Why Forex isn't Fastlane....

[Martinv678]

I recently enrolled on a Forex course to learn the ropes and learn how to use the money I've got and create some side wealth. I also had some interest because I find it fun and had done okay before on it. Before looking for courses I heard course providers saying that 'if you become a forex you are going to become a millionaire' and 'explode your wealth now!' Remembering from the 'TMF ' you need to be exceptional or have to start with large capital.

I read people saying it is fastlane and that you can make millions.

Now i'm on the course and on a live trading floor the vision has been shattered and for anyone who believes it is fastlane it is not. You have 0% control. You can do fundamentals and technicals all week but you can never expect this.. Yesterday the Swiss Dollar strengthened by 1800pips against the Euro out of no where. This has knocked out one to biggest brokers in the UK:

http://www.bbc.co.uk/news/business-30846543

Forex should be seen as a extra savings account and yes through compound interest you can increase your account to a good level but to do this you have be pretty amazing and expect that wealth will take around 15-20 years. You can become a millionaire but this is rarely done with £500 account within a year.

The best thing is that all the professional traders around me are looking to start their own business outside else where online... e.g a Fastlane business. I recommend looking it Forex as a way to increase wealth you have already created but do not look at it as a way of creating a fastlane life as not all strategies are 100%.

Alpari probably thought they were pretty fastlane... but with no control, your vehicle can easily swerve of the road.

 

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[Nicoknowsbest]

Now i'm on the course and on a live trading floor the vision has been shattered and for anyone who believes it is fastlane it is not. You have 0% control. You can do fundamentals and technicals all week but you can never expect this.. Yesterday the Swiss Dollar strengthened by 1800pips against the Euro out of no where. This has knocked out one to biggest brokers in the UK:

It is not fastlane. For the reasons you mentioned. I have experience in that market. The only ones getting rich relatively quickly if done right are not the traders, but the ones that profit from every transaction - the brokers (under normal conditions).

Forex should be seen as a extra savings account and yes through compound interest you can increase your account to a good level but to do this you have be pretty amazing and expect that wealth will take around 15-20 years. You can become a millionaire but this is rarely done with £500 account within a year.

More than true. Glad you saw behind the scenes.

 

[Martinv678]

It is not fastlane. For the reasons you mentioned. I have experience in that market. The only ones getting rich relatively quickly if done right are not the traders, but the ones that profit from every transaction - the brokers (under normal conditions).

So true and people making expert advisors who think the expert advisors are going to make them rich!

 

[Nicoknowsbest]

You know what's the worst? Seeing people go in with their hard earned cash, that they saved for years. The leverage it with 1:200 or even 1:500. And then lose it within half a day. I once tried to create a company that would act as a mediator between traders and brokers, giving newbies additional securities and basically educating them. Didn't really work out. If you see the fear and the greed in people's eyes, you know that you cannot do something against this irrational behaviour.

After my experiences, I turned my back on this market. It's a sleazy market (at least that's what people make of it). So I am not a big fan of it in general.

 

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[Martinv678]

I agree with you. I do how ever like the market... just not the sharks that feed on people. I remember going to a seminar in London about Forex. This company told the room that if they signed up to their magic program they could be millionaires in a year... I looked around the room and realised it was probably the most slow lane thing I had ever seen first hand.

 

[Guest3722A]

Yesterday the Swiss Dollar strengthened by 1800pips against the Euro out of no where. This has knocked out one to biggest brokers in the UK:

http://www.bbc.co.uk/news/business-30846543

Why couldn't you just add a rule to not trade on days like this, and also, for a system to be consistent, what are the odds that your set-ups were aligned properly when this happened? To add to this, let's say they were, so if your system is consistent and let's say that you did have rules in place that didn't stop your system from creating an opening position when this happened, surely your system would have uniform stops in place though, right? So you take a losing day. Lick your wounds, go have a beer, and wait for the next set-up to trigger.

There's always going to be an unforeseen event. Rule around them.

 

[CarrieW]

stops werent honored in most cases today... even those with safeguards got screwed...

a lot of people lost their accounts today.

a lot of brokers are out of business too. its pretty bad.

it can happen in any market tho.

 

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[Martinv678]

All valid points but the issue is stops didn't work and they ripped people's accounts apart. This meant people went straight to minus. It doesn't matter how good your strategy is it can be taken out instantly. This doesn't happen often, but say like alpari who have been around for 25 years were wiped out in one day and the same could have happened to your 25 year account. The real issue here is the lack of control.

 

[Guest3722A]

stops werent honored in most cases today... even those with safeguards got screwed...

a lot of people lost their accounts today.

a lot of brokers are out of business too. its pretty bad.

it can happen in any market tho.

