Looking for best broker/how you learned/if you make any money..etc...

GO!

Maybe I should of titled the thread "Does anyone know what FOREX trading is?"

*crickets chirping*

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http://countingpips.com/fx/2010/12/05/learn-how-not-to-fail-with-these-six-tips-to-succeed-in-forex-trading/ ........

Yeah I can google stuff. Looking for more users experiences on this forum.

Right..

Not sure how big of a "FOREX" market there is on this site though.

LMFAO....If you're asking on a forum like this STAY AWAY!!!!

I don't know where to begin, but suffice to say currency traders are among the most sophisticated out there. Saying you'd be bringing a knife to a gun fight would be a gross understatement - more like noodle of spaghetti.

If you really feel a need to get your ass handed to you, I recommend trading a few of the currency ETF's out there. Just buy or short the ETF tracking the currency you want to make a bet on.

A fellow I work with is into ForeX trading, he actually mentioned he made 5K last week, but he has been into the stocks and ForeX for several years now. This stuff takes a long time to figure out.

ForEx (Foreign Exchange trading, for those who didn't click the link above) can be tricky, but it can also be very, very profitable.

It is indeed something that takes skill, though there are trading "bots" out there that help significantly and even run the trading for you. Most won't make you a ton of money overnight, but they do typically make some.

The ForEx market is only a respectable bet as long as the currency market is not erratic and unstable (which it has been for the last couple years, though it's stabilizing now, from what I'm told).

It's certainly something to look into. If you'd be interested in checking out a bot, I could probably ask around, as I know several people who use one to at least supplement their income.

gut;588128 wrote:LMFAO....If you're asking on a forum like this STAY AWAY!!!!

I don't know where to begin, but suffice to say currency traders are among the most sophisticated out there. Saying you'd be bringing a knife to a gun fight would be a gross understatement - more like noodle of spaghetti.

If you really feel a need to get your ass handed to you, I recommend trading a few of the currency ETF's out there. Just buy or short the ETF tracking the currency you want to make a bet on.

Thanks, this post was really useful. I almost invested all of my money and my 10 future paychecks all on FOREX trading, but because of this post, I decided to just put it in a low interest savings account.

I appreciate it.

sleeper;588351 wrote:Thanks, this post was really useful. I almost invested all of my money and my 10 future paychecks all on FOREX trading, but because of this post, I decided to just put it in a low interest savings account.

I appreciate it.

Hey, to each his own. Whether you want to throw away hundreds or thousands, more power to you. You'll likely have better success at the casino. If this is your hobby or how you get your juice, great.

But what I said is 100% true and often is "useful" advice to people who are clueless. My description of you bringing a wet spaghetti noodle to a gunfight is apt. You may get lucky and make a few bucks, for a while. But it's dumb to trade options - that's a zero sum game. Expecting to make money in a zero-sum game with other players far more sophisticated and with a comparatively "stacked" deck (execution, speed, analysis, information) is a fool's bet.

gut;588722 wrote:Hey, to each his own. Whether you want to throw away hundreds or thousands, more power to you. You'll likely have better success at the casino. If this is your hobby or how you get your juice, great.

But what I said is 100% true and often is "useful" advice to people who are clueless. My description of you bringing a wet spaghetti noodle to a gunfight is apt. You may get lucky and make a few bucks, for a while. But it's dumb to trade options - that's a zero sum game. Expecting to make money in a zero-sum game with other players far more sophisticated and with a comparatively "stacked" deck (execution, speed, analysis, information) is a fool's bet.

This is actually why the bots are helpful. They buy and sell based on rules, which removes the human emotional element and the human tendency to hesitate. Banks actually use some of the more beneficial ones (and more expensive ones) to make them money off investing other people's money.

There is actually a whole world of ForEx traders of all levels of experience. There's even an annual competition for ForEx bot programmers where each bot is given a fake $10,000 and has 30 days for their bot to make as much as possible. The winner in (I think) 2008 turned $10K into $130K in a month's time. A bank promptly bought his bot for seven figures.

It can work, even for beginners, but I would start out with it as a hobby if I were you, only putting money into it if you know you can lose it. The ForEx market, just like the stock market, is a gamble when all is said and done.

O-Trap;589031 wrote: There is actually a whole world of ForEx traders of all levels of experience. There's even an annual competition for ForEx bot programmers where each bot is given a fake $10,000 and has 30 days for their bot to make as much as possible. The winner in (I think) 2008 turned $10K into $130K in a month's time. A bank promptly bought his bot for seven figures.

