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Is Retail FX Trading Dead?

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Can anyone actually make a living trading FX anymore unless you are trading very large size? Just asking.

"FX Volatility is becoming a potential *significant* concern. A huge list of major currencies just spiked new *all-time record lows* in implied Vol including $EURUSD, $USDJPY, $AUDUSD, $USDCHF, $USDCAD and $NZDUSD."

Macro Charts @MacroCharts

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12 minutes ago, Caseynotes said:

Can anyone actually make a living trading FX anymore unless you are trading very large size?

Frankly I'm surprised that anyone could make a 'living' from it in the first place.

95% failure rate, but out of the remaining 5% how many are making a 'living' as opposed to just making a net profit?

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5 minutes ago, dmedin said:

Frankly I'm surprised that anyone could make a 'living' from it in the first place.

95% failure rate, but out of the remaining 5% how many are making a 'living' as opposed to just making a net profit?

To make money trading price has to move in any direction other than sideways, as the price chart shows eurusd has just been moving sideways for a long time as the implied vol chart confirms.

When I say traders I mean traders rather than the hopers, dreamers and fantasists who make up the large percentage of failures you are referring to 😥

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EUR/USD has been moving 'sideways'?  WTF?  Am I looking at the wrong chart?

 

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3 minutes ago, dmedin said:

EUR/USD has been moving 'sideways'?  WTF?  Am I looking at the wrong chart?

 

Oh dear, it looks like the ATR is about to hit zero ...

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EUR vs USD has been moving down for over a year.  As Chris Beauchamp says, 'Sell the rallies.'  We're all experts with hindsight :)

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Can anyone make a living from trading - yes, if they work for Goldman Sachs ...

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2 minutes ago, dmedin said:

EUR vs USD has been moving down for over a year.  As Chris Beauchamp says, 'Sell the rallies.'  We're all experts with hindsight :)

realistically it's been moving sideways all year but the question is though with a 14 period daily ATR of just 35 points what sort of size would you need to trade this to actually make a living. Compared to Dax for example which is also historically low at just 135 points.

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I agree, and I think the idea of trading for a 'living' is (and probably has always been) impossible for a 'retail' client.  Simply not losing your money puts you in the top 5 percent ...

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Just now, dmedin said:

I agree, and I think the idea of trading for a 'living' is (and probably has always been) impossible for a 'retail' client.  Simply not losing your money puts you in the top 5 percent ...

but you see that 'what' you trade is going to really affect outcomes if you are retail operating with low size . FX is the traditional entry (or was until crypto) but neither is necessarily the 'right' asset to trade. Low volatility is fine for investing but death to trading.

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6 hours ago, dmedin said:

I agree, and I think the idea of trading for a 'living' is (and probably has always been) impossible for a 'retail' client.  Simply not losing your money puts you in the top 5 percent ...

isn't it 25%...

banner is telling me 75% of people lose money.

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to answer the question though, making money from trading is about the long term, and whilst implied volatility on a specific asset is low, that doesn't mean it's the case for everything. There are lots of opportunities out there.

look at oil yesterday.

just need to look at other volatility opportunities and run with it. Uping your trade size to capitalise on small moving markets I don't think is a great idea. when the vol comes you'll be stung.

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1 hour ago, cryptotrader said:

isn't it 25%...

banner is telling me 75% of people lose money.

The stats are unclear ...

What exactly do they mean by 'lose money' - do they mean than 75% of clients have made a net lost over the last 12 months?  Because anyone who trades regularly will lose money at some point.

Okay - and if so, how many of those clients were day trading?  Because some of them will be buying and holding positions, or swing trading, or buying options etc.

The 95% figure for day traders is from an academic research paper than Caseynotes linked to but I can't find it. 

Edited by dmedin

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Guest Homer Enronride
4 hours ago, dmedin said:

The stats are unclear ...

What exactly do they mean by 'lose money' - do they mean than 75% of clients have made a net lost over the last 12 months?  Because anyone who trades regularly will lose money at some point.

Okay - and if so, how many of those clients were day trading?  Because some of them will be buying and holding positions, or swing trading, or buying options etc.

The 95% figure for day traders is from an academic research paper than Caseynotes linked to but I can't find it. 

