Why does forex have a bad rep? - Currency Futures | futures io social trading
futures io futures trading


Why does forex have a bad rep?
Updated: Views / Replies:7,986 / 56
Created: by TickedOff Attachments:1

Welcome to futures io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.


You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike

Reply
 1  
 
Thread Tools Search this Thread
 

Why does forex have a bad rep?

  #41 (permalink)
Market Wizard
Boca Raton
 
Futures Experience: Advanced
Platform: Variety
Broker/Data: Optimus Futures, LLC
Favorite Futures: Futures
 
mattz's Avatar
 
Posts: 1,907 since Sep 2010
Thanks: 1,813 given, 2,572 received


SMCJB View Post
Unfortunately there's only 8 liquid CME futures, and they are all USD crosses, which is very limiting when compared to FX brokers that offer dozens of different pairs.

Forex has come along way since it was introduced to retail. I remember days of "slow servers", internalization of all orders, and inability to asses risk, even by LPs. But, I think that the latest evolution of FX, and for that matter many of the OTC markets, has been operating as close as possible to an exchange. BATSs recently purchased HotSpot FX, Deutsche Borse acquired 360T and to me it indicates that OTC and exchange traded product could provide a fair dealing ground. You could potentially have a large pool of LPs who practice and enhance the transparency of their FX dealing.

Clearly there are shady operations in FX typically in countries where regulation is "relaxed". However, they are thriving too because their customers are lured with "bonuses", etc. and their account minimum are just plain low.


Thanks,
Matt Z
Optimus Futures and FX

There is a substantial risk of loss in futures and Forex trading. Past performance is not indicative of future results.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
Reply With Quote
The following 2 users say Thank You to mattz for this post:
 
  #42 (permalink)
Trading Apprentice
Varsity Lakes
 
Futures Experience: Advanced
Platform: Ninja Trader
Favorite Futures: ES
 
Posts: 7 since Nov 2015
Thanks: 3 given, 4 received

Around 95% of Forex traders are failures. !!!!!!!!!!!
Stands to reason why. 99% are DAY traders.
Forex traders are conditioned to be day traders, therefore conditioned to fail.

Reply With Quote
 
  #43 (permalink)
Market Wizard
Houston TX
 
Futures Experience: Advanced
Platform: XTrader
Broker/Data: Advantage Futures
Favorite Futures: Energy
 
Posts: 1,862 since Dec 2013
Thanks: 1,585 given, 2,805 received
Forum Reputation: Legendary



KiwiOz View Post
Around 95% of Forex traders are failures. !!!!!!!!!!!
Stands to reason why. 99% are DAY traders.
Forex traders are conditioned to be day traders, therefore conditioned to fail.

And rollover rates are conditioned to put non-day traders at a significant disadvantage as well.

Reply With Quote
 
  #44 (permalink)
Elite Member
Christchurch, New Zealand
 
Futures Experience: Beginner
Platform: SC
Broker/Data: IB,IG,TT, IQ Feed
Favorite Futures: US Equities
 
Neo1's Avatar
 
Posts: 364 since Jul 2014
Thanks: 434 given, 421 received


KiwiOz View Post
Around 95% of Forex traders are failures. !!!!!!!!!!!
Stands to reason why. 99% are DAY traders.
Forex traders are conditioned to be day traders, therefore conditioned to fail.

Around 95% of all Businesses fail within the first five years, so with that in mind, FX trading is no different to running any business.

The reality is 1-5% of all active traders are profitable less comms/fees, irrespective of how they trade.

"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
Reply With Quote
The following user says Thank You to Neo1 for this post:
 
  #45 (permalink)
Trading Apprentice
Varsity Lakes
 
Futures Experience: Advanced
Platform: Ninja Trader
Favorite Futures: ES
 
Posts: 7 since Nov 2015
Thanks: 3 given, 4 received


SMCJB View Post
And rollover rates are conditioned to put non-day traders at a significant disadvantage as well.

For Futures traders, Yes. But not for Forex traders.

Reply With Quote
 
  #46 (permalink)
Market Wizard
Medellin, Colombia
 
Futures Experience: Advanced
Platform: Spoon!
Favorite Futures: Oct 26 1985
 
Rory's Avatar
 
Posts: 2,689 since May 2014
Thanks: 5,298 given, 7,883 received
Forum Reputation: Legendary


Neo1 View Post
Around 95% of all Businesses fail within the first five years, so with that in mind, FX trading is no different to running any business.

