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SixCoins

Forex Trading

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Hello.

 

I've been doing some research about day trading, starting with a low balance. What I am looking at now is Forex.

 

I'm using a demo from FXCM. I've done one imaginary trade, and It seems like this is not really the way to go for someone who isn't trading without large amounts of money...

 

Currently, I've purchased 1 micro lot of JPY, at 76.221. Roughly, this means I have 76,221 Yen. In order for this to make even 1% the price of Yen needs to go up to 76.983 today. That would give me a $10.00 profit.

 

Maybe it's just my inexperience talking, but I don't see that happening. I watched the prices for about an hour, and they simply didn't move. Well, they did move. Down. Slowly. I concede that I did not study the USD/JPY market. I just took a position to see it in action.

 

My initial thought's are that it's unrealistic to try to build up funds on the Forex without first having a large amount in the account. Millions of teeny increases necessary. Not a few hundred tiny increases. Use a large fortune to make a small fortune. (Luck and years of experience notwithstanding.)

 

I'd like to hear your thoughts on my cockemamy plan to use small funds in the Forex market.

 

On a side note... I don't expect to make large amounts of money starting with small amounts.. HOWEVER.... I think starting with a small amount will minimize my risk while I learn the game. I am very interested in this study. I just want to start in the right place. Is there such a place?

 

Thanks for reading. I'm listening to every suggestion. Ideally, the best answer would be "if you really want to do day trading with limited means, you need to study X market with no less than X amount of money"

 

I feel I have months of learning to do before I even begin trading, but I need to start learning the right stuff.

 

Can anyone point me in the right direction?

 

Listening Intently.

 

Thanks in Advance,

Steve.

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It is difficult to make large amount with investing small amount in forex trading. I also agree with you for your views "sufficient learning is necessary before to start trading". There is two good sites babypips.com/school/ and dailyforex.com/forex-basics for learning forex trading.

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Maybe it's just my inexperience talking, but I don't see that happening. I watched the prices for about an hour, and they simply didn't move. Well, they did move. Down. Slowly. I concede that I did not study the USD/JPY market. I just took a position to see it in action.

 

Hi Steve,

 

USD/JPY moves relatively slowly compared with the other major currency pairs. For example, looking at the Average True Range of USD/JPY for the past 14 days, the pair's average daily range has been about 45 pips. The average true range of EUR/USD in contrast has been about 135 pips. So if you're looking for something that will be moving more, you may want to look at other currency pairs.

 

Just be careful with volatility since leverage in the forex market can magnify swings in the currency pair, and thereby your profit and loss.

 

Jason

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Sixcoins, the problem is that you are going about it the wrong way. First, there is little volatility in USD/JPY, for me, the best pairs are EUR/USD and GBP/USD, however the GBP spread is slightly higher.

 

Second, instead of trying to get lucky and win big with a small deposit, you need to use a compound trade. This also gives you easily attainable targets to aim for each day.

 

Example, starting with a $50 dollar account, 2% compound trade and 0.35% risk.

 

day 1 target is - $1.00, risk - $0.18 balance $51.00

day 2 target is - $1.02, risk - $0.18 balance $52.02

day 3 target is - $1.04, risk - $0.18 balance $53.06

----------------------------------------------

day 10 target is - $1.20, risk - $0.21 balance $60.95

----------------------------------------------

day 37 target is - $2.04, risk - $0.36 balance $101.99

----------------------------------------------

day 100 target is - $7.10, risk - $1.24 balance $362.23

----------------------------------------------

day 365 target is - $1,350.40, risk - $236.32 balance $68,870.41

 

That's just at 2% compound, if you were to add just another 1% to your compound figure the total would then be a staggering $2,424,136.23. That's after 13 months trading and believe me there are hundreds of small traders like yourself who have been trading for longer than 13 months, and everyone of them wish they had done this 12 months ago.:crap:

 

Hope this helps. Start small but think big - compound it!!!

