The way I see it, being profitable for over a 3 month period is enough time to exclude\filter most winning streaks. The data speaks for itself really, any assumptions about it without further evidence is hearsay.
why retail FX traders loose
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The way I see it, being profitable for over a 3 month period is enough time to exclude\filter most winning streaks. The data speaks for itself really, any assumptions about it without further evidence is hearsay.
Shakone
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With respect, this depends a lot on how often someone trades. One trade every 3 months does not mean much.
Even for regular traders, lets say someone has 1:1 risk reward, and enters randomly, lets say their prob of winning is .49 (because costs/spread make it less than .5.)
From what I make out, after 100 trades of this, the probability of one of these traders being breakeven or better is 46%, much higher than the 33% those stats show. That's someone without a clue. 100 trades in 3 months is fairly active.
So i don't think the data says what you think it says. But I'm repearting myself again....
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Like you said, are you repeating yourself. Absolutely, as am I. Your argument however is just your opinion against fact. Experience has taught me that 60 days is a valid sample size for measuring if a strategy is successful or not. Furthermore, how many traders do you know taking 1 trade every 3 months
R.Charnock
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It's the ultimate Never Loose strat: buy and hold for life.
ChocolateDigestive
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lol. not sure which part you dont get. do you doubt that the top tier participants make money trading? I would hope not. If they are making money and are trading size it means someone else must be losing. not rocket science bud. The actual % of losing retail traders matters not, I personally couldnt give a flying 7uck what % of them lose all I know is that is is the majority. now consider the retail traders trade smaller size. Who do you think is losing? someone has to after all.
I mean where is this going? do you think retail traders win on average, or 50/50. dont understand where this is going?
whatever it's all good, as long as you are making money that's all that matters.
rsh01
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in a zero sum game where the top tier participants make money whilst trading size and retail traders lose whilst trading smalls the losing % is likely to be very high.
hi CD,
Contrary to your zero sum assertion above, the top tier participants are not necessarily 'making money' on their spot trades, they are often just 'doing business'. The fx transaction could be for eg: a straight fx exchange on behalf of a middle east consortium wanting to purchase a british company; or part of a structured deal cashflow at market price - & the money the big player makes is prob on the fees/derivs/other asset underlyings ....etc etc. So their profit may have zero to do with the fx spot part of what they are doing. With that in mind you could, in theory, have all market participants making money inc retail traders - you would just need to include all the other related transactions in the 'making money' equation. Obviously for this to happen the other side of the retail trades would always (if you assume one ctpy takes both ends of the trade) be taken by the big players who are just 'doing business', and we know this doesn't happen, & we also know big players have prop desks as well so they are clearly profiting just from fx spot trades.
I just wanted to clarify that you cannot really use the zero sum game bit in your argument as this assumes everyone is trading fx spot for prop purposes (making money just from fx spot).
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What the #uck has this got to do with the topic. You have more bull#hit than anything useful.
ChocolateDigestive
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do you mean the topic of the thread I started. lol. All i stated was that the majority of retail traders fail and I deduced this from the fact that most top tier participants are profitable. If 10% of the volume is retail then where the funk do you think there profit is coming from.
The % of losers does not matter, I don't understand why you are getting so worked up about that, sure people come out with wrong assumptions at 5%, who gives a damn.
peace and love
ChocolateDigestive
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sorry we will just have to disagree. I can assure you I understand all of the market mechanics involved in trading spot FX and I understand the roles of each participant. It is a zero sum game, of course some of the larger players will make additional money via selling options or lending out their counter party credit plus other extras and this is not 'baked in' to the zero sum equation. Over time on average they do not lose on their spot FX transactions.
The thread was originally about why the majority of retail traders lose. that's all. If anyone is seriously suggesting the majority of retail traders win then I would like to hear the arguments, any further handbags are just futile.
rsh01
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you clearly do not, the remainder of your post is evidence of that.
Your point is pointless... What has the profit factor of banks or whatever you want to call them have anything to do with a retail trader. They don't sit there looking to stick it to the retail crowd
The Leopard
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You mean you're not " another salesman at Curry's, trying to give it the bigun"?
ChocolateDigestive
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really? would you care to point out the remainder of my post which shows I do not understand the mechanics of the FX market. I trade yards you go spend your demo dollars. :clap: run along to investopedia there's a good boy.
ChocolateDigestive
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Shakone
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Research from Berkeley, 15 years of trading analysed of Taiwanese day traders.
http://faculty.haas.berkeley.edu/odean/papers/Day Traders/Day Trading Skill 110523.pdf
Some quotes
"In the average year, about 360,000 Taiwanese individuals engage in day trading and about 15% of these day traders earn abnormal returns net of fees (commissions and transaction taxes)."
"In the average year, about 1,000 day traders are able to predictably outperform. Specifically, we
sort investors into groups based on their day trading returns in year y and analyze the
performance of each group in the year y+1. We document that only the 1,000 most
profitable day traders (less than 1 percent of the total population of day traders) from the
prior year go on to earn reliably positive abnormal returns net of trading costs in the
subsequent year. But, the stock picking ability of these investors is remarkable. Top day
traders (based on prior year ranking) earn gross (net) abnormal returns of 49.5 (28.1) bps
per day on their day trading portfolio, while the tens of thousands of day traders with a
history of losses in the prior year go on to earn gross abnormal returns of -17.5 (-34.2)
bps per day."
http://faculty.haas.berkeley.edu/odean/papers/Day Traders/Day Trading Skill 110523.pdf
Some quotes
"In the average year, about 360,000 Taiwanese individuals engage in day trading and about 15% of these day traders earn abnormal returns net of fees (commissions and transaction taxes)."
"In the average year, about 1,000 day traders are able to predictably outperform. Specifically, we
sort investors into groups based on their day trading returns in year y and analyze the
performance of each group in the year y+1. We document that only the 1,000 most
profitable day traders (less than 1 percent of the total population of day traders) from the
prior year go on to earn reliably positive abnormal returns net of trading costs in the
subsequent year. But, the stock picking ability of these investors is remarkable. Top day
traders (based on prior year ranking) earn gross (net) abnormal returns of 49.5 (28.1) bps
per day on their day trading portfolio, while the tens of thousands of day traders with a
history of losses in the prior year go on to earn gross abnormal returns of -17.5 (-34.2)
bps per day."
ChocolateDigestive
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ha ha ha ha ha ha ha that is one of the funniest things I have ever heard on T2W. ironically this thread is actually demonstrating why most retail traders lose.
it's all good dude.
ChocolateDigestive
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Hey Shak
dunno why you are bothering mate. seems we cant even get beyond 'most retail traders lose' at the zoo.
some prime time lulz on T2W tonight!
The Leopard
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ha ha ha ha ha ha ha that is one of the funniest things I have ever heard on T2W. ironically this thread is actually demonstrating why most retail traders lose.
it's all good dude.
Loose.
You trade yards... Oh please the lulz is so good its almost priceless
ha ha ha ha ha ha ha that is one of the funniest things I have ever heard on T2W. ironically this thread is actually demonstrating why most retail traders lose.
it's all good dude.
$1.490 trillion in spot transactions
$475 billion in outright forwards
$1.765 trillion in foreign exchange swaps
$43 billion currency swaps
$207 billion in options and other products
200000 billion in speculative bank trading. They are so good they don't need the other sh! T
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