Thanks Carrie. Obviously I am completely out of the loop when it comes to forex as I was sold towards futures markets back in the day(oh boy, lol). But, in looking at the futures chart of the Swiss Franc 6S, it looks like this event began at 4 am today est? Fwiw, and I could be completely wrong but just from a quick glance, and just trying to make my original point , it doesn't look like my system would've had a signal to enter long, and it definitely would not have been short at the time but as crazy and backwards it is, it does look like it would've triggered an entry on the short side at around 8 am. ...wtf

The euro, though, I absolutely would not of had an entry triggered because I took a lump once (well 2 or 3 times) on getting into trades after AHEM above average volume occurred so I put a rule in place to stay bored and not trade after above average volume.

Does forex not have volumes? Stupid googlable question.

 

[Guest3722A]

All valid points but the issue is stops didn't work and they ripped people's accounts apart. This meant people went straight to minus. It doesn't matter how good your strategy is it can be taken out instantly. This doesn't happen often, but say like alpari who have been around for 25 years were wiped out in one day and the same could have happened to your 25 year account. The real issue here is the lack of control.

I definitely believe it man! I remember that flash crash on the ES a few years back. No buyers!!

I guess to better make my point, out of all active forex traders, what % was wiped out? Did some systems prevail? Did some systems not have trades even triggered due to their rules? And to narrow it down even more, out of all active forex traders who trade that instrument where it is their instrument of choice, how many got wiped out? How many had systems that kept them out of the trade?

Obviously once you're in it you're in it, but from a different perspective, did everyone who had an open position get wiped out? I'm just curious

 

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[Chitown]

It is not fastlane. For the reasons you mentioned. I have experience in that market. The only ones getting rich relatively quickly if done right are not the traders, but the ones that profit from every transaction - the brokers (under normal conditions).


More than true. Glad you saw behind the scenes.

I used to work on the floor of the MERC - runner/out trade clerk for one of the "founding family" firms on the old Butter & Egg exchange -- over in the meat complex (pits). Pork bellies had a pit area of, maybe 315 sqft -- I don't know how the one broker in that pit -- if you want to call it that -- made a living.

However, across the floor was the S&P pit. Holy of all Holies on Wacker Drive.

I know for a fact that there were at least 4 brokers in that pit grossing -- at a minimum -- $75,000/day. These guys got $2.00...per contract...coming and going. Talk about printing money...

 

[100k]

Time and control.

You need to put in time - you can't just make passive income with it.

You can't control what trade will or won't go up/down.

 

[Guest3722A]

I've watched no bs guys do LIVE seminars while trading the ES and make 12k in less than 20 minutes. Real $$ which I verified by seeing their trades go up on the dom. But it does take time and money. Years. And sorry to say but a hell of alot more than an entry level account and I do have to side with the fact that years of watching and study from several sources is needed too.

 

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[mt_myke]

I've watched no bs guys do LIVE seminars while trading the ES and make 12k in less than 20 minutes. Real $$ which I verified by seeing their trades go up on the dom.

I think this is what trips up a lot of novice traders with small accounts. The 12k figure is irrelevant...what percentage of their account does that 12k represent? If that's a 500k account it's a 2.4% gain...nice but hardly spectacular. When I was still active in forex I'd see the pro guys give some trading results and new traders would become fixated on the fact that a guy just made $2000 in a single trade...but not realize that a $2000 loss was only going to be 1% down on that guy's $200K account, while their $200 account would be wiped out 10x over. Same effect in reverse, I had some excellent trades on small live accounts that were ridiculed because the dollar amounts were small, even tho the percentage gains and R/R were great.

 

[Guest3722A]

You can't control what trade will or won't go up/down.

In order to put control in the trader's favor, I think one of the first things needed to understand is that trading in general becomes an odds game where each market has its own unique set of variables. Once they're understood with your instrument of choice, the next step I'd say would be to identify something that happens all the time, and then build a system around it, keeping in mind that variables include things like commissions, events, taxes, long periods of time without trades (weeks or more sometimes if there isn't a setup), low capital, technicals etc.

Then, system around that stuff.

This is where the control comes into play in that you design the parameters on your system in order to put more winning trades on your side, and then you test the hell out of it making sure that with all of the variables, you still come out ahead. If you find a good system but it has a squeaky wheel, or two, figure out ways to minimize/control, then test again!

Something I've learned is that good systems are the ones that work in any market conditions. A long trade can be taken when the trend is down and a short when the trend is up. The secret here is don't be greedy and understand that there's a variety of ways to work stops. But yeah, control is there.

 

[Pacman385]

If you have good risk management strategies, you would have been immune to that financial disaster. Would you not say that before this event, the people managing Alpari were running in the fast lane? They took the biggest hit.
I'm sitting at 17% since early August of 2014, I use proper risk management and as a result the event only cost me 1.5%.
My friend on the other hand took a trade that I didn't and the result of that was that he banked 14% in a single day. It may not be feasible long term but as of now I don't see any downside.

 

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[mt_myke]

My friend on the other hand took a trade that I didn't and the result of that was that he banked 14% in a single day. It may not be feasible long term but as of now I don't see any downside.

14% in a single trade is the kind of result that's not sustainable. There are people most every month that win millions, sometimes over 100 million, playing the lottery as well.

