Seriously does anyone make a living off this?

Beginner Questions
85

Ernie,

while your stats may be indicative of a high failure rate, theres definately some noise in it and some light at the end of what seems to be a very dark tunnel. I agree that many a failure is due to lack of risk management and money management. A simple number crunch in excel or a small program can tell you how much your risking per trade even for the non-math people who won’t want to do it in their head.

I went to school in Finance and one thing I learned is that this field is all about putting a number to risk. thats it. A guy who has a bachelors degree or equivalent experience in the markets does not have any more ability to tell the future any better than a PH.D. in the field.

The name of this game is not, as many people would believe, about making a bunch of money in a short time and speculating. It’s a number crunching game. Something only people who love stats and charts would love to do all day.

Many people arn’t number crunchers and even if they learn how to do it that doesn’t mean they love to do it. Their emotions get involved. They are better off finding another field to make a living instead of thinking this is going to make them rich.

So if noone is better off in speculating than anyone else what seperates the handful who make money from the large amount of people who attempt to but fail.

  1. the ones who make money love to number crunch and love the markets and the various stats. They constantly look at indicators, support/resistance levels, and do all kinds of analysis to validate that they are making a profitable trade in the long run.

  2. They have done this so long that mere experience gives them wisdom to see how stats alone cannot make them consistently profitable or just trading one system. The problem with using stats and history on any market alone is the simple fact that the market is never the same and never will be the same. And in the rare instances they are, you can never tell when exactly its going to be the same. People learn from their mistakes and the market is always evolving from that.

You have to love being a number cruncher and you have to love the markets and be able to change with the markets…always adapting your systems to whatever works at the time and constantly trying to improve it. I think few people do both of these things which is why you see a high failure rate.

To anyone looking to make a living off of this someday, I would evaluate whether you have both of these qualities…are you a stats nerd, do you look at excel or tables full of stats all day and charts and does that excite you? Do you love the market and how its different everyday? Do you always talk about the market? If you do, you should consider putting a good amount of time in doing this.

87

I’d say 2% a month is a fairly decent return.

88

You have several factors skewed here.

95% or MORE lose.

That includes all the shortimer one and done accounts.

The percentage of traders that make money that have stuck with the program is much higher than one would think.

We see it every day on this site alone. Some noob thinking he’s found the pot of gold at the end of the rainbow.

For every 10 of those, you’ll have one that sticks it out, and gets a handle on it.Out of that, if 50% of those that stick it out profit, You’ve got your 5% winners.

Fact. If you think you need to outsmart the market, you will lose money.

You don’t OUTSMART the market, you get in tune with it.

There are edges that can be had from several different directions. The problem isn’t entering a winning trade, it’s how to not let that trade become a loser.

89

The goal is not to out smart the institutions, more like ride on thier ripples when they make a splash.

Most people can look at a chart and tell you with out a doubt which way its going to go, now you add money into the mix, and all of a sudden they are not so sure anymore, then you throw in a bunch of “indicators” that most have no idea how to interpret and now they are even more confused.

My humble opinion is that people panick when there is actually something at stake and make wrong decisions. Add to that the fact that new traders overtrade, trying to get in on every tick and bounce, no wonder there is such a high failure rate… I even have to laugh at this myself, in the last 3 months I’ve made 16 trades but if I were to rewind to 4 years ago, it would easily be over a 100 for the same time span

Once you can get your emotions under control and you find a system that suites your personaility, with practise you can do well…

90

Very insightful… look forward to more of your posts… brokers wont! :slight_smile:

91

After thinking about it, I find Ernie’s opinion to be absolutely hilarious. If you believe the market is always against you; always your enemy, no sh*t you’re going to lose.

92

thanks.an excellent post.

93

I would like to re-phrase my comments earlier in this thread. Yes its immpossible to outsmart the market or beat it, what you must learn to do is hitch a ride on the moves the big boys create. “Go with the flow” By fighting with these people is like going down to the sea and trying to keep the tide out with a brush.

And I will add support to the fact that far too many people think a chart load of indicators will solve the problem. They dont understand them or cant read them. I went down this road last year, and lost my whole account.

94

Learn about SR and price action, then you can add the indicators later…maybe 6 months later :wink:

95

I am reading a lot of classic trading cliches - be disciplined, control emotion, don’t overleverage, use indicators carefully, etc. But to address the OP’s question, I restate the question: If there are retail traders out there making a living, where are they?

Treat it like a trade and tune out the noise. BP has 78k members. If even a fraction of 1% made it as traders, that’s still hundreds of people. I believe the sentiment here eludes to a couple possible explanations.

  1. There’s a legion of successful retail traders (many thousands, if 5% is a given metric) out there who are never seen or heard from in any capacity.

