Forex is too risky, so why you still doing trading.

[SnerpGoodWord]

I really think you may be delusional or something. If you average down in a currency that drops to 1/10,000th of it's original value, you're going to lose all your money - or at least about 9999/10,000ths of it depending on exactly where you add to the position on the way down. That's losing all your money.

All the currencies I mentioned devalued at least that much.

I really get the feeling you're a guy who knows nothing about finance, but loves to argue about it on the internet. I'd ignore you, but I'm afraid someone will believe you and do something dangerous.

[lycan]

Originally Posted by SnerpGoodWord

I really think you may be delusional or something. If you average down in a currency that drops to 1/10,000th of it's original value, you're going to lose all your money - or at least about 9999/10,000ths of it depending on exactly where you add to the position on the way down. That's losing all your money.

All the currencies I mentioned devalued at least that much.

I really get the feeling you're a guy who knows nothing about finance, but loves to argue about it on the internet. I'd ignore you, but I'm afraid someone will believe you and do something dangerous.

The posts I have exchanged on this board, all of which you saw, are the only time I argued about finances on the internet in the last few years. I have only made a handful of other related posts in my lifetime. I don't like online discussions because nobody knows what they are talking about.

The problem with your arguments is that they are strawmen arguments. You are arguing not against my position, but against a caricature you have of it in your mind based on, I imagine, online discussions you had with other people, or a caricature some professor may have used to illustrate a point to you, or whatever. The collapse of the greek currency in 1944 is completelly irrelevant to this discussion. If you are going to trade in minor currencies, you trade in several at once, not a single one, just like if you were going to trade in stocks... AND/OR you actually study the nature of that currency and stop averaging down once you realize it is being destroyed. It is not hard to know that a currency is being collapsed. I don't really care because I no longer have any real interest in finance and I certainly don't have the means to do anything in the area. I'm merely sharing the truth because there is just so much ♥♥♥♥♥♥♥♥ around I feel sorry for people looking into this sort of stuff.

[Peterw]

Have any of you guys actually ever had a margin call and blown an account from not using stop losses and falling into the loss trap?

I have - twice now..

I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on

Green pips for 2012 to all

[lycan]

Originally Posted by Peterw

Have any of you guys actually ever had a margin call and blown an account from not using stop losses and falling into the loss trap?

I have - twice now..

I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on
I will always use stop losses from now on

Green pips for 2012 to all

Margin calls happen due to overextension, not lack of a stop loss. You can lose everything while using stop losses, it will just happen one trade at a time, as slowly or as fast as you make those trades. Imagine you are running a retail store. You have credit with which to buy products to stock your shelves. The key is not "to sell at a loss to prevent bigger losses" because the products you are stocking rarely really change. You are selling now hoping to get a better price later on the same product, not to change the fundamental nature of what you are selling. If you are changing your mind that often simply because of volatility you will go out of business. The key is to know the frequency of sales against purchases, your markup, the cost of "carrying" your inventory, etc, and manage your "currency store" properly, instead of blowing all your margin on a product you think will be hot and then seeing the fad go away. All trading businesses work on the exact same fundamental principles, be it Wall Mart or Wall Street. Snerp actually kind of understands this, as his "Tickle me Elmo" post demonstrates.

[SnerpGoodWord]

Originally Posted by lycan

Snerp actually kind of understands this, as his "Tickle me Elmo" post demonstrates.

You paid zero attention - the "Tickle Me Elmo" strategy uses a stop, and a damn close one (6 ES ticks), and it works.

You're horribly confused and providing terrible advice - saying random things involving trading words without understanding what they mean. It's embarrassing. You should quit. It's like giving bad chainsaw juggling advice - you make think you're cool and impressing all the other chainsaw jugglers, but really you just look silly and are risking cutting some noob's arm off.

[Peterw]

Originally Posted by lycan

Margin calls happen due to overextension, not lack of a stop loss. You can lose everything while using stop losses, it will just happen one trade at a time, as slowly or as fast as you make those trades. Imagine you are running a retail store. You have credit with which to buy products to stock your shelves. The key is not "to sell at a loss to prevent bigger losses" because the products you are stocking rarely really change. You are selling now hoping to get a better price later on the same product, not to change the fundamental nature of what you are selling. If you are changing your mind that often simply because of volatility you will go out of business. The key is to know the frequency of sales against purchases, your markup, the cost of "carrying" your inventory, etc, and manage your "currency store" properly, instead of blowing all your margin on a product you think will be hot and then seeing the fad go away. All trading businesses work on the exact same fundamental principles, be it Wall Mart or Wall Street. Snerp actually kind of understands this, as his "Tickle me Elmo" post demonstrates.

That's all a bit overcomplicated for me.

I use stops because if a trade goes against me and the reason I took it is therefor invalidated I like to cut my losses and get on with the next one.

You're going against a very important rule that any serious trader will consider a mandatory requirement for long term success. I'm not going to argue with you about it but I'll reiterate Snerp when he says that anyone looking to go into this business please do not follow this advice about not using stops.

