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Honest truth about forex.....

Oct 09, 2015 at 20:07
7,911 Views
180 Replies
Member Since Dec 17, 2015   30 posts
Jan 05, 2016 at 09:16
In regards of leverage, isn't it the case that it is completly the same if you trade on 1:100, 1:400 or something else if you use a predefined % max. Risk per trade (the only thing that changes is the used margin).
Member Since Jun 07, 2013   17 posts
Jan 11, 2016 at 08:16
mlawson71 posted:
Try to avoid trading during high-impact news, learn from your mistakes and don't open new positions because you're bored or you don't have the patience to wait for a good entry point. It took me a while to learn these simple truths.

Yeah news have a very initial impact on the market and if you make any mistake in predicting the influence of news on the market, then it could be a very big loss.
Member Since Dec 11, 2015   1487 posts
Jan 11, 2016 at 13:03
Tell me about it. My personal rule is that if I'm not sure what the effect of the news will be, I don't trade them. And more often than not I'm not sure what the effect of the news will be.
Member Since Sep 12, 2015   1948 posts
Jan 11, 2016 at 15:25
No one really knows what the news will be until its released apart from a few people,you can prepare for it though.Trade up to the news or 10-15 mins after,of course there is another option of a straddle trade,but you need to be experienced at doing this,I have done this many times successfully,you can get caught though if your not careful,it depends on what your trading and the Data type.
I had a straddle on NFP on Friday past,which went well,you can check my post.
"They mistook leverage with genius".
Member Since Jul 16, 2013   92 posts
Jan 12, 2016 at 03:17 (edited Jan 12, 2016 at 03:23)
janettte,
the problem is when it comes to too high of leverage, like 1:500, is if an inexperienced trader do not have position protection or account protection the whole account can be wiped out very quickly if he's caught up on the wrong side of the market.
That is why it's so important to have a stop loss on every position and also on the whole account it self. I don't actually see high leverage as negative in trading but new traders do not grasp this until they have experience how important it is to be fully protected.
Also there is a concern with gaps, overnight positions and weekend positions for new traders. Just one mistake can actually wipe out the whole account if the leverage is too high. Low leverage is like a stop loss from the broker and better start with low leverage to prevent mistakes like forgetting stop losses and account protection.
" Lock in the profit and minimize the draw down "
Member Since Dec 17, 2015   30 posts
Jan 12, 2016 at 13:23
kricka posted:
Low leverage is like a stop loss from the broker and better start with low leverage to prevent mistakes like forgetting stop losses and account protection.

Interesting point. Totally agree with you (so far i never thought about this).
Member Since Jan 11, 2016   7 posts
Jan 12, 2016 at 13:25
Makes no odds with using 1:50 or 1:500 leverage providing you use proper risk and money management.

2% is still 2%, whether it's yours or not.
He who risks nothing, risks everything.
Member Since Sep 12, 2015   1948 posts
Jan 12, 2016 at 13:52
kricka posted:
janettte,
the problem is when it comes to too high of leverage, like 1:500, is if an inexperienced trader do not have position protection or account protection the whole account can be wiped out very quickly if he's caught up on the wrong side of the market.
That is why it's so important to have a stop loss on every position and also on the whole account it self. I don't actually see high leverage as negative in trading but new traders do not grasp this until they have experience how important it is to be fully protected.
Also there is a concern with gaps, overnight positions and weekend positions for new traders. Just one mistake can actually wipe out the whole account if the leverage is too high. Low leverage is like a stop loss from the broker and better start with low leverage to prevent mistakes like forgetting stop losses and account protection.

There is the option of a guaranteed stop loss.
"They mistook leverage with genius".
Member Since Sep 06, 2013   137 posts
Jan 12, 2016 at 14:45
Good post - I would make a few suggested edits though (in my opinion)

1. Over leveraged. I know the appeal of trading 1:500 or even 1:1000, but DON'T do it. You will blow you account. My max now is 1:100 and that carries a significant amount of risk. - GOOD :) Leverage = Bad

2. Money management. Do not risk more than 1% of your account. Some say 2% is fine, but 1% is better. set your stop losses at 2% of capital. - Its more about risking what you don't mind losing.

