This may sound like a cheeky question but I think I have to ask it.
How much does a good forex investor make for him/herself? I ask because I read an article where a forex training school was bragging that they have a system that produces a whopping 34% annual return.
Now, I’m no math wizard, but if I start with say, $5000, an amount, incidentally I’ve been warned is far too much, that would mean, if I was to be as good as this guys says he is with his great system, that would mean, at best, a first year profit of $1500. Which, if you trade 5 days a week, every week of the year, would average out to about $5/day. Now I understand the principle of compounding your wins, but I would assume this 34% includes that. After all, they were [B]bragging[/B] when they mentioned 34%.
Now, considering the time and energy and capital allocated for this discipline, does it make sense even starting if a 34% annual return is considered good? I can make an additional $5/day hunting for change in the park with a metal detector.
But seriously, if one starts with $5000, and ends up the year with $6500, would I have bragging rights, or would other “traders” laugh at me? I don’t want to have any illusions about this.
So typically, a novice trader not only doesn’t make any money trading, but he loses his $10,000 kitty, and he loses it in 5 days? So if I start with $5000, I can expect to lose it in 2.5 days.
So based on the observation that I am no smarter than the average novice rader, maybe a bit dumber, (looks and brains don’t go together), it would be highly unwise, at least from a statistical viewpoint, for me to try this for real regardless of indicators, money management, or any other bits of knowledge I may pick up. It’s basically giving away my money.
Well if that’s the honest truth, then you saved me from disaster. Although my demo trading wasn’t very encouraging, either. lol.
BTW, you’d think that the worst a trader could do was be wrong half the time. But it seems that 80% of my trades go the wrong way in any given time frame. If I was to flip a coin, by rights, I should get it right 50% of the time. Perhaps I should be like George Constanza and just do the opposite of everything I would have otherwise done. Rather than go long, go short, rather than go short, go long. Do everything the opposite. Then, by rights, I should win 80% of the time, rather than losing.
That’s a real possibility. Accounts burn quicker than you can ever imagine.
It’s basically giving away my money.
Yes.
If you are not prepared and haven’t done the necessary work beforehand.
Well if that’s the honest truth, then you saved me from disaster. Although my demo trading wasn’t very encouraging, either. lol.
Now if you are serious about this trading journey of yours I would advice you to do the following…
learn TA
A very good start is “Phil’s Basic Chart Analysis Method” PDF in the Free Forex Trading Systems Forum on this board.
study price behavior
Study the threads “Alternative Templates” and “Technical Templates 2” in the Free Forex Trading Systems Forum on this board.
If you still want to trade after having studied TA and price behaviour you might start to practice what you learned from above resources on your demo account.
That will keep you occupied for awhile and might change your whole perspective in regards to that trading journey of yours
Thanks Cas, but here is where I am at a crossroads. Is it fair to say that even if a novice reads up on technical analysis, or fundamentals, the chance of losing one’s money is still very high, or do the odds favor me over the next guy, and they’d have to since it is a zero-sum game?
I read today that only 20% of the volume in the Forex is done for banking reasons, with pure speculation making up the balance. Do you concur?
I guess it comes down to knowing how much of that 80% is traded by uneducated, newbie traders, [I]people that I may have a chance of beating[/I] by educatiing myself as you suggest and which I am trying to do, vs. how much of the volume is actually done by people that know everything I am ever likely to know.
I read an article yesterday about the Efficient Market Hypothesis theory which postulates thus:
[I]In finance, the efficient-market hypothesis (EMH) asserts that financial markets are “informationally efficient”, or that prices on traded assets (e.g., stocks, bonds, or property) already reflect all known information, and instantly change to reflect new information. Therefore, according to theory, it is impossible to consistently outperform the market by using any information that the market already knows, except through luck. [/I]
I’ll be honest. I have no formal education. I dropped out of high school, not once, but three times. Is is reasonable for me to expect that I can make a living trading against other traders who not only know everything I know, and anything I can be expected to gather, either from reading a book or a studying a website, but have a lot more experience to boot?
To put it in forex terms, how many pips should I NOT expect to make by [I]leveraging [/I]a few months of reading?
It is said, and it is true, that trading is simple but not easy.
In other words, you don’t need to be a rocket scientist to trade well. Success in trading will depend more on patience and discipline along with a reasonable IQ and an ability to think critically.
Someone, can’t recall who, said something roughly along the lines of: As a highly intelligent maths professor I was able to overcome this obstacle and become a successful trader.
You might have read my previous post but you haven’t understood it. I [U]never[/U] used the word [B]read[/B].
I used the words [B]learn, study[/B] and [B]practice[/B].
