I am fairly new to forex trading. I read the statistic that 90%-95% of forex traders lose money. However, reading forums such as these there as so many systems that claim to have profitable results, and are backed by literally thousands of posts on each system. How are so many people losing money if it’s as easy following a free system posted on the internet? Are these systems not actually profitable, or are the masses too stupid to follow the guidelines exactly?
Another thing that I find laughable is when people say you need to find a system that fits yours personality. What does following directions have to do with my personality? Take the Ozfx system that I have been reading a lot about recently. It has clearly defined entries and exits. There is a right and a wrong way to follow the system, it’s not subjective. I probably could have followed the system in 3rd grade if I had someone to teach it to me. My personality has nothing to do with anything, I either follow the system exactly or I don’t. So what do you think, guys, do most traders lose money because the systems are not profitable or are most people just too stupid to follow directions?
So what do you think, guys, do most traders lose money because the systems are not profitable or are most people just too stupid to follow directions?
This is basically the answer, but not quite, people think they
are too CLEVER to follow a system or they need to make the
system more complicated.
That is the reason for finding a system to suit your personality,
if you can’t sit still on a trade find a scalp system, if you are
ok to set the trade & leave it, go for a longer term system.
But when it gets down to the nitty gritty most people are looking
for a get-rich-quick scheme & gamble rather than trade, which is
a sure way to lose it all, takes too much time to learn to trade.
Following directions has a great deal to do with your personality, actually. If you’re an automaton, mechanistic adherence to a system is simple - ask anyone that programs expert advisors. Inclinations, appetites, misgivings, overconfidence, naivete, bias, impatience and plenty of other foibles all dictate and in many cases can sabotage your trading. Methods/systems vary in quantity of entry signals generated, screen commitment, amount of capital risked, timeframe used etc., with a method configured in one way more amenable to a person with a combination of personality characteristics than others. Both of the reasons you’ve provided concerning why traders lose money are correct, but there is a third - lack of candid self-understanding - that is primarily responsible. You could call it self-stupid, if you like.
And I don’t simply mean “personality type A matches well with system A1, personality type B matches well with system B1”, etc. I mean what most traders - and non-traders - lack: humility (before the market in our case) and a developed capacity for self-cognizance, self-criticism, self-correction and discipline.
Add all of that together, and it is no wonder most (the 95% statistic was originally directed toward futures traders) traders fail, despite manifestly simple and objective entry and exit criteria.
IMHO,i would say that so many people are loseing money because of education.
Have anyone tried to open an automehanic reparation store after reading 5 books about automehanics?Or has any one tried to fly an jumbo-jet after playing simulation game on PC?I think that there are many peeps who just cant wait to start trading live and have not enough patience for learning proces.So they lose.
Also,i am shure that there are many people wich are thinking that they can open micro account with 500$ and become rich mother f…s in few months,but all they get is - on they account.
For shure,there are more reasons why one can lose $$$ on FX market.
I am stil faaaaaar away from even thinking about opening an live account,and i am aware that i must live,eat,dream(this one is for real,when i lie down in bed and close mine eyes i see candlesticks jumping around! LOL),breath FX on dayli basis because IMHO this is the only way.
But approaching the subject with common sense and cool head could help a lot(i think so…)
Cheers!
VingTsunKuen
In part, some of the systems you see out there aren’t work the time it takes to read them. There are a lot new traders trotting out ideas they have which either haven’t been properly tested or are only good under certain types of market conditions. The other part, as others have noted, is lack of education, an overly inflated ego, lack off appreciation for the risk, and a few other related elements.
Another thing that I find laughable is when people say you need to find a system that fits yours personality. What does following directions have to do with my personality?
I’m glad you get a laugh out of that because I’ll be laughing as I take your money.
OK, that might have been a bit more mean than I’d usually be, but you’re speaking from a decidedly narrow perspective and without much in the way of experience at all. If it were only folks posting here saying matching your trading to your personality is important, then you might be able to write it off. However, when folks who have made many millions of dollars in the markets say the same thing, I think you want to take it seriously. Read Market Wizards.
[B]If you think it’s a matter of intelligence you’ve got a LOT to learn. Psychology plays a huge roll in trading.[/B]
As far as a system that fits your personality. I see your point and to a degree I agree. Our whole purpose is to make money. Whatever system will do that for you is the one you should be using. One that fits your personality [B]could[/B] possibly be easier for you to make money with though.
What’s the point of doing all that stuff if a system like Ozfx’s works? I guess what I’m asking is do systems like his (or the Cowabunga system for another example) work? Because if they do I don’t see the point in doing all that work.
I don’t know either system, nor do I care to. That said, it’s more a question of whether [I][U]you[/U][/I] can consistenly trade the system. The best system in the world doesn’t mean much if you can’t stick to it. And systems which don’t fit your personality are hard to stick to because they will invariably do something which is counter to how you operate. Some have long drawdown periods. Some require more or less risk taking than is comfortable. Some don’t operate in the right timeframe. All systems go through rough patches, which is when folks tend to bail out of them because they don’t really have the faith required to stick it out.
A system won’t work by itself…it needs a trader to take advantage of it when it’s in the “best interest” of the trader to take the given profits.
Not all signals in any given system are created equal. Some are valid, some are fake…some are strong to get many pips, others will give some but may not reach the target before becoming a loss…how will you know the difference?
Just about any system will work, but if you work it like a robot, it won’t do as well as if you work it with an edge/knowledge. You get that edge/knowledge by “doing all that work”.
Just like driving…sure the car works but do you know how to drive? Did you learn to read the street signs, know what the instruments/switches on the dashboard mean/do…cause if you don’t you’ll surely get into an accident! :eek:
I am sooo new in this FX stuff…
But mine sense is telling me that only way to be successful is hard work,not taking others hard work.