[lycan]

You're going against a very important rule that any serious trader will consider a mandatory requirement for long term success. I'm not going to argue with you about it but I'll reiterate Snerp when he says that anyone looking to go into this business please do not follow this advice about not using stops.

Which serious traders?

[lycan]

Originally Posted by SnerpGoodWord

You paid zero attention - the "Tickle Me Elmo" strategy uses a stop, and a damn close one (6 ES ticks),

The fundamental principle of the strategy and how you decided would be a suitable way of applying it are two different things.

You're horribly confused and providing terrible advice - saying random things involving trading words without understanding what they mean.

Excuse me?

It's embarrassing. You should quit. It's like giving bad chainsaw juggling advice - you make think you're cool and impressing all the other chainsaw jugglers, but really you just look silly and are risking cutting some noob's arm off.

What I shared here is the essential principles, which work, period. How anyone chooses to apply them, or not, is their business.

[lycan]

Originally Posted by SnerpGoodWord

It's embarrassing. You should quit. It's like giving bad chainsaw juggling advice - you make think you're cool and impressing all the other chainsaw jugglers, but really you just look silly and are risking cutting some noob's arm off.

You don't get it. I don't care about your approval. It won't make me any more, or less, correct.

[SnerpGoodWord]

Originally Posted by lycan

You don't get it. I don't care about your approval. It won't make me any more, or less, correct.

Well, you certainly couldn't get any less correct...

[lycan]

Originally Posted by SnerpGoodWord

Well, you certainly couldn't get any less correct...

lol

[Peterw]

Originally Posted by lycan

Which serious traders?

Pretty much anyone who takes it seriously and treats it like a business. I can't name them all but they're in the market wizards books and other places.

Anyway - I'm not going to argue with your need to be right. I'll just reiterate that any newbies please do not follow this asdvice about not using stops.

[lycan]

The fact you blew your accounts by not using stops is a clear sign that you are overleveraging. Overleveraging is a form of gambling which indicates you do not take it seriously or treat it as a business.

[Peterw]

Originally Posted by lycan

The fact you blew your accounts by not using stops is a clear sign that you are overleveraging. Overleveraging is a form of gambling which indicates you do not take it seriously or treat it as a business.

So are you saying I should have used stops? And that not using stops = overleveredging which is unprofessional?

[NoJobRob]

Stops are ESSENTIAL to trading. Ask any professional trader. If you follow the 2% rule it will take you at least 200 to 300, or more, consecutive losing trades to blow your account. If you get stopped out of a trade, it means that you were wrong, or, you didn't get as good of an entry as you could. In the case of being wrong, you WANT to be stopped out in order to stop the bleeding of your equity.

As for brokers messing with the data feed, it does happen, but if you watch the same chart through a few different brokers, and do this long enough with many different brokers, you will eventually sniff out the crooked brokers. And then the solution is simple. Don't trade with them. Or you can trade off the higher time frames. I personally like H1 and higher. I find it to be long enough to filter out most of the noise, yet short enough to keep you engaged and not bore you to death.

I can tell you with 100% confidence that trading is very doable, and rewarding. It does take some painful lessons and a lot of learning and screen time, but it is doable. It's not easy, but it's not that hard either. It's like any other profession. The more practiced you are, the easier it gets. Take my dad for example. He's an OBGYN. I'm sure when he was a brand new, fresh out of med school resident, doing a c-section was probably a bit nerve racking because it was something new to him. Fast forward 30+ years, and he could do a c-section while standing on his head and with one arm tied behind his back. In fact, I'll bet you that he could do one while holding the surgical instruments in his teeth! LOL

[just jr]

I am gonna add this to this long overdrown argument. anything you do when you are looking for a higher rate of return ( ie more then a savings account) theres gonna be higher risks, rather its a business, investing in the stock market or trading currencies. as a individual you have to way the odds and follow a system. if you do loose money it may not be the vehicle in which you used to trying to make money but more so it could be the timing in which you used that vehicle that caused you to loose your money. I am sorry for anyone loosing their hard earned money - however because its your hard earned money shouldn't that person used a risk adverse investment approach??

[lycan]

Originally Posted by Peterw

So are you saying I should have used stops? And that not using stops = overleveredging which is unprofessional?

No. And I'm not going to play this game with you. Good luck with your trading.

[Peterw]

Good, I'm glad that's settled then.

Always use stops!

[lycan]

Originally Posted by Peterw

Always use stops!

When you don't know what you're doing.

[Peterw]

Originally Posted by lycan

When you don't know what you're doing.

Just out of curiosity - what do you do when a trade goes against you? Do you hang on and wait/hope it turns around - even if that takes a couple of years of massive drawdown/margin call?

[SnerpGoodWord]

Originally Posted by Peterw

Just out of curiosity - what do you do when a trade goes against you? Do you hang on and wait/hope it turns around - even if that takes a couple of years of massive drawdown/margin call?

I think it's a waste of time at this point - a bunch of people have come in and told him he's being ridiculous, and he doesn't care, so that's that.

[NoJobRob]

Originally Posted by Peterw

Just out of curiosity - what do you do when a trade goes against you? Do you hang on and wait/hope it turns around - even if that takes a couple of years of massive drawdown/margin call?

