Dark underworld of forex trading: "A-books" and "B-books"
- Thread starter OddTrader
- Start date
This is all noob trader stuff though. You need to be aware of this thing happening and STOP to figure out what's going on. I feel like this conversation is going in circles because it's common sense but the dysfunction is attempting to be justified with "go big or go home" irrationalities.
right, that's why I only bet black, but if it starts spinning red I decrease my bet, and when it starts spinning black again I increase my bet, just like Kelly said I should.
I doubt there is any trader on this board that is more conservative than me. I never let losses get out of hand. And I pay good money for that insurance in the form of drawdown.
aw shit, I can never keep them straight. So if it's heads twenty times in a row, does that mean it is trending, or about ready to go tails?
or do they give you much better odds in the market than they give you on a 50/50 coin toss? So...you set your money management up like you were betting on a coin toss, that's your 90% foundation, and then you will either make money or lose money, depending on how good a guesser you are. And it's a hell of a lot easier to guess what the market will do rather than guess what the coin will do. The coin doesn't just keep coming up heads because people are betting it will, but the market just keeps going up because people are betting it will.
this is one fun thread to read 
Why are there so many FX brokers and which ones can we trust?
It is so interesting to see these threads. After many many years involved trading, I can tell you that in my experience, FOREX markets are neither worse nor better than any other market for trading. In fact, imo they are far more amenable to retail trading. Here is why:
The are two catastrophes in FOREX:
- The market is huge and manipulation of them is extremely difficult if not impossible. Try that with stocks.
- Since you are trading one currency against another, you are in essence pair trading. This is also far more amenable to mathematical analysis and therefore systemic trading.
- Since it is not regulated by the SEC, there aren't idiotic rules like you need $25,000 and the PDT rule
- The competition is stiff for your money. There are so many forex brokers and ecns and banks that spreads are narrowing.
- MBTrading also instituted rebate trading, making HFT forex trading possible for retail traders. In essence, retail traders can try their hand at being MMers. There may be others that will follow suit soon. Rebate trading changes the game to overcome the commission negative expectancy enough to make smart traders gain positive edge.
- The possibility of true statistical arbitrage in the form of triangular arbitrage, quadrangular arbitrage, etc. Granted, this takes extreme sophistication in both programming, IT, and understanding. But it is within the realm of the high-end retail trader.
- Leverage is tremendous. However, if you are a maniac gambler, you will be shown the door with your account going to zero in no time flat. But if you have edge and know how to manage risk, the leverage is welcome.
- If you live outside the US, you can trade CFDs. That means that things like oil, gold,silver, etc become easy to trade without a futures account.
The are two catastrophes in FOREX:
- If you live in the US, Dodd-Frank. In order to do institutional type trading, you have to have huge amounts of money if you have a US address. Opening an account with a Prime Broker requires USD 10,000,000. Too bad, because imo, it is one of my favorite markets to trade. This is probably due to lobbying Congress by US exchanges. It is one reason not to be in the US since foreign brokers have been coerced into huge amounts of paper work to service US traders. It isn't worth the hassle so they don't accept US traders.
- Last Look. This should be abolished from existence.
- That FOREX options took off in liquidity and tighter spreads.
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