English 
فارسی (Persian) 
Türkçe (Turkish)
Plowing bulls in forex refer to people who want to conquer the market based solely on their algorithm. These so-called geniuses put their heads down and see only one meter ahead of them and plow. In fact, these people think that the world is just one meter away in front of their eyes.
Bulls plowing in Forex believe that all the problems of the world can be solved with algorithms and mathematics. The capital market is also considered one of the world’s problems that can be overcome with an algorithm.
Capital market and forex brokers, by abusing the point of view of plowing cows in forex, easily try to empty the jeep of these people and those around them.
Who are the plowing cows in Forex?
Not a week goes by that I don’t receive an email from a new genius who has discovered a new way to trade in Forex and asks for my opinion. All these geniuses also claim that their method is the best algorithm in the world and is able to make a profit in any market condition! And not three and four percent profits per month, but two hundred percent and three hundred percent profits per month!!
In our conversations, we call such geniuses who want to conquer the market only with algorithms, "plowing cows".
Plowing cows are mostly engineering students and graduates. These people are good at mathematics and have a high IQ. The only problem of these people is that they only look in front of their feet and they want to solve global equations with this mathematical tool and their intelligence. They don’t look around them, they don’t throw an opinion behind their heads, and they don’t have the ability to raise some horizon and look at the matter from above.
Because mastery of math has given the bulls a false sense of confidence, they enter the market with confidence, and that confidence makes them climb faster, unaware that the higher they climb, the harder their bones will break when they fall. .
The plowing cows think that the heart of the sky has opened and they have descended from the sky to conquer the capital market with an innovative indicator and the use of various technical and mathematical methods and amaze the eyes of the world.
They think that the people of the bazaar are mostly “illiterate” (because they are cheap and superficial people!).
Therefore, these people, who entered this market from a scientific environment, will be able to predict any situation with their knowledge and, unlike these “illiterate”, will earn a good profit from the market.
Unaware that Forex and capital market brokers, seeing these plowing cows, rub their hands together and like a spider, they are happy when a mosquito falls into their web:
A new bait has arrived that can easily empty his pockets and those around him. Because it is a "plowing cow".
Plowing cows are mostly engineering students and graduates. These people are good at mathematics and have a high IQ. The only problem of these people is that they only look in front of their feet and they want to solve global equations with this mathematical tool and their intelligence. They don’t look around them, they don’t throw an opinion behind their heads, and they don’t have the ability to raise some horizon and look at the matter from above.
Because mastery of math has given the bulls a false sense of confidence, they enter the market with confidence, and that confidence makes them climb faster, unaware that the higher they climb, the harder their bones will break when they fall. .
The plowing cows think that the heart of the sky has opened and they have descended from the sky to conquer the capital market with an innovative indicator and the use of various technical and mathematical methods and amaze the eyes of the world.
They think that the people of the bazaar are mostly “illiterate” (because they are cheap and superficial people!).
Therefore, these people, who entered this market from a scientific environment, will be able to predict any situation with their knowledge and, unlike these “illiterate”, will earn a good profit from the market.
Unaware that Forex and capital market brokers, seeing these plowing cows, rub their hands together and like a spider, they are happy when a mosquito falls into their web:
An example of a plowing bull in forex
For example, I want to mention a person who was very skilled in writing “Expert Advisor”. This person had a master’s degree in programming and wrote experts in which ten technical indicators were used at once. In fact, he had considered all market conditions and his experts were excellent in backtesting.
In other words, it can be said that his expert, which was written for “Metatrader” software, worked in the trendy market, SideWay and news. The BackTest of this expert was a masterpiece in a ten-year period. Also, the drawdown of this system did not exceed 5%. On the other hand, it worked on all currency pairs and all time frames. In reality, it would fall on the charts like a fortune, and it would make profits. But all this was in the demo and backtest and had no results in the real market.
This person was a professor of mathematics, algorithm and programming. As far as theory was concerned, his work had no words. But the problem started from the place where the action was taken. In practice, this person first started with $500 on a real account. That expert didn’t last even two days with all those brilliant backtests and made the account a call margin. But this person did not accept defeat. In fact, he thought that it was his expert’s fault. Thus, he made some changes and started again with 1000 dollars. But he did not draw 1000 dollars in a week and it became a margin call.
This friend of ours wasted more than two hundred thousand dollars of his money and that of his friends and acquaintances in a two-year period. Even until he was imprisoned for fraud, he still thought that the problem was part of his expertise and that if he had some more money, he could have made a lot of money by fixing the flaw in his method!
