Is forex education misleading or everyone is stupid?

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Introduction

I am a programmer, I was introduced to forex market by a client in 2015. After studying the markets I then published an EA on the market August 2016, sold just 5 copies and rented 10 copies for one month only, because I believed then that too many users will affect EAs performance so I removed it from the market. It was a night trading EA as my research back then showed that the only profitable strategy was night trading. There was one best selling night trading EA back then, tried searching it but couldn’t find it. It was performing well but had a flaw of massive drawdown which cancelled a lot of gains in one bad trade, but still profitable in long term far & far better than anything on offer in that period, even today. So mine was better in ‘stable drawdown’ terms. Point is, 6 years later there’s still no profitable strategy besides night trading. You can check it yourself, even signal providers, the only stable ones are those with ‘flouting losses’ base strategies (Overall losers cause they’ll have to deposit at some point to manage drawdown) and night trading.

Main

I spent a lot of time researching about forex market every time I get a forex client, so lately I spent a great time trying to figure out why everyone is so stupid and couldn’t solve a simple equation, which is:

·         Find a certain pattern with a probability of 51% or more

·         49% of the time you lose, make sure you lose less or equal to what you profited 51% of the time

Simple!!!!

So I worked! I started with the most popular indicator which is Japanese Candlesticks, wrote a script that calculates accuracy of certain pattern during certain period of time e.g. how many profitable inside bars in the last 2 years, by profitable I mean 2 pips & more at least.

After 8 months of coding I reached the following conclusions

·         Not a single popular pattern is profitable, not even one!

·         90% indicators are moving averages. Pointless to combine them, they do the same thing!

·         No such thing as Naked or Price action strategy, it’s a joke because candlesticks are momentum indicators! Duh!

·         Forex is a utilitarian market, Retail trading account for only 10% of the $6.6 trillion per day traded volume.

·         Most retail trading income comes from Marketing, Yep! The gurus, telegram/Instagram signals and EAs. Almost no one makes money from actual trading. Why?

·         Stock Market and Forex market is apple and oranges, nothing in common. So why use candlesticks that were designed for Stocks on Forex?

·         Forex Market is random. RANDOM

Okay these are a facts you won’t find anywhere on the internet because the moment your search include the word ‘forex’ then you will bombarded with all sort of forex marketing material. E.g. googling a simple newbie question like, how forex prices move, will give you a ‘Market maker strategy’ crap as first result or shit like supply and demand, like WTF I just want to know where my $1 I lost went!

So by Random I mean every single transactions going through the market will affect its movement. e.g. Your 0.01 lot sell trade on EURUSD pair means there’s 0.01 units of USD taken off the market, so EURUSD quotes must be adjusted, so is GBPUSD, so is USDJPY, EURGBP and all other pairs! Your little trade on EURUSD will affect all other pairs! YES Market marker strategy is just a crap marketing gimmick made up by the ‘Gurus’. It’s impossible for one individual or a bank to influence/manipulate a pair to move in a particular way.

Bold claims I just made there right? So let me prove it to you. Easy, here’s an exercise for you, do the following equation:

·         EURUSD = EURJPY / USDJPY

This means when you divide EURJPY quotes by USDJPY you will get EURUSD quotes. Which then means trades done on EURUSD or any other pair will affect every other pair! Meaning for a ‘Market marker’ to manipulate EURUSD prices to his advantage, he will have to manipulate all the other pairs! This is called Triangular Equilibrium. The entire system is designed around maintaining a stable equilibrium. As one grow in value, several others have to decrease by equivalent amount and that’s why forex charts are generally in range.

Real trading is done on EURUSD, price moved BUT all the other pairs prices must be adjusted as well, meaning more than 90% moves are random. Why no one know this? So much time wasted trying to find a profitable system using candlesticks which are completely useless!

Conclusion

If you compare Apple stock chart with EURUSD chart you will notice that Apple has gained a lot while EURUSD price today is generally the same as it was decades ago. Forex exist to provide a service while stocks are for creating wealth. Everything on the internet about forex is LIES, it’s there just to get money from you, not the other way around, and that’s why you will not find anything about something like Triangular Equilibrium.

It’s mathematically impossible to profit from forex market using traditional methods currently being in used because everyone is looking for a pattern to repeat itself in a random environment…like how???. This is why 98% traders are losers.

It’s not all gloom and doom though because we have Probability mathematics! We can examine the chains of non-overlapping events that follow each other. Probability trees and hypotheses, we can calculate entries based on market processes using fractal-probability chains, e.g. С(n,k) = n! / ( k! * ( n - k )! )

Basically everything in the universe is fractal, so we can use math to calculate defined fractals given that the forex market is random. We currently do this with weather

Have I realized this from the beginning, I wouldn’t have wasted so much time. I am currently testing a mathematical approach and it’s promising. I invite all programmers who like math like I do to my project I’m currently busy with.

