The truth about trading and money managers
Feb 03, 2013 at 22:16
Guys,
I've been on MFB for a while and I've read so many dumb stuff that I though I'd write down some basic facts about real life trading.
We're a swiss fund, we've done between 5% and 15% per month for the past 2.5 years and we have 50M in AUM. I decided to stay anonymous and just give this back to the community; we've been using MFB internally a lot and we recruited a few talented guys through MFB.
Market is going to open in 20 minutes, I have some time to kill, believe this topic or not, I won't care.
=================
-> Money Managers : First off, I'd like to talk about money managers... guys... forget about money managers who accept clients with small accounts. If a trader/money manager was good, he wouldn't take any client below 100k - and that's what we're doing. We have nobody below 300k and clients can't test us with less than 100k... not a single $1 below; we don't have time to waste with small investors, we're good traders with good performance.
-> Social Trading : Forget about sites like ZuluTrade or eToro, forget about social trading, we've had some fun with 25k and it doesn't work, even the best traders suck on these platforms. Think about it... eToro gives you about 30$ for each 50 followers you have... so if you have 10 000 followers, you get 6k$ per month; and even the 'best' traders on eToro only have 2k-something followers.
6k per months...... Some of my friends make 2k a day..... they don't even accept clients, they're independent why the heck would they share their trading skills with random people to get an extra 300$ per day ?
-> Leverage : How many time have I heard that using 1:100 or 1:50 leverage is safe.... that you're supposed to make 30% per month on the FX market because of leverage.... and that people 'don't understand how FX works' because they're looking to get 2% per month. The only reason why you have leverage on FX is because it moves less than other financial products (oil, stocks, bonds ...) and that you'd like to make as much money on FX as on the stock market. The reality is that professional people never use these leverages. 80% of the time, we use 1:5 leverage.... 1 to fucking 5.... we never go above 1:20.
Think about losing 5% on a 50M account... that's a 2.5M loss, it doesn't even represent lots of pips if you're on 1:100 or 1:200 leverage.
-> Get rich quickly : that one is the best. People who think they can turn 10k in 25k in x months.... guys wake the fuck up, if you do 20% a year, that's already very good. A wise investor is going to look for a fund that makes between 10 and 40% per year... not per day. And getting good at trading is not a matter of days or week, it takes year, stop thinking you're the smartest guy on the market just because you read babypips and you hang out on the forums once in a while.
-> Brokers : ECN... STP... Trading Desk.... bro they're all the same. When you're a professional trader or fund manager, you actually go to your broker's office to open new accounts, you negotiate the price with them and you have a lunch with their CEO every month.
I can tell you how they work... if you have an online account, if you've never seen them and if you put less than 50k$ on your trading account, your broker is not even going to process your trades. They will 'trade against you', whether you think they are ECN, STP or whatever marketing name you can find online.
Someone who has only 50k to trade is a beginner, 95% of beginners wipe out their account. So instead of making 2000$ in commission, they just don't process your trade and wait until you blow up your account, and then they make 50k.... It has nothing to do with regulators... regulators allow them to do that, they have specific ratios to know how exposed they can be.
-> Back-test, useful or useless? : that is the big question. Most dumb guys who don't know what they're talking about think that back-tests are useless, that they do not represent the reality. Fuck off. Back-tests are very important. An EA for intra-day signals, that process 1 to 10 trades per day, can be backtested easily and will reflect the reality.
You want to avoid believing in back-tests when they show scalping or high-frequency scalping (between 50 and 1000 trades per day). Simply because the data is already on the hard drive, so there is no network latency, thus there is no slippage and when you scalp on 3 - 5 pips, the slippage + commission can quickly cost you the earnings.
-> Bonus : no VPS, we have servers in our broker's datacenter, we have a full rack with our own security and a secondary office in their building. if you need good quality stuff, never use a VPS or some sh*t like that, get investors and buy actual servers.
-> conclusion <-
Traders = it's gonna take a while before you become profitable, between 6 months and 3 years, and you should never target more than 5-10% a month. Anything above it is just too risky - you don't even have to explain me your strategy, I can tell you there's something wrong if you do more than 10% a month. Either your leverage is way too high or you're taking too much risks.
Investors = if you have less than 300k to invest, forget about it, work at mc donald for a while and then invest 300k. Don't put it online, find real life guys who have different strategies, a 6 month+ track-record, overall doing between 10 and 15% per year.
=================
cheers
I've been on MFB for a while and I've read so many dumb stuff that I though I'd write down some basic facts about real life trading.
We're a swiss fund, we've done between 5% and 15% per month for the past 2.5 years and we have 50M in AUM. I decided to stay anonymous and just give this back to the community; we've been using MFB internally a lot and we recruited a few talented guys through MFB.
Market is going to open in 20 minutes, I have some time to kill, believe this topic or not, I won't care.
=================
-> Money Managers : First off, I'd like to talk about money managers... guys... forget about money managers who accept clients with small accounts. If a trader/money manager was good, he wouldn't take any client below 100k - and that's what we're doing. We have nobody below 300k and clients can't test us with less than 100k... not a single $1 below; we don't have time to waste with small investors, we're good traders with good performance.
