Solid video, solid thread, just solid all around. Congratulations.

If you think this wasn't all luck, then you'd be crazy to stop trading. The only reason to stop trading would be because you think you're a fish on a heater.

My opinion: events for a while probably coincided with how you view things, how your brain works. And you probably got lucky on a few key pots. For example, there's a permabear who makes 20+ baggers when the market collapses, and slowly goes broke when it goes up consistently. Is he skilled? I dunno, but his returns are completely at the mercy of the market.

The same thing happens in poker. A very loose aggressive strategy can crush over a few thousand hands if you run into the right situations and opponents. And get crushed over the long run.

You *could* turn this into a $1K to $10K challenge. That seems to be meaningful money to you, you believe you have an edge, so why not? Place your bets where your beliefs lay, and see what happens.

I'm betting against you also. Just on a heater.

Take it up to at least $25K. $1000 is peanuts.

I would expect nothing less

In hindsight I agree. This was a pretty clear case of jumping the gun given that the "retracement" as I saw it on the hourly was a little more substantial than prior ones, therefore probably needed additional confirmation.

I really don't know how to respond to this. I'm not used to this kind of tone from you. Lol.

In nominal terms, sure, $1K is peanuts. But heater or not, this wasn't necessarily easy. Look at the equity curve I posted. It was hardly a straight shot up to $1000. As a trend trader, you'll go through serious drawdown when the market ranges or when perceived pullbacks become changes in trend. This happened on a number of occasions. And losing 7 or 8 trades in a row is enough to make most noobs go on tilt or just throw in the towel. I didn't.

I don't believe I have any real edge in regards to market analysis or trade execution. But compared to your average noob I feel I do have an edge in the psychological/emotional game. That's probably the driver that got me here to be honest.

This is because customers stop showing up, not because the house went on a doomsday downswing.

Awesome...

next 1k to 5k challenge....

I would advise you post 1 good 1 bad trade per day and your thinking, this will speed up your process tremendously....


This was bad due to let side having better momentum entry 4-5 bars earlier. If you can spot this. It means you are late, but more importantly you will pay a very high price as edge gets arbed away fast.


Everyone is routing for you.....go go go

Agreed. If I was going to take a long here, it needed to be at the first bullish candle after the consolidation at the 200 MA, or stay out altogether since the short-term trend on the 5min chart was bearish.

Thanks for the encouragement. I have indeed decided to keep going. I'll try to post some more winners and losers as I have time.

Awesome. You look like a man willing to put his balls on the table for what he believes.

I want to see you crash and burn ($1000 -> $100) or prove us all wrong.

Need a new challenge. $1K - $5K? $10K? $25K?

Prop bet?

Well, the first was a 10 bagger (to borrow your phrase). Why not make the next one the same? $1K to $10K

If it were to happen, it damn sure won't be in 3 months again. My current risk % per trade is half of what it was when I started this.

What do you have in mind?

buy put options on your PnL

So as a hypothetical example:

If a bettor takes a put option on my PnL at a strike price of $800 expiring in 2 months (just a wild guess), if I go on a big downswing and wind up at $500 at the expiration, I owe him $300.... if I continue on as I have and wind up at, say, $1,300 then the bettor owes me $500.

Something like that? Or am I way off here?

A rough look over your numbers makes it look like the standard error is somewhere around 35-40 which with a mean of 3.5ish and a sample of 250 puts your 95% confidence interval between -1.5 and 8.5. It looks promising. If you maintained this rate over a couple thousand trades I'd consider that pretty strong evidence but that's a pretty tall order.

And if you do get there, then you have the real million dollar question wrt to how far you can you scale it before your volume of trade impacts your margins.

This was something I was curious about. Is it possible that the smaller, retail trader can have an edge using momentum trading due to their nimble trade size? Whether or not it is profitable enough to be worth the time and effort is another story.

Statistics involve an assumption about underlying conditions. To give you an example, let some monkey flip a clown. If it's heads, the thesis is "USD/EUR will strengthen consistently for a month;buy any dip". If it's tails, the thesis is "USD/EUR will weaken consistently for a month; sell any spike up.