I'm curious about that myself. Common sense would dictate that if one was wrong about the trend, then one would let themselves get stopped out, or close their position manually, and then go with the trend after finding a good entry (however your system dictates), and then be on the right side of the trade instead of the losing side. There is absolutely no point in holding on to a loser when you could be in the money... All that does is tie up money and waste potentially massive amounts of time.

[VinceG]

Originally Posted by Peterw

Just out of curiosity - what do you do when a trade goes against you? Do you hang on and wait/hope it turns around - even if that takes a couple of years of massive drawdown/margin call?

Does he even trade? I thought he said that he doesn't, that he just read some books about it or traded some in the past.

[lycan]

Originally Posted by VinceG

Does he even trade? I thought he said that he doesn't, that he just read some books about it or traded some in the past.

I don't trade. I know what the return that can be generated from (serious) trading really is. I don't have the capital to bother with it.

I'm curious about that myself. Common sense would dictate that if one was wrong about the trend, then one would let themselves get stopped out, or close their position manually, and then go with the trend after finding a good entry (however your system dictates), and then be on the right side of the trade instead of the losing side. There is absolutely no point in holding on to a loser when you could be in the money... All that does is tie up money and waste potentially massive amounts of time.

So you were wrong about the trend the first time and now you think you can reverse your losses by predicting the trend again? It's an interesting concept. Currency trading is a game of shuffling wealth from one currency to the other and back. It is not a game of predicting which currency is the best or what will be the price 10 minutes from now and then leveraging your guess like a cocaine addict.

[NoJobRob]

Originally Posted by lycan

So you were wrong about the trend the first time and now you think you can reverse your losses by predicting the trend again? It's an interesting concept. Currency trading is a game of shuffling wealth from one currency to the other and back. It is not a game of predicting which currency is the best or what will be the price 10 minutes from now and then leveraging your guess like a cocaine addict.

I never said anything about predicting. Predictions are for amateurs and entertainers. What I do advocate though, is being able to properly react to what is actually happening. And with a sound system, it's more than doable. If it wasn't, then how do you explain people like myself who make it work consistently?

[thehawkman]

The smartest tip I ever read was: "If you are losing money trading now, cut your lot size five times". And here's an example of why stop losses suck; in fact, this is the holy grail of trading; when to fold them and when to fold them.

the problem with stops

I hope it's clear what I am talking about in that picture.
Going long at the green thumbs up, you would have been stopped at the red x only to see price return to where it was (the purple line). This would have merely made your broker richer, not to mention unnecessarily giving away 40 to 50 pips of your profits, and as you can see price returned precisely to where it was before.
I'll concede that not having a stop could mean that price could keep going down for days and result into a margin margin call. But if that is the case you are overleveraged, or rather, your lot size is too big because a leverage of 1:500 on a lot of 100 dollars isn't going to get you into a margin call on a large enough account, but on a lot of 200,000, that's a whole different story.
This is the crux of the problem. Do we die a death by a thousand cuts and slowly grind away our profits due to volatility (one step forward, one step back), like in this screenshot (and let's face it, this happens all the time, it's what led me to try carry trading in the first place) or do we run the risk of getting into a huge mess with countless positions and interminable waiting? I have to admit I haven't really figured the answer to this. Perhaps someone else has an idea.
When do you call "uncle" in a case like this, because like I said this is what trading is all about (at least to me) (dealing with, or avoiding this type of unnecessary losses).

[SnerpGoodWord]

Originally Posted by lycan

I don't trade. I know what the return that can be generated from (serious) trading really is. I don't have the capital to bother with it.

So in other words you're giving advice about something you don't actually do, and don't even meet the minimum requirements to get started in (namely, capital)?

And everyone who actually does trade gives the exact opposite advice as you? Imagine that...

Stops have certain technical problems, namely that you lose the bid-ask gap and there can be slippage. There can be issues around triggering them too. But at heart, stop loss orders simply represent the idea of abandoning failed trading ideas. And in that sense they're indispensable.

[thehawkman]

And by the way, Van K Tharp doesn't trade. Like most guys who can't do, he teaches.

[NoJobRob]

Originally Posted by thehawkman

And by the way, Van K Tharp doesn't trade. Like most guys who can't do, he teaches.

But Dr. Alexander Elder does, and he's a world renowned trader, presenter, and author. Same goes for Mark Douglas. And they both advocate using stop losses. Trading without a stop loss is like driving on the Autobahn without a seat belt. It's just plain stupid. Period.

[Peterw]

Originally Posted by lycan

I don't trade. I know what the return that can be generated from (serious) trading really is. I don't have the capital to bother with it.




So you were wrong about the trend the first time and now you think you can reverse your losses by predicting the trend again? It's an interesting concept. Currency trading is a game of shuffling wealth from one currency to the other and back. It is not a game of predicting which currency is the best or what will be the price 10 minutes from now and then leveraging your guess like a cocaine addict.

So you don't trade, you're telling people 'how it is' and you have absolutely no clue what you're talking about.

maybe you should stick to giving out advice on how to use credit cards instead of a rainy day fund when times get tough.