First of all, I would like to introduce myself. My name is Andrew and I am currently on my gap year between school and university. I am currently working in london as an administrator/ intern at a financial adviser firm. it wasnt long after I started working there that i got interested in investments and trading. I started off with demo stock/ share trading accounts and did fairly well with them. i then looked into forex, and while my progess has been slow, i am much more interested in FX trading, mostly because it is such an independant thing to do because of the fact that you are working solely on your own skills and wits. needless to say, i bombed out on several demo accounts before I started taking it seriously and doing a bit of studying. I am slowly getting better, but i am still in a net loss on the demo account i opened in late january (i fell into the trap of “what does this button do?.. oh… it loses me money…”), but im closing in.
I’ve been going through the school of pipsology as much as i can, but I’ve come up with a couple of questions.
i’ve heard that short term trading is left to the experienced players. as a newbie, what kind of timeframe should i be looking at/ how many trades would you consider to be a reasonable amount?
2)should i try and get very familiar with 1 pair, or should i get a feel for lots of pairs to improve my opportunities?
3)stop-loss; these bar-stewards get me all the time. for a medium- long term trade, say a few days, what kind of stop-loss would be reasonable? 10 pips, 30 pips, 100 pips? i’ve tried to work with bands and fib levels, but my results are telling me i’m doing something wrong.
Here is a thread that has some pretty good explanations of “Short Trading” or “Shorting” 301 Moved Permanently
Most people would agree that starting out with one currency pair is best and I tend to agree with it also. Some good ones to start out with are the EurUsd, GbpUsd and Aud/Usd. I tend to stick with those, however I sometimes venture off to the Usd/Chf and Eur/Chf
Alot of people work their stop loss strategy by the 2% rule. Which means, set your stop loss to 2% of your account balance. Its not an absolute science, some people will go anywhere from .5% - 2%
I am sure you will get many more opinion, but that should help you get going.
I understand the idea of going long and short. What I meant by “short term trading” is, how long you have the position open. Eg, opening a position on monday and then closing it on tuesday- would that be a good timeframe for a newbie to be trading to?
The time frame will depend on the system being traded. Don’t over trade, you dont wanna have too much capital expose at any one time.
Whether you trade 1 pair or 10 thats up to you, but as a newbie you could start with the majors. .
I’d recommend placing stops above or below the swing high/lows respectively for whichever time frame you’re using.
OK, so ive been going at it for a couple of weeks now, and i havent had a significant win in a long time. no matter how much time i spend analysing a trade, i always seem to jump in just as the market decides “oh hey lets change direction”. what the hell am i doing wrong?
That’s really normal, it just means you are on the bandwagon with most other traders. Keep trying and before you realize it, you will be ahead of the crowd. Here’s something to consider if you haven’t already: are you trying to follow a trend, or fade a trend? Fading simply means you do the opposite of what is currently happening. When you start to look at things differently like this, it can have a profound impact.
Be careful when you say things like “most people” or “they” – because mostly they aren’t good traders. You should spend some focused time playing around with the charts. Screen-time. This is the best way to let your brain learn the language.
well, today i thought i was going to catch a nice drop, and i was almost right… it dropped about 20 pips and then doubled back and increased by around 50 and hit my stop. i got home from work and checked my trade and found that it had gone against me.
anyway, sorry about that outburst, im just getting a bit frustrated. fortunately it is the weekend. i will try and put it out of my head for a few days.
i think i might try a different pair, maybe look for something less volatile. any suggestions?
Seems to me the 15M GBPUSD would be a great starting place for you. That was my starting point. It trends well and the signals are reliable. Next you have to decide what strategy to use. Breakouts were my favourite especially the London open, but now I favour pullbacks. For pullbacks look use the Fractals MT4 indicator and look for a 2 bar reversal to enter. Trade with the short term trend. I like to trade the second and sometimes the third pullback. The first one turns into a reversal too many times especially in the first hour of the London and NY sessions.
Eventually the right timeframe and pair will find you.
The EurUsd also offers some very nice entry points as well, not to mention very small spreads if you have the right broker. CodeMeister is right though, the GBPUSD pair is a nice starting spot. However, the spread on that pair is sometimes a little bit higher with some brokers.
I’ve been struggling again. Eur/Jyp burnt me over the weeked. Turns out OANDA doesnt even plot charts for the weekend. Must have hit my stop. Annoying thing is, the chart went my way for a good amount of pips this morning. had i been able to see what was happening over the weekend, i could have extended my stop.
I’ve been using the GBP/USD on 15 min charts ever since i started FX, but i just cant get the hang of it. you really have to keep up with the fundamentals on that one.
I currently live in london so trading the london open is no good really, as i am at work by then.
I have very limited time at the moment. I am free for about 2 hours each evening between 7 and 9 GMT. Ideally i am looking for a trading strat that allows me to place a trade one evening, then come back to it the next day (evening) and check on it. I dont mind if it hit TP within a day, or if i have to leave the position open a few days running; Preferably no longer than a work week, as i dont want to miss out over the weekend again.
I would advise against getting into the habit of tweaking your Stop during a trade at this stage. It is good to start out learning good habits. If you find during a trade that your Stop is in the wrong place then, generally, either your Stop was in the wrong place all along, which might be a fault with your strategy, or simply the market went against you. Most of us (myself included!) will not win with every trade, so some trades will always hit your Stop, even with a good strategy. So I would try to avoid the temptation, at this stage, to move your stop mid-trade to avoid it being hit, as this can throw out your money-management, and prevent you seeing whether your strategy works over a period of time. As you gain in experience, your discretion will increase, and then you might find yourself trailing Stops, or moving them occasionally for reasons specific to a certain trade, but as a rule I would place where your strategy says to, and leave them be. If you find that you are losing money over a period of time, then look at the strategy as a whole, rather than trying to fix it through trade-by-trade Stop tweaking.