It can work, even for beginners, but I would start out with it as a hobby if I were you, only putting money into it if you know you can lose it. The ForEx market, just like the stock market, is a gamble when all is said and done.

I just find it hard to believe someone can buy a bot for a decent price and make money. Anything can make money in the short-run, the old "start with 100 bots and a few will make money, not because they are good but just law of large numbers". I know some quants who develop very complicated Forex models. It's a tough ass business. Like I said, it's a zero-sum game and for 99.99% of amateurs out there it's only a matter of time before they lose their bankroll. You honestly have a better chance of making money by becoming a poker pro.

I mean, even an equity day trader can luck out and make money in a rising market by virtue of holding more than he's out, and that doesn't apply in FX. To actually make money and not just be lucky you have to be able to trade, you have to understand parity, and you REALLY have to know your macroeconomics.

When I say someone has to be a complete fool to think they are going to make money in FX I'm actually trying to be helpful. I don't doubt you know some people who make money with bots, or at least claim to. However I don't think a legitimately good trading system has ever been developed that people sell cheap. I could see a bank paying that winner of a competition who maybe doesn't have any capital. I just think people who are buying trading systems are the biggest fools out there. Transaction bots for triggers and stop-loss are good but only as a means of execution not profit generation.

On the other hand, FX and Commodity traders are the least consistent of the bunch. So I suppose you could argue it's a better game for someone wanting to partake in chance than equities. Yep, still better odds than the lottery!

gut;589214 wrote:I just find it hard to believe someone can buy a bot for a decent price and make money. Anything can make money in the short-run, the old "start with 100 bots and a few will make money, not because they are good but just law of large numbers". I know some quants who develop very complicated Forex models. It's a tough ass business. Like I said, it's a zero-sum game and for 99.99% of amateurs out there it's only a matter of time before they lose their bankroll. You honestly have a better chance of making money by becoming a poker pro.

Indeed, it's not an easy industry. Going in trying to trade on your own without any experience is virtually suicide. The bots use historical trends and algorithms, and though a bot won't last forever (the market patterns eventually do change), many of them DO make people money.

Now, you won't likely be making thousands upon thousands with a $50 bot and a $200 market investment. However, you might be looking at $25 - $50 a month. You might not know diddly about ForEx trading, but the creators of the bots usually do, and do enough so that they know what patterns have worked for themselves in earning on the ForEx market. The better, more exclusive, more expensive bot ... the better your chances to make more money. That's the reason the banks buy the high-ticket bots. They run on virtual autopilot, and they generate those banks significant revenue without much upkeep. After the up-front cost and market investment, it's a VERY low overhead means of income, and with a high-ticket bot like that, the odds increase significantly that the market trends will make the bank good money over the course of a couple years.

Moreover, I would contend that you have a better shot with the "blind squirrel" luck in ForEx than you would a poker pro if you went into it just as much a newbie.

gut;589214 wrote:I mean, even an equity day trader can luck out and make money in a rising market by virtue of holding more than he's out, and that doesn't apply in FX. To actually make money and not just be lucky you have to be able to trade, you have to understand parity, and you REALLY have to know your macroeconomics.

If you're doing it manually, yes. If using a bot, not necessarily.

gut;589214 wrote:When I say someone has to be a complete fool to think they are going to make money in FX I'm actually trying to be helpful. I don't doubt you know some people who make money with bots, or at least claim to.

He lives in Hudson, Ohio. I've been to his house and seen his operation, as well as the increase he's been making on the FX market.

gut;589214 wrote:However I don't think a legitimately good trading system has ever been developed that people sell cheap. I could see a bank paying that winner of a competition who maybe doesn't have any capital. I just think people who are buying trading systems are the biggest fools out there. Transaction bots for triggers and stop-loss are good but only as a means of execution not profit generation.

Not sure what you mean by that. Please explain.

gut;589214 wrote:On the other hand, FX and Commodity traders are the least consistent of the bunch. So I suppose you could argue it's a better game for someone wanting to partake in chance than equities. Yep, still better odds than the lottery!

FX trading has indeed been the least consistent over the last few years, but that isn't always the case. Just like any market, there are patterns, acute though they may be.

O-Trap;589470 wrote:FX trading has indeed been the least consistent over the last few years, but that isn't always the case. Just like any market, there are patterns, acute though they may be.

