The problem with Moving Averages is that so many blinkered traders use them as… Moving Averages.
If you research arbitrage, and I mean research it!!.. Not just read a paragraph on the subject… and take away a full understanding of the arbitrage concept, you can apply Moving Averages (and quite a few other indicators) in a more predicative manner… Positions are opened, well before any crosses.
I’m not going to spell out a complete strategy here on BP… my days of wasting time and spoon feeding here have come to an end… A few significant threads can be found by posters that left these forums long ago that obviously were using this concept well before I understood it…
@Trendswithbenefits has posted some extremely good material here on BP during his time here and has not perhaps received the recognition for it that he deserves. But that tends to be the trend here…
Maybe if you encourage him, he might just soften up a bit and…?
As a newbie, I don’t want to be spoon fed. I find it a much more meaningful learning experience to research and test on your own. You really need to have “skin in the game” to truly benefit from the learning experience, whether it be financial or sweat equity. With that said I’m going to be reviewing @Trendswithbenefits old posts to see if I can pick up a thing or two. I’d rather follow the breadcrumbs than get fat from somebody’s spoon
Did you learn to feed yourself when you were young?? And did you never go to school to learn to read and write?? And when you started your first job did you not have an instructor to help you know what you needed to know to do the job correctly??
If you answered no to all these questions then you are one talented individual.
Trading is one of the most difficult things to do and yet soooooo many newbie traders think that they can learn how to trade without any help or guidance. Those traders go broke long before they ever stumble accidently upon success.
Traders in the big trading firms have backgrounds in mathematics finance risk assessment and banking and these are the traders you are competing with. To believe that you can educate yourself to the point where you are able to beat these guys wishful thinking at best.
Remember the fable of Hansel and Gretal who follow a trail of breadcrumbs only to have the birds eat the breadcrumbs and as a result they got lost.
I did it my way is an admirable attitude but not necessarily the best strategy.
This is very true. Not only do new recruits in the professional finance industry have to meet stringent entrance criteria, they also have highly developed induction and training programs - and training continues throughout one’s career. They also have in-house access to market analysis, economic forecasts, company objectives and are part of a team that pools information.
The only word here that could be confusing is to say “competing with”. Obviously, this does not mean they are the retail trader’s counterparty and that if they win then the retail guy loses. The forex market is a giant pool where retail are in their own world. Perhaps it would be clearer to say that these are the people one has to compare oneself with. I.e. what can I do as a retail trader in order to compare with the performance of those professionals who are in much more advantageous circumstances.
Ultimately, the retail sector is in its own universe and with specific requirements and inevitable disadvantages. These have to be accepted, challenged, and overcome in order to be a consistent earner - and that is totally possible for many retail traders.
Perhaps the biggest problem is finding the right kind of education amongst all the junk that swamps the internet. And in that respect, BP is not one of the most reliable sources! OK, the Babypips course is a good start, but because BP is a site aimed at, and attracts, primarily Newbies, then the forum membership is also primarily Newbies. Newbies that, due to their lack of own experience will pick up all kinds of myths and deceptions and simply regurgitate them to other Newbies. Today’s Newbie is tomorrow’s Veteran - or in plainer text: the blind leading the blind.
So whilst one should certainly seek guidance, input, and education, it is not a simple matter to decide where to find it and what is worth it!
One aspect that I think is quite revealing, is that it seems most internet “educational” material simply concentrates of a trading method/system - of which there are literally thousands to choose from. And yet with all that choice, and more added daily, the rate of success amongst Newbies does not increase at all. Does this not suggest that the cause of losses in not in the approach/method/system but in the capabilities of the traders themselves to read and handle markets. But this is not an easy thing to teach without the kind of team work environment typical of an institutional trading room.
Great point and well said. The other real issue with the internet is that with so many different trading styles newbies find themselves jumping from one method to another without getting to understand anything that is being taught by these so called online gurus.
There are many ways to trade but what Newbies don’t realise is that it is important to pick a style or method and then stick to it long enough to become proficient and hopefully profitable. That’s why I believe that it’s important to find a creditable educational site that has sincere educators and really put in the serious hard work to learn to trade.
why dose everybody compare retail traders to traders from the big institutions , why dont you say what positives retail traders have (if any ) ie no pressure to it reach targets , work flexible hours own environment , use of leverage and diversity of what to trade ect. These guys i guess who are "playing " with huge sums of money its a total different ball game and situation
Of course there are many benefits from trading as a retail trader. But none of these benefits are realised if the retail trader loses money - and that is the issue here.
