Starting Out In Forex....

[forex5x 10]

My suggestions to a new trader:

 

- only demo trade until you can make a consistent profit

- start a live account with very low leverage at first and move up to about 2% per trade calculated as follows...if you have a $10k account then 2% is

$200. Now you have $200 of risk to put on the charts. If you go a full lot at $10 per pip you can have a 20 pip stop or if you go to a mini lot you can have a 200 pip stop. Determine your stop based on the chart and factor in how large a position you can take and stay in your 2% risk per trade.

- limit your daily risk to some level between 2 and 10%. Start at the low end and move towards the larger. To calculate your point in this take your last 30 trades and take your net gains divided by your net losses. If you are at 1 or less ......back to demo trading for a week. As you approach 4 then you will be getting naturally better at risk but keep the total at 10% daily risk or less.

 

I like the idea of a variety of boxes so the trading doesn't become overloading to me. This is BOX for risk.

 

- Develop your own trading rules for your way of trading. You may look at a lot of systems and take pieces of them or go off in your own way. In the end though when you are trading real money you have to know your system and its strong points and weak points. If you get some reccomendations like:

 

Buy EURUSD @ 1.2345

Target 1.2444

Stop 1.2333

 

What do you do as the price reaches say 1.2475?

Do you move your stop and lock in profit?

Do you leave it wide until it either makes a profit or loses the trade?

Do you add a postion?

Do you take some of your profit off the table?

 

The point being that entering a trade is easy....how to manage it and to close it in the end is the harder part.

 

- Don't over trade your real account but trade your demo like crazy.

Some would disagree with me on this with the idea that you should trade your demo as a real account. These opinions are at opposite ends of the spectrum.

 

For me I suggest that you purposely overtrade a demo and see how it goes.

Purposely lose money to see how a margin call unfolds.

Purposely add to losing trades.

Trade with a 2 to 1 stop (2x) to target (1x) ratio

Trade with a 1 to 2 stop (1x) to target (2x) ratio

Trade with a 10 to 1 stop (10x) to target (1x) ratio

Trade with a 1 to 10 stop (1x) to target (10x) ratio

 

-If you have a habit of overtrading then do this:

Choose 6 pairs and make a list and set up the charts.

Use a kitchen timer and set it to 10 minutes.

Every 10 minutes you move to the next pair on your list.

You must make either a LONG or a SHORT trade.

You have 10 minutes to decide and when the bell dings place the trade.

Move to the next pair on the list and repeat.

This is to help build discipline, in this case by learning to wait and to act, even though this is contrived it will help to wear out your tendency to overtrade.

 

- Trade and look to make the first week 10 pips per day and then quit.

If you do a full week like this then bump it up to 15 or 20 and repeat.

When you can pull a consisten 40 pip per day out of the market you are on your way to financial freedom. Consistency is key.

 

- Make all the mistakes you can in a demo. This is your education. Learn from what worked and what didn't. Adjust your trades accordingly as you develop your own "feel" for the market.

 

- Even as you go live have a demo account or several. Test out ideas in a demo not with real money. If you are satisfied with the results you can go to live money but always dial a new idea in the live account to very low risk and let it gradually grow. Controlling risk is a key part of trading...keep your account positive and you can come back tommorow. If you blow your account then you are done.

 

- Network with other traders in your area or anywhere. I use Meetup: World's largest community of local Meetups, clubs and groups! here locally but have a very international set of friends in Forex.

 

- Know that a system that works for someone else may not work for you.

 

You must know yourself to trade well.

Here is what I know:

- I can't trade long term. It isn't about not being able to see trades rather it is about being impatient.

- I like indicators that are on the chart and show me specific point on price rather than some indicators that tell me about the BARS. (like get out on next bar...this is somewhat after the fact for me)

- I like simple rules that are easy to follow and take little thinking to put on.

.... you will find out more about yourself from trading if you pay attention.

 

- Look around you outside of Forex for inspiration for example:

- driving and deciding what lane is going to go faster

- watching other drivers and see if they are safe or unsafe in their driving...what is the relationship that can be made to trading?