This person, if he could come a little higher and look at the whole matter from above, he would realize that basically the person who works as a forex broker, that too with a leverage of 1 to 500, does not like his eyes and eyebrows, who earns 200% and 300% profit per month. he gives Even one percent a month does not give him a profit, which means that he will empty all his money out of his pocket.
Read more: What is leverage in digital currency?
He didn’t see this obvious fact, because he was just a bull in the forex and he only saw in front of his feet. This plowing cow of ours is still, even in prison, thinking of making some capital and conquering the market this time with his new method (which is completely perfect this time)!
Sir, you are hot with your writing... please blow up the forex market!!
A “Borsi” friend sent the above message to me while loading forex and forex along with some juicy lichars.
I don’t think that the enmity of “stock exchanges” (especially those involved in the stock exchange organization) with the forex market is due to their sympathy for the victims of this market; If that was the case, they should have been sympathetic to tens or even hundreds of small investors who are commonly sitting in the black soil in the Tehran stock market and are still sitting. Therefore, the reason for the opposition of the stock exchange organization to forex should be sought elsewhere.
A basic point that has been neglected here and is perhaps raised here for the first time by me, is that basically the entry of the “stock exchange organization” into the forex market and interference in it (for example, declaring forex illegal and prosecuting forex traders according to paragraph 1) Article 49 of the Securities Law) is illegal.
Any person who, without complying with the provisions of this law, engages in activities such as brokerage, broker/dealing, or marketing that requires obtaining a license under any title or introduces himself under any of the aforementioned titles.
Article 11 of the Monetary and Banking Law of the country approved on 4/18/1951 – the latest amendments on 10/21/1992 emphasizes in this case inexplicably:
The Central Bank of the Islamic Republic of Iran is responsible for regulating the regulations related to foreign exchange transactions and the obligation or guarantee of foreign currency payments with the approval of the Money and Credit Council, as well as the supervision of foreign exchange transactions.
According to the above explicit law, foreign exchange and forex transactions are under the supervision and legal inclusion of the Central Bank, and therefore any entry of the stock exchange organization into this market has no legal impediment.
The fact that I have mentioned “forex” in this article regarding the plowing cows in forex, not because of my enmity with this market, but because of creating the right view and attitude towards the market among young people and newbies. Contrary to the thought of that friend of the stock market,
My intention was not to destroy forex, but I have tried to correct the attitude and method in one of the largest financial markets in the world. Of course, any renovation is not possible without destroying some parts of the building.
Interpretation of the stock exchange organization about the law of non-interference of the stock exchange in forex
In the previous section, I criticized the unnecessary and illegal interference of the Stock Exchange Organization in the forex market. We said that forex (buying and selling currency) is under the supervision of the Central Bank according to the law, and the interference of the stock exchange organization in the field of forex is illegal under paragraph 1 of article 49 of the Securities Law.
The answer we received from the friends of the stock exchange organization was as follows:
According to Section 24, Article 1 of the Securities Law, the concept of securities and equivalent financial instruments are considered, and according to that, securities are any type of paper or document that includes transferable financial rights for the actual owner or its benefit. be The Council will determine and announce the negotiable securities. Therefore, since the financial instruments of the forex market are currency pairs or currency derivative instruments such as futures contracts, trading options, buying currency fluctuations, etc., they are considered to be included in the legislator's definition of securities.
The obvious (and rather sophistical) mistake in the interpretation of our Bursi friends is in this sentence:
According to paragraph 24, article 1 of the Securities Law, the concept of securities and equivalent financial instruments are also considered.
“Financial instrument” has a very broad concept and “securities” is considered a type of financial instrument. The ratio of “financial instrument” to “securities” is like the ratio of the concept of the word “organization” and the word “securities organization”. Although “securities organization” is considered an “organization”, it cannot be said that every organization is the same as securities organization, and the word “securities organization” cannot be equated with the word “organization”.
In the same way, securities are a financial instrument, but the concept of securities and financial instruments cannot be considered equivalent. Paying attention to the text of the law shows that the legislator (unlike our lawyer friends in the stock exchange organization) has fully considered this issue.
Because Article 24 of the Securities Law has a very important stipulation:
The concept of financial instruments and securities are considered equivalent in the text of this law.
The above sentence clearly shows that the honorable lawmaker fully knew that financial instrument has a wide concept and if it is used in this law, it can create different interpretations. Because even banknotes and cash can be considered a kind of financial instrument (and the stock exchange organization can easily have all the powers of the central bank with this misinterpretation!).
