Forex Trading

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Learning101
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Forex Trading

Post by Learning101 »

Dear all,

I have posted in the wrong place by mistake in the past but I hope I have found the correct section.

This question is nothing to do with passive investments in face quiet the opposite, however, I have noticed that their are some investment savvy people on this site that have always given good advice, therefore I hope that it is suitable for to ask the following.

Recently I attend a free Forex trading seminar here in the UK and I although I do not believe in quick get rich schemes (not saying they they portrayed it in this way) it did capture my interest and I found it fascinating to learn about.

Sadly, they have pretty poor reviews which has turned me off but I think it would be un-ethical to mention company names.

Having said all the above it has captured my interest even from just a learning point of view.

As I say I do not believe in get rich quick, hence why I like Jack Bogles books so much, at the same time can anyone advise / point me in the right direction regarding Forex Trading?

Any advise / comments much appreciated!

Mark
Jags4186
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Re: Forex Trading

Post by Jags4186 »

Loser’s game. Good luck.
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Cyclesafe
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Re: Forex Trading

Post by Cyclesafe »

No offense, seriously. There's smart money and dumb money.

A partial forex play is non-hedged foreign investments.
"Plans are useless; planning is indispensable.” (Dwight Eisenhower) | "Man plans, God laughs" (Yiddish proverb)
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TomatoTomahto
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Re: Forex Trading

Post by TomatoTomahto »

How many supercomputers have you got? How many mathematicians? A mug’s game unless the answer to the questions is at least 1 and 1.
I get the FI part but not the RE part of FIRE.
runner3081
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Re: Forex Trading

Post by runner3081 »

I did this with some play money for a year or so. Made low 4 figures. It was fun hobby when I worked from home. Now that I am in the office, no time for it.
Shallowpockets
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Re: Forex Trading

Post by Shallowpockets »

Learning101 wrote: Sat Jul 20, 2019 9:10 am
Sadly, they have pretty poor reviews which has turned me off but I think it would be un-ethical to mention company names.

It seems to me it would be unethical to NOT mention the company name. You are turned off by it, per your research. What's with that? Why even post this thread?
LeftCoast
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Re: Forex Trading

Post by LeftCoast »

I provided professional services to a major FX dealer for over 20 years. It was common knowledge that non-professional FX traders rarely make money. I knew of one FX dealer that specialized in servicing retail FX traders. That dealer was constantly struggling to recruit new retail clients, as about 80% of new clients quit trading within 6 months, having lost their capital. Even professional traders, backed by state-of-the-art computers, struggle to earn consistent profits.
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whodidntante
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Re: Forex Trading

Post by whodidntante »

I am not a trader, but I have a keen interest in financial markets, so I'm aware of some of the trading systems people have used. I would classify these like so:

1) price action based. This would be trend following, chartists (e.g. RSI, floor/ceiling, chart patterns, etc.), or any of the weird systems that people come up with that worked well in a backtest. For example, you might determine that if the dollar is down versus the Euro for 3 days in a row, then it was 58% likely to be up on the 4th day, so you short the euro on the 4th day to the tune of a million dollars using futures contracts.
2) macro based. You develop a view that a certain currency pair is likely to trend up (or down) over a certain time frame based on well, whatever you base it on. Then you take a position to express your view. Soros and Dalio do this.
3) market manipulation. A non-starter for most people, but Soros did it successfully.
4) quant based. You formalize your views into a model, you refresh your inputs to the model periodically, and you do what the model tells you to do. Systematic and quantitative are the key words. This might overlap with #1 but can also take inputs other than price.
5) anomaly based. You discover a temporary mispricing, which you can exploit relatively risk free by hedging.
6) event driven. The Fed/ECB/BoJ will/will not do X, so you take a position to profit from it.

I think most traders are in camp #1. You've walked up to a Vanguard cult and asked about forex trading so I think your odds aren't great. If you're serious, I suggest you do some reading, and plenty of it. Some introductory books would be "Options, Futures, and Other Derivatives" by John Hull, "The New Market Wizards" by Jack Schwager, "Trend Following" by Michael Covel, and "The Quants" by Scott Patterson.
Topic Author
Learning101
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Re: Forex Trading

Post by Learning101 »

Jags4186 wrote: Sat Jul 20, 2019 9:11 am Loser’s game. Good luck.
Thank you for the response
Topic Author
Learning101
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Re: Forex Trading

Post by Learning101 »

Cyclesafe wrote: Sat Jul 20, 2019 9:14 am No offense, seriously. There's smart money and dumb money.