If global events happen such that USD has a few news events and a general market sentiment which strengthen it and buy all the dips over that month, you'll get a nice smooth upward graph, low variance, with huge return. Running naive statistics on it, you'd end up with the thesis that our coin tossing monkey is statistically likely to be a big winner at forex. You hit a (say) 1/6 event that fit your thesis/trade model, and got a 600% return, despite having no edge.

This is a simple example, but it's kind of how it works in practice. The variance and the edge is pretty hard to determine given various eddies and swirls and temporary currents in the market. It's impossible to know without a much larger sample if someone is reading those currents correctly, or if their view/model simply coincided with the way things were going for a while. It's nearly always the latter imo.
Volume/liquidity on forex is truly massive.

Pretty good take. I can't really argue with any of this.

Except for the fact that it's "EUR/USD" not "USD/EUR"

Regardless of which currency you were buying I'd be skeptical as to how strong the impact of the type of trend you're talking about would have over the course of several months with entries/exists that take place over the course of a few minutes. ie: If the US dollar appreciated/depreciated by a few cents over a year of trading and the cumulative time lingering between his buy/sells was several hours, it doesn't seem like it would have a significant impact on the value of his trades for the reason you mentioned. Especially not if a good chunk of his positions were for euros australian dollars etc.

There's lower reliability in the estimate than plugging the numbers would suggest. It's also very likely that the standard error of the sample is indicative of the overall stdv. But it's at least a ballpark idea of the kind of sample you'd need absent of any apparent structural issues. It shows that even in the most optimistic assessment of variability there's a decent chance he's a sizable loser.

" Volume/liquidity on forex is truly massive."

Out of curiosity how do you measure that?
Will a million in volume move something like one ten thousandth of a percent, or one ten millionth of a percent?

You'd be amazed. With EURUSD for example there been a large upward trend as the US dollar has weakened consistently over the period in which OP traded.



That upward bias - really driven by just a few big news events and general skepticism about the fed - meant that any kind of buy the dip would succeed. It meant that certain setups - playing a reversal on a breakdown, for example - would succeed strongly. Month-long sentiment can affect the results of 10 second trades. You see it often in equities as well. Counterinutitive maybe, but not really if you think about it or trade often. As an example from equities, if there's good economic data for example out that day, ticking up the market, you're going to get your ass handed to you trying to buy puts on breaking down stocks at the point where a breakdown signal come through. It WILL get bought up on the downtick in an uptrending market. The most severe downsides where you make your big money will be attenuated. Etc.. On the other hand, if the market is a bit shaky in general, you have pretty large positive expectation if you can pick the breakdown on an individual stock. Daily sentiment here has a huge effect on 20 second trades.

OP may be reading these trends correctly or he may have been lucky, having the market fit with his trading biases for a while. The statistics won't tell you.
You measure it by looking at the size offered at the bid/ask. It's millions. Several million dollars will not move the needle at all. $5 trillion dollars of forex is traded a per day. In comparison, in stocks, a few hundred billion is traded per day, often with larger range as well. Individual stocks are in the billions traded, not even that for many.

This is why it's so unlikely there are large edges in forex. It's the most liquid instrument you can trade, all market participants work off the same small set of information, and you can take unbelievable size without moving the needle at all.

TS is correct, that's why also bad timing can work if you are ding them within the correctly biased market.

The question isn't whether the effects exist, it's a matter of quantifying them relative to the margins he's trading at.

If you're not going to consider the relative scale of it's impact you could use that line of argumentation to dismiss any sample size no matter how little the currencies shifted.

250 instances of 2 minute exposure over a period of 6 months with a 5 cent appreciation is what, $0.0000005 of structural appreciation for the average exposure? What do you think is a more appropriate way to estimate the impact? We can go month by month too and look to see if he happened to take positions in the best possible scenarios. Or we can go day to day to measure the same. We're not dealing with a high degree of confidence though - these unknown variables are a big contributor to the randomness.