For this reason, with this sentence, he asked to limit the concept of “financial instrument” to securities and nothing else. For this reason, it is stated in the text of the law that wherever “financial instruments” are mentioned in the law, they mean securities and not other forms of financial instruments.
Similarly, when it is stated in the Securities Market Law that:
The concept of financial instruments and securities are considered equivalent in the text of this law.
It does not mean that we consider every financial instrument as securities and extend the securities law to other financial instruments. Rather, the meaning is that wherever financial instruments are mentioned in the text of the capital market law, we should know that it means securities and not other financial instruments.
If according to the interpretation of the stock exchange organization, any financial instrument should be under their control, then the central bank should gather its books and hands and give all its powers to the respected organization of the stock exchange, for the simple reason that money and currency and Checks and promissory notes are financial instruments!
The Stock Exchange Organization is not legally the custodian of forex in the country.
Another interpretation of the stock exchange organization’s law of non-interference of the stock exchange in forex
My intention is that the legal debate related to forex should not continue and we can return to our main discussion sooner which is “bulls plowing in forex”, but because the issue of the involvement of the Stock Exchange Organization in “forex” is an important issue that Unfortunately, I have not seen it discussed anywhere, it seems important to complete this discussion.
Again, we have received a new argument from the stock exchange organization to show that the entry of the stock exchange organization into the “forex” market is done with legal means.
On the other hand, Clause 14 of Article 4 of the Securities Law states that one of the specific and exclusive duties, powers and competences of the Supreme Council of the Stock Exchange is “granting permission to accept foreign securities to the Stock Exchange”. Therefore, the only unique legal mechanism and platform for the trading of foreign securities is to accept these securities in the country’s official stock exchanges, and that is only by obtaining permission from the Supreme Council of the Stock Exchange. Using the concept of the aforementioned regulation, other mechanisms are unlicensed, prohibited and criminal.
Unfortunately, and exactly like the previous case, this interpretation of the law is not correct at all. The text of the law is as follows:
Granting a license to accept foreign securities to "Exchange".
The meaning of the above sentence (contrary to the directional and counterfactual interpretation of the stock exchange organization) is clearly that:
Paragraph 14 of Article 4 of the Securities Law states that the stock exchange organization does not have the right and permission to accept and trade any type of foreign securities “unless the Supreme Council of the Stock Exchange gives it this permission on a case-by-case basis.”
That is, the text of the law was established to limit the “stock exchange organization” (and not others) not to offer foreign securities on the stock exchange without the permission of the Supreme Council of the Stock Exchange (in principle, no one other than the stock exchange organization can issue new securities to introduce the stock exchange). Clearly, this law does not prohibit the buying and selling of foreign securities by others.
It is clear that the legislator did not have such an interpretation of the stock exchange law for the simple and obvious reason that:
The purchase and sale of foreign securities by the Central Bank is allowed in Article 7, Clause H of the Monetary and Banking Law of the country, and contrary to the interpretation of the honorable Stock Exchange Organization, it is not subject to the permission of the Supreme Council of the Stock Exchange in any way. (Does the reason need to be more obvious than this?!)
And in this case, the stock exchange organization has suffered a wrong interpretation and the concept of the mentioned regulation is not used in any way that other mechanisms are unlicensed, prohibited and criminal.
It can also be seen that the stock exchange organization is not legally responsible for the forex market.
Pa wrote:
Definition is given in a positive way and to define something. Of course, we have the opposite bias here because we have looked at this issue in a negative way. My inspiration when using “reverse emphasis” was this bit by Bijan Targhee, who spoke beautifully about “reverse progress”:
You have gone from kissing hand to kissing foot
You have done “reverse progress”.
Now we have “reverse concentration”!
Forex legal considerations
With all the attributes that we have mentioned and the reasons that we have listed about the illegality of the stock exchange organization’s entry into the forex market, the activity under the title of “broker” or “referring broker” is still illegal in the forex market. The legal document of this article is not the Securities Law, which is “the Resolution of the Supreme National Security Council” on July 14, 2018.
According to this resolution, which has not yet been canceled and is still in force, acting as a “broker” and “representative broker” in the forex market has been declared illegal. However, this resolution does not refer to the Securities Law.
