FOREX Trading

momchil9 said:
Winnings in poker are measured in ROI(if you are playing tournaments whethere it is MTT or SnG) or in big blinds won per 100 hands.

Not by "games won".

This is due to that different tournaments have different buy-ins and different entering fee(rake). On top of that they have different payouts for the different places you finish.

If you win 50% of your games(other than HU) you, sir, are a millionaire.

If you play cash games, "games won" cannot even be applied.

Otherwise, yes, poker is negative sum, because there are fees(rake) involved.
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Yup, I'm a poker player myself.

I was trying to keep my point simple. You have to win more money than you lose just to break even because of rake/transaction fee's.

There are many great comparisons between poker and trading, which is probably why so many poker players trade as well.

I suggest that traders (who do not play poker) consider two things: variance and your different skill levels at different types of trading.

In poker, variance is a wild thing. You could be a winning poker player and lose money for 2-3 months straight. You could be a losing poker player and win for 2-3 months straight. I've made 3k playing poker and have played over 100k hands and i'm still not convinced i'm a winning poker player (most of my earnings came from 2 tournament wins). I assume variance works the same way in trading... don't assume you're a good trader because you make a few winning trades.

My second point also applies to poker. I "think" i'm a winning player in multi-table tournaments, I'm breakeven at single table tournaments, and i'm a losing player at cash (over 10 nl). Each game is still texas holdem, but they are vastly different from each other. Different enough that I can win at one and lose at the other..

Once again, i'm sure the same applies to trading. Don't assume you're going to be a great forex trader just because you can successfully trade stocks and options.

Hope this helps!
 


wayn3 said:
nowhere did i say you cant make money doing x.

im just telling you about things you clearly didnt take into account. go trade paper, whatever thats supposed to mean. just do yourself a favour and dont convince yourself that youll be able to produce the same returns trading live. psychology will always affect you when your real money is on the line, whether you want to admit it or not. so is slippage. if you intend to trade the news, forget about it. brokers dont allow you to trade during newstime, or make the spread so wide that its not profitable. of your demo trading, cut off 15 pips at both ends of the trade. every trade, not just your winners. are you still turning a profit?

what i question is the potential you see in forex. making significantly more than 20% a year is clearly not an option.
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If you were familiar with paper trading you would know that it is trading does produce the same results as using real cash the only difference is.

FOREX is open 24 hours how can I not trade on news time? Plus I use technical analysis so not sure why I would care that much.
So I don't know what you even mean.

Slippage? Yeah what about it? Do you even know what slippage is? Or why some things have more slippage than others? I do I just don't see what this has to do with paper trading?


Psychology-- that might be a problem that you have but when I trade I know what I am risking and it doesn't bother me. . . you could sit across from my trading desk and not know if I am up 10k or down 10k .


If you don't know what trading paper means then you must not be active in trading or test out new strategies.

As far as potential I have no idea I've never done it, that's why I started this thread so other could share experiences not opinions. I will share my experience once I get the ball rolling.


Again I am not saying that any of this is easy or that I think this is something I will be ready to master in 6 months. I'm just saying people should say you can't make money or insane profits in the markets.

You CAN become a millionaire doing this or any combination of investing you just have to know what you are doing. Just like AM there will be winners and there will be losers. . . it's up to you.
 
papajohn56 said:
Expect to lose money. You're trying to beat the system in something that's negative sum...just like gambling.
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Relating to FOREX you might be right, I don't know yet I just started reading on the subject.

As for the stock market. . . I guar-an-fucking-tee you can make monies!
 
Falian said:
Yup, I'm a poker player myself.

I was trying to keep my point simple. You have to win more money than you lose just to break even because of rake/transaction fee's.

There are many great comparisons between poker and trading, which is probably why so many poker players trade as well.

I suggest that traders (who do not play poker) consider two things: variance and your different skill levels at different types of trading.

In poker, variance is a wild thing. You could be a winning poker player and lose money for 2-3 months straight. You could be a losing poker player and win for 2-3 months straight. I've made 3k playing poker and have played over 100k hands and i'm still not convinced i'm a winning poker player (most of my earnings came from 2 tournament wins). I assume variance works the same way in trading... don't assume you're a good trader because you make a few winning trades.

My second point also applies to poker. I "think" i'm a winning player in multi-table tournaments, I'm breakeven at single table tournaments, and i'm a losing player at cash (over 10 nl). Each game is still texas holdem, but they are vastly different from each other. Different enough that I can win at one and lose at the other..