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Example, starting with a $50 dollar account, 2% compound trade and 0.35% risk.

 

Do you mean 35% risk? And where does this number come from? I love this strategy btw...I've always been a fan of compound numbers lol

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Example, starting with a $50 dollar account, 2% compound trade and 0.35% risk.

 

Oh and another thing, is 2% as "easily attainable" as you think? If the GBP/USD opens at 1.58014 (like it did today, the 3rd) it would have to move 316 pips to reach 2%! And you'd have to average around 300 pips a day for those 365 days, as long as the value of the dollar stayed around 1.58 for the whole year. I looked up the average volatility for the GBP/USD for the last 10 weeks, and it said the average per day was 122 pips, or .78%. So, you'd have to be able to watch the forex every minute during the most volatile hours to be able to go long and short at the right times. PLEASE tell me I'm looking at the numbers wrong. Otherwise I'll just have to say I knew becoming a millionaire by 365 days was too good to be true (I was planning on using $1k on my first day, compounded daily at 2%, which would have put me at 1.37million at 365 days).

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No, not 35%, at that rate you'll be putting up $17.50, over 1/3rd of you deposit to win $1.00, that's the way of madness my friend ;).

 

A 2%-3% trade of capital and a .35% risk factor is one of the unwritten rules that is consider to be good trading etiquette by most experienced traders.

 

If most new traders followed this advice, then although they may still lose, they wouldn't lose everything before they could get some experience. However try telling them that! :bang head:

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lol,

Before you'd start calculating money find the strategy for winning that money!

The task is difficult, the learning curve may take 4 years plus.

But trade live, it's for better. Demo trading is frustrating, rather try to earn money straight away.

There is 2 main directions in fx methodology - indicators and price action. The late is less reliable and to be successful with it trader has to use indicators anyway. Trading without indicators is a form of creeping not to mention the drawback of getting from it trade setouts for the middle of night entries. There is no edge there, lots of analysis (taking lots of time), and endless task of drawing of lines. At the moment of entry in both methods one faces choice of trading up or down - neither method gives extraordinary edge over the other. Surely there is no edge in price action methodologies and definitely waste much time on analysis. PC does the analysis for you via indicators.

Maybe try to save some of your time by using indicators and trading live straight away?

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I totally agree with you fxtrader12, you can't win anything without a good strategy. And there are plenty for free on this and other FX forums.

 

I was just trying to explain that there is also more than one way to trade on a small account.

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Br88dy, if it was 2% of price action that you needed to achieve, ie 316 pips, nobody would be trading the forex, lol.

 

If you're using a 2% compound trading system then the 2% you need to achieve is always of your compound balance at the time you place your trade.

 

Therefore, if your compound balance is at $70 then your target is: $70 multiplied by 2% = $1.40, which at $1.00 per pip = 1.4 pips. Always remember it's your balance that governs your target.

 

Is 2% achievable yes it is. However as fxtrader12 wrote, without a good trading system even 2% can seem like reaching for the moon.

 

Happy trading!

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Is 2% achievable yes it is. However as fxtrader12 wrote, without a good trading system even 2% can seem like reaching for the moon.

 

I understand that being profitable in the FX is supposed to be wildly difficult and often takes years to master. But if you look at the 2% compound strategy, and take, for example, 1 standard lot size of GBP/USD at 1.5824, you'd pay 3164.8 for the lot. And if 2% was your goal, you'd have to be up $62.30, or 6.23 pips.

 

Is 6 pips hard to average a day? I still feel like I'm missing something, because after a few days of studying candles and Fib support levels, I started paper trading. And over the past few days, 6 pips was extremely easy. In fact, 2 nights ago I was up 32.6 pips in 45 minutes...

 

After hearing how hard trading the FX is supposed to be I've been containing my excitement because I'm afraid I'm doing something wrong. Anyone insight would be extreeeeemely appreciated. Thanks

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Show positive pip count at the end of the month is what matters only and only.