Basically, this resolution shows that the stock exchange organization is not the guardian of the forex market. Because if it was, we would no longer need the approval of the National Security Council and we would draw the same conclusion from the Securities Law. The resolution of the National Security Council clearly confirms our words that the forex market has nothing to do with the stock exchange organization and the securities law.
Although acting as a “broker” and “representing broker” (IB) in the forex market has been declared illegal, but acting as a “dealer” or even an “investor advisor” and “basketball operator” in the forex market is not legally prohibited. Is.
Of course, the respected organization of the Stock Exchange refers to all the three titles that we have mentioned (i.e. trader, investor advisor and portfolio manager) as “financial institution”. The argument of the respected stock exchange organization is that according to article 28 of the stock market law, “financial institutions” need to register and obtain a license from the stock exchange organization, and if a natural or legal person operates without a license and with one of the titles of a financial institution, It will be subject to paragraph 1 of article 49 of the Stock Exchange Law.
But as we mentioned in the previous parts, this article is about “securities” and not the forex market. According to the text of the law, the forex market is governed by the rules of the Central Bank, and it is illegal for the stock exchange organization to enter it.
Even if we mistakenly accept that the securities law can be applied to forex, firstly, according to paragraph 2-2 of the guidelines for identifying and registering financial institutions approved by the same stock exchange organization, it is not only financial institutions that can invest in securities and to operate (other people can also operate and invest in the stock market without a license). Secondly, according to Article 1-3 of this directive, those whose activity is not major and whose assets are less than 50% securities are not included in the definition of financial institution and do not need a license. This means that activity as a “dealer” and “basket operator” and “investor advisor” in the forex market will not require a license from the stock exchange organization according to the instructions for identifying and registering a financial institution.
It is not bad to read another argument from the friends of the legal circle of the stock exchange organization as a good ending.
Therefore, since the financial instruments of the forex market are currency pairs or currency derivative instruments such as futures contracts, trading options, buying currency fluctuations, etc., they are considered to be included in the legislator's definition of securities.
This mistake of the respected stock exchange organization is also quite clear. It is unlikely that the legal circle of the stock exchange organization does not know that the custodian of currency derivatives and futures transactions in the Islamic Republic of Iran is, according to the law of the Central Bank of the Islamic Republic of Iran, not the stock exchange organization, and therefore the purchase and sale of currency is not subject to the legislator’s definition of securities.
It is enough to take a look at the “executive regulation of currency futures transactions” (which is easily accessible on the Internet with a Google search). This regulation was correctly prepared by the Central Bank, which is in charge of the purchase and sale of foreign currency (forex) and currency derivative instruments, and not the stock exchange organization, and this strong reason calls into question the entire basis of the arguments of the stock exchange organization.
Since this discussion has not been done anywhere else, I felt it necessary to raise it for the first time so that it may open a knot from someone, when the knot is very “blind”.
Survival Bias
A servant of God in our neighborhood took the initiative and created a pond in the yard of his restaurant and raised fish in this pond. The customer, who entered the restaurant, would choose live fish from the pond, and there the lucky fish would be killed and grilled in front of the customer’s eyes. This was calculated and the restaurant was always full of customers.
It didn’t take a year that in our neighborhood, at least six or seven other restaurants opened live grilled fish in our neighborhood, until this idea became a “fad” (generally, in our country, it is very customary to repeat every golden idea so much Of course, they had the same habit in other countries before the copyright law.
Two years later, all of the copycat restaurants went bankrupt and folded, but the original was still standing and as busy as ever.
The main point that I had not paid attention to before, and probably all the imitators of the restaurant business had not paid attention to it, was that several live grilled fish restaurants had opened in our neighborhood in the past years and all of them had gone bankrupt.
In fact, the successful restaurant in question was a “survivor” among many restaurants that all more or less followed the idea of grilled live fish. All the restaurants that went bankrupt suffered from what is scientifically called survival bias.
Read more: Survival Bias
The mistake of the bankrupt restaurants was that they did not notice that the successful restaurant was just one of several restaurants that implemented this idea and was the only “survivor” among many other restaurants that implemented the same idea and went bankrupt. .
We hear another example of the “killed life” bias over and over again in everyday conversations:
Today's young people eat vegetable oil! We used to eat animal oil in the old days. This is why our constitution is so strong!!
This argument is completely wrong, and the reason for the error is that in our daily life, we see “old people” who have “survived” all the conditions of their past lives. We don’t see the millions of other old people who just died with a cold or diarrhea and are lying in the ground, and therefore we think that all the old people are so good-natured and can handle any illness without even going to a doctor.