-> Social Trading : Forget about sites like ZuluTrade or eToro, forget about social trading, we've had some fun with 25k and it doesn't work, even the best traders suck on these platforms. Think about it... eToro gives you about 30$ for each 50 followers you have... so if you have 10 000 followers, you get 6k$ per month; and even the 'best' traders on eToro only have 2k-something followers.
6k per months...... Some of my friends make 2k a day..... they don't even accept clients, they're independent why the heck would they share their trading skills with random people to get an extra 300$ per day ?
-> Leverage : How many time have I heard that using 1:100 or 1:50 leverage is safe.... that you're supposed to make 30% per month on the FX market because of leverage.... and that people 'don't understand how FX works' because they're looking to get 2% per month. The only reason why you have leverage on FX is because it moves less than other financial products (oil, stocks, bonds ...) and that you'd like to make as much money on FX as on the stock market. The reality is that professional people never use these leverages. 80% of the time, we use 1:5 leverage.... 1 to fucking 5.... we never go above 1:20.
Think about losing 5% on a 50M account... that's a 2.5M loss, it doesn't even represent lots of pips if you're on 1:100 or 1:200 leverage.
-> Get rich quickly : that one is the best. People who think they can turn 10k in 25k in x months.... guys wake the fuck up, if you do 20% a year, that's already very good. A wise investor is going to look for a fund that makes between 10 and 40% per year... not per day. And getting good at trading is not a matter of days or week, it takes year, stop thinking you're the smartest guy on the market just because you read babypips and you hang out on the forums once in a while.
-> Brokers : ECN... STP... Trading Desk.... bro they're all the same. When you're a professional trader or fund manager, you actually go to your broker's office to open new accounts, you negotiate the price with them and you have a lunch with their CEO every month.
I can tell you how they work... if you have an online account, if you've never seen them and if you put less than 50k$ on your trading account, your broker is not even going to process your trades. They will 'trade against you', whether you think they are ECN, STP or whatever marketing name you can find online.
Someone who has only 50k to trade is a beginner, 95% of beginners wipe out their account. So instead of making 2000$ in commission, they just don't process your trade and wait until you blow up your account, and then they make 50k.... It has nothing to do with regulators... regulators allow them to do that, they have specific ratios to know how exposed they can be.
-> Back-test, useful or useless? : that is the big question. Most dumb guys who don't know what they're talking about think that back-tests are useless, that they do not represent the reality. Fuck off. Back-tests are very important. An EA for intra-day signals, that process 1 to 10 trades per day, can be backtested easily and will reflect the reality.
You want to avoid believing in back-tests when they show scalping or high-frequency scalping (between 50 and 1000 trades per day). Simply because the data is already on the hard drive, so there is no network latency, thus there is no slippage and when you scalp on 3 - 5 pips, the slippage + commission can quickly cost you the earnings.
-> Bonus : no VPS, we have servers in our broker's datacenter, we have a full rack with our own security and a secondary office in their building. if you need good quality stuff, never use a VPS or some sh*t like that, get investors and buy actual servers.
-> conclusion <-
Traders = it's gonna take a while before you become profitable, between 6 months and 3 years, and you should never target more than 5-10% a month. Anything above it is just too risky - you don't even have to explain me your strategy, I can tell you there's something wrong if you do more than 10% a month. Either your leverage is way too high or you're taking too much risks.
Investors = if you have less than 300k to invest, forget about it, work at mc donald for a while and then invest 300k. Don't put it online, find real life guys who have different strategies, a 6 month+ track-record, overall doing between 10 and 15% per year.
=================
cheers
forex_trader_79941
Membro Desde Jun 06, 2012
1439 posts
Feb 04, 2013 at 07:18
hi smartguy
why so rude language
does it makes you feel better?
why so rude language
does it makes you feel better?
Membro Desde Feb 03, 2013
2 posts
Feb 04, 2013 at 17:08
Interesting, would like to hear a contra opinion. What you say is powerful in dispelling the get-rich-quick myths surrounding forex. Of course we all need a dream and most of us only hear what we want to hear.
Feb 05, 2013 at 05:06
(editado Feb 05, 2013 at 05:09)
I can see that some people got angry about the so called rude language used by smartguy. I also don't quite understand why he claims he has used MyForexBook for awhile with only 9 hours registration time.
But anyone who has been trading for awhile knows that he has stated some hard truth here. Truth that some newbies or most traders don't like to hear about.
Although i agree with most of what he says, namely:
a) The 'Get rich quickly' theory
b) The fact that i don't need to hear about your stratregy if you make more than 10% a month, etc (I would not put my limit on 10% here. I would say more than 30% a month. 10% is a good target and perfect achievable by a good trader. With more than 30% a month there is surely some risk problems with the strategy)
c) Social trading.....
I have to disagree about the ECN, STP brokers. If he trades more than 300K choosing the right broker is VERY IMPORTANT. Good liquidity is a must unless you trade 1 lot with that amount of capital. If you don't do that you end up loosing very good oportunities with retries, unless you trade in the daily chart with very low leverage where a 10 pip slippage is not a big deal.