Pattern trading is mostly garbage. It's temporary anomalies that, for the most part, only makes people money when they are lucky enough to get off it before the "pattern" changes. The old days of quantitative trading that identified actual arbitrages/inefficiencies in the market is gone. Most successful systems now are hybrids, whereby one looks at the world going forward a few months and identifies what factors are going to work and trades based on those factors. Not to dismiss technical analysis, but it's more a self-fulfilling prophecy than actual prudent research. What I meant to say by FX being the least consistent was that it is by far the toughest market to consistently make money in, meaning you see far fewer money managers with a track record of consistent success.

Again, NO ONE with a good trading system of any merit sells it to the masses. You go get investors or you sell it to the highest bidder. There are backtests and a variety of other "tire kicking" tests that can establish if this model legitimately can make you money. Only suckers buy models sold to the masses. Anyone making money with such a system has strictly been lucky in the short-term. Just an example of the classic pyramid scheme whereby I mail 1000 people and tell 500 to take one-side and 500 the other and then 500 people think I'm a genius.

gut;589541 wrote:Pattern trading is mostly garbage. It's temporary anomalies that, for the most part, only makes people money when they are lucky enough to get off it before the "pattern" changes. The old days of quantitative trading that identified actual arbitrages/inefficiencies in the market is gone. Most successful systems now are hybrids, whereby one looks at the world going forward a few months and identifies what factors are going to work and trades based on those factors. Not to dismiss technical analysis, but it's more a self-fulfilling prophecy than actual prudent research. What I meant to say by FX being the least consistent was that it is by far the toughest market to consistently make money in, meaning you see far fewer money managers with a track record of consistent success.

Again, NO ONE with a good trading system of any merit sells it to the masses. You go get investors or you sell it to the highest bidder. There are backtests and a variety of other "tire kicking" tests that can establish if this model legitimately can make you money. Only suckers buy models sold to the masses. Anyone making money with such a system has strictly been lucky in the short-term. Just an example of the classic pyramid scheme whereby I mail 1000 people and tell 500 to take one-side and 500 the other and then 500 people think I'm a genius.

In terms of a HIGHLY profitable bot, I agree. However, someone who makes a bot that does an average increase of under a hundred bucks for that creator may indeed be sold to the masses. The creator makes more money, and it ultimately doesn't damage his income stream.

For the big earners, though, I agree.

O-Trap;589666 wrote:In terms of a HIGHLY profitable bot, I agree. However, someone who makes a bot that does an average increase of under a hundred bucks for that creator may indeed be sold to the masses. The creator makes more money, and it ultimately doesn't damage his income stream.

For the big earners, though, I agree.

$100 means nothing to me. You have to talk in terms of VaR and ROI. There's a cost of capital. And I disagree with you. With leverage virtually any GOOD system has significant value, even moreso when you consider funds and banks have access to more leverage, better borrows, and faster execution than joe average. Any system that has an expected value greater than its transaction costs is worth big bucks to hedge funds and investment banks. Such a system is never available for purchase to the average schmuck. Yeah, I suppose there are some with very marginal profitability that funds stay away from because of tail risk. Again, goes back to luck that you can make money with such a system if you are lucky to get out before it inevitability fails - that tail risk can't be ignored, you make money for many months and then it's all wiped out in a few days. You say the pattern changes, of course, but it's almost impossible to see that pattern change before you're wiped out.

In short, buy a bot if he needs help with execution and risk management. If he wants to make money, though (assuming he has a talent), he has to learn some fundamentals so he can express his macro ideas in a trade.

Wouldn't actually investing be a better option than throwing darts?

gut;589724 wrote:$100 means nothing to me. You have to talk in terms of VaR and ROI. There's a cost of capital.

Herein lies the beauty of selling a bot in downloadable form. The denominator in your ROI becomes mostly fixed, and the overhead is ALMOST nonexistent, as the bulk of the investment in creating such a software is a one-time investment on the front-end. You don't incur any default per-unit costs (once it is created, it can be downloaded as many times as needed, so long as there is adequate bandwidth. Thus, you are able to invest more into marketing (often measured in CPV, CPC, or CPA) and the monthly costs, such as hosting the download.

Here's why it makes sense to the person selling it to the masses, even if it has shown to be able to make a nice return: Suppose in tests, he's seen a positive return in four of six months, and an overall return of $1.05 on the dollar. This would be a very valuable system, yes?

Ultimately, the model to the consumer is very similar to the model of the producer. Let's use the hypothetical we've already got.