3. Worry about entries less and focus on how you're going to exit the trade that makes the most sense. Once you're in the market manage that position. Worry more about the REASON for entry - what has caused price to be where it is - is there a fundamental reason for it - is that reason likely to change.

HOLY GRAIL: Fundamental Analysis to chose your pairs/direction, Technical Entry/SL/TP for consistent Management of those decisions
Member Since Apr 04, 2010   14 posts
Jan 13, 2016 at 14:49
I disagree on the leverage. Guns don't kill people. People kill people. The same with leverage.

With financial instability and incidents like Alpari I say bring on 2000:1 leverage and thin capitalisation - purely because then more money can stay where it needs to be. In my account. I would rather owe my broker than have my broker owe me.

Also, after many years looking at this I reckon one of the biggest issues for new retail traders is watching too many things. Its like learning to fly a plane blindfolded. Rather learn to fly first - then try figure out how to deal with the blindfold.

Consistently on myfxbook competitions, the average losing trader has 65% winning trades but average loss is double the average gain. I am no statistician, but the coin flip analogy is often used, and coin flips are a 50:50 thing. So fine. Forget everything else, conceptually, flip a coin and you will be right half the time which is less than the 65% wins from trading competitions.

So if you can be right 50% of the time, the key to having edge (or total gains exceeding total losses) is to be able to consistently identify R:R greater than 1:1 because with say average performance of $1.7 of gain for every $1 lost, then 50% win rate or 65% win rate, a trader will be profitable - and no need to follow 1% rules or 3% rules or anything else. Just trade consistent lot size regardless of profits or losses

Edge is edge and a methodology with edge recovers from drawdowns be they 10% or 70%
If you like it, buy it. If you don't sell it.
Member Since Sep 12, 2015   1948 posts
Jan 13, 2016 at 19:08 (edited Jan 13, 2016 at 19:26)
Would you let someone drive your porsche that has no driving licence,something my boss used to say for fun.True beginners should stick to one pair.My trades are 60~65% correct,I could even get away with 40% it's all about how much you make on those winning trades to wipe out the tiny losses,most of my trades are 6:1 or 5:1,4:1 minimum,stupid to trade anything less,my entry is more important than exit,I get maximum gain this way.There are many ways but this is mine.
"They mistook leverage with genius".
Member Since Sep 11, 2015   14 posts
Jan 19, 2016 at 07:59
Thanks for your notes. I shall say that entry is also of high importance, especially with news. If you can determine strong signal to entry over time, than you can afford higher leverage and lot size and thus get more profit per trade
Flat space
Member Since May 20, 2011   724 posts
Jan 19, 2016 at 11:01
FradeauX posted:
Thanks for your notes. I shall say that entry is also of high importance, especially with news. If you can determine strong signal to entry over time, than you can afford higher leverage and lot size and thus get more profit per trade
entry DOES NOT matter. It has been proven MANY times quantified over and over that you can have a random entry and still be profitable in the long run. It just isn't as sexy as entered on a supply demand level or that moving average crossover.
Member Since Sep 12, 2015   1948 posts
Jan 19, 2016 at 14:49
Everyone has their own way of trading, Buy the time Moving average cross over kicks in half the trade is over or reversing,signals are only useful some of the time,mostly false or too slow because their depending on past data.
"They mistook leverage with genius".
Member Since Sep 12, 2015   1948 posts
Jan 20, 2016 at 00:35
focusedfinance posted:
I disagree on the leverage. Guns don't kill people. People kill people. The same with leverage.

With financial instability and incidents like Alpari I say bring on 2000:1 leverage and thin capitalisation - purely because then more money can stay where it needs to be. In my account. I would rather owe my broker than have my broker owe me.

Also, after many years looking at this I reckon one of the biggest issues for new retail traders is watching too many things. Its like learning to fly a plane blindfolded. Rather learn to fly first - then try figure out how to deal with the blindfold.

Consistently on myfxbook competitions, the average losing trader has 65% winning trades but average loss is double the average gain. I am no statistician, but the coin flip analogy is often used, and coin flips are a 50:50 thing. So fine. Forget everything else, conceptually, flip a coin and you will be right half the time which is less than the 65% wins from trading competitions.

