I know the perfect way to win at forex - page 6
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Its a reasonably good observation.
If you do some testing, you'll find that random systems result in an approximately 50/50 win rate presuming an equal risk to reward ratio.
Yes, I am tempted to think so, but Forex seems to be a diferent kind o species. I could test that. Anybody can.
You are partially right in your assumption that the new trader will not act randomly. If the trader where truly random then they'd lose the spread. The psychological bias's in your trader will of course ensure that they do significantly worse than a mechanical random system.
Thats the the main assumption of my theory.
I think that you'd probably agree with me that if you where trading a mechanical system without the psychological bias then the answer would be most definately not.
with some reserve, agreed.
If you where to try this experiment then you really do need to completely seperate the two people involved. You need to put the first trader under as much pressure as possible, hire someone, offer them a decent bonus but unrealistic targets. The second trader incentivise them to only follow instructions (or automate the 2nd trader role).
Yes, as I have already said, the second trader will be an automate software that will only mirror what the "novice" trader does. I have already done that software, but for unknown reasons I don't know why it isn't working over Internet. It works fine on intranets (it's an issue of dotnetapi i think) .
.
Using your wife is a great idea, particularly if she's going to suffer financially as a consequence of the trades she makes, its that kind of pressure that might possibly give you an edge.
Yeah, it was almost a joke. What it isn't actually a joke is the proposal I have done to Lion Zion, to give him 25 cents for every lost dollar. It's some kind of reverse psychology, and it might work. When you know that you can earn money for sure by loosing trades in a demo account, greed raises fast like a bullshit trendline, which is an invaluable source of money for me, because in fact the trader does the same thing but he thinks it's easier to lose, and greed is bigger, which is the primary fuel of my account's balance.
I do think however you are underestimating the role of random chance in all this. Its very common to see completely clueless people with very health equity curves ! The way around this problem is diversification, and if you think about it, thats exactly what most MT4 based brokers do, they take the other side of trades made by people psychologically programmed to fail.
This is what is to be experimented. You are good
They say the message is to short that's why I put this sentence here.
Failure in trading has nil to do with being "psychologically programmed" to fail or whatever you want to call it. That is nothing more than an excuse for not doing due diligence.
This is just plain and simple false. And you will shortly see why.
Failure in forex trading comes because of various reasons, which ultimately can be defined as not having a winning system.
- Not knowing how to be patient
- Not knowing how to set a stop loss
- Not knowing when to take profit
- Not having a daily or weekly goal
- Not being aware of economical news announcements
- Not knowing when to trade and when not to trade
- Not having a set of reliable indicators
- Not being able to recognizing a useless indicator.
- Not managing money well.
- Trading lot sizes that are too big for the account
-Etc
And here it is why: the fact of not having all issues you've listed here, means that people trade uncounscioslsy (or however you spell that), randomly, whithout goals. That would keep their accounts floating statisticaly around the initial value, for an indefinite period of time (or until spreads eat completly their balance, which means years). But the common knowledge shows us that this kind of people lose their accounts in maximum three months. Then what is the cause of this rapid lose ? Because it is not statistics anyway. Something else. Let's call it somehaw, or give it a name. Not "psychology" because this term is already taken. I let you choose one.
I don't know how to get rid of this sentence.
....LOL....
Junior memer try to teache seniors...
...over and over...
same music...
I don't know how to get rid of this sentence.
There could be any number of reasons why they lose their accounts.
I would name "impatience" caused by "greed" to be the first reason.
There could be any number of reasons why they lose their accounts. I would name "impatience" caused by "greed" to be the first reason.
Perfect answer. See ? It is not the "Wheater", or "bad food" or "clothes". It's "greed", a thing that belongs to psychology.
11111111111111111111111
Failure in trading has nil to do with being "psychologically programmed" to fail or whatever you want to call it. That is nothing more than an excuse for not doing due diligence.
I agree with all of the things on your list, but I would argue that there's a very strong psychological bias involved.
I've taught quite a few people my methodology from scratch and as part of the teaching process I initially require them to take completely random trades. Almost without exception, people perform significantly worse than a purely mechanical random system when applying exactly the same rules.
They use the same initial stops, targets, position sizes / money management, indicators etc, but they perform much worse and there has to be a reason for that.
When you analyse why its always a psychological bias thats responsible.
I dont think there's too much doubt about the validity of these claims, software vendors selling technology to bucket shop brokers quite openly cite statistics on the success rates of retail clients. Its even used as a sales and marketing tool to encourage brokers to accept risk internally rather than hedge positions. If 95% of your clients are going to lose, why wouldnt you ?
All the OP is trying to do is exploit the same edge as a retail broker, but without the advantages of spreads, slippage, commissions, and asciated fees. Personally I dont think he'll succeed without understanding most of the things on your list, but its a reasonable starting point for developing an edge.
I used to argue that psychology was overrated, and I still constantly call out people who argue that the edge is inside the individual, or that people need to develop a "winning attitude". Whats required is a statistical edge that exploits some form of market behaviour, and all the money management or psychological mumbo jumbo wont help unless thats in place. BUT psychological bias's effect everything we do, how we undertake research, the type of systems we are attracted too, even how we impliment and test and the conclusions we draw.
The only antidote is evidence based analysis and statistical rigour, but you have acknowlege that psychology plays a part.
You have to admit that there are massive psychological differences between someone who does reasonable due dilligence, conducts research and testing, tries to manage risk, and treats this as a business, and some fool undercapitalised, leveraged at 400:1 taking a punt on a martingale EA they purchased off eBay !
The reason both those people behave an think differently is surely a matter of their own personal psychology.
Mirq's Quirks
@ Mirq,
I am curious as to whether or not you have kept records of just how well (or not so well) your strategies have been working out for you. To be honest I'm not an expert trader myself and so I've been looking at your posts objectively (without the eyes of experience) and I must say you're still not making much sense.
It really sounds to me as if you're trying to reinvent the wheel, or create some revolutionary new system of trading which will not only make you money but earn the respect and admiration of those around you. It's not going to happen.
The truth is that if you're looking for recognition by being "different" and seek to break "new ground" in a given field or craft maybe it's time you considered music or theatre? A lot of people will tell you trading is an art, and they're right in some capacities, but it is not an art in which you display your work for admiration and respect. It's an art in which you excel to make money, perhaps share your knowledge with others, and so on...
In conclusion...I'm laughing while I scratch my head. Perpetually.
@ Mirq,
I am curious as to whether or not you have kept records of just how well (or not so well) your strategies have been working out for you. To be honest I'm not an expert trader myself and so I've been looking at your posts objectively (without the eyes of experience) and I must say you're still not making much sense.
It really sounds to me as if you're trying to reinvent the wheel, or create some revolutionary new system of trading which will not only make you money but earn the respect and admiration of those around you. It's not going to happen.
The truth is that if you're looking for recognition by being "different" and seek to break "new ground" in a given field or craft maybe it's time you considered music or theatre? A lot of people will tell you trading is an art, and they're right in some capacities, but it is not an art in which you display your work for admiration and respect. It's an art in which you excel to make money, perhaps share your knowledge with others, and so on...
In conclusion...I'm laughing while I scratch my head. Perpetually.I understand why you're scratching your head, but not why you are laughing.
I am not so disperate or poor to make it an art from making money. But I am the kind of person that wants to understand from ground what's behind things. And forex is something that is a big challenge, not for the money, but for the thrill of hacking it.
I understand why you're scratching your head, but not why you are laughing.
Maybe because scratching one's head is quite funny?