A partial forex play is non-hedged foreign investments.
Thank you for taking the time to respond
Topic Author
Learning101
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Re: Forex Trading

Post by Learning101 »

TomatoTomahto wrote: Sat Jul 20, 2019 9:16 am How many supercomputers have you got? How many mathematicians? A mug’s game unless the answer to the questions is at least 1 and 1.
Many thanks
Topic Author
Learning101
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Re: Forex Trading

Post by Learning101 »

runner3081 wrote: Sat Jul 20, 2019 9:42 am I did this with some play money for a year or so. Made low 4 figures. It was fun hobby when I worked from home. Now that I am in the office, no time for it.
Thank you
Topic Author
Learning101
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Re: Forex Trading

Post by Learning101 »

Shallowpockets wrote: Sat Jul 20, 2019 9:47 am
Learning101 wrote: Sat Jul 20, 2019 9:10 am
Sadly, they have pretty poor reviews which has turned me off but I think it would be un-ethical to mention company names.

It seems to me it would be unethical to NOT mention the company name. You are turned off by it, per your research. What's with that? Why even post this thread?
The reason I posted this thread was just to get some guidance from people, well smarter than me and I am sure their are many on here.

Thank you for your response
Topic Author
Learning101
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Re: Forex Trading

Post by Learning101 »

LeftCoast wrote: Sat Jul 20, 2019 10:45 am I provided professional services to a major FX dealer for over 20 years. It was common knowledge that non-professional FX traders rarely make money. I knew of one FX dealer that specialized in servicing retail FX traders. That dealer was constantly struggling to recruit new retail clients, as about 80% of new clients quit trading within 6 months, having lost their capital. Even professional traders, backed by state-of-the-art computers, struggle to earn consistent profits.
Many thanks for this post.
Topic Author
Learning101
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Re: Forex Trading

Post by Learning101 »

whodidntante wrote: Sat Jul 20, 2019 10:47 am I am not a trader, but I have a keen interest in financial markets, so I'm aware of some of the trading systems people have used. I would classify these like so:

1) price action based. This would be trend following, chartists (e.g. RSI, floor/ceiling, chart patterns, etc.), or any of the weird systems that people come up with that worked well in a backtest. For example, you might determine that if the dollar is down versus the Euro for 3 days in a row, then it was 58% likely to be up on the 4th day, so you short the euro on the 4th day to the tune of a million dollars using futures contracts.
2) macro based. You develop a view that a certain currency pair is likely to trend up (or down) over a certain time frame based on well, whatever you base it on. Then you take a position to express your view. Soros and Dalio do this.
3) market manipulation. A non-starter for most people, but Soros did it successfully.
4) quant based. You formalize your views into a model, you refresh your inputs to the model periodically, and you do what the model tells you to do. Systematic and quantitative are the key words. This might overlap with #1 but can also take inputs other than price.
5) anomaly based. You discover a temporary mispricing, which you can exploit relatively risk free by hedging.
6) event driven. The Fed/ECB/BoJ will/will not do X, so you take a position to profit from it.

I think most traders are in camp #1. You've walked up to a Vanguard cult and asked about forex trading so I think your odds aren't great. If you're serious, I suggest you do some reading, and plenty of it. Some introductory books would be "Options, Futures, and Other Derivatives" by John Hull, "The New Market Wizards" by Jack Schwager, "Trend Following" by Michael Covel, and "The Quants" by Scott Patterson.
Hi,

Thank you for this which is very helpful, interestingly I also have a huge interest in the finance / investment / economy etc which is why I joined this site in the first place. I did not expect my odds to be good or that people are in favour of Forex on here, however, something I have learnt along the way in life is that if you do not know anyone in the know about a particular subject or field then go and find the closet person or people that might be able to tell you something and hopefully happy to help hence the question on this forum.

