Hi people of the FOREX community!

@Simeonquant I notice you are a quant. Does that imply a physics background?
As in quantitative analyst?

@Simeonquant I just noticed that you said we seem to have things in common. I think we have more in common than either of us thought. I have a physics background. Military not finance though.

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Yeah I’m sure they are areas we can Callab on looking forward to it… The military give a good grounding in assessing risks and adapting to changing markets.

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@Simeonquant yes they do. When I said 98% fail due to brokers, it is just a number.
What I meant was that the expectations brokers instill in new traders are way too high.
And as you mentioned there is the way they stop hunt, etc. YouTube is rife with false representations. Get rich schemes, etc abound.

I think we are all saying essentially the same thing.

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There is one other thing I would like to bring up here. I have a suspicion that demo accounts are far from innocent. By that I mean if you use a demo account with your real broker he is going to see the way you trade and he can then adjust his side accordingly. Just a thought?

Any thoughts on this?

I don’t believe brokers are out to get you, not in that sense anyways. Large, reputable brokers want you to succeed to a certain degree so that they can keep collecting their fees.

Also, I see no reason not to trade naked, as long as you’re in your own home and not in a public space.

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Hi @MattyMoney if only that were true. If you read most of the PDS documents from any broker you will find that they admit to being the counterparty. I am in Australia and I have just done a lot of research on this matter. In fact the regulator here is about to limit the leverage on FX to 1:20. They have done their research too.

I trade mostly indices as in the S&P500, DAX, etc. Rarely FX.
Naked trading is just a term I use. Lol I never use stops either! Well I do but they are hidden.

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Demo accounts, IMO depend on the broker. Some are a good representation of live trading while some run on a loop. They are great for learning but can create false hope because individuals take chances they never would if on on a live account.

Experience is the only way you can get good at this game so opening a demo account with only the money you would use in a live account is important. Even better is practising on a live account using only a fraction of the capital you are willing to trade with long term. However, new traders typically don’t have the discipline or mentality to do this.

Yes, you are right there. What I meant was that we all use demo accounts to develop algo’s or I do at least. That means the broker can see just how your algo works.

Maybe I’m paranoid?


You can’t be too careful, you never know who’s watching you trade naked, lol

Lol! It gets cool too!!! Haha

Yes, this is so. Which is why it is strange that it is so often claimed that the banks are running retail traders’ stops. For one thing, these institutions are not interested in the peanut sums that most retail traders are risking - and even if they did run the price up and down, they would gain nothing since it would be money in the broker’s accounts and not the banks’.

There are certainly times when prices are moved to a certain extent by the professional participants but it is hardly credible to imagine that they all “club together” and plan their moves for the day! They are all trading the same market as everyone else - they just have different agendas and perspectives, as well as proper training, a minimum standard of abilities/capabilities and a greater access to revelant resources.

I do not believe that any broker targets individual clients, but they do, naturally, monitor their overall exposure, order flow and location of market orders. Whereas a broker may be guilty of various devious practices such as widening spreads and trawling in stop losses, I am sure that most of the time the broker does not have to do anything to profit from the clients since the majority of newbie traders are more than capable of losing their money through their own mistakes without any help from the broker!!

But many of the newbie traders make it too easy to be taken advantage of simply through the way they trade. One can see on many, if not all, of the trading journals that appear on BP, that new traders, and those with small balances, tend to trade on short timeframes with TP and SL typically in the range of 10-50 pips. In volatile markets such as forex, this is actually a game more suited to highly experienced traders rather than beginners.

It seems hard to believe for Newbies but trading longer term with, say, daily charts is far more reliable and almost impossible for brokers to manipulate due to the greater distances to TPs and SLs. The trouble with this, thought,for the average Newbie is that the greater stoploss levels means smaller positions and longer waits for a few dollars profit - it seems far more attractive to go for the quick 10 pips with a bigger position. But in reality this rarely works consistently!