So if you can be right 50% of the time, the key to having edge (or total gains exceeding total losses) is to be able to consistently identify R:R greater than 1:1 because with say average performance of $1.7 of gain for every $1 lost, then 50% win rate or 65% win
rate, a trader will be profitable - and no need to follow 1% rules or 3% rules or anything else. Just trade consistent lot size regardless of profits or losses

Edge is edge and a methodology with edge recovers from drawdowns be they 10% or 70%

I like your moto,here's my version. If you like it sell it,if you hate it buy it!
"They mistook leverage with genius".
Member Since Jan 25, 2016   38 posts
Jan 25, 2016 at 07:40
focusedfinance posted:
I disagree on the leverage. Guns don't kill people. People kill people. The same with leverage.

With financial instability and incidents like Alpari I say bring on 2000:1 leverage and thin capitalisation - purely because then more money can stay where it needs to be. In my account. I would rather owe my broker than have my broker owe me.

Also, after many years looking at this I reckon one of the biggest issues for new retail traders is watching too many things. Its like learning to fly a plane blindfolded. Rather learn to fly first - then try figure out how to deal with the blindfold.

Consistently on myfxbook competitions, the average losing trader has 65% winning trades but average loss is double the average gain. I am no statistician, but the coin flip analogy is often used, and coin flips are a 50:50 thing. So fine. Forget everything else, conceptually, flip a coin and you will be right half the time which is less than the 65% wins from trading competitions.

So if you can be right 50% of the time, the key to having edge (or total gains exceeding total losses) is to be able to consistently identify R:R greater than 1:1 because with say average performance of $1.7 of gain for every $1 lost, then 50% win rate or 65% win rate, a trader will be profitable - and no need to follow 1% rules or 3% rules or anything else. Just trade consistent lot size regardless of profits or losses

Edge is edge and a methodology with edge recovers from drawdowns be they 10% or 70%

I agree with your comments, but would like to add one more key element which most of succesful traders have in common: Increasing positive positions and only trail the SL... When to enter a positions is for me completly overated. BTW:
Member Since Sep 11, 2015   14 posts
Jan 26, 2016 at 07:19
FXtrader2010 posted:
FradeauX posted:
Thanks for your notes. I shall say that entry is also of high importance, especially with news. If you can determine strong signal to entry over time, than you can afford higher leverage and lot size and thus get more profit per trade
entry DOES NOT matter. It has been proven MANY times quantified over and over that you can have a random entry and still be profitable in the long run. It just isn't as sexy as entered on a supply demand level or that moving average crossover.

Does or does not, it also depends on strategy, isn't it? For example, two same trades with different entries of lets just say 40 p. It can be noticeable depending on volume. My example was not concretized, you mentioned about long run and I meant some single trade. Thank you and sorry if I m not right after all.
Flat space
Member Since Apr 18, 2016   4 posts
Apr 19, 2016 at 06:05
Do you want to hear honest truth about trading in general?? Its addictive and it gets worse if you make a little bit of money...all of sudden you feel invincible
Money never sleep
Member Since Sep 12, 2015   1948 posts
Apr 19, 2016 at 15:58
Dave008 posted:
Do you want to hear honest truth about trading in general?? Its addictive and it gets worse if you make a little bit of money...all of sudden you feel invincible

That's because it has the same effect on the brain as coke.This is true until you learn to control your emotions or at least suppress that high.
"They mistook leverage with genius".
Member Since May 20, 2011   724 posts
Apr 19, 2016 at 18:08
FradeauX posted:
FXtrader2010 posted:
FradeauX posted:
Thanks for your notes. I shall say that entry is also of high importance, especially with news. If you can determine strong signal to entry over time, than you can afford higher leverage and lot size and thus get more profit per trade
entry DOES NOT matter. It has been proven MANY times quantified over and over that you can have a random entry and still be profitable in the long run. It just isn't as sexy as entered on a supply demand level or that moving average crossover.

Does or does not, it also depends on strategy, isn't it? For example, two same trades with different entries of lets just say 40 p. It can be noticeable depending on volume. My example was not concretized, you mentioned about long run and I meant some single trade. Thank you and sorry if I m not right after all.
But that is just personal preference then! Do you want to drive Lamborghini or Ferrari? Both will go fast and look sexy. What matters is most is your exit point and how you manage risk, more than anything else.
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