Thanks again

Mark
Valuethinker
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Re: Forex Trading

Post by Valuethinker »

Learning101 wrote: Sun Jul 21, 2019 5:37 am
whodidntante wrote: Sat Jul 20, 2019 10:47 am I am not a trader, but I have a keen interest in financial markets, so I'm aware of some of the trading systems people have used. I would classify these like so:

1) price action based. This would be trend following, chartists (e.g. RSI, floor/ceiling, chart patterns, etc.), or any of the weird systems that people come up with that worked well in a backtest. For example, you might determine that if the dollar is down versus the Euro for 3 days in a row, then it was 58% likely to be up on the 4th day, so you short the euro on the 4th day to the tune of a million dollars using futures contracts.
2) macro based. You develop a view that a certain currency pair is likely to trend up (or down) over a certain time frame based on well, whatever you base it on. Then you take a position to express your view. Soros and Dalio do this.
3) market manipulation. A non-starter for most people, but Soros did it successfully.
4) quant based. You formalize your views into a model, you refresh your inputs to the model periodically, and you do what the model tells you to do. Systematic and quantitative are the key words. This might overlap with #1 but can also take inputs other than price.
5) anomaly based. You discover a temporary mispricing, which you can exploit relatively risk free by hedging.
6) event driven. The Fed/ECB/BoJ will/will not do X, so you take a position to profit from it.

I think most traders are in camp #1. You've walked up to a Vanguard cult and asked about forex trading so I think your odds aren't great. If you're serious, I suggest you do some reading, and plenty of it. Some introductory books would be "Options, Futures, and Other Derivatives" by John Hull, "The New Market Wizards" by Jack Schwager, "Trend Following" by Michael Covel, and "The Quants" by Scott Patterson.
Hi,

Thank you for this which is very helpful, interestingly I also have a huge interest in the finance / investment / economy etc which is why I joined this site in the first place. I did not expect my odds to be good or that people are in favour of Forex on here, however, something I have learnt along the way in life is that if you do not know anyone in the know about a particular subject or field then go and find the closet person or people that might be able to tell you something and hopefully happy to help hence the question on this forum.

Thanks again

Mark
I have a relative who list over 1 million pounds this way.

The reason these companies have to recruit new customers all the time is their existing customers often go broke.
cheezit
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Re: Forex Trading

Post by cheezit »

One place to start in sussing out the unknown unknowns would be the half-dozen publications from the CFTC warning investors about different aspects of the forex market. The CFTC has very limited power to regulate forex for the same reasons that nobody else can really do so, but they are at least able to put out signs that say "Achtung, Minen!" in a few choice locations.
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JoMoney
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Re: Forex Trading

Post by JoMoney »

Trading is a zero sum game. The aggregate return of traders is zero, the shifting back and forth generates nothing in aggregate... worse it has fees/spread costs that have to be overcome, starting the trader with a negative expectation at every trade. The more trading going on, the more fees generated to brokers and market-makers, the more losses in aggregate.
On top of that, forex brokers will typically offer absurd amounts of leverage so that trading very slight fractional changes can make big movements... exhilarating for the gambler... but certain to be very risky. There is a concept called "gamblers ruin" that highlights poor money management and the tendency people have to risk too much (make too large of bets) relative to their bankroll. Even if the gambler had a positive expectation (which they don't) they will frequently go bust because the bets they are making is too large and a a bad run (that is statistically certain to happen eventually) will wipe them out. The absurd leverage is the cause of the quick failures of many retail forex traders, even more so than the fees/market spread costs.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Topic Author
Learning101
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Re: Forex Trading

Post by Learning101 »

Valuethinker wrote: Sun Jul 21, 2019 8:01 am
Learning101 wrote: Sun Jul 21, 2019 5:37 am
whodidntante wrote: Sat Jul 20, 2019 10:47 am I am not a trader, but I have a keen interest in financial markets, so I'm aware of some of the trading systems people have used. I would classify these like so:

1) price action based. This would be trend following, chartists (e.g. RSI, floor/ceiling, chart patterns, etc.), or any of the weird systems that people come up with that worked well in a backtest. For example, you might determine that if the dollar is down versus the Euro for 3 days in a row, then it was 58% likely to be up on the 4th day, so you short the euro on the 4th day to the tune of a million dollars using futures contracts.
2) macro based. You develop a view that a certain currency pair is likely to trend up (or down) over a certain time frame based on well, whatever you base it on. Then you take a position to express your view. Soros and Dalio do this.
3) market manipulation. A non-starter for most people, but Soros did it successfully.
4) quant based. You formalize your views into a model, you refresh your inputs to the model periodically, and you do what the model tells you to do. Systematic and quantitative are the key words. This might overlap with #1 but can also take inputs other than price.
5) anomaly based. You discover a temporary mispricing, which you can exploit relatively risk free by hedging.
6) event driven. The Fed/ECB/BoJ will/will not do X, so you take a position to profit from it.