From about seventy years ago until now, the average human age has increased from about 35 years to about 70 years, and we owe this to the progress of health and medical science. That is, until just seventy years ago, no matter how well-built you were, your life expectancy was about 35 years. no more.
Naturally, there were 70-year-old and even 100-year-old people in this era. However, these were only exceptions and thousands of people lost their lives alongside them at a young age.
The fact that our grandfather, who survived among thousands of people and did not go to any doctor and survived and ate animal oil, cannot be concluded that the ancients were all fit and healthy and today’s people are all weaker and less healthy than their fathers. Because thousands of people were the same era as our grandfather and passed away suddenly and none are here to testify or be included in our statistical sample.
The error of bias is one of the main errors of most people in the capital market and financial markets. I dare say that if you can recognize this mistake and avoid it in life, you have taken one of the most important steps towards financial success.
I will talk more about this error in financial markets and forex.
Mr. Dr. Alfi believed that basically modern medicine is useless and the cure for all diseases should be found in plants and in old books. Based on a very old prescription belonging to at least 1000 years ago and by combining several plants and herbs, he succeeded in discovering a medicine that he considered “definitive treatment of blood pressure”.
A medical student who happened to be a disciple of our “Dr. Alfi” wanted to give this discovery a scientific flavor. Therefore, he started a medical experiment to scientifically prove his master’s discovery.
The method of the medical student was completely scientific. He found 50 elderly volunteers who were hypertensive patients and agreed to use this drug every day and report their blood pressure every month in order to test the effectiveness of “Dr. Alfi’s” special drug.
After five years of using the drug, the results were amazing. At the beginning, the average blood pressure of the volunteers was 16 over 12, and now after 5 years, their average blood pressure had reached 13 over 9. This result completely proved the miraculous medicine of our “Herbal Doctor”. The young student was completely satisfied and excited about this result and prepared his thesis based on this great research.
But this student’s thesis was rejected in the first review. The professors’ reason was quite simple: In his research, the young student was fooled by the sophistry of “surviving bias”.
The fact of the matter was that out of the 50 initial volunteers during this 5-year research period, 12 had read the farewell poem, and the less experienced student had simply crossed out the statistics of these dead people from their average. That is, those who survived taking the medicine were included in the experiment.
In this way, Dr. Alfi’s miraculous medicine only worked on those who were “alive” during the experiment! Those who were dead had nothing to do with him! Our young student reasoned with himself: Adam is another. He may die!
Thank God that the superior professors of this student stopped the project. An experiment without considering the weaknesses and failures and only seeing the strengths and victories is not a correct and complete experiment and can lead to very disastrous results.
Of course, the aforementioned Dr. Alfi still believes that they have not appreciated him and that he has the cure for all diseases and is still busy deceiving the simple-minded who do not know the secret of the sophistry of “biased life”.
He believes that those who died during the experiment were part of divine providence and had nothing to do with the drug. But those who survived must have survived the miraculous effect of his medicine.
With this argument, anything can be applied to any disease. If he died, it was God’s fate and providence, and if he got well, it was a miracle of what we have molded for him!
The main mistake of this friend of ours, who is also a good mathematician, was that he fell into the trap of “perpetual bias” in the BackTest of his Expert Advisor.
Backtesting a strategy means testing the buying and selling strategy on the previous prices of one or more stocks or derivatives.
The first and most important error that occurs in the backtesting of all the data of any stock or derivative is the “survivor bias” error. This means that we only focus on the share or the time period in which the backtest has been successfully performed and remove all cases of failures and so-called system failures from our statistics.
This is an important and very common error in backtesting. For example, if the backtest is not correct within 1 minute, we will remove it from the backtest result. Or if, for example, a test on a specific share or currency pair(s) is not correct, we remove it from our statistical population.
The result will be that we have one or more very good backtests with thousands of percent profit! While we have easily removed dozens and even hundreds of backtests with 100% losses from our results, and we simply think that we have created the best strategy and the best expert in the world (in fact, we are like the student in the example above) We have removed all death statistics from our statistical population.
The error of survival bias prevents you from seeing losses in the backtest of a financial strategy. But this loss and failure is quite real and will come to you quickly as soon as you step into the real world.
The error of “deadly bias” in the financial market has made many people poor and unfortunately, it is still busy taking victims. Beware of the error of bias in trading and in your life.
Of course, creating a backtest that is completely free of the “survivor bias” error is a very difficult task. But is this really possible? And if yes, how?