The reality is 1-5% of all active traders are profitable less comms/fees, irrespective of how they trade.

Thats a very simple and good point. I knew the general business startup failure rate was near that over 5 years but the dots did not connect. Would have been very useful for "please stop helping me" conversations in the past two years hehe

I tell people I make icecream now. A mentor's idea.

Reply With Quote
The following 2 users say Thank You to Rory for this post:
 
  #47 (permalink)
Market Wizard
Missoula, MT
 
Futures Experience: Advanced
Platform: NinjaTrader
Broker/Data: NinjaTrader
Favorite Futures: CL, ES
 
michaelleemoore's Avatar
 
Posts: 3,191 since Nov 2012
Thanks: 4,827 given, 10,417 received
Forum Reputation: Legendary


Rory View Post
Thats a very simple and good point. I knew the general business startup failure rate was near that over 5 years but the dots did not connect. Would have been very useful for "please stop helping me" conversations in the past two years hehe

I tell people I make icecream now. A mentor's idea.

Regarding @Neo1's statement, which has also been an alleged "fact" that Rand Paul has thrown around. Maybe it's true somewhere else in the world, but in the US, it's patently false.

At least four studies, including this reference from the Small Business Administration, say otherwise. Quoted from the Washington Post:

"The Small Business Administration, in its informative frequently asked questions on small businesses, provides this answer on the survival rate of new businesses:

ďAbout half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firmís age. Survival rates have changed little over time.Ē

The source for the SBA statement is the Bureau of Labor Statistics, which offers this chart on survival rates."

I'm guessing the rate of trader failure is higher than that

Reply With Quote
The following 2 users say Thank You to michaelleemoore for this post:
 
  #48 (permalink)
Elite Member
Christchurch, New Zealand
 
Futures Experience: Beginner
Platform: SC
Broker/Data: IB,IG,TT, IQ Feed
Favorite Futures: US Equities
 
Neo1's Avatar
 
Posts: 364 since Jul 2014
Thanks: 434 given, 421 received


michaelleemoore View Post
Regarding @Neo1's statement, which has also been an alleged "fact" that Rand Paul has thrown around. Maybe it's true somewhere else in the world, but in the US, it's patently false.

At least four studies, including this reference from the Small Business Administration, say otherwise. Quoted from the Washington Post:

"The Small Business Administration, in its informative frequently asked questions on small businesses, provides this answer on the survival rate of new businesses:

ďAbout half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firmís age. Survival rates have changed little over time.Ē

The source for the SBA statement is the Bureau of Labor Statistics, which offers this chart on survival rates."

I'm guessing the rate of trader failure is higher than that

Sounds like the source of the 50% after 1 and 95% after 5 also came from the US Small Bussiness Administration.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


I guess it also comes down to how you classify a failure.

"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
Reply With Quote
The following user says Thank You to Neo1 for this post:
 
  #49 (permalink)
Market Wizard
Medellin, Colombia
 
Futures Experience: Advanced
Platform: Spoon!
Favorite Futures: Oct 26 1985
 
Rory's Avatar
 
Posts: 2,689 since May 2014
Thanks: 5,298 given, 7,883 received
Forum Reputation: Legendary


michaelleemoore View Post
Regarding @Neo1's statement, which has also been an alleged "fact" that Rand Paul has thrown around. Maybe it's true somewhere else in the world, but in the US, it's patently false.

At least four studies, including this reference from the Small Business Administration, say otherwise. Quoted from the Washington Post:

"The Small Business Administration, in its informative frequently asked questions on small businesses, provides this answer on the survival rate of new businesses:

“About half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firm’s age. Survival rates have changed little over time.”

The source for the SBA statement is the Bureau of Labor Statistics, which offers this chart on survival rates."

I'm guessing the rate of trader failure is higher than that

As you said, its regional in many other (developed) countries it is higher. The US is different (good and bad) from other developed nations. One might also consider that many startups are founded TO be bought from inception. The appetite for innovation through acquisition being great.

Rand Paul (whoever he is haha kidding) is possibly not far off as it kinda depends on how you define a failure?

From the Harvard Business Review:

"If failure refers to failing to see the projected return on investment, then the failure rate 70 to 80 percent. And if failure is defined as declaring a projection and then falling short of meeting it, then the failure rate is a whopping 90 to 95 percent.

"Very few companies achieve their initial projections," says Ghosh. "Failure is the norm."
"

I expect most ordinary individuals quit trading between 2 and 5 years as they don't make enough consistently? A few especially talented ones just utilise trading for income until they have bridged a gap to doing something more worthwhile to them.

Regarding the original point. I asked around when I started in 2014 before choosing Futures. I carry out due diligence when getting into things. Of the three(ish) dramatic (> ~$100k) retail Forex failures involving seemingly sufficiently intelligent people I am personally aware of:

1. Variable leverage (got sucked into greed)
2. General inconsistency (brilliant guy who always, always screws everything up or the universe hates him)
3. A corrupt broker in the especially bad old days.

EDIT: Neo and I were editing at the same time lol.


Last edited by Rory; June 14th, 2016 at 01:23 AM.
Reply With Quote
The following user says Thank You to Rory for this post:
 
  #50 (permalink)
Membership Temporarily Revoked
Boston, MA
 
Futures Experience: Intermediate
Platform: NT7
Favorite Futures: CL, RB, LE
 
Posts: 264 since Apr 2014
Thanks: 102 given, 173 received



michaelleemoore View Post
Regarding @Neo1's statement, which has also been an alleged "fact" that Rand Paul has thrown around. Maybe it's true somewhere else in the world, but in the US, it's patently false...

ďAbout half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firmís age. Survival rates have changed little over time...Ē

...I'm guessing the rate of trader failure is higher than that

But what is the definition, at the US SBA, of the failure of a business?

I have heard that statistic thrown around as well... (90% of small businesses fail within the first couple of years of operation, yada yada. Sounds like trading, yeah?) But what constitutes a failure of a business? Is it their failure in the third year to file taxes? Is it the actual owners filing an official form to the SBA that says they are closing their business?

And what if that business in their 3rd year of losses, then posts a profit in the 4th year? Does the SBA take that into account, or are they only looking at their own return rate on the small-business loans they dole out and receive interest income on? How is the SBA calculating the difference between a failed business venture and a successful one?

The SBA gives out loans. That was their original charter (mostly), when the US Congress created the thing in 1953, after the fallout of some other organization formed by Herb Hoover during the Great Depression of the 1930s, which became something else, which became the SBA, etc. But like any other US governmental reporting agency, you need to take their reports with a grain of salt.

The USG just ain't that good on their own data, man. They know not what they got, lol!

Back to the point... with this small-business failure rate in context, what constitutes a failed trader? Is it someone who blows up a 10K account once? Twice? On the third try he/she succeeds and makes millions. Does he/she now count as a success? Or are they still counted as one of the 95% that failed? What is the context of that failure rate?

*sighs*

Reply With Quote

Reply



futures io > > > > Why does forex have a bad rep?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

FIO Journal Challenge featuring NinjaTrader ($2,000+ of prizes)

May

An overview of volumetric analytical tools w/Sergey Sokolov @ PTMC

Elite only

John Hoagland (TBA)

Elite only

FuturesTrader71 Extended Ask Me Anything (AMA)

Elite only

Pete @ Jigsaw Trading (TBA)

Elite only

John @ No BS Day Trading (TBA)

Elite only

An Afternoon with FIO member Softsoap (being rescheduled)

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Does anyone use a Tradestation sales rep that they would recommend? vbt101 TradeStation 15 January 6th, 2016 03:49 AM
Arizona Rep. Giffords Shot, Many Wounded in Rampage Quick Summary News and Current Events 1 January 11th, 2011 01:52 AM
Bad January, Bad First Half: A Gloomy Omen for Stocks Quick Summary News and Current Events 0 July 19th, 2010 04:00 PM
I need a GOOD Account Rep at Mirus.... Any suggestions? HJay Reviews of Brokers and Data Feeds 17 April 12th, 2010 01:49 AM


All times are GMT -4. The time now is 04:17 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-05-27 in 0.21 seconds with 20 queries on phoenix via your IP 54.162.91.86