I think most traders are in camp #1. You've walked up to a Vanguard cult and asked about forex trading so I think your odds aren't great. If you're serious, I suggest you do some reading, and plenty of it. Some introductory books would be "Options, Futures, and Other Derivatives" by John Hull, "The New Market Wizards" by Jack Schwager, "Trend Following" by Michael Covel, and "The Quants" by Scott Patterson.
Hi,

Thank you for this which is very helpful, interestingly I also have a huge interest in the finance / investment / economy etc which is why I joined this site in the first place. I did not expect my odds to be good or that people are in favour of Forex on here, however, something I have learnt along the way in life is that if you do not know anyone in the know about a particular subject or field then go and find the closet person or people that might be able to tell you something and hopefully happy to help hence the question on this forum.

Thanks again

Mark
I have a relative who list over 1 million pounds this way.

The reason these companies have to recruit new customers all the time is their existing customers often go broke.
I certainly do not have that sort of capital to lose.

Thank you for the response.

Mark
Topic Author
Learning101
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Re: Forex Trading

Post by Learning101 »

cheezit wrote: Mon Jul 22, 2019 8:07 am One place to start in sussing out the unknown unknowns would be the half-dozen publications from the CFTC warning investors about different aspects of the forex market. The CFTC has very limited power to regulate forex for the same reasons that nobody else can really do so, but they are at least able to put out signs that say "Achtung, Minen!" in a few choice locations.
Many thanks

Mark
Topic Author
Learning101
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Re: Forex Trading

Post by Learning101 »

JoMoney wrote: Mon Jul 22, 2019 8:39 am Trading is a zero sum game. The aggregate return of traders is zero, the shifting back and forth generates nothing in aggregate... worse it has fees/spread costs that have to be overcome, starting the trader with a negative expectation at every trade. The more trading going on, the more fees generated to brokers and market-makers, the more losses in aggregate.
On top of that, forex brokers will typically offer absurd amounts of leverage so that trading very slight fractional changes can make big movements... exhilarating for the gambler... but certain to be very risky. There is a concept called "gamblers ruin" that highlights poor money management and the tendency people have to risk too much (make too large of bets) relative to their bankroll. Even if the gambler had a positive expectation (which they don't) they will frequently go bust because the bets they are making is too large and a a bad run (that is statistically certain to happen eventually) will wipe them out. The absurd leverage is the cause of the quick failures of many retail forex traders, even more so than the fees/market spread costs.
Thank you for this which is very helpful and informative. As mentioned in one of of my earlier posts and I have a passion for learning within the field of finance / investment etc so even if I do pursue this it is more of a passion for learning than anything else. It is interesting how we define risk as I am sure you lose money if you do down the pub or a bar. I have friends who are heavily into cycling, all of them have been seriously injured and still cycle. As I say it is interesting how we all define risk.

Mark.

P.S love the quote by the way and I have read his book but admittedly found it hard going
DippityDoo
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Re: Forex Trading

Post by DippityDoo »

Learning101,

I have some experience with forex. If you decide to go ahead, please open a DEMO account and test your skills with fake money. And do that for at least a year before you plunk down any cash of your own. Run like the wind from any broker or exchange that wants cash without a chance to demo the platform first! If you try your hand trading a demo account, you will soon learn that trading is more than anticipating price movement. You will discover that trading is also about development of self-discipline. For example, you will have to learn to control emotions such as greed and fear of missing out. You'll need patience to wait for the best trade, which may take hours or days. You'll need restraint to accept losses and resist the urge to revenge trade in hopes of getting back your money. If you can master all that, you still need at least one solid trading strategy that works within your risk-to-reward criteria and the times of day you're free to trade.

There are all kinds of people out there selling strategies, trading systems, indicators and signal services pretending they can help you make money. Please don't fall for the marketing glitz! If those people really had the secret to making a fortune, they'd be out living the high life instead of peddling crap to newbies. If you're curious and want to learn about forex, I suggest you read a few books. I would NEVER recommend forex to a newbie trader.

