This delusion globally entails
identical aftermaths: 90-95% of traders turn steady to loose their deposits
having studied books by Bill Williams, Alexander Elder, Thomas Demark, J.
Schwager, et al.
Following the burn down of
their first deposit trader's plunge themselves again into scrutinizing Forex
scholars, in this manner suffering losses of the second, the third and
subsequent deposit. I will hereinafter try to elucidate where from the above
regularity grows, so that no trader repeats his forerunners' mistakes.
This statistics is common
knowledge: 90% of traders constitute Forex losers... But the figure has always
been giving rise to a leviathan of my doubts. It isn't because of somewhat
different 95%-5% loser-to-winner ratio quoted in the Van Tarp and Brian June
"Intraday trading: secrets of mastership". With 90% quoted
universally, there naturally emerges the question, as to whether there is
someone capable to check, to specify or to disprove the above figure.
NO ONE IS, besides the directors of largest Western banks providing streamline
Forex quotes, but having never raised the issue.
WHY? Because should this
statistics be published, there will be sharp and ultimate decline in number of
those chasing easy profits from the world Forex market. Otherwise banks would
not keep mum in advertising purposes. Neither would they be silent if losers
constituted at least by few points less than 90%. In any advertising, customer
attraction is ensured by quoting beneficial maxima and non-lucrative minima.
This has always been, is being and will always be a universal practice.
As a conclusion, 10% Forex
winners is a maximum result among traders. It's them, who have understood Forex
market absolutely simple truisms and who attained steady daily earnings in
amounts being gained by others within years or even the whole of life.
Certainly, those are to be recollected, who in late 80s were the first in the
ex-USSR to grasp laws of commerce and who began accumulating their initial
stock. The rules used to be so simple that presently any schoolboy or a
first-year student can show the way the capital might have been easily scraped
up and augmented on the USSR debris and in the course of market relations being
established in the post-Soviet space.
I do exactly allow for the fact
that through the years a new generation will be laughing at the way we are now
incapable to comprehend the laws, where under currency rates either spike up or
fall down, all of a sudden.
With this provision, those
seeking fast money at Forex have a much greater time limit than the ones
engaged in capital building in the post-Soviet space (Forex market is
incommensurably greater than that in the ex-USSR), but not to the extent
thought by many.
By now trends are thoroughly
less numerous than they used to be 10-20 years ago. By way of taking a glance
the charts history You are in the position to understand the way traders used
to earn under 20- 40 pts spread, commission and slippage. A trend was followed
by a trend at that epoch.
AND WHAT'S NOW? Nowadays many
of traders are impotent to gain under 3 pts spread without commission and
slippage.
Thus, this book is intended for
those willing to perceive Forex market laws.
In order to get understanding of the way 5-10% of successful traders obtain
profits, let's at the outset analyze the reasons and the way the outstanding
90% of traders suffer losses. The 90%-figure looks scaring, to say nothing of
95% or 98%. It occurs despite the amount of literature on the issue equals to
hundreds of fundamental books, written by authors, having gained capitals
expressed by means of more than 7-digit figures (G. Soros, B. Williams, A.
Elder, T. Demark).
Thus, the above minimum of 90%
of smart, well-read, broad-knowledged people:
- scrutinize the really great
traders' heritage;
- open accounts with Forex
Broker's and banks, start trading and...
- loose funds up to complete
rout!
AND WHERE'S THE LOGIC? The
answer springs to mind by itself... There's something wrong in the literature
(by the way, recognized throughout the world, where the deposit-killing
statistics is as disappointing as it is in our country) so long as its studying
yields such oppressive results.
STRANGE? No, rather natural,
than strange on account of the following:
1. Being a great trader is not
indicative of everyone being a great teacher.
2. Multitude of rules
elaborated by scholars 10-40 years ago, has grown obsolete, since the Forex
market is changing.
3. The scholars HAVE NOT
revealed ALL the secrets even WITHIN THE FRAMEWORK OF THE THEN
FOREX, therefore by now their
advice and recommendation turn out either obsolete or naïve.
Thus, once one's advice and
recommendations bring every 9 of 10 market participants to loose their money in
each country, where one's books have used to be published and have enjoyed all
sorts of hosanna in the press, THEN ONE IS NONE OF A TEACHER.