There's no formula, my bureaucratic, big picture model friend. Experience and looking at the results of others gives you an idea. They're far more valuable than doing mean and SD and confidence intervals on his sample, which is close to worthless at this stage.
Not really. There has been a tremendous and very straight bear run on USD right when he started, dropping it to multi year lows. Once he's traded a few different markets and market conditions (or stayed out of them, which is maybe even more valuable), we'll have a better idea.

You're not thinking about this properly. Like most things, there is no way to estimate it outside of experience. It is an unknown.

We know from looking similar data that 600% heaters over 300 trades are normal even for huge lifetime losers. We know they are fairly common.

Also, his average trade duration is 6 hours, not two minutes. He appears to take positions with a stop and let them run otherwise. Which is death in a flat or volatile market, solid gold in low volatility directional one. His profits are all USD pairs, and most (I haven't looked at all the data) seem to be shorting the USD. His delta pick is exactly at chance at 49.5%, so there's no demonstrated delta edge. Is he finding setups where his risk/reward is excellent, or is he getting lucky in a market that suited his trading bias? Impossible to say or even estimate.

And again, your model is just failing here. Read again what I wrote about options on breakdowns in an up-ticking market. Your hilarious (fraction of time)/(total time)*appreciation formula just doesn't capture the choke points that traders trade where these effects are vastly magnified.
The way to analyze this would be to look at his reasoning when he takes his trades, like jb says. A dumb "reversal setup with 30% stop" is going to get killed in a normal market and crush in a prolonged directional run driven by news events. Most markets, most of the time, are the former and not the latter.

Most worrying of all in his stats are the commissions. I hope this is a mistake. If not he's drawing stone dead in the long run and needs to walk away or find a far cheaper broker:



You can't be paying pay 33% (or 50%, not sure how the commission is accounted for) of 700% profit. Because your long term expectation in forex is way below 33% of 700%.

That's the question. How worthless is the data itself without imputing our apriori knowledge that no one and certainly no one with such little experience wins at anything close to the rate of his sample. That I agree with.

For any given trade he's as likely to have hit a stretch where the USD is over-performing (relative to the rolling avg) as he is where it's under-performing. Why would the randomness not be reflected in the standard error of the sample?

FWIW 6 hour exposure vs 2 minutes pushes the decimal places over a couple places, which probably does get it closer to the point of having a significant impact on his results.

My average winning trade duration, maybe. Certainly not my losing trade duration as I place relatively tight stops (usually within 10-20 ticks). So my true average trade duration is certainly lower than that.

All true.

The commission is accounted based on your lot sizing. For 1 standard lot on EUR/USD, it's about $7 round-turn, which is pretty standard for an ECN broker that links you straight to the interbank market and doesn't quote their own FX prices (market makers, which are the inescapable death of any retail trader no matter how good or lucky they are). I currently trade anywhere from 0.2 - 0.4 lots at the moment, depending on how much room I think my stop needs. So it works out to being somewhere around $1.40 - $2.80 per trade.

My average trade in gross is $5.28. Average commission is $1.57. So just under 30% which is about what my work income gets taxed at. I try to think of it in those terms

A better trader than me would have a lower percentage by trading less in terms of number of trades, while still returning the same.

If you're paying 400% commission for a 1000% (1400%?) return, and you pay the same commission when you lose, you are trading a market which is not even close to beatable.

Would be nice to hear some other opinions, but to me this look like 100% certainty of drawing dead in the long run.

Your average trade gross while returning 1000% in 200 trades.

Your average trade gross while running normally even with extreme skill/the best trader in the world is maybe 50%/200 trades.

Thus your average trade gross is roughly 25c in the long run under absolutely optimal conditions (I assume the commission scales as you scale up size?) and your average commission is $1.57. Hence why you are drawing dead in the long run.

Let me know if anything I said is wrong. if it isn't, you have no chance and should take the $1000 and run.

Maybe, but how large do you think your expected return is per trade? Is it greater than 30%? That would be unheard of. And that would be breakeven. It might seem possible when you're running like God, but throw in a downswing or two and life gets very unfair very fast.

I wouldn't mind hearing some more opinions as well, especially as to how these commissions compare to trading other instruments.