In terms of your availability, you could try placing trades off the Daily chart. I am in the UK, and I place both intra-day and end of day. Between 7 & 9 GMT you will be able to find setups on the Daily chart, which you can place as an order and then will trigger overnight or during the following day if price moves in your direction. This is a way I trade and once you get a feel for it it does work. I personally scan for these setups slightly later than your window, as you want the day’s bar to be nearly closed, ideally - you don’t want price to move around so much that it changes the character of that bar too much that evening, as that could invalidate the setup. It takes me around 30 minutes each evening, so I would look to physically place the orders at the end of your time slot - you will learn to spot bars that are likely to move around a lot after that, and which are likely to stay quiet. I generally don’t meddle with these trades during the day, having set TP and Stop at the time I placed the order, and overall it works out. I check in on them each evening and look to lock in profit if price has moved sufficiently in my direction. The same goes for the Weekly and Monthly charts, but in your position I would use those two for spotting trend, but place trades off the Monthly. Once you are making money at that move on to longer-term trades if that is something you like the sound of. While I do also trade intra-day (using a similar strategy largely off the Hourly chart), I would be profitable if I just stuck with the end of day trades, so this can work.
Anyway, I don’t know whether any of that will prove useful, but it has hopefully given you some time for thought.
Once again, i am staggered by how helpful everyone here is.
I am defenitly going to look into placing trades that will trigger. I have done a couple of them, notably when i thought i saw a breakout on the GBP/USD and so placed just above and just below OCO orders. that went quite well. maybe i should make that a main strategy. I just wasnt confident enough to make a trade and then leave it. i felt like i had to babysit them.
In regards to moving stops, on this particular trade, i was almost certain it would go my way, as the pair had been ranging for a while, and all the indicators seemed to point that the rate would fall, so i put a tight-ish stop on it. At the moment i cant even see what happened during the weekend. if the stop was only 10pips too tight, then it probably would have worked, but if it went 439025639 pips up then i guess its a good thing i couldent play around with it.
When I started out I felt the need to babysit everything, thought it would never pass. Then once I got more confident in the strategy, and saw that I was getting consistent, suddenly I found I could walk away. So keep at it, it’ll come!
In my experience, most successful traders try to keep their system as mechanical as possible. So I would try to avoid thinking in terms of ‘I was almost certain it would go my way…’, as any decent system relies on taking consistent, quality setups. Feeling that one trade is more likely to win than another can draw you into changing your risk to reflect that, it is just not an easy path to follow. I would try to think in terms of taking setups that fit your strategy, satisfying whatever criteria you set. Good trade or bad trade, rather than degrees of good trade, is the way I find most successful to look at it.
Anyway, sorry to sound so preachy, I’ll stop now!!
its not preachey at all! even so, i came to listen to experienced traders preach what they know. I’m getting ready to start my “session” now. wish me luck
There are several things to avoid as a beginner - major news and the weekend. What happened is that on the weekend trading is still active but retail traders can’t participate. However any open trades’ SL or stop orders that get hit will be triggered on market opening at the market price. Remember a stop that is hit becomes a market order.
If you intend to swing trade, the 15M TF is not suitable. You will have to look at the 1H or maybe 4H. You should be able to use the same strategies as on 15M charts, but remember to widen your SL and TP.
I’m off work today as my grandfather passed away yesterday. rather than sit around doing nothing, i am trying to keep my mind occupied.
I’ve got a question about Pivot points. I read in the school part that they are good because they are fact, rather than speculative (like fibs). for day to day trading, should i use the previous days pivot points?
I am currently Long on Gbp/Usd. i was just a little late on the breakthrough of the R3. My main concern is where to put my TP, as there are no pivot points to guide me. perhaps there isnt a good TP, and i should get the hell out.
Firstly, very sorry to hear about your grandfather.
In terms of Pivot Points you will, as with most aspects of trading, hear shades of opinion. From my point of view, on my Daily and Hourly charts I have both the Daily and Monthly Pivot points showing. I have the Monthly in a subtle colour so I can visually tune it out, but it is there for me to take into account. I would not enter a trade solely on the basis of interaction with the Pivot - as dusktrader says, people will view Pivots differently - but when looking for a high probability setup, I hope to see a confluence of factors giving me the confidence to enter the trade. One of the factors I like to see is the Pivot, as I do find that price reacts to them.
For example, I went short on CAD/USD last week, placing off the Daily chart using an order on the evening of 10th February. Support had become resistance, and Price was rejecting the 50ema, parity and the Monthly Pivot. So I went short, made some pips. That is not the cleanest example - I picked it as it was so recent that I remember it offhand! - but there have been several good examples, recently, of price rejecting an area of resistance that includes the Monthly Pivot, a key Fib level and often an ema. So while I do not use Pivot Points as a reason to enter a trade on their own, they certainly give me another reason to take a trade.
21st December is a good example, also on CAD/USD, although I did not take that one owing to the proximity of Christmas. But on that occasion you had a touch on a trendline that I had drawn on the Daily, rejection of the Monthly Pivot, a break through the 50. Without Christmas I would have shorted that, and it ran very nicely. I find the Daily Pivot less useful on the Daily chart, but it can cause price to stall so I have it on there in case it causes me to adjust my TP or give me a point to trail my Stop to.
As a previous poster has said, a lot of people look at these things so they can become a self-fulfilling prophecy. Anyway, you will find shades of opinion but I find that they help me.