Once again, i'm sure the same applies to trading. Don't assume you're going to be a great forex trader just because you can successfully trade stocks and options.

Hope this helps!
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Maybe I can't communicate what I am trying to say but I think you hit the nail on the head. Anyone of these financiaul instruments can net you great profits but do they suite your particular skill sets.
 
jonas33h said:
Relating to FOREX you might be right, I don't know yet I just started reading on the subject.

As for the stock market. . . I guar-an-fucking-tee you can make monies!
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I didn't say you couldn't, stocks are *not* zero sum. Forex is. The house always wins in Forex in the long run.
 
papajohn56 said:
I didn't say you couldn't, stocks are *not* zero sum. Forex is. The house always wins in Forex in the long run.
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Not when you do the following:

1. Earn USD monies.

2. Exchange all for BRICS monies.

3. Wait.

4. Buy stuff with BRICS monies.


See? Easy as cake. Anyone can do this shit.
 
lukep said:
Not when you do the following:

1. Earn USD monies.

2. Exchange all for BRICS monies.

3. Wait.

4. Buy stuff with BRICS monies.


See? Easy as cake. Anyone can do this shit.
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aww-yea-meme-original.jpg
 
papajohn56 said:
Forex is zero sum.
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Foreign exchange can be zero-sum, negative-sum or positive-sum depending on how profits and losses are defined, the type of 'trader', as well as the roles of the various players.

a) Are sources of friction, or the costs involved in initiating and closing out trades, equal to zero?

b) How do we define central banks and their role in the game?

c) Forex is not traded in a vacuum.

d) Counter-party risk.

e) Total benefits and taking foreign exchange trading beyond zero-sum?
 
Falian said:
Nothing is zero sum if there are transaction fee's involved. Same with Poker, it's technically zero sum, but it's not if you play anywhere with rake. Because of this, there's more losers than winners and you have to win more than 50% to merely breakeven.
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Foreign exchange trading (not futures or derivatives) has no transaction fees. All costs are part of the spread quoted with said cost, or margin taken by the market-maker or broker, being a forex transaction, not a fee.

Ref. http://www-bcf.usc.edu/~lharris/ACROBAT/Zerosum.pdf

(Though foreign exchange is still not a zero-sum game despite Harris's definition.)
 
momchil knows what he is talking about.
He's either done it or been connected to it.

I worked in Futures for 6 years as a broker in a major firm.
We traded prop and institutional accounts only. It looked then like trading was actually feasible.

I then moved to a smaller firm due to retrenchments. The smaller firm served mostly ordinary people and I can tell you that people were losing money every day. Trading for ordinary people died in the 90s. The computers have taken over.

The high frequency trading, spread trading and algorithm shit will kill everyone who's not a serious professional with an edge or who is working for a firm. Heck, even the big boys lose money.

Stay out unless you have too much money to deal with.
If you're hoping for returns in a year, turn around already.
If you just want the experience and are willing to lose thousands (10s), go ahead and have the time of your life.

The only real individuals who can make money are those who are seriously disciplined and have the emotions of a rock. Not to mention they'd need a real edge than watching indicators on a chart or whatever.
 
Wright said:
Foreign exchange trading (not futures or derivatives) has no transaction fees. All costs are part of the spread quoted with said cost, or margin taken by the market-maker or broker, being a forex transaction, not a fee.

Ref. http://www-bcf.usc.edu/~lharris/ACROBAT/Zerosum.pdf

(Though foreign exchange is still not a zero-sum game despite Harris's definition.)
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I'm obviously not as knowledgeable of Forex as you. However, as long as money is taken out of the transactions, then a zero-sum game becomes a negative-sum game.

So, is FOREX a zero sum game? I'm sure it's a complicated answer.
 
Falian said:
I'm obviously not as knowledgeable of Forex as you. However, as long as money is taken out of the transactions, then a zero-sum game becomes a negative-sum game.

So, is FOREX a zero sum game? I'm sure it's a complicated answer.
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Nah, not complicated at all.

The traditional definition of zero-sum is that no trader may profit without there being an equal loss by one or more other traders. (Though what also has to be recognized is that trading transpires for more than pure profit purposes: hedging, enjoyment (gambling), international trade, etc.)

What we have to realize is that in many foreign exchange transactions there are often three or more parties to it (in particular if you're not a bank), not just one buyer and one seller.