 
Good.

Finally someone who understood forex and was able to articulate.

What's your approach, what type of contribution are you looking for?
 
I wish to find out what finally works at the end

 
One more crucial difference between forex and stocks is the leverage applied. While stock traders mostly trade withour leverage, forex traders in average use 50 or more, which is 50 times riskier. First thing to do is to check what forex traders that trade without leverage are doing
 
Although there is a difference imposed by leverage, it's not what it's about.
Leverage is a method to make money for those providing it.
Here is an example of why leverage and swaps are money printing machines to the "liquidity providers".
IIt all comes down to Euler's number. If you take 1$ and (just for the sake) 100% interest per Anno. You would have 2$ after one year.
Now if you pay out the interest every day, you would end up with 2.71$ at the end of the year (Euler's number).
This is how they make money.
And let's not forget, forex movements are so small, without leverage, there would not be any profit gain for the trader.



 
I disagree. Forex movements are small, so without leverage it is clearly very hard to lose as with leverage. And as said by OP, eurusd is at the same place for decades, so you have to adjust your non leveraged strategy to a ranging type market, this way it is much harder to lose.

 
Ndumiso Mavuso:

Introduction

I am a programmer, I was introduced to forex market by a client in 2015. After studying the markets I then published an EA on the market August 2016, sold just 5 copies and rented 10 copies for one month only, because I believed then that too many users will affect EAs performance so I removed it from the market. It was a night trading EA as my research back then showed that the only profitable strategy was night trading. There was one best selling night trading EA back then, tried searching it but couldn’t find it. It was performing well but had a flaw of massive drawdown which cancelled a lot of gains in one bad trade, but still profitable in long term far & far better than anything on offer in that period, even today. So mine was better in ‘stable drawdown’ terms. Point is, 6 years later there’s still no profitable strategy besides night trading. You can check it yourself, even signal providers, the only stable ones are those with ‘flouting losses’ base strategies (Overall losers cause they’ll have to deposit at some point to manage drawdown) and night trading.

Main

I spent a lot of time researching about forex market every time I get a forex client, so lately I spent a great time trying to figure out why everyone is so stupid and couldn’t solve a simple equation, which is:

·         Find a certain pattern with a probability of 51% or more

·         49% of the time you lose, make sure you lose less or equal to what you profited 51% of the time

Simple!!!!

So I worked! I started with the most popular indicator which is Japanese Candlesticks, wrote a script that calculates accuracy of certain pattern during certain period of time e.g. how many profitable inside bars in the last 2 years, by profitable I mean 2 pips & more at least.

After 8 months of coding I reached the following conclusions

·         Not a single popular pattern is profitable, not even one!

·         90% indicators are moving averages. Pointless to combine them, they do the same thing!

·         No such thing as Naked or Price action strategy, it’s a joke because candlesticks are momentum indicators! Duh!

·         Forex is a utilitarian market, Retail trading account for only 10% of the $6.6 trillion per day traded volume.

·         Most retail trading income comes from Marketing, Yep! The gurus, telegram/Instagram signals and EAs. Almost no one makes money from actual trading. Why?

·         Stock Market and Forex market is apple and oranges, nothing in common. So why use candlesticks that were designed for Stocks on Forex?

·         Forex Market is random. RANDOM

Okay these are a facts you won’t find anywhere on the internet because the moment your search include the word ‘forex’ then you will bombarded with all sort of forex marketing material. E.g. googling a simple newbie question like, how forex prices move, will give you a ‘Market maker strategy’ crap as first result or shit like supply and demand, like WTF I just want to know where my $1 I lost went!

So by Random I mean every single transactions going through the market will affect its movement. e.g. Your 0.01 lot sell trade on EURUSD pair means there’s 0.01 units of USD taken off the market, so EURUSD quotes must be adjusted, so is GBPUSD, so is USDJPY, EURGBP and all other pairs! Your little trade on EURUSD will affect all other pairs! YES Market marker strategy is just a crap marketing gimmick made up by the ‘Gurus’. It’s impossible for one individual or a bank to influence/manipulate a pair to move in a particular way.

Bold claims I just made there right? So let me prove it to you. Easy, here’s an exercise for you, do the following equation:

·         EURUSD = EURJPY / USDJPY

This means when you divide EURJPY quotes by USDJPY you will get EURUSD quotes. Which then means trades done on EURUSD or any other pair will affect every other pair! Meaning for a ‘Market marker’ to manipulate EURUSD prices to his advantage, he will have to manipulate all the other pairs! This is called Triangular Equilibrium. The entire system is designed around maintaining a stable equilibrium. As one grow in value, several others have to decrease by equivalent amount and that’s why forex charts are generally in range.

Real trading is done on EURUSD, price moved BUT all the other pairs prices must be adjusted as well, meaning more than 90% moves are random. Why no one know this? So much time wasted trying to find a profitable system using candlesticks which are completely useless!