Naturally, no trader will
reveal his professional secrets to the full. But when studying Forex literature
one gets astonished by a negligible extent the above secrets are
"confided" at all, with a book on Forex containing 99% of common
truth and 1% only of useful novelties. But should one train up even several
thousands perspective traders, one will in no way burden oneself with
competitors, due to the Forex market huge sale nature. Beyond a shadow of a
doubt the above traders are really great. You may agree or not, but anyone,
having earned USD1 bn or more, deserves being named "great". So, one's
books should be published as memoirs. I am not attaching any irony hereto,
since these persons have acquired gains by virtue of their minds and labor, as
opposite to Rockfellers, who inherited their fortunes or to Russian oligarchs,
who either stole or got their capitals dirt-cheap from state authorities.
Hopefully, understandable is
the difference between such editions and manuals for beginners.
G. Kasparov, say, is far from
writing manuals for chess beginners, since the job can be better completed by others
with this fact not at all undermining Kasparov's being a great chess player.
And his advice and recommendation is sure to be of interest rather to a close
circle of grand masters, than to those having touched the chess for the first
time.
Actually Kasparov is but to be
respected for not being tempted by the lust for fast money, by virtue of his
name in the chess world and by way of cooking up manuals for beginners.
At Forex, by contrast, and for
some reason, everyone deems oneself a teacher, which fact results in millions
educated people worldwide leaving stock market being disappointed, angry with
an inferiority complex life-time pursuit.
And hence, the unanswered
question for them: is that all a fraud or not, since gains are midget, whereas
losses are titanic?
I am recalling the book titled
"The Alchemy of Finance" by G. Soros (the one I've read in early
90-s). I admit, it's interesting, instructive..., but it is all narrated in so
an inarticulate and tangled manner. As indicated in the foreword by an American
investor, the theory has hardly been understood by few only.
So what's the use of writing in
such a manner? A theory may generally be complicated to any extent, BUT IT MUST
BE wrapped in a simple, clear and understandable wording.
You are welcome to attempt to read the above book once You have time to.
Shortly, the Soros reflexivity theory of the countries' cyclic development may
easily bear a couple-sentence confinement:
1. Following liberation from
totalitarian yoke, a country is granted credits, then, there is a rapid growth
and flourish of economy.
2. As soon as the above credits
are to be paid back, a country's economy faces a natural recession.
Is it as difficult? The
question may be addressed to a schoolboy (to say nothing of an American investor):
when should those countries' companies' shares be purchased and when they are
to be advantageously sold in order to acquire maximum profit? What's going to
happen in case one is too late to sell the shares, shortly exhibiting an
impetuous growth in price?
Propounded long before, the
Soros theory has been entirely corroborated in August, 98 by the dismal
practice established in Asian and Pacific countries and later in Russia.
There still is another
question: how inarticulate should Soros have been to enable his theory to be
grasped by few only?
The second part of the book is
not worth retelling. Reading its original is sure to be much more instructive
with my annotation leaving no conundrums therein.
The theory is permeated by
Soros's strategy: enter long on what's shortly going to enjoy price growth with
a 100% probability and "pull out" Your money along with profits
before the companies enter crisis, thus facilitating bankruptcies thereof.
This is the way I clearly lecture my students on Forex-related complexities,
thus conveying my logics to them. Despite its own complexities (news, TA,
corrective actions, etc.), Forex is essentially reduced to a very simple truth:
at a certain moment one should not be late with going long or short on a currency
with "tertium non datum".
And when asked if the Williams
Alligator needs something to be added thereto, the majority of my students
reply "Yes!", indicating what exactly is to be added.
I'll present a detailed vivisection of the issue in a separate chapter by way
of proving that the Williams Alligator is but 50% effective.
Fig. 4. H1 EUR chart as of
April 12, 2005. (See Note below)
The Alligator's jaws display
upward opening with a fractal formed at 1.3006. According to Williams, one
should enter long one point higher, i.e. at 1.3007. Upward motion continues
extra 11 points. Then the rate sharply swivels to fall down by 170 pts.
Another example.
Fig. 5. H1 EUR chart as of
April 22, 2005. (See Note below)
Please, figure out 1.3094, 16
pts above the previous fractal, following the Alligator upward opening.
Thereafter, a sharp down swivel covering 140 pts.
Hundreds of similar examples may be drawn. But what are the implications?
With the Alligator's mouth
opened, 50% of entries should be pro-Williams while the outstanding 50% -
counter-Williams (i.e. vectored opposite to the Alligator mouth opening). When
embarking on Forex, You must possess clear knowledge of the difference between
either of the above 50%-portions. Otherwise..., You are doomed to loose even if
You follow Williams's technique, let alone other ones.