 

Ok, that brings me to my next question. When you purchase, say, a 10,000 mini lot of GBP/USD, does that mean you have to constantly watch the pair? For example, if I enter the trade and make 5 pips, which is more than my goal per day, can I exit the trading for the day and be 5 pips higher than I was before? Or do I have to keep watching it?

 

I have small goals for each and every day once I start trading real money. I plan on keeping all my profits in my trading account for 2 years, while working a normal job. Using a compound strategy I should be able to make a good living after 2 or 3 years. Anyways, I have a million questions, but I'll leave them for another day. Thanks for the help guys

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...

Is 6 pips hard to average a day? I still feel like I'm missing something, because after a few days of studying candles and Fib support levels, I started paper trading. And over the past few days, 6 pips was extremely easy. In fact, 2 nights ago I was up 32.6 pips in 45 minutes...

 

Best way to find out is to try yourself. Start today and check the result next month.

I don't mean it is easy or hard.

I think it is better for you to see it yourself;)

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No, not 35%, at that rate you'll be putting up $17.50, over 1/3rd of you deposit to win $1.00, that's the way of madness my friend ;).

 

A 2%-3% trade of capital and a .35% risk factor is one of the unwritten rules that is consider to be good trading etiquette by most experienced traders.

 

If most new traders followed this advice, then although they may still lose, they wouldn't lose everything before they could get some experience. However try telling them that! :bang head:

 

I have a question about this .35% rule. If you're using leverage to buy 10,000 Pounds with around $315, why would you only risk .35%? Wouldn't that make the process of earning the necessary pips to earn the 2% longer?

 

The only reason I'm entering a trade is if I'm certain I know which way the pips are going, so why not use the $315 and make the 2% quicker? And have a well placed stop loss? I would like to know why using the entire $315 is a bad idea if you're 80-90% sure of where the pips are going.

 

Thanks again for the patience!

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I guess many traders would love to be 80-90% sure...if you are so sure It is a good idea to speed up earning process, until that 10-20% hits you:roll eyes:

 

Well, being 80-90% wouldn't be a normal thing. I'd say it'd be good to average 70% certainty on every trade. Which also means you might only do 1 or 2 trades a day. And if you're ok with the losses you sustain the rest of the 30%, then why not use more leverage? Just makes more sense to me, but again, I'm new to this.

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the problem is that the prices don't move as a straight line. if you increase leverage, then you may not be ok with your losses. you will have to use tight stops with high leverage.

think that you opened a position, it may go 30pips in the opposite direction before it gives you 100 pips.

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the problem is that the prices don't move as a straight line. if you increase leverage, then you may not be ok with your losses. you will have to use tight stops with high leverage.

think that you opened a position, it may go 30pips in the opposite direction before it gives you 100 pips.

 

 

Well I'm not trying to make 100 pips in one trade, I'm going for maybe 5 a day average. I don't plan on making good money till after a couple years, and during the first 2 years leaving everything I make in my account so I can use as much leverage as possible.

 

If I can clearly see a trend, and I can make 6-10 pips a day on trends, then I've already made more than my goal. "Slow and steady wins the race" is the strategy I'm trying to build and use successfully.

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Mastering 10 pips @ day is all what is needed to survive on fx. No need for money management strategy. Only good entry and exit to get that 10 pips.

Still OK if that day you get +10; -10; +10 ( = ? )

3 entries intraday can also give you +10; +10; +10 ( = ? )

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Mastering 10 pips @ day is all what is needed to survive on fx. No need for money management strategy. Only good entry and exit to get that 10 pips

 

In all honesty I think greed is the reason why the majority of people aren't profitable in the FX. I'll keep testing my 100% risk, 70% certainty, 4 pips a day strategy. I know it'll change at some point, but it will probably conform to what I'm best at and what I'm willing to lose in 1 trade.

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