst waiting for the number 12 bus …and he seems like an alright chap and a bloke i could see myself going down the pub with doesn’t mean i’m going to automatically believe him when he says he a professional basketball player for the NBA but the first time he picked up a basketball was two years ago.

I’ll always be that bit skeptical until i can see some hard evidence.

I’m assuming you like most other people got into forex with the goal of making money and a better life for yourself. friends imo are just a bonus.

If harry is offering to teach [and god forbid actually charge] don’t be afraid to ask harry to see more than a slam dunk.

treat forex as a business not a social club. and i say that in the kindest possible way.

17

Ultimately, some people take these forums too seriously… People on here come and go all the time, and if older ‘resident’ members want to share their experiences and are having some positive results, no amount of doom-talking will change the fact that they are happy in their lives and maybe make a bob or two on their trading account… We need to lighten up on here! Let’s take trade-talk with a pinch of salt and accept that we will never get to ‘prove’ or not if someone is or is not a ‘successful’ trader…

I am happy to believe that some people on here are genuine, because they are not here asking for my money, my address, or to brainwash me: I trade with my own style and around a full-time job…for fun… Yes, I may make a bit of money, but, like PipNRoll, I also love my main job, so trading is something I do for fun…I have not blown up any account yet and I trade small money…I like telling others about it not to con them or because I pretend to be some sort of finance guru, but because, as GP00053 was saying, if you manage your risk accordingly, there is no reason why anyone could not be successful at it…

:))

18

Very nice post defiance888 & a point well made!
Newbies seeking validation from those you refer to in your post is a long overdue default in my view. People, newbies especially, deserve total transparency & the more exposure this subject gets the better for all concerned.

Hopefully it will expose the time wasters & egotists & encourage all concerned to conduct more effective due diligence before investing their time & effort in these instructional threads.

I have scouted the forum before seeking publicly referenced fxbook or equivalents from these high profile posters but haven’t come across any at all. Perhaps it’s high time they began including them so members could judge whether or not they were worth paying attention to, because as you say there’s far too much kidology & low quality advice being dispensed from these senior members on here.

19

Yep, that is true. The fact is, it is difficult to make your ultimate goal of maybe 15-20% a month if you cannot even keep or achieve a 1% a month. You have to start somewhere at the very minimum or as an " internship/entry" level. Do not expect that you will start making money right a way. Any business started small. The first 5 years is a tough one to build, to sustain and to maintain. It is no different when you are trading. But there are a few exceptions that someone can starts, in about 2 years , with 60% plus ;).

Although, You do not set for less either. If you can make a lot more by all means do it. However, with the attitude like the OP , I think it will be best to start on a very minimum and bring that feet on the ground and start to focus more on the strategies and gain more knowledge before thinking about the rate of return or maybe it will be best for him to just let someone else take care his investment…

20

Once you gain more knowledge and confidence of what you do, I think it will come to a point where you will seek other venues where you can learn more. BabyPips community is a great starting point to anyone but I have come to realize that a lot of good folks cannot stay on here much longer. Just like other contributors that comes here before me and have contributed a lot of their time without asking for money and they do it all for free… It is very unfortunate but sometimes you have to think for yourself if the time you spend can help you and others to grow or is that time spend will prevent you to excel and hone your skills and talents…

Focus more on how you can grow and improved because you are not just like everyone else. This is what winners and successful people do… They constantly looking for ways to improved and at the same time , they keep their feet on the ground…