GBP/USD is trading at 1.5867/72 (bid/offer). But you check out your broker's quotes and they quote to you 1.5866/73. They're baking a profit into the transaction to make a profit. So they sell it to you at 1.5873 and buy it a point cheaper elsewhere. The aggregate is still zero-sum.

If you're trading futures (a derivative and not pure foreign exchange) you will incur brokerage fees and exchange fees but since the fees are usually less than a point and the trading spread is often narrower than what you'd get interbank for the same transaction the costs (or friction) are negligible, even if you're a major day trader.

So from this point of view, foreign exchange is a zero-sum game.

But as asked in a previous post: How do we define central banks and their role in the zero-sum game? The Swiss National Bank decides to devalue the CHF against the Euro. Have they not now created a negative-sum game?

Or counter-party risk. Each and every trade that is made is subject to counter-party risk: MF Global, Lehman Brothers, Enron, the central bank of Greece, etc. This can create a negative-sum game (unless you're a lawyer).

Foreign exchange can be a zero-sum, positive-sum or negative-sum game.
 
jonas33h said:
I agree wholeheartedly day trading is such a crock of shit for the average jo. But it's also bullshit when people say "you cant beat the market" or wall street always wins. That's shit dumb fucks say. It's like AM some will make it and the rest just talk shit because they cant figure it out.
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- Day trading is lucrative if you know what you are dealing with. (i predominantly scalp the market = less exposed risk).

- You can beat the market, or better said, your opponents. But in order to do this you must align your concepts with that of the markets structure, and how it functions on a microstructure basis is key to this.

- Concepts/systems/ideas must be thoroughly tested (PoC). Learn to automate your concepts thoroughly and run 10.000 trade simulations across various markets. If your concept is viable, you will see it instantly. If not, rinse and repeat.

- Most people havent got a fuking clue what they are doing, hence, its a scam, or a 'gamblers trait'. Profesional risk takers are not gamblers, since every 'bet' is thoroughly calculated within their risk parameters.

- Markets are in constant motion looking for fair value, it goes from efficient to inneficient. Learn to identify these inneficiencies and you got yourself a potential edge to isolate and test.

- A gambler places irrational bets on a continual basis.

- A trader places rational bets only when a significant statistical edge appears.

- It is not how much you make, but how much you save from losing.

- Markets can, and have been (!), dissected and classified. But this is highly classified :nopenope: :ugone2far:
 
zandor said:
The only real individuals who can make money are those who are seriously disciplined and have the emotions of a rock. Not to mention they'd need a real edge than watching indicators on a chart or whatever.
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In part i agree, in others i dont.

With automation, the system has the discipline you 'programmed' into it. So no need for human discipline which we all struggle with at one point or another.

As for a real edge, i agree 100%.

Most believe that having a series of wins in a row gives them the right to believe they have an edge, little do they know about liquidity.
 
Scalped,

I'm posting merely my experience watching lots of people get burnt. Even many of the "pros" I know have quit the market in the long run.

Sure, some of the real good ones can keep at it. But that's like the top 1%. A guy I knew used math to make money in warrants etc. It was good for a year then whatever edge he had was nullified. During that period though, it was decent. Like $40k on a good month for a small-timer. Not bad at all. But even he is now looking for a new edge and finding slim pickings. Not sure how long more he can go on trying to find something else.

I admire the people who can continue to perform in this market. With all the automation and all. Sure, even the small guys can use automation but most can never compete with the funds out there.

I personally had a good 2 years trading the eminis myself before I quit playing. The program trading got worse each year. Guys who can program their stuff certainly have a edge over others.
 
Zandor,

Yeah i see that is from your experience, no worries there dude.

It isnt an easy task, anyone who thinks they can 'walk in' and rinse the markets is delusional. In fact, the odds of them making it are slim to none.

I have friends working at an institutional level, ex pit traders aswell, know one will give anybody a free lunch in this game. There is simply too much money and with that corruption going on.

But what i will say is that for those that do make it they will only make it by being creative in their approaches. They have to think laterally to make it.

I know guys who can average enormous amounts consistently, when i mean enormous i mean xx%/week or more, consistently.
At the same time i know other people who cannot comprehend this, and average xx%/year.

Its like life. There is the poor, the middle class, and the ultra rich. And each 'class' does things in a different manner.

Can it be done? Absolutely! But it will take years of intensive research, development, proofing and stamina.

Regards,

Scalped
 
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