I believe successful trading is boring and irritating, scraping out tiny gains and taking one step back for every two steps forward. If you're thrilled and having a great time, you're setting yourself up for big losses.

Ironically I made several thousands (enough to buy a modest used car) when the peg was first put in place. I had been trading the franc short, taking on increasing losses, until the peg shot my trades back up 1000 pips in a day. However that kind of thing only works 1) if you identify the correct driver for your trade, in this case the SNB being forced to "do something" and stop the franc from strengthening further (fundamental analysis), and 2) get the timing at least right enough that you can exit your position before hitting stops (technical analysis and position sizing). I ended up losing most of those profits back to trades where 1) and 2) didn't work out.

I do regret not trading the Scottish independence vote - just using a simple breakout trade would have worked, as the bet is that regardless of outcome the currency will move for a while (which is what happened). There's really only a few really great/obvious trades like that a year, though.

 

[Pacman385]

14% in a single trade is the kind of result that's not sustainable. There are people most every month that win millions, sometimes over 100 million, playing the lottery as well.

I believe successful trading is boring and irritating, scraping out tiny gains and taking one step back for every two steps forward. If you're thrilled and having a great time, you're setting yourself up for big losses.

Ironically I made several thousands (enough to buy a modest used car) when the peg was first put in place. I had been trading the franc short, taking on increasing losses, until the peg shot my trades back up 1000 pips in a day. However that kind of thing only works 1) if you identify the correct driver for your trade, in this case the SNB being forced to "do something" and stop the franc from strengthening further (fundamental analysis), and 2) get the timing at least right enough that you can exit your position before hitting stops (technical analysis and position sizing). I ended up losing most of those profits back to trades where 1) and 2) didn't work out.

I do regret not trading the Scottish independence vote - just using a simple breakout trade would have worked, as the bet is that regardless of outcome the currency will move for a while (which is what happened). There's really only a few really great/obvious trades like that a year, though.

He's currently sitting at 78% since January 2014 over 200 trades. You're right, 14% on a single trade isn't sustainable, he got lucky there. But had he not taken that trade, it doesn't take away from the fact that his strategy is sustainable.
I'm not sure what approach you took to trading but the only news I pay attention to is the NFP as it has a habit of stopping me out of good positions. Other than that it's strictly technical analysis where I let the edge of the market doing what it has done before play out over many trades.

 

[mt_myke]

He's currently sitting at 78% since January 2014 over 200 trades. You're right, 14% on a single trade isn't sustainable, he got lucky there. But had he not taken that trade, it doesn't take away from the fact that his strategy is sustainable.

Sustainable for now. 18 months is really the minimum time to establish a system, 24 is better. Just biasing toward long trades (that generally move the same direction as the SP500) would have worked in 2014. Long-term ( > 1 year) market cycles and changes in dynamics is where most systems tend to get tripped up.

I'm not sure what approach you took to trading but the only news I pay attention to is the NFP as it has a habit of stopping me out of good positions. Other than that it's strictly technical analysis where I let the edge of the market doing what it has done before play out over many trades.

I developed a nice NFP auto-trader that exploited the way NFP used to have big breakout moves the year after the financial crisis, as people were still getting over the shock of what just happened. That pattern died out right around the time I had confirmed it and went live.

 

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[Guest3722A]

I think this is what trips up a lot of novice traders with small accounts. The 12k figure is irrelevant...what percentage of their account does that 12k represent? If that's a 500k account it's a 2.4% gain...nice but hardly spectacular. When I was still active in forex I'd see the pro guys give some trading results and new traders would become fixated on the fact that a guy just made $2000 in a single trade...but not realize that a $2000 loss was only going to be 1% down on that guy's $200K account, while their $200 account would be wiped out 10x over. Same effect in reverse, I had some excellent trades on small live accounts that were ridiculed because the dollar amounts were small, even tho the percentage gains and R/R were great.

Sorry I didn't reply on this sooner! And yes, I completely agree with you. And to further back this, but from a bit of a different view, the amount of risk I was willing to take on was on a low dollar amount futures contract, the micro euro/dollar, m6e. Tick amounts were $1.25.

( Irrelevant though and I'm not sure if this would be considered a small account size in forex but futures accounts require a minimum of I think $5000? )

But regardless, what really helped me was the small $1.25 per tick of risk was something I could easily stomach which made it very easy to build a system around and trade live. At times several contracts were triggered onto a position and other times only one or two. Sometimes it would take up to 40-70 ticks, sometimes my walking stop only allowed 1 or 2. Sometimes it went against me completely and took out everything I risked!!

The benefit for me with the low risk was that I was able to sleep while my system was on, leave the house while it was on, and I even had a knee surgery while it was on!! I was that comfortable with it.

Could this have been built into a fastlane? Possibly because there was the full sized contract 6e at $12.50 ticks, and the emini e7 at $6.25 ticks.

The problem I ran into?

No financial foundation to support my personal life, and my income was unexpectedly cut off.

I will be back again but for now I'm working on a foundation to support a true fastlane idea.