why retail FX traders loose

[ChocolateDigestive]

choc

I know sweet fanny adams about forex, but isn't it the case that the vast majority of retail punters have their broker as the counterparty who may, or may not, hedge their net exposure on the "real" market at some stage.

So, where is the retail money on the "real" market that the big players can identify and manipulate?

jon

100% agreed barjonny. That's why I am saying large players versus smaller and not jumping to the extremes of deutsche bank v. Bucketshop. Let's say players who trade yards directionally per day versus 10,20,50, 100 lot traders.

 

[ffsear]

That bird is ****ing minging!

 

[forker]

Who are these "larger players" building positions? Are you talking about macro hedge funds now? It can't be interbank spot desks, as most of those guys are flat at 5pm every night.

Just as an aside, given that you readily admit to having no experience of seeing institutional flow, why do you believe so strongly that you know exactly what goes on at a bank, or a fund, or anywhere else?

He won't discuss as he will be disclosing his edge that he likely bought for £99.95 on ebay. Of course after reading the pdf, he is now in the know, the secret elite... It's all top secret stuff

 

[meanreversion]

By the way if you had 10 yards of volume to trade and you were looking to make a directional play how would you enter your position without moving the market thus giving you a poor entry? For now let's all assume none of us has traded 10 yards and also that 10 yards would be enough to give a bad entry (in case anyone attempts another derail about how much moves the market - that's not the point)

Do you have any idea how often a "10 yard" trade goes through in FX? They are incredibly rare. In fact, trades in excess of 1 yard are pretty rare as well.

Your argument is based entirely on assumptions you've made about what is happening. That would be like me saying that the hardest part of flying a helicopter is the take off (PS I don't fly helicopters).

 

[ChocolateDigestive]

Do you have any idea how often a "10 yard" trade goes through in FX? They are incredibly rare. In fact, trades in excess of 1 yard are pretty rare as well.

Your argument is based entirely on assumptions you've made about what is happening. That would be like me saying that the hardest part of flying a helicopter is the take off (PS I don't fly helicopters).

No I don't know how often a 10 yard prints as I have not traded on EBS etc. Ironically my point was that a trader would not trade that size in 1 go, did u read what I wrote at all. That's why they do it stealthily. If you were to trade that size you break it up and enter carefully so not to arouse suspicion. Lol

 

[ChocolateDigestive]

He won't discuss as he will be disclosing his edge that he likely bought for £99.95 on ebay. Of course after reading the pdf, he is now in the know, the secret elite... It's all top secret stuff

Surprised you show your face around here after your earlier embarrassment. I think one of your stinger setups is forming. Sting.

 

[meanreversion]

No I don't know how often a 10 yard prints as I have not traded on EBS etc. Ironically my point was that a trader would not trade that size in 1 go, did u read what I wrote at all. That's why they do it stealthily.

What's wrong with wanting to be stealthy about processing a large order?

Or is your point that the interbank trader will use his knowledge of retail positions and stops to more efficiently process his own order?

 

[The Leopard]

A stupid question no doubt, but in my defence I do not trade forex.

I am aware of what a yard is in relation to a cable, link, chain, furlong and so on, but what is a 'yard' in this context?

 

[meanreversion]

A stupid question no doubt, but in my defence I do not trade forex.

I am aware of what a yard is in relation to a cable, link, chain, furlong and so on, but what is a 'yard' in this context?

Yard is a billion. From "milliard" (French) I believe.

 

[wackypete2]

1 yard = 10,000 standard lots, therefore a 1 pip move = $100,000

Peter

 

[The Leopard]

Yard is a billion. From "milliard" (French) I believe.

1 yard = 10,000 standard lots, therefore a 1 pip move = $100,000

Peter

Merci beaucoup mes amis.

 

[meanreversion]

1 yard = 10,000 standard lots, therefore a 1 pip move = $100,000

Peter

Are you the world record poster now Pete - surely t2w will send you a congratulatory mug at 8,000??

 

[ChocolateDigestive]

What's wrong with wanting to be stealthy about processing a large order?

Or is your point that the interbank trader will use his knowledge of retail positions and stops to more efficiently process his own order?