AMF in France did a study 2009-2012 

Maybe wrong place to add a link😉

But they wrote this 

"In addition to the great majority of losing clients and the losses suffered, the study shed light on a behavioural phenomenon: individual investors learn little over time. Indeed, it appears that the most active and regular investors see their losses mount over time."

 

 

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Trading is a skill that we all strive to achieve because we know that there are many benefits for us as individuals.  I thought this page might help us all to gain strength and focus.

https://www.babypips.com/trading/forex-self-discipline-20191204?utm_source=BabyPips.com+Daily+Newsletter&utm_campaign=c523638c48-Daily+Newsletter+-+December+5%2C+2019&utm_medium=email&utm_term=0_e6d6948c39-c523638c48-417587933&ct=t()

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Rayner Teo is mostly a price action trader & he gives away heaps of trading techniques for free.  I know the markets have been difficult recently but his techniques are simple and very effective & may be of assistance to all.

 

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Making a living out of trading..
Depends on what your needs are. Would you need $50 or $100 or $500 etc income a day to make a living from?
How much time and dedication can you put in?

No you wont get rich in a few days. It does take time. Build up your capital/portfolio trade by trade and day by day. Trade with the mindset that it is going to take you 2 years to build up enough trading capital.


There is a difference between trading and gambling(taking a chance on a trade). Sometimes this can be a fine line. Crossing that line to taking a punt/taking a chance and you will lose for sure. Keep your cool, analyse then place a trade.
Cut your losses soon enough when you see a trade going against you. Let your winners run until such time to cash in.

Rather lose out on trade not take than lose on a gamble trade.

There are difference between trading and investing. FX markets are trading. I dont think one would make money just by "buy and hold" strategy on FX markets.
I dont trade FX markets. I only trade Indices and only at certain times of the day and only trade certain Indices. They are more predictable and more market/economy related.So you have some gauge which direction the market is heading. 


Yes there is money to be made. It takes time, dedication and concentration. eyes on the screen and ears listening to CNBC and/or Bloomberg television.


If you go through a bad patch - stop trading for few days until you are "in sync" with the markets again.

Know that you will blow up your account before you succeed. Almost guaranteed. Refund again then blow it up again. That will be the pattern until you learn from your mistakes or until you are totally broke.
Until you acknowledge what you are doing wrong. What bad trade habits you have. Recognise them. Work on those. Work on them on demo account. Note your own trade pattern, weakness and mistakes you make while on demo account and work on them. Dont use demo account to see how much money you can make. Demo account is like Monopoly money. Overcome them otherwise you will never succeed.
 

There are hours and hours of training material on the internet. Use it.

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@AVOR All very good and important points and very true as to trading generally but with a market (eurusd) having an ATR of just 35 points trying to make a daily living with a small account/bet size is going to be a problem.

Edited by Caseynotes

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7 hours ago, dau710 said:

Rayner Teo is mostly a price action trader & he gives away heaps of trading techniques for free.  I know the markets have been difficult recently but his techniques are simple and very effective & may be of assistance to all.

Very true, you can find a collection of his work linked in this thread.  

https://community.ig.com/forums/topic/4559-ta-technical-analysis/

image.thumb.png.96f95599e694d5e19d0a6d7955670ac6.png

 

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For risk on/ risk off moves in some cases I reckon indices are the way to go.

 

USDJPYH1.jpg

JPN225H1.jpg

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yes, the eurusd has had a 14 period daily ATR ranging between just 25 to 40 points for the last month whereas the Dow has ranged between 140 and 200.

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3 hours ago, AVOR said:

There is a difference between trading and gambling

The problem is that there are an enormous number of financial professionals, some with decades of experience, who would disagree with you.  And the published figures and academic studies also disagree with you.  So you really are putting forward a point of view that requires a lot of faith to believe in.

Edited by dmedin

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9 hours ago, dau710 said:

Rayner Teo is mostly a price action trader & he gives away heaps of trading techniques for free.  I know the markets have been difficult recently but his techniques are simple and very effective & may be of assistance to all.

 

 

 

Yes, a trader can adopt techniques to minimize his/her losses - but make a 'living' ... hmm.  Even people who write books on 'how to make a living day trading' are usually found, upon closer inspection, to be earning income from other sources (for example, from selling books ... and teaching).

