I think that central banks have a vested interest in the value of their currency so they “protect” certain levels by buying their own currency in huge amounts in order to keep it from dropping past a certain level.
This is one reason why sometimes we see very powerful support levels. those order flows are coming from huge money, not just hedge funds and such. So if a central bank is intentionally raising the value of its currency, and there is bearish sentiment (which causes price to drop in the first place) than when the central bank buys the value goes up, the bears lose money and are forced to buy in order to close their position hence raising the value further.
It is zero sum but not in a gambling sense. It is more a balance and when there is a tug of war at some point there will be winners and losers. If you have big central bank muscles than yuo will certainly win, but lets face it everybody wins and loses at this. It is a fact and it is the most important reason for money management.
In the short term, no, it’s not worth it. You will spend 2 to 5 years learning how to trade before you can bank any profits. The vast majority of newbies give up before they learn how to trade, many losing a lot of capital along the way. You can’t expect to profit without learning how to trade first. After 2 to 5 years of study and practice, you will have a career for a lifetime. It’s not that much different than getting a college degree. Five years of hard work, study and practice while you make zero bank, then a good career for a lifetime. For comparison, I have a trusted and very successful friend who started his own small business. He told me it was 10 years before he had his first profitable year.
I now make a good living at Forex, but I lost consistently for the first two years and it was 5 years before I was able to win consistently. That seems about average. This is not a get rich scheme. Some learn a little faster than I do, and some a little slower, but it’s not a race, it’s a journey. On the far extreme, there may be a very few people who will never be able to trade for a living, but I believe anyone of average intelligence or better can learn to trade. A few people have mental problems that may need counseling before they will allow themselves to be successful, but that refers to anything, not just trading.
So, the answer to your question is no and yes. If you put in a year and invest a ton of money and lose it all and quit, as 95% of Forex traders do, then no, it wasn’t worth it. If you study and practice in demo at no charge, taking it on as a mental challenge, like a very difficult sudoku math puzzle, then yes, it is worth it. You you will have spent nothing but free time and worked to make yourself something more than you are. In my own humble opinion, that effort, to make yourself into more than you are, is always worth it. I started trading as an awful stock trader, became a decent futures trader, and now I am a comfortable Forex trader. Though I didn’t make a lot of money at everything I did, yes, it was all worth it.
thanks much for sharing your thoughts and experience. I got your point, everything is worth doing if you are really motivated to do so with an aim in mind no matter what the results are. thanks
Everyone is entitled to their beliefs, & at the end of the day you can call it whatever you want, but each time you click that buy & sell button on your platform, betting is exactly what you’re doing.
I’d have thought having spent 3 years hanging around this game you’d at least have been aware what it was you were engaged in.
I agree 100%, and its always amusing to watch those who clearly dont make money arguing against this simple truth. [B][I]The distribution of gains and losses from an edge is random. [/I][/B]
It’s exactly the same as gambling and counting cards, and the sooner people accept that fact, the sooner they have a chance of success.
Betting is based on a COMPLETELY random outcome that has the same probablilities with no influence from outside factors
Forex trading is speculating on a currencies strength against another which is affected by various technical and fundamental factors, one of those being the impossible to predict order flow of retail traders causing seemingly random movements on the shorter time frames.
To the unknowledgable there the same thing, to a successful trader theres a significant difference.
If you are a casino, you are carrying odds in your favor of roughly 4%.
The outcome of each individual game is random, however your edge gives you winning numbers.
In forex, your edge, whether it be technical, fundamentals, roll of the dice, neap tide predictions, or farmer’s almanac gives you that same advantage. If you have a solid edge, you are the house, not the player.
The outcome of every trade is random, as winners and losers aren’t predictable. The more accurate your setup is, the stronger the probabilities favor you in each trade.
We as forex traders, are not “investors” but speculators.
Investments are in the equities section on aisle 14.