Conclusion

If you compare Apple stock chart with EURUSD chart you will notice that Apple has gained a lot while EURUSD price today is generally the same as it was decades ago. Forex exist to provide a service while stocks are for creating wealth. Everything on the internet about forex is LIES, it’s there just to get money from you, not the other way around, and that’s why you will not find anything about something like Triangular Equilibrium.

It’s mathematically impossible to profit from forex market using traditional methods currently being in used because everyone is looking for a pattern to repeat itself in a random environment…like how???. This is why 98% traders are losers.

It’s not all gloom and doom though because we have Probability mathematics! We can examine the chains of non-overlapping events that follow each other. Probability trees and hypotheses, we can calculate entries based on market processes using fractal-probability chains, e.g. С(n,k) = n! / ( k! * ( n - k )! )

Basically everything in the universe is fractal, so we can use math to calculate defined fractals given that the forex market is random. We currently do this with weather

Have I realized this from the beginning, I wouldn’t have wasted so much time. I am currently testing a mathematical approach and it’s promising. I invite all programmers who like math like I do to my project I’m currently busy with.

We cannot solve our problems with the same thinking we used when we created them.


A. Einstein

 
Yes, I admit. Although you do not take into account inflation on the currency itself. Holding it for such long times will not benefit you. In fact you will end up with less buying power after such long holding times.

I guess building a swap-profit strategy utilizing leverage would benefit you more than simply holding a currency over a longer time.

After all, if profits are supposed to be reasonable, you'd need to have a deep pocket.

1.0 Lot is the equivalent to 100.000 of the currency. And as we all know, the profits are small on such. So all you would save by trading without leverage would be the swaps.

Again, the movements of the currency would have to be at least the average inflation rate, which is somewhere around 3% per year. This compounds to around 40% over a 10 year period. Means, a currency's rate would have to change at least 40% to compensate your investment for interest.

So, even if it would do so, which it doesn't, since it keeps ranging, you would think and suspect having made huge profits, but in fact you didn't.

I cannot think of any constellation where trading forex without leverage could give you any sustainable profits.
 
Dominik Egert #:
Yes, I admit. Although you do not take into account inflation on the currency itself. Holding it for such long times will not benefit you. In fact you will end up with less buying power after such long holding times.

I guess building a swap-profit strategy utilizing leverage would benefit you more than simply holding a currency over a longer time.

After all, if profits are supposed to be reasonable, you'd need to have a deep pocket.

1.0 Lot is the equivalent to 100.000 of the currency. And as we all know, the profits are small on such. So all you would save by trading without leverage would be the swaps.

Again, the movements of the currency would have to be at least the average inflation rate, which is somewhere around 3% per year. This compounds to around 40% over a 10 year period. Means, a currency's rate would have to change at least 40% to compensate your investment for interest.

So, even if it would do so, which it doesn't, since it keeps ranging, you would think and suspect having made huge profits, but in fact you didn't.

I cannot think of any constellation where trading forex without leverage could give you any sustainable profits.
Instead of holding lomg time, waiting for 40 % you would think a more reasonable attitude to trade forex taking into account the ranging quality and the swaps is non leveraged day trading, which suffers no swaps.

* or a swing trade of course anything that makes use of counter trend moves has inherent logic taking into account the type of movements in forex
The point is that leverage is the clear factor that causes forex loss vs stocks, and most people dont make the adoption of leverage and type of market to forex 
 
Dominik Egert #:
Good.

Finally someone who understood forex and was able to articulate.

What's your approach, what type of contribution are you looking for?

Thank you Dominik.


First approach I'm busy working on right now is simple actually, first I worked out a definition of UP/Down movement, then workout probabilities then finally risk management approach.

I found a way to define an algorithm for up / down movement, worked out a very promising probability of 54%. I wont go into details its a complex subject but for reference, I got a lot of inspiration from this article .


I will publish the project as a free EA after 30 days live trading test which I hope will be after December 3rd, for further inputs from others willing to approach this differently.

Applying the probability theory to trading gaps
Applying the probability theory to trading gaps
  • www.mql5.com
In this article, we will apply the probability theory and mathematical statistics methods to creating and testing trading strategies. We will also look for optimal trading risk using the differences between the price and the random walk. It is proved that if prices behave like a zero-drift random walk (with no directional trend), then profitable trading is impossible.
 
Thandeka Mbonambi #:
I wish to find out what finally works at the end

Surely nothing a little mathematic can't solve.

Ngeke sihlulwe into engakhulumi sisThandeka  (we got this!).

I'm sure if it was'nt for these greedy Gurus feeding people nonsense, someone would have worked this out by now.

stay tuned, I got something promising, My hope is, publishing this idea for free, it will be exposed to many traders out there and open their minds so that new other ideas will come out

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