forex trading for a living

[coolshades]

am a newbie and am sure this has been asked before ..does anyone here trade forex for a living..

and an experienced trader would be able to earn what kind of money in a year ?

 

[rav700]

am a newbie and am sure this has been asked before ..does anyone here trade forex for a living..

and an experienced trader would be able to earn what kind of money in a year ?

I will keep this very short and simple:
"Forex is about making pips" -----the only thing missing from this quote is "WITH CONSISTENCY"

So let me re-iterate

"Forex is about making pips with consistency"

Step 2:
Now I will explain things to you in layman's terms....

If you can achieve 400 pips a month with confidence and consistency then you have a salary and I would consider Trading for a living......

I have been trading forex for quite a bit of time and I spent a good Year paper trading and trying to make pips with consistency and then I started with small stake like £3 and £5 a point .
When you are trading with real money the difference is the phsychology changes....The factors like Greed and patience are the main downfalls and you start playing with higher stakes and endup turning trading into gambling...I had very bad period and I blew my account 2 times .

After these events I started thinking in pips rather than £'s and things changed for me.....
I started trading and made pips consistenty and realised what a beautiful market forex is.....
I think a 100 pips is easily achievable.

And now am into a much more higher stake bracket.

In short the perks are good if you get it right......

Happy Trading

Rav

 

[investor_me]

I will keep this very short and simple:
"Forex is about making pips" -----the only thing missing from this quote is "WITH CONSISTENCY"

So let me re-iterate

"Forex is about making pips with consistency"

Step 2:
Now I will explain things to you in layman's terms....

If you can achieve 400 pips a month with confidence and consistency then you have a salary and I would consider Trading for a living......

I have been trading forex for quite a bit of time and I spent a good Year paper trading and trying to make pips with consistency and then I started with small stake like £3 and £5 a point .
When you are trading with real money the difference is the phsychology changes....The factors like Greed and patience are the main downfalls and you start playing with higher stakes and endup turning trading into gambling...I had very bad period and I blew my account 2 times .

After these events I started thinking in pips rather than £'s and things changed for me.....
I started trading and made pips consistenty and realised what a beautiful market forex is.....
I think a 100 pips is easily achievable.

And now am into a much more higher stake bracket.

In short the perks are good if you get it right......

Happy Trading

Rav

Very well put. I do know of people who live on forex trade (online and not paper trade). But the issue of consistency is not guaranteed without proper money management and sometimes 'hedging'. There is a notion that says "save your white note for the black day", which means if you get a profitable month, make sure you deduct an amount from that as saving for days when you may be losing, because in forex, losing is inevitable and there could be months when you get a minus ahead of your gained pips.

BTW, I've been interested in knowing of reliable online brokers who apply MT4 expert systems, so if you know of any, please share them with us.

i_me

 

[damianoakley]

am a newbie and am sure this has been asked before ..does anyone here trade forex for a living..

and an experienced trader would be able to earn what kind of money in a year ?

Hi coolshades,

May I ask why, as a new trader, you have decided to choose Forex in particular for your trading?

It seems that many new traders just jump at the forex market first because it seems so accessible and easy to get into.

Have you looked at other markets?



Thanks


Damian

 

[coolshades]

Hi coolshades,

May I ask why, as a new trader, you have decided to choose Forex in particular for your trading?

It seems that many new traders just jump at the forex market first because it seems so accessible and easy to get into.

Have you looked at other markets?



Thanks


Damian

Damian,

what other markets wld you suggest?

 

[fxtraderjustin]

am a newbie and am sure this has been asked before ..does anyone here trade forex for a living..

and an experienced trader would be able to earn what kind of money in a year ?

Hi Coolshades -

I think for a new trader, this would be good to read. Per the Blog, Chris is already a trader on our platform. However, he wrote this Blog for his subscriber base to answer many questions to people looking for information about Forex.

http://tradesight.com/wordpress/?p=46

Chris Mercer says some very important things in this blog.

 

[Directional]

Damian,

what other markets wld you suggest?

well for a start there are index futures, commodity futures and bond futures.

If you get in with a forex bucketshop, you'll have the odds stacked against you before you even try to gain consistency.

 

[FXSCALPER2]

This is a tough business. I am afraid the reason it is tough has very little to do what every body says. Broker manipulation, for example, is a red herring. I am sure it happens but that shouldn't stop a good trader from profiting. However, there are too many pitfalls on your way that, on balance, it is something you have to make sure you want to get into.

It is a very painful journey, regardless what anybody may tell you. You stand to lose a lot: your money, relationships (unless you are very lucky), your sleep and peace of mind. For months after you start, it is going to be hell and, most of the time, you won't know why. You will do all the wrong things, you will work so hard and spend so much time and will have nothing to show for it. You will almost certainly run out of money. After all this, you may find that you have no talent for this business.

It is very important to understand what you are getting yourself into. You have got to make sure you got the stomach and the support mechanism for all that is going to happen to you. I believe good traders are born, not made. After all the struggle, you are highly likley to discover that you shouldn't be doing this.