I’d look at Walmart, and Intel right now;)
Many traders are just anxious to get right into trading with no regards to their total account size. They simply determine how much they can stomach to lose in a single trade and hit the “trade” button. There’s a term for this type of investing….it’s called GAMBLING!
When you trade without money management rules, you are in fact gambling. You are not looking at the long term return on your investment. Instead you are only looking for that “jackpot”. Money management rules will not only protect us, but they will make us very profitable in the long run.
Hate to burst your bubble, but whether you trade with or without money management, you’re still gambling – that’s what you’re engaged in when you speculate.
Assuming of course you come to the market adequately equipped with a successful strategy. Without that vital piece of kit your money management rules will be rendered worthless.
When you trade without money management rules, you are in fact gambling. You are not looking at the long term return on your investment. Instead you are only looking for that “jackpot”. Money management rules will not only protect us, but they will make us very profitable in the long run. If you don’t believe me, and you think that “gambling” is the way to get rich, then consider this example:
People go to Las Vegas all the time to gamble their money in hopes to win a big jackpot, and in fact, many people do win. So how in the world, are casino’s still making money if many individuals are winning jackpots? The answer is that while even though people win jackpots, in the long run, casino’s are still profitable because they rake in more money from the people that don’t win. That is where the term “the house always wins” comes from.
The truth is that casinos are just very rich statisticians. They know that in the long run, they will be the ones making the money—not the gamblers. Even if Joe Schmoe wins $100,000 jackpot in a slot machine, the casinos know that there will be 100 more gamblers who WON’T win that jackpot and the money will go right back in their pockets.
This is a classic example of how statisticians make money over gamblers. Even though both lose money, the statistician, or casino in this case, knows how to control their losses. Essentially, this is how money management works.If you learn how to control your losses, you will have a chance at being profitable.
You want to be the rich statistician…NOT the gambler because in the long run, you want to “always be the winner.”
So how do you become this rich statistician instead of a loser?
I’d like to throw my 2 cents in here if I may. I would say that forex (as with any market) is gambling in the sense that you risk money to make money. Thats what gambling is at its core. I’m not sure how you can argue that. Now having said that, gambling doesn’t necessarily mean random. The markets have patterns and the sooner you notice these the sooner you can capitalize on it. It is the same with poker. There are professional poker players that gamble their money but they have acquired a skill that they use to hopefully make money.
you studied maths and statistics but did not study forex trading. everybody is entitled to think what they like. what i think is money management do help and i do not agree with you. rest is upto people if they agree or not.
dhoee, it would be wise not to ignore what people are saying. No money management is capable of changing a negative profit expectancy into a positive one. You can average up, average down, milk the Kelly Criterion until the cows come home, but you will never ever make a profit if your system has no edge.
forex like all markets are random. We try to map them and make sense of them but the fact remains is that [B]it is impossible to know what is going to happen next[/B] Because we cannot know what is going to happen we seek to have an [I]edge[/I] in the market. The fact that we seem to be able to predict market movement is really just an edge and the best traders realize that at any moment they can be proven wrong and in that moment close the trade or wait for a better price to close for a loss.
Do not ignore this reality. I agree that money management is at the core of any system but what simbafx and others are trying to say is if you lose more than you win and your expectancy is negative than you don’t have a chance of being profitable.
In my thread one of the posters described how you can find expectancy. Do it for yourself and you will see if you will win overall or lose overall.
fxtex posted this…
It’s not about the “chance of winning,” in the sense of how many trades are profitable; it’s about the expectancy, which is how much you will win or lose per trade over the long run.
For example, if your system loses 10 pips 90% of the time, but wins 150 pips on average the other 10% of the time, this is how you calculate expectancy:
(90 * -10 + 10 * 150) / 100 = +6 pips per trade
btw forex is a form of gambling the only difference is we seek to get a better than 50/50 chance at winning which is entirely possible with proper money management and of course an edge.