Even my students are in the
position to advise what is to be added to Alligator in order to realize proper
entry vectoring. Least of all would I want this example to be taken as a
personal criticism of Bill Williams, whose contribution to the Forex theory is
a significant one. And the majority of traders, like me, used to begin earning
after studying HIS books. But not to go astray..., even without any addenda
Williams managed to make a tremendous fortune, since a skilled trader (moreover
being the Alligator's father) is capable to differentiate between a steady
travel and a pullback, or, say, a flat, or, visa versa, a trend low for the
entry to be vectored oppositely. It is all fairly understandable for an
experienced trader. But what about beginners as regards their interpretation of
a flat, a recovery or a trend change?
These folks are sure to require
assistance, especially, in information not presented in literature on Forex.
Without this knowledge a trader
will never perceive the ABCs of stable daily earnings. But why the Forex
scholars do not clear out the issue? This query is to be addressed to them, not
to me. While reading these opuses, I am getting horrified at the fact that we
are being foisted expensive high-sounding titled books, which are not going to
ever teach a trader how to attain profits at the market.
Let's open one of them (E.
Nayman's "Trader's Minor Encyclopedia" and "Master-trading:
Secret Files") to get the understanding of the way almost all the books on
Forex are written and supposed to have the price of USD20-100.
You may agree or not, but the
name looks very beautiful and pretentious: "Master-trading: Secret
Files", 320 pages of sheer secrets...
HOWEVER, I HAVEN'T FOUND ANY
SECRETS THERE! You are welcome to discuss an argue Yourself:
1. "The interrelation
between fundamental factors and exchange rate dynamics" being a detailed
story of how a country's macroeconomic growing, benign rumors trading and
political stability promote the exchange rate growth.
A "valuable" secret
to be practically encountered in any Forex edition. But below is a real FA
secret (not paid any attention to by Nayman): why does currency use to reverse
against its country's economic news? A whole chapter here will be dedicated to
the issue.
2. "Construction of two
moving averages on a single chart and twin combinations thereof". The
author furnishes a "wise" recommendation: entries should be made in
the direction the MAs diverge (adding secretly that the most effective MA
combination is 21, 55, 89, etc., as per Fibonacci).
The pseudo-secret nature of the
above recommendation underlies the fact that any MA combination (should it be
21+55, as the author's; 10+20 as in many Western trading systems; 5+8+13 as per
B. Williams or 1+21 as used by numerous traders) yields the same results.
Ok. It all looks great.
However, E. Nayman et al., seem to have circumvented the MA intersection chief
secret, through which traders suffer constant losses: a "lighter" MA
has crossed a "heavier" one, say, upwards, but... thereafter there is
sharp downturn resulting in the MAs intersection again.
Fig. 6. GBPUSD H1 chart as of
April, 21-26, 2005. (See Note below)
A fivefold reciprocating
crossing of MA 21 and 55. You are welcome to calculate traders' losses.
Now, let's call it a day with
examples. The MA intersection technique operates perfectly in certain
circumstances, while turning out impotent in others, thus inflicting losses
upon traders. No criteria have ever been stipulated by Forex scholars as to
entries to be effected pro- or counter-divergence of moving averages.
3. MACD construction and
analysis. What sort of secret may one expect from the following statement of
Nayman's: "a subsequent high being lower than the preceding one suggests a
bullish trend depletion or even its changing with the same being visa versa
under minimum MACD values". Much of a secret, isn't it? I thought it were
the MACD operation principle, familiar to any Forex novice. The secret-fancier
B. Williams hasn't even taken effort to advise to perform inputs change from 9,
12, 26 into 5, 34, 5 to provide for a lag killer.
Assuming the above, authentic
MACD secrets are not paid any attention to by scholar, which fact inflicts
losses upon traders. The situation comes into effect, when upon a divergence
formation, no trend change is observed with another same-trend wave taking
place instead.
Fig. 7. GBPUSD H1 chart as of
April, 2005, where MA21 crosses MA55 with slight rise and sharp downturn. (See
Note below)
Another example:
Fig. 8. GBPUSD H1 chart as of
May, 2005: a divergence with MA10 upward crossing MA21; a brief nudge up to
1.8916 and a sharp downturn. (See Note below)
As different from Nayman and
other Forex scholars, we'll touch in detail upon the ways to detect when MACD
is trustworthy as a trend reversal attribute and when it is not.
4. TA classical patterns. One
can not help smiling at the author sharing a secret of
"head'n'shoulders" and "double bottom" patterns, being
studied by beginners at the earliest lectures on Forex.