Almost there. My point is the larger trader will use his knowledge of smaller trader (not bank v bucketshop think several yard directional player v. Sub 100 lot player) to enter a position stealthy and use the liquidity (stops) to get out. After all if you stealthily enter a several yard position and you want to take profit you have a problem, your size is the problem (been there before lol) so you use the lesser informed traders to get out. I know you know I am just spelling it out.

 

[Martinghoul]

Probably best we agree to disagree on this one.

Sure thing, let's agree to disagree... If I may be cheeky, I should say that another reason why retail traders lose is their unwillingness to admit (first and foremost to themselves) when they're wrong .

By the way if you had 10 yards of volume to trade and you were looking to make a directional play how would you enter your position without moving the market thus giving you a poor entry? For now let's all assume none of us has traded 10 yards and also that 10 yards would be enough to give a bad entry (in case anyone attempts another derail about how much moves the market - that's not the point)

Right, so, first and foremost, 10 yards is a lot, but not really egregious in the context of some of the larger end users (e.g. SAFE, CBs like the SNB or Norges Bank, as well as an occasional very large M&A deal). In such a context, it's very important to understand what you're trying to achieve.

For example, if I don't want my execution to move the market as I am trading, I might do what's known as a "drive-by" (very bad form). Otherwise, if I am a decent guy, I will slice the order up into smaller bits over time (either myself or ask a dealer to do this). There are many ways to do this, e.g. VWAP, TWAP, etc.

Occasionally, and this goes back to what I mentioned previously regarding M&A, a dealer who has to trade 10 yards actually doesn't care about the mkt impact. I think there was a relatively clear example some time in 2010 when Prudential was doing the rights issue to buy AIA. HSBC, which was one of the underwriters for the issue, went in and absolutely slaughtered cable. They simply didn't give a damn that they moved the mkt by a couple of big figures, 'cause the FX slippage was less than an afterthought, given the fees they were being paid (supposedly, the three lead underwriters shared $1bn in fees).

 

[meanreversion]

Almost there. My point is the larger trader will use his knowledge of smaller trader (not bank v bucketshop think several yard directional player v. Sub 100 lot player) to enter a position stealthy and use the liquidity (stops) to get out. After all if you stealthily enter a several yard position and you want to take profit you have a problem, your size is the problem (been there before lol) so you use the lesser informed traders to get out. I know you know I am just spelling it out.

If you're talking about spot traders jamming stops, then that does occur - however, it's still far from being the main reason why retail traders lose money.

 

[The Leopard]

Are you the world record poster now Pete - surely t2w will send you a congratulatory mug at 8,000??

How dare you? It is well known that Mike Slapooplappos is the World Record poster. You will be hearing from my lawyer.

 

[ChocolateDigestive]

If you're talking about spot traders jamming stops, then that does occur - however, it's still far from being the main reason why retail traders lose money.

Nobody said anything about it being the MAIN reason. Somebody already pointed out the main reason is that they are 5hit at trading. I am glad we agree it is a reason.

 

[meanreversion]

Nobody said anything about it being the MAIN reason. Somebody already pointed out the main reason is that they are 5hit at trading. I am glad we agree it is a reason.

Ah ok, maybe rename the thread "An almost insignificant reason as to why retail traders lose money" then? Wouldn't be very catchy, especially if spelt correctly.

 

[Just4Fun]

Nobody said anything about it being the MAIN reason. Somebody already pointed out the main reason is that they are 5hit at trading. I am glad we agree it is a reason.

Well, it is one reason.
Some people will never succeed.
They have the wrong temperament altogether.
There is one guy..."Beastieanimalbrute"...who is a member here...but we shall just call him thus...:cheesy:
He...despite persistent warnings and advice..
overtrades...
and what is worse...
persists in contradicting conditions..
with the result that he takes the most spectacular hits...
and storms off in the most spectacular tempers..
and disappears for hours...
and then sheepishly returns..
and promises himself not to do it again...
but invariably...
the next day, after having made a profit...
then gets carried away and tries to force...:cheesy:
and repeats the cycle...
its just hopeless....

 

[forker]

Surprised you show your face around here after your earlier embarrassment. I think one of your stinger setups is forming. Sting.

Embarrassment. I never get embarrassed and certainly not by a mullet that calls himself chocatedigestive. I am surprised your not though as everyone seems to be picking at the flaws in your logic yet you still hang around. That being said you have ranked up over 1000 posts since you joined early this year. It's the making of a troll, multi nick perhaps even.