There is a big difference.
The point of losing your money and trading live is so far away for you that you can’t even see it. Because you are neither ready not prepared to trade with real money. You are loads of steps away from that point. So why using all that headspace of yours thinking about it…?
I read today that only 20% of the volume in the Forex is done for banking reasons, with pure speculation making up the balance. Do you concur?
Study those two threads. It will give you a different perspective on how you might fit in when you’re ready and still want to trade.
I’ll be honest. I have no formal education. I dropped out of high school, not once, but three times.
That’s not a good sign to be honest. It points to lack of stamina and not finishing what you have started. Two traits good and successful traders don’t have. Can’t afford to. It’s to costly.
To put it in forex terms, how many pips should I NOT expect to make by [I]leveraging [/I]a few months of reading?
Don’t read.
Learn.
Study.
Practice.
Get prepared.
Whatever is needed to make you fit for trading.
Use your time efficient.
Get the best resources you can get hold of.
There are different ways to get fit for FOREX.
But it’s an individual thing.
There is no “one fits all”.
And the most important thing is to find that edge to get you in front of the rest.
I mean… I grok it sort of, but don’t put it into practice well enough. I haven’t read those threads you mentioned. But off all next week and will study them.
Cas, so if understand you correctly, it is your contention, that if I study the material enough, and practice it, I will not likely lose my money? So would you then say that those who do, these typical novice traders who lose $10,000 in 5 days, have not studied enough? While nothing in life is sure, and I have never been risk adverse, can studying and demo trading mitigate enough of that risk, and indeed, generate enough profit, to make risking that initial money a smart move? I am asking for anyone who wants to answer and who has made money long term trading, but what has been your experience?
It’s the beginning. During that process of studying and practicing the material you might have to deal with other issues as a result of it. But at least you get a solid footing. Also you can deal with those other issues without putting your money at risk.
To get ready and prepare yourself for live trading is an individual process in personal development and having established a solid foundation. This undergone process increases the likelihood of not losing your money. Also it erstablishes structure, discipline and patience because of extended practice of the studied material.
Trading is repetitive…once properly understood. It has got nothing to do with exitement and glitz. It’s hard work and boring as hell most of the time. Unsocial hours and a chronic lack of sleep as a result.
You might even find that trading is to demanding, challenging for you and/or you are not suited and you don’t want to do it it in the first place. At least it didn’t cost you a cent to come to that conclusion.
So would you then say that those who do, these typical novice traders who lose $10,000 in 5 days, have not studied enough?
They haven’t got a clue what they are doing.
Real Trading isn’t trading using charts, fancy graphics and colored lights.
The factors that actually move markets are news flows and [B]supply/demand fundamentals.[/B] The typical novice traders who burn their accounts in no time has got no idea about these factors. There is no substitute for knowledge.
And through knowledge you will gain experience because that knowledge will keep you alive to gain experience in FOREX trading.
While nothing in life is sure, and I have never been risk adverse, can studying and demo trading mitigate enough of that risk, and indeed, generate enough profit, to make risking that initial money a smart move?
There is no substitute for live trading. Because of the psychological factors involved.
But practicing TA and supply.demand fundamentals through price study in demo…which is a de facto PA live feed…and developing your own way of doing things in the process…incl. the discipline, patience and structure that that requires you might be able to lay a behaviourial foundation so you can trade in such a way to mitigate that risk you are talking about.
You might even come to the conclusion youself that $5’000 is a bit high to start with because of personal factors. But that is pure speculation. In the end it’s your journey.
Cas, first off, thanks for your detailed and indepth responses to my questions.
Secondly, you say that to survive in Forex you have to have an edge, some technique that most other traders do not have. And you claim to have developed one. So am I to understand that in addition to knowing what the other guys know, which can be obtained through study, that alone is not enough. I’d also have to develop a system that is unknown even to them?
That part I have down pat! But I’ve always been that way, suits me to a T:D
Of course everyone has their own way of doing things. I don’t follow step by step the bb/ma thread, so I don’t know if that’s what you mean by an edge, probably not, but I’ll get it eventually.
To save all the quoting, the answers to your other questions are all ‘no’ I get that. But there’s still that ‘something’ that I don’t get.
like a word that’s on the tip of your tongue and you can’t quite get it out.
Dimly visible, it seems as if it were there.
surviving, well over the 5 day average , but not thriving.
Sorry Pippy, guess I’m kind of butting into your thread but seems we are not that far apart in our early stages of development in some ways.
In order to gain more pips than the average you have to do things differently. And surely you would not give away that edge. You hang onto it for dear life.