Consumer model:
w = the ROI of the software to date
x = the fixed cost of the FX bot/software (for our purposes, we'll say $100)
y = the investment
z = the overall return

w(y) - x = z

In our example:

1.05y - 100 = z

Now, with the producer of the software, the model is again similar.

a = the fixed cost of creating the software for the first time
b = the gross profit from selling each unit
c = the chosen cost from selling each unit (if one chooses to create a CPA model for an affiliate program)
d = number of units sold
e = the number of months the sales model has been running
f = the fixed monthly overhead cost of hosting such a software
g = the overall return

(b - c)d - e(f) - a = g

Now, let's flesh that out a bit. You can find adequate hosting for, say $5 a month, and a domain name can be gotten for about $12 a year ($1 a month), so monthly overhead sits at about $6. Suppose you want to pay affiliates (ie contracted sales people) 60% commissions on the $100 software. And suppose it cost $2K to build the software and the site where it is available. Then the model would look like this:

(100 - 60)d - e($6) - $2000 = g

40d - 6e - 2000 = g

Now if a person markets properly, d would only need to equal 50 to cover the startup cost (we could factor in taxes, but you get the gist), and then every additional sale on top of that covers e up to 6.67.

So the possibility for selling a software that shows to be profitable in the FX market, if done digitally, could indeed be VERY profitable.

I've never been involved with such a software launch, but I know a couple people who have launched their own to the general public and made as many as 4000 sales in a week's time. That's pretty profitable, I'd say.

gut;589724 wrote:And I disagree with you. With leverage virtually any GOOD system has significant value, even moreso when you consider funds and banks have access to more leverage, better borrows, and faster execution than joe average. Any system that has an expected value greater than its transaction costs is worth big bucks to hedge funds and investment banks. Such a system is never available for purchase to the average schmuck. Yeah, I suppose there are some with very marginal profitability that funds stay away from because of tail risk. Again, goes back to luck that you can make money with such a system if you are lucky to get out before it inevitability fails - that tail risk can't be ignored, you make money for many months and then it's all wiped out in a few days. You say the pattern changes, of course, but it's almost impossible to see that pattern change before you're wiped out.

In short, buy a bot if he needs help with execution and risk management. If he wants to make money, though (assuming he has a talent), he has to learn some fundamentals so he can express his macro ideas in a trade.

I do agree with much of this. The ones that are hugely successful are indeed the ones that are never made available to the public, and it IS important not to rely on a bot for years of income. However, even many of the bots made available to the public are profitable in the short term. Just as with any trading market, it's always about pulling out of one at the right time and investing in another at the right time.

Go to GFT and get a practice account.

O-Trap;590222 wrote: I do agree with much of this. The ones that are hugely successful are indeed the ones that are never made available to the public, and it IS important not to rely on a bot for years of income. However, even many of the bots made available to the public are profitable in the short term. Just as with any trading market, it's always about pulling out of one at the right time and investing in another at the right time.

Again, that's mostly luck. I don't need any sort of system to make money if I know when to get out, that's the name of the game. The history on Wall Street is littered with fat-tail models that blow-up, and many of those models were hugely profitable for a short-time. There is nothing you can buy, especially some nickel-and-dime trading model, that beats the market.

I can't emphasize this enough, ANY model that can be marginally profitable is worth far more to hedge funds and banks because they have access to more leverage and lower transaction costs. The only people selling a model to the masses are ones with garbage models that couldn't get the big score from raising capital themself or selling to one of those hedge fund guys or banks. This is basically an axiom to anyone who knows how those guys operate - the appetite for good models that actually work, even for a short-time, is almost infinite in that world.

There is no free money out there. The FX market is the most liquid and most efficient market out there. I know guys who make these models and I know how complicated they are and how extensive the research is. There are high-frequency models out there designed to pick-off pennies. I can sit down at a blackjack table with any system I want and have a chance of making money in the short-run as well, but inevitably I will bust.

What you are referring to is mostly momentum trading, i.e. that a pattern persists. And, yes, people can and do make money in the short-run, but the reason so few do so consistently and the vast majority eventually bust is "getting out" and foreseeing the pattern changing is almost impossible.

You can get 50-1 leverage in the FX market. And therein lays the problem: You can make 2% on trade after trade (possible only with high leverage) but then you hit that inevitable 3-sigma move and it wipes you out. You're netting 5bps a trade and getting 2.5% because of leverage, but then you lose 200bps on a trade and it wipes you out. And that's why people sell these bots because it's more profitable than trading themselves. Again, there's no such thing as a model that only makes $25-$50 a month - it's relative to capital invested and leverage. Any model that can consistently outperform basic indices would attract real capital and would never be sold to the masses. These models are sold because, at best, they underperform if they even have an expected positive value in the first place. I would bet money if you could see a validated backtest that nearly all these models sold to the public are not profitable, even in the short-run.