Best wishes (and sorry if I rained on your parade)
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Learning101
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Re: Forex Trading

Post by Learning101 »

Hi,

Thank you for this and you have certainly not rained on my parade at all.

I would never risk anything until I was fully comfortable with the basics to begin with.

Thanks again

Mark
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Re: Forex Trading

Post by abuss368 »

Speculation. Don’t walk, run!
John C. Bogle: “Simplicity is the master key to financial success."
columbia
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Re: Forex Trading

Post by columbia »

My sense is that one would have a better shot at gambling on football - and that’s not easy.
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JoMoney
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Re: Forex Trading

Post by JoMoney »

columbia wrote: Sat Sep 28, 2019 6:47 am My sense is that one would have a better shot at gambling on football - and that’s not easy.
Depending on how much leverage is used, and how much of a move a forex trader is looking for, the bid/ask spread can represent a larger negative expectation than a lot of casino games.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
grndcomm
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Re: Forex Trading

Post by grndcomm »

Although I have had losing days, they are rare. I tried forex trading with a small account ($1000) and lost. After a year of struggles with forex I learned about EA's. I have one that now produces a small profit daily (Mon-Fri). I boosted my account balance to $15,000 to do the trading and am happy with the returns. Self control is important as it is sometimes tempting to adjust the EA for higher profits and that can/maybe lead to losing a lot of money. I am very conservative being happy with an average return of $15 a day (average of $3900 per year or 26% annual return).
Last edited by grndcomm on Sat Oct 26, 2019 10:11 am, edited 1 time in total.
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Re: Forex Trading

Post by z3r0c00l »

If it is such a good business, why does this company need your money? Why would they even tell you about it? Their business is trying to get your money through fees and who knows what else, forex fortunes are just the fantasy they are selling you. It could just as easily have been weight loss, a tropical vacation, house flipping, etc. And at least for those three, you would have something tangible to show for it.
70% Global Stocks / 30% Bonds
X528
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Re: Forex Trading

Post by X528 »

grndcomm wrote: Sat Oct 26, 2019 8:49 am Although I have had losing days, they are rare. I tried forex trading with a small account ($1000) and lost. After a year of struggles with forex I learned about EA's. I have one that now produces a small profit daily (Mon-Fri). I boosted my account balance to $15,000 to do the trading and am happy with the returns. Self control is important as it is sometimes tempting to adjust the EA for higher profits and that can/maybe lead to losing a lot of money. I am very conservative being happy with a return of $15 a day (average of $3900 per year or 26% annual return).
What is an EA?
grndcomm
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Re: Forex Trading

Post by grndcomm »

Expert Advisor. Software put in MT4 account for automatic trading.
http://www.investorwords.com/7635/forex_EA.html
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arcticpineapplecorp.
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Re: Forex Trading

Post by arcticpineapplecorp. »

every morning when I listen to the marketplace morning report on the way to work there's an ad for Forex Trading which ends with "Forex. It's your world. Trade It. Forex trading involves significant risk of loss."

After the ad runs, I always say to myself, "That sounds like fun."

From their website:
Risk Warning: Trading Forex and Leveraged Financial Instruments involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. It is the responsibility of the Client to ascertain whether he/she is permitted to use the services of the FXTM brand based on the legal requirements in his/her country of residence. Please read FXTM’s full Risk Disclosure.

source: https://www.forextime.com/education/for ... -beginners
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
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JoMoney
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Re: Forex Trading

Post by JoMoney »

Aside from maybe some potential advantage/return on interest rate carry (and that's only a MAYBE), there is no expected return from simply holding a foreign currency. Trying to profit from forex is purely a trading game. You have to out-trade the other participants in a game that is zero sum minus expenses, and the expenses are built into spreads at every transaction. The more you trade, the bigger the disadvantage (from expenses) you have to overcome.
While I won't rule out the possibility of some traders having information that gives them an advantage, obviously the middle-men transacting for others do (some of which literally take the opposing side of their customers trades), it's highly unlikely a retail trader has any informational advantage over the institutions moving the bulk of the money. As far as I can tell, most retail traders are simply gambling with variations on a martingale scheme, risking potentially large sums to pick up pennies in front of a steamroller.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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