The sad fact is that there is no minimum bar level for entry into the retail forex markets and inevitably there will be many that simply should not be there and are fleeced very quickly - either deliberately or by sheer own ignorance. :thinking:


Congratulations @anon46773462 you have just hit it right on the head! I couldn’t agree more.
As you said, scalping appears very attractive to the nube. And again I agree the longer timeframes are the way to go.

I think too that traders, especially new traders should do their due diligence before trading. But sadly it seems they just go in with the expectation of easy money.

I have been trading for a very long time with very many brokers and very many areas. And I would say it is the hardest thing I have ever done. I came here just to get a gauge of how others perceived the FX market really. Call it research. I just throw ideas out there and see what comes back.

If you really believe its a crooked game, you must leave trading. If you don’t leave trading, that can only mean what you say and what you believe are two different things.

@tommor that is a very simplistic attitude. I do think the brokers are underhanded. It doesn’t mean I don’t make money. It just means we all must be vigilant.

This is interesting when joined with your earlier comment that:

There have been a number of experienced traders here recently who have been saying the same thing. I.e that trading indices and commodities is far more preferable (and presumably profitable) than forex. I have also gradually migrated to the same markets from forex in recent years but only really because of the Brexit syndrome and the uncertainty it brought in my key pairs EU and GU - otherwise forex has always been a challenging but profitable market for me and I am slowly moving back into it again.

What are your reasons for not trading forex (very much) and is this a permanent state or temporary?

I found that FX is just too volatile. In recent years it was not too bad. But recently it has become too volatile, for me anyway. Some people say it is due to high frequency trading.
I’m not sure just what it is, maybe world events. But volatility is my reason.

For instance it is not inconceivable that say the GBP/? could drop by say 100 pips in a heartbeat. Also if you look at the EUR it never has the types of steady trends it has had in the past. It is mostly just choppy.

Indices are far less volatile, just my opinion.

Forgot to say that Brexit has had a profound effect on the pound, and if it actually happens it will possibly just get worse. US China trade wars, Trump, etc…

I certainly agree that the EU pair has probably been a very difficult pair to trade all this year - even on daily charts. This is what it looks like for 2019 so far:

But, surprisingly, (or maybe not!) the eurgbp has been trending very nicely this year in comparison. But I think the uncertainty and fears arising from markets reacting to political events and comments rather than economic factors has probably thrown a lot of even longer term traders out of this market at various times- especially during that ringed patch! :joy: maybe @tommor has something to comment on that, being a longer term trader?

But when it comes to the SP500, I am sure you will agree, since you trade it, that a 100 pips is like nothing! It offers very big moves in terms of pips and the moves have been quite orderly and durable - but it also has its scary moments - like these last few days…and these are 500-1000 pip daily moves!:

But indices and commodities are just as vulnerable to events such as Brexit. And perhaps even more so with respect to the US-China trade war and its impact on global economies. And other Mr Trump influences such as Iran and Venezuela don’t exactly help smooth things either! :joy:

But I think one of the key difficulties affecting volatility and uncertainty in forex is that each pair is not one but two sets of economic and other considerations.

But the other major influence that has been mentioned is the impact of automated trading and although that has been studied by numerous central banks, especially with respect to the black swan type events, it is still unclear how much these programs actually distort the price flow and even if they have enough volume to do so. But there are signs, such as the JPY spike in January that they are indeed a threat in thin markets!

But the fascinating and unresolved riddle is why, when these spike and unexpected volatility occur, it is always in the wrong direction!!! :joy::joy::joy:

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Hi @anon46773462 you have outlined it perfectly. The S&P is still in my opinion a clear winner. Large moves are good as long as they are in an orderly fashion.

Consider this also. It is technically possible that a currency could go to zero. It could do it so fast that it gaps, your stop loss will not trigger. (If you use one)
There’s your house gone.
It happened in 2015 with the Swiss franc. We all remember that.
(Not zero but a huge drop)
For the same to happen to an index every company in it would have to go bankrupt simultaneously.

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