I have NEVER think about taking some others system when the time comes to think about systems…I am the kind of person that likes to do everything on mine own rather than let others do it for me…A part of this attitude is that i have confidence in my self and i believe that when time comes i will be able to make a damn system.
Mine decision is to trade for a living,it will take few years but this is possible.
May be you have different intentions when it comes about trading.
The point is you MUST know what you are doing.There are bypass ways,but usualy in life they are wrong ways.
Cheers!
VTK
Meaning, “are they profitable?” Two very different systems which are both, generally, profitable. What does that mean, though? Profitable in backtest, or profitable as they’re traded forward by specific traders? There’s usually a significant difference.
Making a system “work” is, again, more to do with the trader than the system. Take a better look at OzFx, as an example. Not the outline of the method, but the “signals” Oz would provide and the way in which different people would interpret them. Even Oz would generate signals that didn’t correspond to the original system and weren’t taken off of AES - Oz simply conjured up trades that were loosely based on OzFx (who knows, maybe he thought they were legitimate) but did not correspond to system criteria. Others, who aren’t “dumb”, look at the same entry and money management criteria and have remarkably different trades.
The best thing to do is pick a system, backtest it, develop some data on results, and then begin trading it forward. And for added value to the experiment, do it dumb (well, uneducated) about the market but doggedly follow the system, just to see if that’s all it takes. You’ll soon see what everyone here is talking about…
I guess “a system that fits you personally” has more to do with your work, time you spend in front of the computer, the money you can risk, etc. rather than if you are funny or depressive.
This comment has already been mentioned, but I think it’s important to mention it again… “Personality” in trading is more or less how you prefer to trade the market. OzFX for example is a longer term strategy that involves trades being open for anywhere from 1-3 or even 4 days. Scalping on the other hand is when trades are on the table minutes or less. Ingots Rainbow on the other hand is a very long term strategy with trades open for weeks or months… All are viable strategies and tend to work if you can “follow the rules”, but where does personality fit in? I, for example, tend to be a bit ADD. I like to get in and either walk away and do something else, or get in and out in a very short period of time. Others may feel comfortable with a strategy like OzFX where you open a trade with a 100-300 PIP stop loss and let it ride for days… Not me. Can I follow the directions on OzFX? Sure! And I have. I actually did ok with OzFX; however, it didn’t fit my personality. I don’t like having my money (fake money at this point) out there in this volitile market for days, but I CAN - just don’t want to.
I also want to offer another perspective on things… A strategy that uses indicators may have clean cut rules on when this oscillator does this and that, buy. But do you know WHY? I came into this Forex stuff about a year ago with a similar attitude as I’m seeing here. After screwing around with every indicator under the sun I realized that just throwing indicators on a chart doesn’t make me an expert. I needed to know what each indicator was trying to tell me… I ended up surfing the internet, reading technical trading books and Borders, and researching forums to find my answers. Trust me when I tell you this! Knowing WHY a stochastic moves the way it does, and how an ADX can give you an idea of what may happen, or what the RSI is telling you when it’s above 80 is VERY VERY important… simply looking for patterns won’t always do - I wish it was that cut and dry…
Have fun learning this stuff. It’s all very fascinating! It’s like a big challenge, and if you have a competitive personality, use that to your advantage and learn learn learn as much as you possibly can.
I normally say happy PIPing, but in your case, Happy Learning, then Happy PIPing!!
speaking chronically, losses come from trades you close at a loss and ones that are closed as part af a margin call… neither being productive, it can seem hard sometimes to choose to avoid one or the other… then you get that rogue news report you didnt read for the pair that u ordered on count that it couldnt get any worse, but it still is… when to pull the plug…
Yep, sorry, I did a mess with the pages and I was commenting one older reply. Anyway is good pointing it out again.
But once I’ve started with that I would like to comment another thing that is passing through my mind these days, and is the insistent advice about not going live until you are absolutely profitable in demo.
Well, what I see is that I graduated in the school of Pipsology and read some books and demoed for less than a couple of months and, honestly, I think that demo is fine to learn the basics, patterns and to how to use the indicators (even if i would need a deeper insight of each of them as scotty says). On the other hand, I feel is very easy to be profitable demoing with a $100,000 account (I already are being totally ignorant in this business), where you have much broader margins than I could afford, risking much more that I would do, and when, to put it short, you are not [I]sweating[/I] each trade you are entering.
I understand the point of not going live when you are a beginner and also the advices about not opening an account with less than $1000, because you are going to lose your money. But I think too that just with demoing you will never put the neccessary effort on each analysis to make you really learn and deeply understand what is going on, because, let’s say it, when is real money involved you really put the effort.
Yes, you know you are not going to be profitable with a small account beign a beginner, but even considering that you will lose it all, is it not a fair price to sacrifice a couple hundred of bucks to have [I]real[/I] training?
Btw thank you scottyPIPin for the welcome and for the advices . Maybe do you have any good resource for learning more about indicators? (or you just wikipedia them)
id agree, thats why i did some demos weher you can set the starting deposit and did it for what i could do, then i jumped straight into live with a cents micro account and $20 deposit, man… that first 20c profit i closed was a feeling i never got on the demo servers…
when its really your mony and the profit or loss could really be yours the heat is on, and the emotions really come through…
Damn, finally i see some intelligence spark on this forums! Hayden, good on you for going live, put in a bit more around 200 buck will give you plenty of practice on micro lots, even if you blow the whole thing, the lessons you learn will cost much more!!!
LOL),breath FX on dayli basis because IMHO this is the only way.