And here goes a real key
secret: in what cases the patterns are indeed indicative of a reversal but in
what cases brokers trap TA pattern-fanciers? Is there someone doubting the fact
that patterns are known not only to traders, but as well to brokers with their
mouths watering to make a rod for the backs of lovers and connoisseurs of the
above patterns, just like on the sample chart below:
Fig. 9. GBPUSD H1 chart as of
May, 09-11, 2005, a classical "inverted H&S" (See Note below)
At 1.8871 there's an impetuous
upward breakthrough, the Alligator rotating upwards, MACD above zero, MA8
having intersected MA21 upwards, the Williams vaunted Awesome Oscillator
signaling long entry, the Accelerator Oscillator pointing up... nevertheless,
the rate reaches as far as 1.8916 and slips down to 1.8481 by 450 pts.
To be noted: much worth
scrutinizing is the phenomenon of Nayman's "Trader's Minor
Encyclopedia" and "Master-trading: secret files" purported at
understanding why over 90% of traders turn losers after reading the books.
The solution, to my mind, is
that the above opuses are but good "ABCs OF FOREX" thus giving birth
to all Nayman's merits and demerits.
The guy is primarily awardable
for having spared beginners' paying USD50-200 to various Forex training courses
or academies. Instead, one can download and study Nayman's books, whose
extracts are, by the way, quoted to trainees during their studies.
Nayman is generally to be expressed gratitude to, because of his having laid
out the Forex basic course in a competent, popular and accessible way.
This is the point, I elucidate
to every beginner, being introduced to me: first one should scrutinize Nayman's
books, then only it's worth discussing hooks and crooks of earning at Forex
instead of losing.
Nevertheless, there is a chief
Nayman's self-delusion about his folios really being in no way secret files
with no one being able to find anything new to enable oneself to improve one's
Forex earnings. These books containing neither unique techniques nor
non-standard solutions are famous for the generalization and systematization of
what has been the Forex knowledge prior to Nayman.
But this fact is not realized
by majority gripped by the "Master-trading: Secret Files"
fascination, who open live accounts and turn losers inevitably.
Shortly upon their pre-mature
success on demo accounts these folks hastened to open live accounts and faced
losses. But since the Dealers' staff managed to convince them in the incidental
nature of the above losses, the folks ventured to go live again and did again
turn to be deposit killers.
With these facts being
proclaimed, I don't hold it appropriate to call any statistics science for
help. Any sensible man is to get the understanding of the above losses as not
being of an incidental nature.
There could be NO OTHER WAY
about it.
The next trader training level
comprises books by B. Williams: "Trading Chaos" and "New aspects
of exchange trading", where the author propounds his own Forex trading
methods along with advertising the other ones', viz. Elliott's.
My book, "Secrets Of
Craftsmanship Narrated By Professional Trader Or What B. Williams and E. Nayman
Have Concealed From Traders" is purported at developing of THAT particular
school of training traders to practical operation at Forex.
Hardly will anyone object to
the fact that B. Williams will disclose his Forex intimacies free of charge.
Neither will he furnish their 100% disclosure after being paid to.
In all his splendor, Williams
possessed sufficient knowledge to;
- to share A PORTION of his
secrets in his "Trading Chaos";
- to share A PORTION of his
secrets as a paid training;
- not to share A PORTION of his
secrets in the least.
My book, "Secrets Of
Craftsmanship Narrated By Professional Trader Or What B. Williams and E. Nayman
Have Concealed From Traders" is also dedicated to teaching how the
Williams secret methods are to be decoded properly to ensure successful Forex
trading capabilities.
Each of my book's 20 chapters is permeated with a common logic aimed at finding
relevant discrepancies in literature on Forex and at presenting my personal
technique of Forex trading.
B. Williams declares being
capable of analyzing tens of currency pairs (of 140-bar history each) that
within tens of minutes, but in no way does he explain how to, whereas, I
explain, that it's feasible for any wide-screen trader, provided my computer
monitor being 3-currency capable only (see: "Ally and adversary
currencies").
B. Williams sings about his
magic Alligator, while I disclose and eliminate its pitfalls by, say, adding a
MA233 thereto. This arrangement visualizes the whole of the 4 potential
currency travel options: up/down above MA233; up/down under MA233.
B. Williams lists a stop-loss
to be a "safety cushion", whereas I disclose and eliminate its
shortcomings by way of alternatively using my own pending orders.
B. Williams hold trades volume
to be authentic resistance breakthrough criterion, while I quote reasons by
which trades volume turns to be deceptive on Metatrader platforms (thanks to
the banks Consortium) and I introduce my own levels true/false breach criteria.
Now, regarding trading on news, I demonstrate the way one can turn a loser if
trade like all the others and I offer my own on-news trading style.
(See continuation of this
article under name Forex Secret. Forex Literature As A 90-95% Of The Traders
Loose Their Deposit. (Part II)