- at a shopping place or bank determine what line is going to be the fastest. Notice things like the number of people in line, their ages, their sex as it relates to the cashier or teller, energy level of the people, time of day, and notice the cashier or teller for similar information. In general work to focus and be aware. Hone your abillity to see, predict and act....not just in Forex but in your life.

 

- Learn what you can control and can't control in the market. Do you cheer on your position? Do you get emotional if you win? Do you get emotional if you lose? Work out how to trade with less emotion and more tactically.

 

- Don't trade if you are Angry, Frustrated or even too Happy. There is a balance much like a martial arts that you want to get to. One trade should not be enough to make or break you. Slow and steady will gain you much more than a series of home runs and strike outs.

 

-- Be willing to throw out all of these suggestions if they don't fit you. Be willing to throw out other suggestion or ideas if they don't serve you and your trading. The rules are to be broken but only with some intelligence and reason. For example there is a general rule to not move your stops once you enter a trade. For me this is a good rule but someone else could have an instinct that makes it work for them. For me I want to know what my risk is before I enter a trade and then ride it out good or bad. There are entirely contradictory rules in competing and successful systems. Be willing to examine if the rules in question suit you or not. If they don't then go to your demo and work out the edges.

 

- Your demo accounts are your laboratory. Have an idea test it in a demo. The objective is not to make money, you can't in a demo anyway, but rather to be curious and see what the facts become from your tests.

 

- Choose a single currency and learn it. I would suggest learning in the following order:

- EURUSD - largest pair traded

- USDJPY - a completely different set of behaviors on the chart

- AUSUSD

- GBPUSD - this is the wild ride, it can move fast and retrace fast...exciting

 

Good trading,

 

Steve AKA Forex5x

[torero 10]

Excellent post steve! Wise words indeed!

[Dr Who 10]

looks like this question spans across 2 threads.....no matter, I'll repeat it here too........

 

we use the 5pm NY close as it's the "recognized" cut-off trigger, certainly amongst the provider desks we deal thru anyway.....it's also the (interest) rollover time period......

 

we calc the weekly pivots (for the following weeks activiry) based on Fridays close......same for monthly numbers - the close of the specific weekly/monthly bar on the final trading day of the week/month..........

 

 

Thanks Buk.

I see that not all use the same times for calculation. Though 5pm seems to be common in stuff I read or people I talk to.

[Dr Who 10]

forex5x

My suggestions to a new trader:

 

- only demo trade until you can make a consistent profit

- start a live account with very low leverage at first and move up to about 2% per trade calculated as follows...if you have a $10k account then 2% is

$200. Now you have $200 of risk to put on the charts. If you go a full lot at $10 per pip you can have a 20 pip stop or if you go to a mini lot you can have a 200 pip stop. Determine your stop based on the chart and factor in how large a position you can take and stay in your 2% risk per trade.

- limit your daily risk to some level between 2 and 10%. Start at the low end and move towards the larger. To calculate your point in this take your last 30 trades and take your net gains divided by your net losses. If you are at 1 or less ......back to demo trading for a week. As you approach 4 then you will be getting naturally better at risk but keep the total at 10% daily risk or less.

 

I like the idea of a variety of boxes so the trading doesn't become overloading to me. This is BOX for risk.

 

- Develop your own trading rules for your way of trading. You may look at a lot of systems and take pieces of them or go off in your own way. In the end though when you are trading real money you have to know your system and its strong points and weak points. If you get some reccomendations like:

 

Buy EURUSD @ 1.2345

Target 1.2444

Stop 1.2333

 

What do you do as the price reaches say 1.2475?

Do you move your stop and lock in profit?

Do you leave it wide until it either makes a profit or loses the trade?

Do you add a postion?

Do you take some of your profit off the table?

 

Good stuff in these comments.

The point being that entering a trade is easy....how to manage it and to close it in the end is the harder part.

 

Definately in the absense of an objective profit target.

 

- Don't over trade your real account but trade your demo like crazy.

Some would disagree with me on this with the idea that you should trade your demo as a real account. These opinions are at opposite ends of the spectrum.

 

I don't agree here with this comment regarding overtrading your demo because you shouldn't overtrade your real acount. But I understand what you are conveying.

For me I suggest that you purposely overtrade a demo and see how it goes.

Purposely lose money to see how a margin call unfolds.

Purposely add to losing trades.

