I started forex trading a month ago and profits are like very high, I went from 120$ to 2500$! And I am finding it quite easy actually.. People everywhere are saying 90% traders fail etc etc so what am I doing wrong here? I trade at 1:1000 leverage, can anyone guide me on this? Thanks
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41:1000 leverage? Wow, you have an immense tolerance for risk. You are aware you are risking more than just your investment, right?– ChrisInEdmontonCommented Aug 19, 2017 at 13:47
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3One black swan event and he's toast.– JTP - Apologise to Monica ♦Commented Aug 19, 2017 at 16:29
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I put a stop loss at 100 pips, and so far 80-85% times I have made profits, so how am I risking it all kindly enlighten me I am a newbie I agree– Ali AsheerCommented Aug 19, 2017 at 17:53
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6"I started forex trading a month ago" - give it time and you'll learn, probably the hard way.– Joe StrazzereCommented Aug 19, 2017 at 22:39
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4Stop losses are no guarantee of anything, one flash crash (look up the pound crash last year) and you are destroyed. I'm also curious what broker is letting someone entirely new to trading take on 1:1000 leverage– Koen vd HCommented Aug 20, 2017 at 8:53
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2 Answers
Think about it like this:
Assume 1,500 people go to a casino to play roulette. They all put their money on a single number, with 1/38 odds. On average, 39 of those people will win, giving them a payout of 36x. Then, all of those people put their money down again. On average, about 1 of those people will win again, giving them a new payout of 36x [for a total payout of 1,296x their initial investment].
Which of those people is most likely to post about their gambling results? The person who won. This is called 'survivorship bias'. It means that we are more likely to hear from people who 'survived', even though most people who played actually lost.
So in this case, you might be considered a 'survivor' of 2 months of fx trading. You seem to be invincible, and can never lose - what were all those people warning you about?! Well really, you have just defied the odds. Don't let your success blind you to the risk that was taken in that success.
answered Aug 21, 2017 at 13:46
There are a few issues at play here. In the stock market, there are gains to be had over the long term. In other words, the system is not "zero sum." Forex is the buying or selling of exchange contracts pitting the value of one currency against another. For sake of discussion, let's ignore commissions. That make this zero sum. In other words, the money you make is not based on widget sales at Acme Corp, but just the misfortune of the guy on the other side of the trade. No judgement here, just facts. I clipped this years ago -
The top broker IB, brags that 46.5% of current accounts are profitable. This number contain the trail of survivor bias. i.e. traders that have lost all their money are likely to have closed their accounts. Over the long term, the average forex trader has no trading gain or loss, save for the commission. It's no more complicated than that.
answered Aug 19, 2017 at 12:55
JTP - Apologise to Monica♦JTP - Apologise to Monica
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Thanks for answering, I understand what you're saying but my brokers are fbs and fxcm and they are an stp broker hence my profits doesn't result in their losses. Commented Aug 19, 2017 at 17:57
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5You don't understand my answer. The losses are for the other trader, the one who took the opposite position than you. Commented Aug 19, 2017 at 17:59
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Have you being fx trading for a long time? If so what do you recommend I should do, the reason I am here is because I know I maybe getting lucky too Commented Aug 19, 2017 at 18:05
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9I haven't traded Forex in over 30 years. It's not an investment, it's a gamble. My gambling is confined to stock options. Commented Aug 19, 2017 at 18:08
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1The relevant press release: Interactive Brokers Leads Industry in Percentage of Profitable Customer Forex Accounts– FluxCommented Apr 18, 2021 at 15:34