A message to those that are failing....

[trader_david]

most people failed:

1) they lack the knowledge and information or the skills, they work all day as ordinarry regular (8~5)employees, then peeked the chart or the quote in the evening, next day they may put out an order to buy or sell, how they can beat those guys who are the market (pit guys/full time traders). back to 2000~2005, the house market boomed, most naives think "they can quit job and just buy house and hold, and they can retire", under this kind of thoughts,not being forclosured is a wonder!

2) they lack funds and do not understand how to manage risk, their accounts are too tiny, a small direction adversity may wipe it out totally, for example, if some guys yersterday bought VNDA using his tiny money account, they went under definitely, if he leveraged the position, then he may own the brokage firm!

3)they do not understand wealth built on diligence, not luck. if things like that, why brokage firms do investing/trading by themselves or those market makers buy/hold or short hold

 

[highlifejoker]

Quote from short&naked:

(I'll bite)

You have basically just discredited all of TA by saying this, you realize this, right?

So if you don't trade with charts, what do you use?

Yes, TA has been discredited as a trading tool countless times in the past. As an ANALYSIS and ILLUSTRATIVE tool it has worth, however, as a trading tool it is absolutely worthless. Think of the name itself TECHNICAL ANALYSIS, not trading ANALYSIS.

Ever wonder why TA is not taught by Prop Shops such as Bright Trading? In fact not one prop shop teaches TA as a primary trading tool, NONE! why is this??? How about why is TA pushed so hard by the countless FX bucket shops who only win when you LOSE? FX dealers such as GFT provide elaborate TA service suites so you beat them? Seriously, get real! Trading with TA is a farce, analysis and illustrate with TA but never trade with it.

i can't tell you what I use. sorry!

Jo K Er

 

[womblevader]

Good post OP. Very thought provoking.

I think I am starting to get it.

1. The only difference I can see between investing and trading is the timeframe, which is an arbitrary difference. So no-one can win that argument. If you look at the difference in terms of risk reward trading has much higher risk reward than investing.

ie I like to make 1% of my capital per day, if I put money into a CD i may get a real return of 1% per year.

2. TA

Did someone actually show that TA works prospectively. I must have missed it.

If it does work could someone please share there analysis for the SnP tomorrow ie open close with low and high in order.

3. Failure

3.1 You need a much higher winning %age than most people think to survive. IMO >70% is required. NB market is not normally distributed.

3.2 Most traders are over optimistic about returns [fueled by the market snake oil salesman] and expect to say double every month and end up taking on too much risk with the one and only obvious outcome.

Cheers

 

[riskfreetrading]

Quote from alex.samant:

all is well, EXCEPT...

investing and trading require two different mind sets.

i don't understand what you mean by "a strategy that combines investing and trading".

either you speculate the dynamics of price case in which you are a speculator (aka let's say "trader")..

or you are an investor, don't really care much about the price at which you buy or sell, but rather care more about yields, dividends, interest and you have a lot of money to make it worth the effort...

you can't assume both roles in one go.

"a strategy that combines investing and trading".

He probably means "losing".

 

[trader_david]

quoted from wikipedia

the most factor most will not survive is : teh house edge, you are under-funded and teh market is deep pocket!


[edit] Why retail speculators should not be able to beat the market
The foreign exchange market is a zero sum game in which there are many experienced well-capitalized professional traders (e.g. working for banks) who can devote their attention full time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these traders.

Although it is possible for a few experts to successfully arbitrage the market for an unusually large return, this does not mean that a larger number could earn the same returns even given the same tools, techniques and data sources. This is because the arbitrages are essentially drawn from a pool of finite size; although information about how to capture arbitrages is a nonrival good, the arbritrages themselves are a rival good. (To draw an analogy, the total amount of buried treasure on an island is the same, regardless of how many treasure hunters have bought copies of a treasure map.)