Trade with a 2 to 1 stop (2x) to target (1x) ratio

Trade with a 1 to 2 stop (1x) to target (2x) ratio

Trade with a 10 to 1 stop (10x) to target (1x) ratio

Trade with a 1 to 10 stop (1x) to target (10x) ratio

What's wrong with setting legitimate stops based on price action as opposed to arbitrary levels based on points or percentages?

 

-If you have a habit of overtrading then do this:

Choose 6 pairs and make a list and set up the charts.

Use a kitchen timer and set it to 10 minutes.

Every 10 minutes you move to the next pair on your list.

You must make either a LONG or a SHORT trade.

You have 10 minutes to decide and when the bell dings place the trade.

Move to the next pair on the list and repeat.

This is to help build discipline, in this case by learning to wait and to act, even though this is contrived it will help to wear out your tendency to overtrade.

An interesting concept.

 

- Trade and look to make the first week 10 pips per day and then quit.

If you do a full week like this then bump it up to 15 or 20 and repeat.

When you can pull a consisten 40 pip per day out of the market you are on your way to financial freedom. Consistency is key.

 

- Make all the mistakes you can in a demo. This is your education. Learn from what worked and what didn't. Adjust your trades accordingly as you develop your own "feel" for the market.

 

- Even as you go live have a demo account or several. Test out ideas in a demo not with real money. If you are satisfied with the results you can go to live money but always dial a new idea in the live account to very low risk and let it gradually grow. Controlling risk is a key part of trading...keep your account positive and you can come back tommorow. If you blow your account then you are done.

 

This is probably good to heed. I think most over dramatise the issue of trading and the risk involved because they don't understand it. Being proficient at understanding risk is paramount wether it is a real or dummy account.

 

Also understand the real requirements of staying POSITIVE EXPECTANT and what it takes to achieve it, maintain it, and better it.

 

 

- Network with other traders in your area or anywhere. I use Meetup: World's largest community of local Meetups, clubs and groups! here locally but have a very international set of friends in Forex.

Thanks for the link.

 

- Know that a system that works for someone else may not work for you.

Very true.

 

 

You must know yourself to trade well.

Here is what I know:

- I can't trade long term. It isn't about not being able to see trades rather it is about being impatient.

- I like indicators that are on the chart and show me specific point on price rather than some indicators that tell me about the BARS. (like get out on next bar...this is somewhat after the fact for me)

- I like simple rules that are easy to follow and take little thinking to put on.

.... you will find out more about yourself from trading if you pay attention.

 

- Look around you outside of Forex for inspiration for example:

- driving and deciding what lane is going to go faster

- watching other drivers and see if they are safe or unsafe in their driving...what is the relationship that can be made to trading?

- at a shopping place or bank determine what line is going to be the fastest. Notice things like the number of people in line, their ages, their sex as it relates to the cashier or teller, energy level of the people, time of day, and notice the cashier or teller for similar information. In general work to focus and be aware. Hone your abillity to see, predict and act....not just in Forex but in your life.

 

- Learn what you can control and can't control in the market. Do you cheer on your position? Do you get emotional if you win? Do you get emotional if you lose? Work out how to trade with less emotion and more tactically.

 

- Don't trade if you are Angry, Frustrated or even too Happy. There is a balance much like a martial arts that you want to get to. One trade should not be enough to make or break you. Slow and steady will gain you much more than a series of home runs and strike outs.

 

-- Be willing to throw out all of these suggestions if they don't fit you. Be willing to throw out other suggestion or ideas if they don't serve you and your trading. The rules are to be broken but only with some intelligence and reason. For example there is a general rule to not move your stops once you enter a trade. For me this is a good rule but someone else could have an instinct that makes it work for them. For me I want to know what my risk is before I enter a trade and then ride it out good or bad. There are entirely contradictory rules in competing and successful systems. Be willing to examine if the rules in question suit you or not. If they don't then go to your demo and work out the edges.

 

- Your demo accounts are your laboratory. Have an idea test it in a demo. The objective is not to make money, you can't in a demo anyway, but rather to be curious and see what the facts become from your tests.

Yes all good comments here.

 

Choose a single currency and learn it.

I agree.

 

Good post!

Dr.