 

[coolshades]

This is a tough business. I am afraid the reason it is tough has very little to do what every body says. Broker manipulation, for example, is a red herring. I am sure it happens but that shouldn't stop a good trader from profiting. However, there are too many pitfalls on your way that, on balance, it is something you have to make sure you want to get into.

It is a very painful journey, regardless what anybody may tell you. You stand to lose a lot: your money, relationships (unless you are very lucky), your sleep and peace of mind. For months after you start, it is going to be hell and, most of the time, you won't know why. You will do all the wrong things, you will work so hard and spend so much time and will have nothing to show for it. You will almost certainly run out of money. After all this, you may find that you have no talent for this business.

It is very important to understand what you are getting yourself into. You have got to make sure you got the stomach and the support mechanism for all that is going to happen to you. I believe good traders are born, not made. After all the struggle, you are highly likley to discover that you shouldn't be doing this.

ok, i hear you.. so why do all of you do it? and also if not forex then what? i am frankly not investing a lot cause i know i will lose.. so i am realistic that way..

 

[coolshades]

well for a start there are index futures, commodity futures and bond futures.

If you get in with a forex bucketshop, you'll have the odds stacked against you before you even try to gain consistency.

i am a newbie here.. so this might be a foolish question.. why wld index be better than forex?

 

[neil]

loadsa money

ok, i hear you.. so why do all of you do it? and also if not forex then what? i am frankly not investing a lot cause i know i will lose.. so i am realistic that way..

Listen again to what RAV says above. Read the knowledge lab. articles - practice some then come back with questions. It will take a long time, people will try to sell you systems ( they love newbies who think trading is simply copying someone else) and you will try many indicators, time scales, products etc. Use demo platforms - trading timeframes? trading plans? trading diary? reading, trying, failing, research, try again, investor? Trader? The list goes on but the biggest obstacle to overcome is yourself. In your case it appears you have a lot of studying to do before you get any further.
So use the search facility at the top of the page, plan, test then come back.
Thinking about returns and you have already planned to fail ( Source: Rav bove)
Good luck

 

[pssonice]

trade forex for a living ...

is a game of take; you have to take the money three times a day.

If you dont succeed in doing so, you are nothing else but a poor investor

 

[damianoakley]

Hi Coolshades,

I think we might have all been of little help to you on this thread.

You came here with a simple query regarding the forex market and we've bombarded you with reasons to be wary of forex, highlighted alternative markets you could trade, and emphasised the difficulty of building a business in trading.

I think, despite us all wanting to help, we may have just served to confuse you further.

No market is necessarily better to trader than another - it's all down to individual personality.

For example - I trade stocks every day. I like stocks because for me they are simple. I find them easy to understand. I like the simplicity of the stock market. I find futures, bonds, commodities and currencies overly-complicated, so I choose to specialise in U.S. Stocks.

There is no right or wrong market to trade - but make sure you trade a market that you understand.

Feel free to send me a personal email if you would like to discuss the Stock Market in more detail.


Good Luck

Damian

 

[DallasSteve]

ForexMadeHard

CoolShades

I'm new here, but I'm not new to trading. I've got the 1099s to prove it. I've traded millions in stocks (it adds up fast when you churn your account) and I lost more than I made.

I was a CPA for 15 years and I've been programming computers for the last 10 years. So I used my skills to backtest a lot of trading systems (one is running right now) and what I've found after litterally thousands of hours of testing systems is that the market (all markets) is very close to a random walk.

My common sense doesn't want to believe that. When I look at charts I see patterns and trends. But I've tried all the technical indicators I can find and I've even made up a few myself, and all of them tested honestly tend back towards zero in the long run.

I've seen a few systems that show a very slim profit, but it's usually not enough to cover commissions and spread. If you trade larger positions and find the cheapest middlemen you've got a slim chance. I had a good system working circa 2002 but the market whittled it away by overfishing and my free commission broker went out of business (I wonder why).

My advice: If you want to trade, start small. What you're doing is very close to gambling and you have to pay the broker and the market maker before you get anything. If you do start to make a profit you can always scale up. That probably won't happen.

Steve

 

[damianoakley]

Hi DallasSteve,

That's what I like - someone who tells it like it is !

If you don't mind me saying, I think your post is overly negative.

I'm not sure what systems you've been testing, but you seem to be suggesting that it's impossible to make trading pay - in other words, we should all give up and go home.

This is not true - it is possible to trade for a living. There are traders who achieved this year after year.

Whist I appreciate your skill and experience in this industry, your failure to find a system that works does not mean that it's impossible - it just means that you haven't found a system that works.

In the words of the great Jack Schwager: "There are hundreds of profitable systems, it's just that they are all very difficult to find."

The random walk suggestion has been suggested before and this part of your post I partly agree with. Van Tharp ran a test on indicators in his book and he discovered that most indicators (when used on their own) failed to achieve any better accuracy than a random entry, ie - 50% success.

But this doesn't mean that we should all stop trading and give up. Entry is a very small part of an overall trading system. Some of the most profitable systems only have a strike rate of 35%.


