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We mentioned in part one about the Forex Market really being a "zero - sum" game - that's after the "trade" - ie Brokers / commercial agents etc have had their "spreads and commissions" off traders participating in the market place.

We also mention the "them and us" - IE commercial institutions / Banks / Governments / Hedge Funds etc - being them and us - being the "poor little relative" - ie the Retail Trader - working for ourselves and trying to make a profitable return from our Capital and our commitment from the amount of effort and time and study we do to try and be consistently profitable.

Now immediately can you all see the "conflict" here - Banks and Hedge Funds need to make large amounts of money simple down to the amount of capital and resources they invest in the currency market . But that profit means - others will make a loss - and lose out - that might be unsuccessful commercial bodies and small investment houses and of course the retail traders. We ( the retail trader ) make up less than 8% of the monies passing through the markets every day - but the market is massive - many many trillions of dollars per day and so 5-8% is still billions.

First Major Myth - 85 to 95% of retail traders end up continually losing money and never end up becoming consistently profitable. OK - the actual broker industry - who really don't want that myth to put new traders off trading the Forex Market - put forward their case that its a lot better than that - ie maybe 20 to 35% of all FX traders do become consistently profitable after learning how to trade etc.. Maybe the real figure is some where between 70% to 80% who never make it - really nobody really knows - simply because the industry is "unregulated" and so no central bodies with real genuine stats and information.

What we do know is that this market is a really a very "secretive" industry - ie In many parts of the world -  "dark pools" - funded by drugs monies and illegal money laundering etc - with many "back door" ways of entering and exiting the market place  - that's why is so Massive - its attracts everyone - the honourable and good, the bad and of course even the evil and ugly etc etc.

Next Myth - The FX market is that large - its too big to be manipulated - its a genuine auction house with hundreds of thousands of participants around the world just buying and selling.

TOTAL UTTER RUBBISH

This is no genuine "auction" house participated by equal bodies with equal opportunities - its manipulated and played with every day by the large players who have sufficient "funds" to alter price to suit them . So it does not matter if 78% of all retail traders  ( millions of us ) are all selling the EU this week - we are just tadpoles or ants in the equation - just one Bank or Large Hedge Fund can act against us and out "trump" us.

Its not a level platform or "field" we are playing - actually as an analogy its like a local village pub football team playing a game against FC Barcelona  - ie its fairly obvious who should win. But don't let that put you off - even "ants" in the game can survive and make money - but only when you really know how - and that brings us to the next myth or misinformation etc

Trading is simple and easy  - Yes it is when you know what you are doing and have a successful method and say 5 or 10 yrs of experience etc. But for newbies and traders still going through the journey who have not discovered a proper successful method - then its not easy - you are competing against many of the cleverest brains in the World - supported by "Super Computers" - so why do you think you with a method copied off a book or found on the internet can make you consistent monies ??

Next Myth - There are hundreds of methods to trade the FX market - pick one that suits you - and just do the trades and make money - Again - total rubbish

Yes there are many many methods to trade and make money - but the vast majority will probably just give you break even or a slight profit one month - a big loss the next month - and a small profit the next month - ie 2 steps forward and then either 1 or 3 steps backwards.

Whats the good of investing say $10k or even $25 k into the Forex market - taking the risk and spending a lot of time learning etc and ending up making just 30% a year - ie $3k or $8k - and finding out the time you have invested means you have only earned equivalent to say $5 an hour after 3 or 5 years.

Its Ok if you can honestly say I only spend 7 hrs maximum a week and it works out I make a minimum $30 or $50 for every hr I devote to trading - then that's great . I spend anything from 15 to 30+ hrs a week ( I am full time ) its my main income and so Its no good me trading with just a $5k account. I am consistent - but can still have hours I make no money and even the odd days when I lose - but then I can also have the odd two hours when I make over $1k - but it down to all the work and effort and study I have done over the years improving my trading skills and sourcing my own "edges"  - that maybe 90% of traders would not know off

Next Myth - Brokers and the trade will never mislead you  - Banks and Hedge Funds are honourable and truthful - Retail traders that are at intermediate level - ie been trading live a year or two are worth listening to - Its only Dodgy Vendors and Gurus that you stay well clear of - and don't spend money when its all free on the Internet.

AGAIN - MORE RUBBISH AND LIES

In fact whats the saying - traders that have a little knowledge are dangerous. They think they have it sussed - simple because they have not lost their third  live account and had 2 months of profits - even though one week of "drawdown" was over 35% - ROFLMAO

These are the traders that end up posting free info on the internet - and its like the blind leading the blind - its dangerous for the followers or for the so called sheeple. Copy Traders generally suck - they just dont have enough experience to stay consistent - and most don't use stops - and again - their results are misleading - until they go bust !!

Ideally you find a mentor who can show you he can trade profitable - not just a few days of statements - ideally he need to have been full time for over 2 years and can make say 50 live trades with you and get over 60%+ correct and end up providing you with a profit with only small "drawdown" and of course consistency - not one week 30% gain - next week lose 26% etc etc etc

Proper full time retail traders do not have losing months if they are using a proper profitable successful method. Yes - they might have the odd losing days - but they should have a system that can make monies in any conditions - strong trends - weeks of ranging - etc etc.

Don't spend 3 or 5 years trawling the internet - never spending any monies testing 20 methods and finding out - they are all sh*te. Back-testing and forward testing is not good enough - you need live real time results  - that shows its working in today conditions

Similar - don't spend $2k or even $9+k on a two week full time course expecting to become an expert in 3 months. It's just not going to happen - and you are wasting your money. Proper experienced Traders - like Sir Gissachance and myself have easily done over 10,000 hrs of trading on live charts - that's years of chart reading experience - you cannot replicate it in 2 or 3 months - its impossible.

Them ( ie the Industry and trade) are bound to mislead - just like the football manager who says he is having to field his "b" side team as his main two strikers are injured and not fit for the final cup match of the year - then at kickoff - they come on and are as fit as they have every been - its "gamemanship" - ie misleading the opposition - just like false sentiments on the charts etc etc

I am sure I could write a book again on all the myths and lies I have heard about FX Trading - but then again would people believe it ? ;-))

Finally to finish this section - the Commercial side of FX trading is different to the Retail FX side - don't think you can compare results etc etc - its a different ballgame again 

Part Three to come soon

Good Trading

 

FXCoalface
Forex Trader,
Previous Contributor: FXstreet, T2W, Forexmosgate, Forexmospherians.com
Currencies: Various: Intraday, Scalp,
Senior Technical Market Analysis

Comments

  • Hi Fxcoalface,

    Another wonderful post and certainly educational and food for thought, interesting read and definitely recommend every Forex Trader to follow. I would also suggest one of the best Forex traders on the net, highly talented, extremely experienced scalper, intraday, swing and a jolly good fellow all round.

    P.S. Thanks for helping me short USDCHF recently Peter and much appreciated

    Best Regards,

    Sir Gissachance

  • Morning Sir Gissachance

    Thank you for your compliments and continual support. Maybe without your support and encouragement from many years ago - I would have ended up just as an experienced "average to good scalper" working hard and just earning a decent return. Instead you made me think more "out of the box"- you opened my mind and got me realising I had so much more to discover on my own FX journey.

    You are still the complete "Master FX Trader" in my eyes but hopefully one day in the near future I will be able to add long term and positional FX trading to my armoury as well as the scalping, intraday and swing I already developed

    All the best & Good Trading

    Regards

    Peter

  • Interesting - been reading on some other forums that many traders think Forex trading is a "straight" game - ie too big to be manipulated and not possible to create " false sentiment " moves to encourage traders to enter in the wrong direction. Some traders will never learn and believe everything they are told - This game is about MONEY - so its bound to have devious clever crooks ( bankers) looking on ways to fool the rest. Here's some examples from the last few years 

    http://www.usatoday.com/story/money/business/2014/11/12/banks-forex...

    http://www.bloomberg.com/news/articles/2013-12-19/how-secret-curren...

    http://www.ibtimes.co.uk/fx-fixing-transcripts-thats-why-i-got-bonu...

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"Keep a Record of the Business or Currency Pair Traded. Reasons why the Trade was taken. When was the Exit. How and why the Trade turned out the way it did"

"It's my pleasure to be part of this forum, which is always different than other places & with a friendly environment. Glad to be in this team"

"Yes, the truth requires neither our belief nor understanding. However to harness truth and apply it for our benefit we must at a minimum allow that it is possible".

"We all know we will never be 100% Accurate with 100% win rate over 100's or 1000's of trades - but as long as your winning pips and money - add up to a lot more than your losing pips and money - then "Bingo" you are successful winning FX trader"

"I figured this was a legitimate break, so I went on the hunt for evidence, so here in succession is the list of clues I used to make my decision:

Rejection of market and weekly pivot at ema confluence.

Complete and broken head and shoulders on 1hr time frame.

Broadening formation on daily with test and rejection of 200 day ma

Bull hinge on daily and Renko stochastic.

Positive momentum on 5min, 1hr, 4hr and daily chart"

"Remember that all models are wrong; the practical question is how wrong do they have to be to not be useful" - George E. P. Box

"Sometimes You Win,

Sometimes you Learn".

"Forex Market analysis relies on two types of analysis much like Stock Markets:

Technical Forex Market Analysis views the data on a chart and considers that the News and Data is built into the Price already (economic, political, social, sentimental and psychological). Various tools and indicators will be used by technical traders, for instance MACD, Bollinger Bands, Moving Averages and more.

Fundamental Forex Market Analysis also uses indicators, for instance reports, Gross Domestic Production (GDP), Retail sales, Consumer spending, Industrial Production, Consumer Price Index, Commodities, Economic Calendars, Balance of Trade levels which could identify Trends between other Nations and more."

"Short rapid bursts and quick glimpses of an entry, trigger activated, trail in place and exit strategy and plan already set. Within a blink of an eye, instinctively the buy/sell button is pushed. The hammer falls and clanks decisively, echoing, sparking, like steel upon steel and the trade is executed. A Traders heart beats on with perfect set up, closely aligned with strict parameters, ready to continue the attack or recoil on a wire. Wrap the profit and then stand down, ready for the next hunt"

"When we are talking about sentiment it is very hard to say that this sentiment will prevail another 6, 9, 13 hours. Sentiment is not a constant line. Main trend is bearish, tech picture on daily is bearish, even intraday neutral. Nobody restrict to play long eur short usd position with the target at 1.12 or even 1.1361, this is every traders individual choice as always"

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