  2. Those who trade are universally unwilling to understand and implement a winning trading strategy. This is explained away via the aforementioned cliches.

96

Would you agree that you have to go through all of those cliches before being able to understand and implement a winning trading strategy?
You can learn TA or FA but noone can actually teach you the above…not easily.

97

With all due respect if you think trading is pointless then why are you here?

To answer some of your questions, 1 - most professional traders do not look a forums, there is no point.

2- Theres a difference between professional and successful, if you have a small account you can still be consistent even though it does not provide you with a living.

Buy low sell high and you will make money, fact!

98

It’s a combo of both of those.

I’m sure there is a lurking contingent of successful traders. There’s also a vociferous bunch of them.

Why would anyone who has spent the time necessary to understand trading enough to be successful want to post their strategies?

There are several of those benevolent types here, but I would say they are the rarities. And why would anyone in their right mind post their net worth?

If one did, you would then ask for proof I’m sure.

There are better things to discuss than your belief that successful traders have a lot in common with the Easter Bunny, Tooth Fairy, and Santa Claus.

Sounds an awful lot like sour grapes.

99

Are you searching fro validation for your confirmation bias? Do you want irrefutable proof?

Let me ask you: How many millionaires have disclosed their financial history? Of the top 5% wealthiest, you’re looking at a microscopic fraction that you even know of (and please do not irritate me by pointing waving this off as hearsay. That has been your argument the entire f*king time). Why can it not be the same for Forex traders? Are you suggesting that FX traders are somehow different; that they must satisfy their ego by making others jealous? Is that how you think this works?

100

The problem with Forex trading is that it is at the same time very simple and very difficult.

It’s simplicity is always what catches our eye the first time we come across it, a simplicity that also promises great wealth creation. This is mana from heaven… a simple way to make money.

Unfortunately for many it is extremely difficult to consistently make this simplicity work due to their relationship with money.

Some people get it but the majority just don’t, many things in life are like that.

I do make a living off this.

101

I understand my opinion is not popular, but the defensive posturing is misguided. My intention is not to attack anyone personally in sharing my opinion. I seek to answer the simple question as objectively as possible:

What EVIDENCE exists in support of the opinion that making a living as a retail spot forex trader is an attainable goal?

If you take the position that supporting evidence is not required as successful forex traders maintain absolute anonymity and never interact with other traders, I suppose we will have to agree to disagree.

102

I suppose it comes down to the stats of which we have little access to.
If you believe the 95:5 rule or 90:10 then clearly it’s an attainable goal for some people and not for the large majority for a variety of reasons.

103

Isn’t someone plainly saying that they make a living off trading enough evidence?? Do you expect people to post thier balance sheets and trading summary as proof? I know several traders who live off spot trading, are they millionaires - no, do they make enough to live a decent life style - yes… thats good enough “evidence” for me

104

Sometimes I like to remind myself of a little fact about the market that you can not discern from simply looking at a price chart. You have to understand what is happening “behind the scenes” in order to appreciate its application.

the fact is:
price movement is completely dependent on the excess of supply, or the excess of demand. There are times when you couldn’t move the market 1 pip with 1000 lots, and there are times when you could move the market 10 pips with a single lot.

the hidden part of this is the volume information, since forex is an OTC market with no reliable volume information. and no, I wouldn’t include tick counts as reliable volume information. So if you look at the chart just as prices jumping up and down, you are missing out on crucial information.

IMO it’s that connection between the volume of supply/demand and the movement of prices that eludes the majority of traders.

My example would be this…
there is one trader who can “see” the hidden volume information and a trader who is completely blind to it. The blind trader sees a fast move in one direction and is too scared to take a position against this fast move because on the surface it appears very powerful because it is moving price quickly. Now the trader with that sense of volume can tell that the move is weak, and will take advantage of it to get an exceptional entry position.

the result on the chart is a long-wicked candle, and the blind trader looks back at it and wishes he could have entered there. Next time he sees a quick move, he might take a position, and end up getting creamed because the move this time is backed by strong excesses in supply/demand. Now he doesn’t know what to do and assumes there are unpredictable forces at work.

Do you see how much of an edge this volume-cognizant trader has over the blind trader, both in price position and in confidence?

These subtle clues about supply and demand are often overlooked, because often the largest volume battles appear as tight-ranged candles, and to the untrained eye appear unimportant.

And the truly wise trader will even be able to pick out areas where upcoming supply/demand lie, allowing him to prepare and possibly even take position before the battle even occurs.

Of course, this is just an analytical edge, and a deficit in emotional fortitude or risk management strategies could negate it very quickly!

105

This is always going to be a problem isnt it ?

Even if someone was willing to provide definitive proof that they made a living out of trading spot forex, you wouldnt know is if those profits had been earned as a consequence of trading a sound strategy, or as a consequence of random chance.

:smiley: