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Old 05-04-2014, 06:30 PM   #21
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Meanwhile, back on Earth, FOREX market maker brokers are warehousing retail orders internally to the point where 60-65% of non-hedged volume is handled in-house.

In other words, FOREX market makers find it more profitable and less risky to just bet against retail FOREX traders with their own money than to bother with external hedging.

There's money to be made from folks with sure-fire systems in zero-sum games.
Lol. You're not telling me anything I don't know. The average trader loses. Only about 25% are profitable. From the brokers' perspective it makes complete sense statistically to bet against their clients. That much should be obvious.

There's no such thing as a "sure fire system." There is such a thing as having an edge such that over a large sample size of trades you come out on top. Traders like Kovner, Seykota, Dennis, Paul Tudor Jones and many others have all proved that they have an edge. Posting consecutive years of triple or even quadruple digit percent returns is no accident or stroke of random luck.
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Old 05-04-2014, 06:36 PM   #22
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Posting consecutive years of triple or even quadruple digit percent returns is no accident or stroke of random luck.
I beg to differ. Consider an example stolen directly from The Investor's Manifesto. Picture a stadium full of 10,000 coin flippers. Heads you remain standing, tails you sit down.

After a given number of coin flips three or four will remain standing. Are they the best coin flippers or just lucky?
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Old 05-04-2014, 06:37 PM   #23
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Hi Jadd,
Welcome to the forum! A 20 year old that aims to retire early fits right in. Please, contribute by sharing your insights on the Forex market and your strategy.
Thanks. I watch about 40 different pairs and trade only the Daily charts. I trade a system based on Mean Reversion Theory that restricts entries to value areas. The entry is discretionary using price action at logical support and resistance areas.
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Old 05-04-2014, 06:50 PM   #24
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I beg to differ. Consider an example stolen directly from The Investor's Manifesto. Picture a stadium full of 10,000 coin flippers. Heads you remain standing, tails you sit down.

After a given number of coin flips three or four will remain standing. Are they the best coin flippers or just lucky?
And after double that given number of coin flips, 1 or 2 will remain standing. Double that, 0 or 1.

In your example, that given number is slightly higher than just 11 flips for 4 to remain standing. A statistically worthless sample size in most applications. What about after 200 flips? 2000 flips? If anyone at all is left standing the odds are of the order of magnitude of 10^-600. Any logical person would conclude that they had to be cheating, maybe using a loaded coin. In other words, oh look... they have an edge.
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Old 05-04-2014, 06:58 PM   #25
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And after double that given number of coin flips, 1 or 2 will remain standing. Double that, 0 or 1.

In your example, that given number is slightly higher than just 11 flips for 4 to remain standing. A statistically worthless sample size in most applications. What about after 200 flips? 2000 flips? If anyone at all is left standing the odds are of the order of magnitude of 10^-600. Any logical person would conclude that they had to be cheating, maybe using a loaded coin. In other words, oh look... they have an edge.
If I had an edge like that I wouldn't broadcast it on a financial forum and invite competition.
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Old 05-04-2014, 07:11 PM   #26
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Mate, I think you'll find this is the wrong forum for you. Most here have 'retired early' in their early 60's or maybe late 50's. People at that age have had the luxury of riding one of the biggest debt fuel growth periods in history - for 40 years or so.

Buy and hold, passive investing has been a no brainer, and it would have been just about impossible to fail aslong as you stayed the course and plugged away. Forex taxing doesn't really fit with the general experience here, so you will be met with sarcasm / 'reality checks'. That's understandable given the successful experience most have here has come from something very different.

I don't think you are really talking about retiring early. More just working for yourself doing something you enjoy / get rewards from that suit you. I say good luck to you. You are young enough to have a go, and hopefully it works out. If not, then so what. Do something else.
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Old 05-04-2014, 07:12 PM   #27
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If I had an edge like that I wouldn't broadcast it on a financial forum and invite competition.
Yeah, I'm not nor do I plan to give out specifics.
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Old 05-04-2014, 07:16 PM   #28
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Hey all, I found this forum recently and thought I would register to start contributing. I'm 20 years old and finishing up my third year of engineering school. I've already had enough of the rat race in my short "career" and I want to enjoy my time as I see fit instead of spending my best years working. None of my peers understand my goals, so I am glad I finally found a place with like minded individuals.

It seems the standard approach here is passive investing, but that is a tad too slow for me. I've spent the last few years learning everything I can about the Forex market in my free time. Through hard work and dedication I have managed to develop a strategy which yields in two weeks what the S&P 500 does in a year, with a better Sharpe ratio too. Hence I'm planning for ER and FI shortly after I graduate from college.

If there are any other traders here I would love to hear from you.
Wow! How come no one told me such a vehicle existed?! What a bunch of suckers we are.

Good luck.
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Old 05-04-2014, 07:17 PM   #29
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Mate, I think you'll find this is the wrong forum for you. Most here have 'retired early' in their early 60's or maybe late 50's. People at that age have had the luxury of riding one of the biggest debt fuel growth periods in history - for 40 years or so.

Buy and hold, passive investing has been a no brainer, and it would have been just about impossible to fail aslong as you stayed the course and plugged away. Forex taxing doesn't really fit with the general experience here, so you will be met with sarcasm / 'reality checks'. That's understandable given the successful experience most have here has come from something very different.

I don't think you are really talking about retiring early. More just working for yourself doing something you enjoy / get rewards from that suit you. I say good luck to you. You are young enough to have a go, and hopefully it works out. If not, then so what. Do something else.
You're right. He's not talking about ER. He's talking about speculating. Nothing wrong with that, except that it's extremely difficult to be successful.
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Old 05-04-2014, 07:29 PM   #30
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Mate, I think you'll find this is the wrong forum for you. Most here have 'retired early' in their early 60's or maybe late 50's. People at that age have had the luxury of riding one of the biggest debt fuel growth periods in history - for 40 years or so.

Buy and hold, passive investing has been a no brainer, and it would have been just about impossible to fail aslong as you stayed the course and plugged away. Forex taxing doesn't really fit with the general experience here, so you will be met with sarcasm / 'reality checks'. That's understandable given the successful experience most have here has come from something very different.

I don't think you are really talking about retiring early. More just working for yourself doing something you enjoy / get rewards from that suit you. I say good luck to you. You are young enough to have a go, and hopefully it works out. If not, then so what. Do something else.
Thanks for your post. You're right; I kinda figured that given the tone of most of the replies I've received so far. I considered it ER as my trading only takes about half an hour per day. Tons of other time for activities.

I really have no desire to continue arguing statistical probability and the feasibility of Forex trading with the folks here. I'll just move on back to my trading forums.

I'll come back to this thread every couple of months and update on my progress. If for no other reason than to show the naysayers that it can be done. If I crash and burn then you all get a laugh at my expense.

Until then...
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Old 05-04-2014, 07:33 PM   #31
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Another bright 20 year old with a way to beat the market. Where have I heard this before? Sorry, but I think you have some lessons coming. A lot of engineers and others here on this forum, people who have been there, done that. You can learn from them or learn from the market. I really wish you good luck, but humility has a way of seeking us out in the end.
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Old 05-04-2014, 07:36 PM   #32
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Best of luck. See ya later.
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Old 05-04-2014, 07:38 PM   #33
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I'll come back to this thread every couple of months and update on my progress. If for no other reason than to show the naysayers that it can be done. If I crash and burn then you all get a laugh at my expense.

Until then...
Hey, no one is wishing you ill or that you will fail. Perhaps you're really on to something. But two or three years, or even ten years, of successes isn't going to cut it. That's just luck. And once in a great long while even people who buy lottery tickets get lucky.

Let us know in 25 years. Best to you.
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Old 05-04-2014, 07:38 PM   #34
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I'll come back to this thread every couple of months and update on my progress. If for no other reason than to show the naysayers that it can be done. If I crash and burn then you all get a laugh at my expense.

Until then...
We look forward to your updates - no matter how they turn out.

However, I am personally very doubtful you'll come back and admit your plans didn't work out when if that turns out to be the case. Airing your failures isn't part of human nature and very few of our posters have the intestinal fortitude to fess up when things go sour. The few that do - like VaCollector and Dixonge - have earned my respect for their honesty and willingness to share where they went wrong.

Best of luck!
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Old 05-04-2014, 07:47 PM   #35
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Welcome to the forums. When I was in college I worked as a trading assistant for an off the floor prop bond trader. Then I went to work as a trading assistant for a firm that did both prop trading in index options and various commodity options (corn, wheat, etc). They also were market makers, or "locals", on the floor of several exchanges in Chicago and Kansas City in index options and futures. We had no clients. We traded the money the firm's limited partners had invested.

I worked my way up to being a local in the wheat and index option pits. It was great fun. Every day I would go to work and stand in a pit of other screaming A-types and battle to make a living by capturing the bid-ask spread on hundreds of trades a day. Each trade, on average, only amounted to about a $5-10 profit but if you could get at least 50 done per day, you were making a good living.

The key for the locals, and what my boss beat into my head, was to be directionally agnostic. Trade only for the spread. Don't go home at night with a position. Be aggressive and always alert to the flow of orders coming in to the various brokers.

The traders that survived long term followed those principles. The others blew out, often spectacularly. I have many stories of those people. Most of them thought they had figured out a system or edge. Maybe they did, but even then, things can go bad quickly and edges can evaporate. And holding positions that are going bad can cause severe emotional decisions to be made at the worst times.

A decade later my company that I founded was building software for prop trading firms. They would invest millions of dollars to build systems to exploit some theoretical arbitrage or other edge. Even with those firms, the profits come and go. They can go bust almost overnight.

My advice to you is get a job with a prop firm in Chicago or NY and learn from the inside how the pros do it. They love hiring top engineering grads as assistant traders. Then when you get promoted, make your money trading the house's account. If you are good you can make as much as 50% of the profits you generate. Then, if it is still what you want, start your own operation or trade solo. You'll have much more chance for success.

But beware retail "systems" that various pundits are pitching. It is a universal truth that if any of those systems had real merit, they would never be sold or shared with anyone other than to raise money to trade with the system. The prop trading industry is absolutely the most insular, secretive industry I've seen because those rare trading edges are so valuable.
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Old 05-04-2014, 08:03 PM   #36
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Hey all, I found this forum recently and thought I would register to start contributing. I'm 20 years old and finishing up my third year of engineering school. I've already had enough of the rat race in my short "career" and I want to enjoy my time as I see fit instead of spending my best years working. None of my peers understand my goals, so I am glad I finally found a place with like minded individuals.

It seems the standard approach here is passive investing, but that is a tad too slow for me. I've spent the last few years learning everything I can about the Forex market in my free time. Through hard work and dedication I have managed to develop a strategy which yields in two weeks what the S&P 500 does in a year, with a better Sharpe ratio too. Hence I'm planning for ER and FI shortly after I graduate from college.

If there are any other traders here I would love to hear from you.
Welcome. I'm not retired yet I'm here to learn. You are like many of the people here, where their family and friends do not understand their goals either. There are also a lot of retired engineers here too.
You're young enough that if your plans don't work out you have time to recover. Life, does have a way of getting in the way sometimes so it does pay to have a backup plan. In the mean time, learn what you can about Forex trading and enjoy.
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Old 05-04-2014, 08:30 PM   #37
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Is this character being trolled by some of our esteemed members?

Ha
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Old 05-04-2014, 08:33 PM   #38
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Is this character being trolled by some of our esteemed members?

Ha
Trying to be helpful but point taken, post deleted.
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Old 05-04-2014, 08:39 PM   #39
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Every once in a while someone like jadd806 comes along to our forum with some ideas on how to get rich doing trades, and we descend like a pack of wolves waiting to attack. While I would not choose to do this myself, I like the fact that the OP knows what he wants to do with his career and has some aggressive plans to get there. Maybe it will work out, maybe it won't. But think of all the people out there who ignored the naysayers who said it couldn't be done, and then went on to become brilliant leaders who changed the world.

If that is what the OP wants to do with his career, I say best of luck and go for it!
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Old 05-04-2014, 08:43 PM   #40
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Is this character being trolled by some of our esteemed members?

Ha
Nope. Almost through my bucket of popcorn, though.
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