Do you think newcomers are easy to earn money in Forex

[Eric215]

Quote from intradaybill:

Not academic at all and not impressive. The basic error you committed, which is a practical empirical truth you denied, is that for trader A to open a long position in forex, someone has to take the opposite side. Forex involves transactions between counterparties, just like in futures.

When A sells to B, A writes a gain or a loss., depending on whether his counteparty, A0, wrote a loss or a gain, respectively.

This is basic. Suppose a new forex game starts Monday morning for currency pair ABCXYZ. At the start of the day, A0 sells to A, thus A0 goes short and A1 goes long. Then, A sells to B, B sells to C, etc. If at the end of the day, A ,B, and C all made money, A0 loses the same amount of money unless A0 bought from another trader B0 to close his position in the meantime, but B0 is now short and as a result, the gain of A, B, C equals the loss of A0 and B0, etc. ad (countable) infinitum.

This is true. So a fair conclusion would be that there isn't one losing trader for every winning trader but there is one losing dollar for every winning dollar. One large trader could potentially win money from several smaller traders or from just one other large trader.

As for the original question everyone else has it right, you will lose quite a bit before you win, so be financially prepared for that. You won't hit the emotional part of trading until you lose a bit, then your journey really starts. Remember, you are trading against the best traders in the world who have more experience, better technology, better transaction costs, and probably even better information flow. It is their sole job everyday to siphon money from people like you (nothing personal) everyday. Good Luck though, just be ready.

 

[number22]

Quote from Eric215:

...you are trading against the best traders in the world who have more experience, better technology, better transaction costs, and probably even better information flow. It is their sole job everyday to siphon money from people like you (nothing personal) everyday. Good Luck though, just be ready.

I have to agree with most of your saying; however; I should add, sometime the counter party are not individual player, but central bank of various country, then its motivation isn't always making money in the market.

Good trading.

 

[Eric215]

Quote from number22:

I have to agree with most of your saying; however; I should add, sometime the counter party are not individual player, but central bank of various country, then its motivation isn't always making money in the market.

Good trading.

I agree. There are non-speculative institutions and individuals who create inefficiencies in the market by buying and selling large sums haphazardly. But every individual speculative trader, whether profitable or not, is still competing against each other for those dollars, or yen, or whatever. Point taken though.

 

[cabletrader]

Quote from Eric215:

Remember, you are trading against the best traders in the world...... but every individual speculative trader, whether profitable or not, is still competing against each other for those dollars

Not really, all you're doing is exchanging one currency for another, where's the competition? Traders aren't fighting over a finite pot of money, the pot is infinite!

 

[cabletrader]

Quote from intradaybill:

Not academic at all....

It's academic is every sense of the word, it's all theory and has no practical relevance.

As others have pointed out, currencies aren't just traded speculatively so although in theory it may be true that for every winner there must be a loser somewhere, in practice it doesn't automatically follow that for every speculatively trading winner there must be a speculatively trading loser. In theory it would be possible for every speculative trader to be profitable.

Forex is a continuous and never ending flow from all kinds of different sources, it's futile to even try to argue that it's a zero sum game between speculative traders unless you have accurate information about volume traded, who's trading it, and why.

Apart from that, to reach any kind of meaningful conclusion you would need to take into account all sorts of local economic and inflationary data, it's an impossible task and to be honest it would be an entirely pointless exercise anyway.

 

[Eric215]

Quote from cabletrader:

Not really, all you're doing is exchanging one currency for another, where's the competition? Traders aren't fighting over a finite pot of money, the pot is infinite!

How do you figure the pot is infinite? Maybe in theory the US or other countries could just keep printing more money and drive inflation up but even then it is only as infinite as the speed at which they print it. When I buy or sell at a certain price that amount goes from my account to someone else's. It's not a video game. If I make $200 on a trade, one person or multiple people somewhere are losing $200 at worst or at best missing out on further profits.

 

[cabletrader]

Quote from Eric215:

How do you figure the pot is infinite?

Too pedantic for me!

I think you're kinda missing the wood for the trees there Eric215

 

[Eric215]

Quote from cabletrader:

Too pedantic for me!

I think you're kinda missing the wood for the trees there Eric215

I don't know what pedantic means but what I said stands on its own. With out going into to much detail I'll try again. A trader exchanges one currency which one country prints for another currency that another country prints. I see finite, not infinite monies there. You may be missing the fact that when you use a dealer like FXCM, Oanda, etc. to trade with they package the currencies into little lots that are convenient for the retail trader. If you wanted to buy say the AUD/CAD cross in a real life transaction you would first have to change your US Dollars (If you're American) into Canadian Dollars and then change your Canadian Dollars into Australian Dollars. The retail dealers make this real convenient for you by packaging little lots with a set margin where these transactions just read as a pip cost. This is why on retail platforms each currency can have a different pip cost. On a retail dealer FCM it is real easy to miss what is actually going on but you are actually buying one currency with another. Not much different then a stock. So I guess with your argument there is an infinite amount of company stock too?

 

[davidmaria1]

Pedantic.
Ped, latin derived, loosely meaning "foot"
Antic.
Often describing a series of physical actions.
Linked together, ped-antic, pedantic.
Foot actions,or, foot movements.
Usage:
"Keep doing that THING and I'll break my FOOT off in your ass"
See? English is EZ.

 

[cabletrader]

Quote from davidmaria1:


"Keep doing that THING and I'll break my FOOT off in your ass"
See? English is EZ.

LOL

I think my foot fell asleep with the rest of me, this debate is surreal!

Maybe I missed a couple of pages somewhere, either that or the proof label on this vino is way out!