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choubix

Beginner Looking for Some Guidance to Get Started

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Hello everyone,

 

I am new here and I'd need some advice from experienced trader as per how to get started a bit more seriously.

 

I've been buying/selling shares and FX for a few years with various degrees of success and I'd like to put a bit more "science" into my trading.

 

Also, what do you think would be the best books to read now to get a feel of good trading strategies for (intraday) FX, Futures (I am not familiar with them as I have never traded any but I understand the leverage...) and shares?

 

I intend to open an account with TS or MultiChart/ Amibroker in order to backtest those strategies and use some money management system from day one. My intention is not to turn $10k into a million bucks and strat writing books about it (even though I'd love to see this happen! ;) ) but at the very least to get some good foundations in trading that I could leverage on over time (and perhaps develop my own semi auto trading system).

 

Thank you for your time,

 

+++

A.

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In my opinion, and also the opinions of many more experienced traders than myself, there are a few "must read" books: Trade Your Way to Financial Freedom and Financial Freedom Through Electronic Day Trading and The Definitive Guide to Position Sizing, all 3 by Van Tharp; the Market Wizards series of books (3) by Jack Schwager, and some good books on technical analysis (John Murphy and Martin Pring are often recommended). My personal recommendation is Barry Burns / TopDogTrading.com, I love his clarity and objectivity. All the best, Eliot

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Hello Dr Lo and thank you for your answer,

 

I am not familiar with some of the books you mentioned so I'll definitely go down to the bookstore and check them out.

 

I already have one of Van Tharp's book waiting for me on the bookshelf. (I've read some reviews saying that, since he's more into psychology and not trading it is not too "relevant" but still provides a good foundation)

 

Btw: If any of the TL's forum traders know a good book that explains how to design, backtest and use an ATS, please let me know. I'd like to try my hand at that (will take some time though!).

 

Thank you and happy new year to all!

 

+++

Al

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Rather than use your funds on buying a bunch of books ... why not use the library. I have found it an excellent resource.

 

I would imagine that for everyone who has learned trading from the newbie stage through to consistent profitability, you need to answer some basic questions. Unfortunately, you are most probably not in a position to know the answers yet - so your first challenge will be to learn enough so that you can answer these questions.

 

What timeframe or timeframes are you most comfortable trading? Are you a scalper or are you planning to take a few trades to catch the 2 or 3 trends of the day? Will you hold positions overnight? What Market(s) will you trade? Why?

 

What type of trader are you? Trend or Counter trend? Momentum or Fade the momentum?

 

How much risk are you willing to accept in order to gain a reward which is sufficient to justify taking the risk? What ratio works for you in terms of Risk:Reward?

 

How many hours or minutes are you willing to put into learning trading? Are you maintaining a job full time and trading on the side? If so -this might suggest some longer timeframe trading might be appropriate where you make adjustments on a daily basis rather than minute by minute?

 

My best advice might be this: Forget about trying to learn an Entry Technique which will result in great gains and few losses. There are no such setups. Each trading style has losses and gains associated with them. The way to win is to know yourself, and your entry setup and trade accordingly while taking profits when the market permits and suggests it's appropriate to do so.

 

Don't waste too long on discovering different entry setups. The real secrets are on exits and managing your trades and taking them according to your plan. Spend more time developing your plan and psychology, less on getting into trades.

 

Trading for a living is a great feeling of accomplishment once achieved but took me far longer than I expected.

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Well choubix, just to confuse you a bit more, I am going to offer my holy grail, which is the opposite of our learned friend bakrob99.

Please don't buy boring psychology books(Van Tharp)

The only mind problem is DOUBT.

You doubt your trading system.So its not your mind that needs fixing- but your entries.

I always read the advise "only take the best entries".But where are they?

 

In a bull market the best entry is at the low of the day!!!!!!!!!!!!!!!!!! which you will miss because you don't know its the low until it reverses. And then it can go back down some more.

So the next best entry is a swing low

Why?

Because your risk is low.You are buying with your stop just below the swing low

And if you get stopped out you wait for the next swing low.

So you are satisfying RULE 1 Risk / reward

 

But you can't just enter at a swing low. You need a signal bar- PRICE ACTION.

Go and buy / borrow (don't steal because your geyser will burst or worse still, you'll be stopped out)

Al Brooks book "Reading price charts Bar by Bar" It will tell you the works!

BUT

Its very difficult to follow

It took me 3 months to fully understand just chapters 1 and 2

But I stopped losing money

Dont try and read it in one sitting. You will skim.

Understand each section before you move on.

Pay attention to H1's and H2's.

If you are a computer expert you could write a program using H1's and H2's to automate your trading.

I can't help you there because I still struggle to find the On/ Off switch on my computer.

I hav'nt covered exits.Worry about the entries. You have to be running to stop running.

 

The BIG problem with only trading the swing lows is you often have to wait a while to trade.ITS BORING.

Thats RULE 2 Patience

 

All the above is obviously reversed in a Bear market

Except the Risk/ Reward and Patience.

 

Remember the problem is DOUBT. You cant eliminate it completely but you can minimise it with a low risk entry.

Learn a few signal bars and take the low risk entry

How difficult is this????????????

Its when you trade in the middle of a range that it gets difficult.

Why? Because your stop is in the middle of nowhere. And if you place it at the correct spot, below the swing low, your risk is too big.

Kind regards

bobcollett

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