This is not a mockery. This is not a joke. This is not an empty discussion. (And hopefully the mods don't think that this is a "rookie talk" material). Follow the logic, and you just might find a forexlightment =)
Let's start with the almost-axiom that majority of traders lose money. These traders cannot be called traders, because real traders make money. Real traders have the discipline, knowledge, and persistence. Gamblers have the money, time, and disrespect towards the market.
But from these gamblers, I seem to have found an interesting trading concept.
The worst trading method/strategy/indicator/EA + a proper money management skill = the easiest way to win in forex.
Easy, but it doesn't mean it doesn't have its own challenges to create such system.
Now, I'll be gentle to build up my discussion as to not scare you away from what is potentially useful for you, or labeling me as cuckoo over the nest.
Most of the gamblers use free/paid scam system. And most of these systems are purely technical systems. The best advice they give in respect to fundamental analysis is to avoid news release. Then most of these traders use these systems and lose money.
Now let's cover our definition of winning and losing trade. Would you consider a trade that suffers 200 pips drawdown, 5 overnight swap charges, then made you a 10 pips profit after 5 days, a winning trade? And would you consider a trade that suffers 10 pips stop loss, then immediately price goes 200 pips in your direction, a losing trade?
I came to a realization that money management is as critical as any other aspects of your trading. With terrible money management, you can consistently lose with the best forex system in the world. On the other hand, with a proper money management, you can easily and consistently win with the worse forex system in the world.
How?
Here's how. Say you buy/get a forex system that consists of purely technical indicators. When 3/4/5/6/7 indicators fire a buy signal, you open a buy. When 3/4/5/6/7 indicators fire a sell signal, you close that buy and open a sell. Say the manual asks you to put 10 pips SL and 20 pips TP as money management. Then you live demo this system for a year, and ends up with 20% winning rate. Winning means it reaches the TP, not manual close. This is very important, you have to stick with the rules of the system. And this also means 80% of the trades hit the SL.
Most of you would probably say that this is a terrible scam forex product. I beg to differ. What does it mean to have 80% of your trades hit your SL? It's a pretty damn ACCURATE system if you take the complete OPPOSITE signal every time it fires a signal, USING the exact money management technique given by the system. So when it gives a buy signal, you take a SELL signal, BUT STILL USING 20 SL and 10 TP to completely reflect the opposite of the original system.
Very very basic example, I notice if you use semafor indicator that repaints every time it hits a new high or low, and trade the OPPOSITE of the signal, WITH proper money management, you'll be doing pretty good.
But hold your gun there son, this doesn't mean you have a Holy Grail, this doesn't mean you can simply switch any poor performing EA signal to do the opposite. Like I said, there are challenges that come with this idea. Many in fact.
First, we have to find the worst indicator(s) ever built by a homo sapien, and most importantly, it must CONSISTENTLY fires a wrong signal. We have to use indicators, naked trading doesn't count because majority of losing traders use indicators. We are simply finding a way to reverse the "advantage" that these losing traders have.
You think this is easy to do? You think scam/free/paid products out there are this "good"? I've been toying with this idea myself for a while, and I have yet to find a consistently poor performing indicator. In a way, it is as hard as finding a consistently great performing indicator.
So came another puzzling puzzle that I found from this experiment: After seeing hundreds of forex systems, none of them are actually really, really, really, terrible. At best, or worst, you find a ~30% winning system. Out of 10 trades, your SL is hit 7 times kinda. You can actually see from the indicators in past chart that some of the signals are actually pretty good. So poor performing system cannot be attributed solely to the bad method/indicator/EA contained on the system, but also the money management aspect of such system. Could it be, could it actually be that all losing traders are simply bad money managers? That had they are given the best forex system, they would still lose? That their itchy click finger toy with their SL or TP or lot size, and turn a mediocre system into a poor one? That their own fear and greed sabotage their own success?
Anyway back to the topic. If such consistently bad performing indicator is found, then forex becomes really easy. Make it an EA and switch it on 24/5, you'll be laughing your way to bank real soon.