It is clear from brokers’ own confirmations that at least 70% of their clients lose money, and this is only from the regulated brokers such as those under ESMA rules. In fact, this percentage has dropped from around 80% when this requirement was first introduced. Now, either this means that retail traders are getting better, or it means there are fewer of the more risky retail traders.
I suspect, but have no evidence, that this decrease was due to the simultaneous introduction of leverage limitations on retail clients. This had two influences: a) Newbies with very limited funds stopped signing up with these regulated brokers because there was no chance of gaining anything worthwhile with low leverage and b) they moved to off-shore brokers that could still provide high leverage, but do not need to report their loss percentages.
This means that the overall percentage of accounts losing money is probably nearer 80% or even more!
Naturally, this is not the case amongst professional traders. Therefore it is a valid line of enquiry as to what is the difference and how can retail traders compensate for their more limited resources and training.
This is a very big issue and it is only beneficial that Newbie retail traders realise that success is not just watching the “red line cross the blue line”.
Only when a retail trader reaches a state of consistent profits can they enjoy the benefits that you mention - and that is the problem that needs to be fixed.
You are right that an institutional trader’s environment is totally different - but one can also speculate that is it the pressure of targets and performance that actually create the discipline that helps them achieve their successes?
How does a sole retail trader maintain discipline, patience, precision, and concentration without “someone looking over their shoulder”? How do they stay focused on their risk/reward exposure and their overall account management without the requirement to report to “the boss”?
Until and unless Newbie traders realise that they are running a business in the same way as an institution with all the same requirements regarding the risk/money management, how can they expect to achieve the same kind of consistent results?
That is why this is important. If Newbies were profitable the comparison would disappear!
well anything what worthwhile i guess or what s empowering is challenging ,maybe wannabe traders dip their toes in and their expectations dont match their results
this comment is nt aimed at you , why do so many convey trading as some sort of intellectual pursuit its pretty boring really especially for us staring at a screen all day. Im sure many who have “cracked the game” on their own or with limited advice think back, was all the time spent worth it.Most of the technical analysis is nonsense and outdated .My analogy of retail trading is like a fruit machine (one armed bandit).You hope to select a positive choice , your skill is knowing when to come off, you profit/loss fluctuate it very random in the short term .Its no big deal
Why do you say this? I would slightly agree if you are referring to mathematically based indicators like MACD, Stochastics, etc, since they only work in certain price profiles. But some claim to profit from them and, if so, who are we to criticise!
Hmmm, Interesting analogy! However, I think we are looking for more than just a “hope” of being right! The core principle with any kind of trading is that we are dealing in probabilities, there are no certainties. Therefore our attention is on trying to create a chart structure that identifies situations where the probability of success is higher than 50/50. I think this is nicely paraphrased in the expression “positive expectancy”. And we can do this because price movement is not random and tends to move in a certain direction for a period of time - the real test is estimating how long a move continues! - and that comes to your other point:
I think you hit the nail right on the head when you say, “your skill is knowing when to come off”. That is exactly the point where a trader moves from loss to profitability! Did you know that some brokers have published statistics showing that traders get over 60% of their directional trades right - and still lose money!!! Running losses and cutting profits murder one’s overall P&L!
If everyone would only work on this one issue that you mention, it would already achieve major progress in raising the number of profitable traders!
Yes, you are right here, too! And many experienced traders here have confirmed that over the years. But I don’t think we mean boring in that one is not interested in the business per se. Rather just waiting for entries can be tedious. Once one has a method, then it is just a case of applying it. In fact, a lot of time is spent deciding not to trade!
For this reason, I always pick instruments that I am interested in anyway. One can always learn a lot about the world and countries etc by reading around the subjects in addition to just watching, waiting for the trade.
Actually, this analogy is much closer to the now defunct binary option market. The odds of winning consistently is less than 50/50 because it automatically builds in the “house” profit. Which really means the longer you play the less likely you are to win. You start with odds against you.
Our aim is to turn that around and put the odds in our favour.
I tend to think of it more like a maze. In order to get to the centre we need to make choices at each junction along the way. We don’t know if they are right at each choice but we turn back as soon as we know it is wrong - but when it is right we continue in the same direction. Cut your losses, run your profits, get to the goal!
maybe we getting our wires crossed abit , as many on here might be long term traders, swing traders, others maybe short term or day traders spread betting ect trading all different instruments.I cant see any use for the likes of Mac D or the Aroon indicator l for a day trader, say trading the GBP/CHF or the DAX ect. especially when Mr Trump makes a comment ect Most people know if the markets was technical alone they would nt exist .