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17 minutes ago, Caseynotes said:

yes, the eurusd has had a 14 period daily ATR ranging between just 25 to 40 points for the last month whereas the Dow has ranged between 140 and 200.

 

Tenner a point then ... 25 x 10 = £250 a day.  Easy peasy!

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3 minutes ago, dmedin said:

The problem is that there are an enormous number of financial professionals, some with decades of experience, who would disagree with you.

I see a difference between a trader and a gambler working with a validated plan and a gambler and a trader working with no plan. 

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6 minutes ago, Caseynotes said:

I see a difference between a trader and a gambler working with a validated plan and a gambler and a trader working with no plan. 

Yes I agree and when you buy a house or any other investment there is always some degree of risk involved in the outcome and the bank has usually made some assessment regarding its value so that they can give you a loan to make the purchase.  You also hope it will go up in value over time but you have no guarantee.  This is all based on the opinion of other people, based on the prices of other houses in that area etc, etc.  Trading CFD's, share or others is no different in my opinion, they are also priced based on other peoples opinion of its current value.  Its not a gamble but a calculated risk and some hope with any investment.

Edited by dau710

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A house isn't really comparable, because it is an object of utility as well as value.  (Unless you are a landlord who buys property solely for the purpose of extracting rents from other people.)

If you're into calculated risks, buy and hold a diversified portfolio.  If you fancy a flutter, spread bet.

Edited by dmedin

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20 minutes ago, dmedin said:

A house isn't really comparable, because it is an object of utility as well as value.  (Unless you are a landlord who buys property solely for the purpose of extracting rents from other people.)

If you're into calculated risks, buy and hold a diversified portfolio.  If you fancy a flutter, spread bet.

In Australia we have CFD's which are a legal contract and have legal value as a contract and I presume that spread betting would also have a legal value between you and IG or the company behind the spread bet.  Although a house is classed as an asset the concept of a legal claim to the increase or decrease in value of a house, CFD's or Spread Betting is the same.  It really doesn't matter if you have taken a loan for the house, CFD or Spread Bet or used your own money you will still have a legal claim to the value increase or decrease.  The outcome of this claimed value is always caused by supply and demand, which is always based on peoples opinion of the value of something and whatever your opinion was when you entered into the legal contract that connects you to the contract of value is what you will receive in the end.  There is no difference between any asset, CFD or Spread Bet in the sense that you make a decision on what will happen to it when you sell it and you are legally bound to it.

Edited by dau710
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Guest Trader Martino

I`ve been trading FX on IG for over 10 years, never made a penny, don't get me wrong had good days weeks months and even profitable years, but over the period always lost and trust me i have tried everything.

The good news alongside this period I have invested in primarily US stocks and built a good quality high dividend yielding portfolio which has performed exceptionally well.

I have learnt a lot during this period so the money lost with IG in my opinion has not been wasted, it gives you great exposure to Financial Markets as a whole and you learn what not to do....

The Key Points I have learnt during this time is 90% of people out there talking about chart patterns trading courses and the like are full of **** who like all of us are correct some of the time but in the long run not profitable and are looking to make money from selling courses to trade and hopefully not lose it this time ha, or they are the talking suits on TV punting there own agenda TRADING OTHER PEOPLES MONEY!.

In my humble opinion once you get away from looking for short term price movements and take a long term investment view can you start making money.

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I`ve been trading FX on IG for over 10 years, never made a penny, don't get me wrong had good days weeks months and even profitable years, but over the period always lost and trust me i have tried everything.

The good news alongside this period I have invested in primarily US stocks and built a good quality high dividend yielding portfolio which has performed exceptionally well.

I have learnt a lot during this period so the money lost with IG in my opinion has not been wasted, it gives you great exposure to Financial Markets as a whole and you learn what not to do....

The Key Points I have learnt during this time is 90% of people out there talking about chart patterns trading courses and the like are full of **** who like all of us are correct some of the time but in the long run not profitable and are looking to make money from selling courses to trade and hopefully not lose it this time ha, or they are the talking suits on TV punting there own agenda TRADING OTHER PEOPLES MONEY!.

In my humble opinion once you get away from looking for short term price movements and take a long term investment view can you start making money.

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