How the markets workDon't feel too bad if you struggle to trade profitably!
If trading were so easy everyone would do it and become rich. Even big powerhouses like MS, GS, JPM lose tons of money but they have special instruments (CDO, CMO, SIV etc..) to sell to make up for the losses. As an individual who has a computer, a tv and a tons of technical knowledge may not be enough to make it. Because you don't have the inside scoop.
I told my brother yesterday at the US Equity Market close that the ugly bitch a. cohen from goldman would be on cnbc this morning - he asked me why and how I knew it. This is all about scamming others and stealing others money. It was my instinct that everytime these crooks run the markets up or down to the extremes this ugly bitch would be on tv the next morning and I swear it's the truth. The same company has been talking about returning the TARP money for a few weeks now. They took $10 billion US tax money as tarp as you may know. With just a rumor of returning the money they pumped their market cap by $25 billion - funny Why do you think big brokers are supporting geitner - because he is one of them and he will do whatever it takes to make them profitable. When he is out of the public servise he will end up at goldman for a $100 million deal for a few years just like rubin. You know what happened with rubin, citi stock went from 50s to 1 but he collected a cool $115 million regardless.
These are the same crooks who made S&P give AAA to Mexican Peso base bond a US AAA Government bond protection over a Bermuda based Company related to some School Girls Charitable Trust. You know drug dealers use countries like Bermuda, Bahamas, Cayman etc...
So, you and I are trying to survive in these markets with a Computer, a tv and some technical knowledge. You'll have a good day and a bad week. You'll have a good week and a bad month. You'll have a good month and a bad year. Trust me it is not your inefficency or lack of technical knowledge or wrong money management skills. It's is how the system is set up. Without inside information trying to make an educated guess will not make you a consistent money maker.
The only thing close to being a somewhat consistent winner for me has been daily activities. The moves (accumulation / distrubution) of the big brokers, central banks, huge hedge funds are not usually a 5 min or 15 min event. When these guys make their move it makes a recognizable trend on the dailies and usually lasts for a few days and rests and continues again if there is enough support from the others who might join the party. Or if a central bank of any government selects a floor and a ceiling for it's own currency you might recognize its support and resistance. If you are able to catch those with not easy to reach stop losses you might have more winners. And that's my 2 cents if it makes you feel any better.
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A quote from an ex city trader quote "Now I read somewhere that the big players in order to get the big money on need to create liquidity in the market, so if their objective is to go short they buy into the market drawing the heard (Me and bab g's bucket shop pals) to go long, being a zero some game giving them the opportunity to dump big time short. "
response to quote written below
Hi , re the above quote, you are quite correct that the big boys do on occassion spoof the mkt. As a bit of background, i was a professional fx broker, working at the worlds largest broking houses in London, back in the 1980's and 1990's. I spent many years in the spot mkt, starting off on the dollar/deutchemark desk, before eventually ending up broking yen crosses. I also broked in the options mkt for a time, otc not exchange based.
My customers were the big boys, i.e the big international banks and investment houses. In those days. yes they spoofed the mkt in order to be able to move 100 -200 million through at a good price.
The beauty of this thread, ie concentrating on the longer time frames, means that we are immune from these moves. No one player, no matter how big, can spoof the mkt to get it to move 100 pips or so. No One!!!! At the most the mkt moves 20 or so pips.
Now, if you're playing the 1min or 5min charts, it's a different story. Most traders lose on the shorter time frames because , in my humble opinion, lots of small losses will eventually lead to their account slowly being strangled.
Oh, in case anyone wonders what i'm doing here, after having other business intersts, i wanted to get back to being involved with the mkts again. Now being a broker has no similarity to being a trader. I simply did wht the big boys told me, buy x amt, sell x amt in the open mkt. Didn't have to worry which way the mkt was going to move, didn't care, as long as the banks bought or sold, i got paid. So when i decided to try and learn to trade, i was lucky in that i knew to steer clear of the short t-f's. I also had an idea of what s/r was, although we used to call it ' stuffing ' levels, as at these areas of price, those slimy useless traders would try and stuff the poor unwittin broker!! Also very luckily, i found this thread, after already starting to study J16.
Anyway hope this helps, great work everyone.
Regards
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Complacency Kills Forex accountsComplacency is word we do not often come across in FX trading. Fear, greed, hope, revenge, and panic are the usual ones. These emotions are commonly attributed to newcomers (newbies, or noobs, as they are called in the jargon).
So, how do we spot a Complacent Trader (CT). It’s simple; just look for these signs:
He will have been trading for a while, and, until recently, has had mixed success
At last, normally under very favourable conditions, he thinks he has found his own ‘Holy Grail’
Lulled into a false sense of security he becomes careless about his Money Management, even to the point of dispensing with setting Stop Losses on his trades
He compounds this basic, and most stupid, of newbie errors by taking any remotely positive signal his system, or method, offers, thereby increasing his exposure through over-trading
There may even be an element of greed appearing in his trading. His recent 'startling' success leads him to increase his trade size, irrespective of the potential quality of the trade. He's had a signal, that's good enough! No time to analyse it, just put the trade on, we don't want to miss all those pips do we?
Why should someone like this be classed as a CT?
Again it’s simple. He doesn’t need to listen to, or take, any of the advice he's read (and maybe offered) over the last few months. His Holy Grail will see him through. His extra months of trading have given him the edge.
It’s possible that he has survived at least one serious draw down, because the trend came to his rescue. He’s so sure his method has that vital edge; it will always get him out of trouble, and, anyway, he’ll pick up some rollover pips while waiting for the trend to re-assert itself, won’t he?
He rarely uses hard stops; the trend is always working for him isn’t it?
Of course the CT hasn’t realised yet that 18 months trading doesn’t give him the right to be successful. Therefore, the CT needs an event to shake him out of his complacency. Such an event took place over the last week or so. A seemingly minor problem (to him) in a small section of the American mortgage market spread out, like a virulent virus, to engulf every sector of the financial industry, including FX.
He sat, and watched (rabbits and headlights spring to mind), as all his smart, clever, carefully planned, trades turned and waved goodbye as they disappeared in completely the wrong direction.
No worries our CT thought. ‘Here’s the good old 150 EMA on the Daily chart. I’ll stick in a Support Zone, and trade the bounce. OK there we go, didn’t risk much but made some nice pips on that bounce. Panic over. Oh bugger, what’s going on? Still, I’ll hold till it hits the 365 EMA on the Daily chart, and play the bounce off that, as well. Seems like a strong Support area, too. WTF! What IS going on? The trend has never let me down before; it’s bound to turn soon, isn’t it?'
Well, the short (pun) side of a long (another pun) story is, it didn’t. Our CT’s long-held beliefs (all 6 months of them) meant as much, in the mayhem that followed, as Icarus’s faith in his waxen wings as he approached the Sun.
So, are there any lessons our CT should have learned from the recent events? I would hope that the main lessons he’ll take from this disaster are these:
Always trade with a hard stop loss. Even a ‘disaster stop’ would have saved most of his account
Don’t over-trade. Multiple positions on multiple pairs was a good thing when the trend was with him, but it’s a recipe for disaster for the ill-disciplined and over-confident trader
The Trend is your friend as long as it’s going your way
What has worked before may not work again. So be prepared for the worst
If he hasn’t the courage to change his method in order to trade against the long-term trend, as he sees it, then stay out of the market, re-assess things when the dust has settled, and watch what the market is telling him NOW
No doubt there are more lessons our CT can take from this period. I’m sure there are many here who could offer some further insights.
Maybe he should start re-reading this thread again, and listen to his own advice!
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