I'll talk more about my findings as this thread continues. For now, it's probably time to dig out your recycled bin. Try to recall the worst performing indicator. Who knows you can actually flip it to a winning system.
Let's start with the almost-axiom that majority of traders lose money. These traders cannot be called traders, because real traders make money. Real traders have the discipline, knowledge, and persistence. Gamblers have the money, time, and disrespect towards the market.
But from these gamblers, I seem to have found an interesting trading concept.
The worst trading method/strategy/indicator/EA + a proper money management skill = the easiest way to win in forex.
Easy, but it doesn't mean it doesn't have its own challenges to create such system.
Now, I'll be gentle to build up my discussion as to not scare you away from what is potentially useful for you, or labeling me as cuckoo over the nest.
Most of the gamblers use free/paid scam system. And most of these systems are purely technical systems. The best advice they give in respect to fundamental analysis is to avoid news release. Then most of these traders use these systems and lose money.
Now let's cover our definition of winning and losing trade. Would you consider a trade that suffers 200 pips drawdown, 5 overnight swap charges, then made you a 10 pips profit after 5 days, a winning trade? And would you consider a trade that suffers 10 pips stop loss, then immediately price goes 200 pips in your direction, a losing trade?
I came to a realization that money management is as critical as any other aspects of your trading. With terrible money management, you can consistently lose with the best forex system in the world. On the other hand, with a proper money management, you can easily and consistently win with the worse forex system in the world.
How?
Here's how. Say you buy/get a forex system that consists of purely technical indicators. When 3/4/5/6/7 indicators fire a buy signal, you open a buy. When 3/4/5/6/7 indicators fire a sell signal, you close that buy and open a sell. Say the manual asks you to put 10 pips SL and 20 pips TP as money management. Then you live demo this system for a year, and ends up with 20% winning rate. Winning means it reaches the TP, not manual close. This is very important, you have to stick with the rules of the system. And this also means 80% of the trades hit the SL.
Most of you would probably say that this is a terrible scam forex product. I beg to differ. What does it mean to have 80% of your trades hit your SL? It's a pretty damn ACCURATE system if you take the complete OPPOSITE signal every time it fires a signal, USING the exact money management technique given by the system. So when it gives a buy signal, you take a SELL signal, BUT STILL USING 20 SL and 10 TP to completely reflect the opposite of the original system.
Very very basic example, I notice if you use semafor indicator that repaints every time it hits a new high or low, and trade the OPPOSITE of the signal, WITH proper money management, you'll be doing pretty good.
But hold your gun there son, this doesn't mean you have a Holy Grail, this doesn't mean you can simply switch any poor performing EA signal to do the opposite. Like I said, there are challenges that come with this idea. Many in fact.
First, we have to find the worst indicator(s) ever built by a homo sapien, and most importantly, it must CONSISTENTLY fires a wrong signal. We have to use indicators, naked trading doesn't count because majority of losing traders use indicators. We are simply finding a way to reverse the "advantage" that these losing traders have.
You think this is easy to do? You think scam/free/paid products out there are this "good"? I've been toying with this idea myself for a while, and I have yet to find a consistently poor performing indicator. In a way, it is as hard as finding a consistently great performing indicator.
So came another puzzling puzzle that I found from this experiment: After seeing hundreds of forex systems, none of them are actually really, really, really, terrible. At best, or worst, you find a ~30% winning system. Out of 10 trades, your SL is hit 7 times kinda. You can actually see from the indicators in past chart that some of the signals are actually pretty good. So poor performing system cannot be attributed solely to the bad method/indicator/EA contained on the system, but also the money management aspect of such system. Could it be, could it actually be that all losing traders are simply bad money managers? That had they are given the best forex system, they would still lose? That their itchy click finger toy with their SL or TP or lot size, and turn a mediocre system into a poor one? That their own fear and greed sabotage their own success?
Anyway back to the topic. If such consistently bad performing indicator is found, then forex becomes really easy. Make it an EA and switch it on 24/5, you'll be laughing your way to bank real soon.
I'll talk more about my findings as this thread continues. For now, it's probably time to dig out your recycled bin. Try to recall the worst performing indicator. Who knows you can actually flip it to a winning system.