If you are a day trader trading for example with 5 or 15 min time frame a high liquidity broker is very important and usually this means ECN /STP broker.
Overall i agree with most of what he says.
But anyone who has been trading for awhile knows that he has stated some hard truth here. Truth that some newbies or most traders don't like to hear about.
Although i agree with most of what he says, namely:
a) The 'Get rich quickly' theory
b) The fact that i don't need to hear about your stratregy if you make more than 10% a month, etc (I would not put my limit on 10% here. I would say more than 30% a month. 10% is a good target and perfect achievable by a good trader. With more than 30% a month there is surely some risk problems with the strategy)
c) Social trading.....
I have to disagree about the ECN, STP brokers. If he trades more than 300K choosing the right broker is VERY IMPORTANT. Good liquidity is a must unless you trade 1 lot with that amount of capital. If you don't do that you end up loosing very good oportunities with retries, unless you trade in the daily chart with very low leverage where a 10 pip slippage is not a big deal.
If you are a day trader trading for example with 5 or 15 min time frame a high liquidity broker is very important and usually this means ECN /STP broker.
Overall i agree with most of what he says.
Feb 05, 2013 at 12:28
I think what he meant by he has been on here a while... he was trolling the forum (for a while) reading all the ridicules posts, so he felt inclined to sign up and give us his wisdom.
Shocker there, finding bad information on a internet forum, you can add any financial media to that statement as well, after all its worked so well for the retail investor for all these years 🙄
Continue trading.
Shocker there, finding bad information on a internet forum, you can add any financial media to that statement as well, after all its worked so well for the retail investor for all these years 🙄
Continue trading.
I just trade.
forex_trader_43716
Membro Desde Aug 06, 2011
345 posts
Feb 06, 2013 at 21:33
stevewalker posted:
hi smartguy
why so rude language
does it makes you feel better?
😎
Feb 07, 2013 at 21:05
I read the post of SmartGuy (SG) but I don't agree with him 100%. When he trades big funds then it ought to be traded in low volume, cause if you leverage the 50m kind of money to 1:20 it will be a billion.....but then it also depends on the confidence of the trader. but forget about the so called big funds, I totally disagree with SG about the traders in etoro or zulu or myfxbook.....I think it is his (SG's) frustration which is causing him to type rude things like this , the frustration because he cannot make this kind of profit in his account. It needs a lot of guts and confidence to take trades like this and make profit. he must be lacking it and so cannot profit in the big account. but small accounts should be traded the way they trade on those sites. there's nothing wrong in it. It is possible to make good profits. I have personnel experience of turning a fee hundred dollars in thousands of dollars in few weeks using latency trading style. but now that my account is big i hesitate a lot while taking a trade because now when i lose its in thousands of dollars, and my latency style trading is not useful for trading bigger accounts. So guys, don't get discouraged by reading SG's comments. use your own mind and brain to determine the things. and now with so much help available online it is definitely a lot easier to trade. all the best guys!!
Membro Desde Jun 10, 2012
2 posts
Feb 09, 2013 at 15:16
I agree 100%
Membro Desde Jan 14, 2010
2299 posts
Feb 10, 2013 at 11:10
I agree with Smartguy wholeheartedly. Very good post. The foul language is a professional disease 😉
Feb 10, 2013 at 22:00
sirius1fx posted:
this guys is a moron, everyone should think and learn for themself!
He may be a moron but he is telling some hard facts for those that want to learn this business. He is not saying people shouldn't learn by themselves. He is just pointing out some hard facts that people tend to ignore.
Membro Desde Feb 18, 2010
86 posts
Feb 11, 2013 at 10:26
(editado Feb 11, 2013 at 10:26)
Anyone who has traded real money for a few years knows where his frustration comes from lol.
Just think of the upside, these people are almost all on the opposite side of your trade. Someone has to be.
Just think of the upside, these people are almost all on the opposite side of your trade. Someone has to be.
Membro Desde Sep 07, 2012
64 posts
Feb 11, 2013 at 14:35
90 to 95 % of you will be wiped out in a matter of months...DO YOU have what it takes to be American Ido...no, wait..wrong forum.
It is true...Constant trading can't bring you fortune! But, if you follow the fundamentals, a chance will present itself (at least once or 2 times a year) to -bet- that's right, BET on a pair that is going 300 pips short or long without a major pullback...If you know how to ride that wave----KA-chiiing-----
It is true...Constant trading can't bring you fortune! But, if you follow the fundamentals, a chance will present itself (at least once or 2 times a year) to -bet- that's right, BET on a pair that is going 300 pips short or long without a major pullback...If you know how to ride that wave----KA-chiiing-----
Carpe diem
Apr 12, 2013 at 18:10
I would agree with almost everything Smartguy says. There is a lot of truth about what it takes to become successful in this business however I do think that there is a fundamental difference between being a money manager in a firm as an employee having to follow internal rules and guidelines and trading the market without those restrictions. In most cases those restriciions are there to stop people doing silly things with other people's money. When you are trading hundreds of thousands or millions of other people's money you have to answer to your employer if you mess up. Fortunately I'm not in that situation and my own experience is rather different.