Thanks

Damian

 

[DallasSteve]

I'm not sure what systems you've been testing, but you seem to be suggesting that it's impossible to make trading pay - in other words, we should all give up and go home.

This is not true - it is possible to trade for a living. There are traders who achieved this year after year.

Whist I appreciate your skill and experience in this industry, your failure to find a system that works does not mean that it's impossible - it just means that you haven't found a system that works.

Damian

You've got my attention. I'd love for you, or anyone else to tell me what system works consistently and I will be testing it within the hour. I'd like to reply to a few specific points:

"I'm not sure what systems you've been testing" - The list would be much shorter for me to tell you which ones I HAVEN'T been testing.

"you seem to be suggesting that it's impossible to make trading pay" - Not exactly. Even if the market is a random walk (or close to it), if you have enough participants the law of averages says that some of them will make some significant profits.

"it just means that you haven't found a system that works" - I did say that I have seen a few systems that show slim profits, but it is difficult to cover spread and commissions. Difficult, but not impossible.

If you can't cite me a specific formula to test perhaps you want to recommend a particular author who can give me some concrete guidance. I've read a few trading books over the years, but might still read one more. One of the more interesting ones that I've read was "The Compleat Day Trader II" by Jake Bernstein, but even that one fell far short of giving me a system I could turn into money, although he truely tried.

Steve

 

[damianoakley]

Hi Steve,

I can't cite you a specific formula to test because I doubt you would be able to backtest the strategy I use.

Each day, I narrow 10,000 U.S. Stocks down to a select few that I choose to trade. The process of narrowing down 10,000 stocks is 80% mechanical and 20% human judgement, and so I doubt you could program a computer to simulate the human 20%.

And this brings me to an interesting point. You are programming a computer to rigidly backtest a strict set of rules completely absent of any trader judgement. Could this be part of the problem?

Also, as regards the systems you are programming, are they just testing entry reliability, or does your testing include position sizing as well? If it does, what position sizing algorithm are you using?

Position sizing is the biggest thing that will effect the profits (or losses) of a trading system.

I hate to bang on about Van Tharp again, but in his book he tests a breakout system with different position sizing strategies. Using the different position sizing strategies on the SAME breakout system, he produced profits of $30,000 for one strategy and $2m on another more sophisticated strategy! Don't forget these radically different profits were achieved using the same breakout system - the only thing he changed in the test was the position sizing technique.


Thanks

Damian

 

[DallasSteve]

Backtesting

Damian

The lack of human judgment in backtest simulations is surely one of its limitations, but I consider the simulations to be very valuable regardless. If I start trading a system it will be programmed into my computer and traded automatically. I'm skeptical that any human can trade better than a computer, but since it can't be proved I won't try to debate that point.

As far as sizing algorithms my backtests assume a constant dollar (or pound) trade size. Please explain how the size of a trade affects its percentage profitability other than in relation to commission percentage or effect on market price (in the case of a very large block trade). When I backtest I only concern myself with percentage profitability. I know that the dollar profit will be a factor of quantity traded.

Steve

 

[Charlton]

Sound advice

Hi Steve,

I can't cite you a specific formula to test because I doubt you would be able to backtest the strategy I use.

Each day, I narrow 10,000 U.S. Stocks down to a select few that I choose to trade. The process of narrowing down 10,000 stocks is 80% mechanical and 20% human judgement, and so I doubt you could program a computer to simulate the human 20%.

And this brings me to an interesting point. You are programming a computer to rigidly backtest a strict set of rules completely absent of any trader judgement. Could this be part of the problem?

Well a newbie's simple question has prompted a lot of sound advice from everyone and I hope it has not discouraged Coolshades, but at least made him step back and consider the advice given.

The discussion about systems, backtesting and human intervention is interesting and has appeared from time to time on this board. I would tend to agree with you Damian that, at the moment , the mechanical aspect of trading is not 100% of the activity, but that human intervention occurs. Sometimes this is detrimental to the process e.g. when emotions cause us to turn away from our prescribed strategy. On the other hand there is a certain something that is currently not captured in mechanical systems, which advanced traders might call intuition. The question that has often been asked is whether this is really just experience and advanced skills that allow the proficient trader to see the signs that other's miss and which have not yet been programmed into a system OR whether this is something else in play, which cannot be deconstructed into logical activity and programmed systems.

Don't forget these radically different profits were achieved using the same breakout system - the only thing he changed in the test was the position sizing technique.

I can understand that, at the lower end of position sizing, transaction costs will comprise a larger % of a potential profit or loss and therefore would have to be taken into account when backtesting a system - the scalping versus swing/position trading characteristics for example. Was this the point that you were making ?

I would also like to ask Steve, if he has compared the results of his backtesting with some measure of the level of discretion that is required with the system and also whether it indicates a higher or lower degree of profitability when discretion is applied

Charlton

 

[DallasSteve]

Charlton

My backtesting methodologies do not incorporate any level of discretion.

Steve