Retail traders are - almost by definition - undercapitalized. Thus they are subject to the problem of gambler's ruin. In a fair game (one with no information advantages) between two players that continues until one trader goes bankrupt, the player with the lower amount of capital has a higher probability of going bankrupt first. Since the retail speculator is effectively playing against the market as a whole - which has nearly infinite capital - he will almost certainly go bankrupt.

The retail trader always pays the bid/ask spread which makes his odds of winning less than those of a fair game. Additional costs may include margin interest, or if a spot position is kept open for more than one day the trade may be "resettled" each day, each time costing the full bid/ask spread.

According to the Wall Street Journal (Currency Markets Draw Speculation, Fraud July 26, 2005) "Even people running the trading shops warn clients against trying to time the market. 'If 15% of day traders are profitable,' says Drew Niv, chief executive of FXCM, 'I'd be surprised.' "[14]

Paul Belogour, the Managing Director of a Boston based retail forex trader, was quoted by the Financial Times as saying, "Trading foreign exchange is an excellent way for investors to find out how tough the markets really are. But I say to customers: if this is money you have worked hard for – that you cannot afford to lose – never, never invest in foreign exchange." [15]

 

[BlindLemonBoosh]

Quote from short&naked:

However, the shorter the time frame, the harder it is to make consistent profits. This is a statical fact.

No, it's not. As one goes across the spectrum from long term toward short term investing it becomes easier to make consistent profits - one can shift from less optimal positions to others having a greater positive expectancy - thus, greater trading efficiency. At a certain point, commissions & slippage begin to outweigh further 'efficiency' gains. From this point in, shorter timeframes will produce lesser results.

 

[short&naked]

Quote from BlindLemonBoosh:

No, it's not. As one goes across the spectrum from long term toward short term investing it becomes easier to make consistent profits - one can shift from less optimal positions to others having a greater positive expectancy - thus, greater trading efficiency. At a certain point, commissions & slippage begin to outweigh further 'efficiency' gains. From this point in, shorter timeframes will produce lesser results.

So you'd think that one would have more success scalping the EUR/USD than following the general trend???

 

[short&naked]

Quote from highlifejoker:

Yes, TA has been discredited as a trading tool countless times in the past. As an ANALYSIS and ILLUSTRATIVE tool it has worth, however, as a trading tool it is absolutely worthless. Think of the name itself TECHNICAL ANALYSIS, not trading ANALYSIS.

Ever wonder why TA is not taught by Prop Shops such as Bright Trading? In fact not one prop shop teaches TA as a primary trading tool, NONE! why is this??? How about why is TA pushed so hard by the countless FX bucket shops who only win when you LOSE? FX dealers such as GFT provide elaborate TA service suites so you beat them? Seriously, get real! Trading with TA is a farce, analysis and illustrate with TA but never trade with it.

i can't tell you what I use. sorry!

Jo K Er

FUNDAMENTAL Analysis, doesn't have the word trading in it either. According to your logic it is therefore useless. The fact that you can't share your oh so secret method makes zero sense.

Also, I'm not just talking about FX trading.

 

[bespoke]

Quote from short&naked:

Possible. Although without knowing details it is hard to make that determination. However, the shorter the time frame, the harder it is to make consistent profits. This is a statical fact.

just another dumb thing posted on ET

show me some statistics to back that statement up since you say it's fact.

good scalpers make very consistent profits day in and day out, every day, every week, every month. can you say the same?

 

[Rocko1]

Quote from short&naked:




1. Don't try to be an innovator... keep it simple!

2. Start with a strategy that blends investing and trading (i.e. stay away from intra-day trading).

3. Don't fight the trend, ever!

4. Use only basic indicators (stochs work well for trending stocks) and the main MAs/EMAs (200, 65, 50, 20). I have also found that 150 works very well on strongly trending stocks.

5. Become friends with trailing stops. Once your trade moves into profitable territory, seal off your profit with a TS. It is always better to walk away with a small profit (or no profit) than a loss.

And in case I didn't mention it: Keep it simple!

short&naked

noob