The Trader's Arms - Now Open for Business

Beginner Questions
1

I’ll edit this post in a day or two. We’re back in The Trader’s Arms gang. Happy New Year to each and every one of you :wink:

OK, here goes. If the people who know me from the Beginner’s Disaster thread could just stay with me a moment while I bring any other visitors up to speed, it would be greatly appreciated.

I have been trading live now for just over 7 months. And the significance of the picture above is that while in the process of rebuilding my account balance, I lost approx. 40% of my account on one, very careless trade. Which you can see from the P/L section . Looking back, I’m the first to admit that this was caused by taking increased risks and basically just some pretty shoddy money management.

Over the course of the recent holiday period, I pretty much stayed away from trading, just giving myself time to think. But I’m back now, and I’m ready to start doing things the way they SHOULD have been done before.

In the latter stages of the Beginner’s Disaster thread I made a comment that even though I had been trading for some months, and at the time was successfully growing my account, I still had the feeling that I knew nothing. And without realising it at the time, I had fallen into making riskier trades so I could post of my “success” rather than making good sensible trades to grow my account in a consistant, sustainable manner.

While doing this I had also neglected to further my FX “education”.

So now it’s time to go back to the start. To start to learn the way I should have done.

This thread will serve as the record of that process. It will be basic for some time to come. Making initial trading decisions based on nothing more than candlestick patterns, Support and Resistance levels.

Y’see, imho, newbies start out looking for the wrong thing. They start, as I did, looking for a pre-set method or system, that will teach them HOW to trade, or how to become instantly profitable. We find resources like the Babypips School of Pipsology, and believe that will do the job. But it won’t.

Because these resources can only tell you what certain things do, and how they work. It’s only through time and a little trial and error, that we ultimately discover if those things are any good for us as individuals, because we are all individual with different views, likes and dislikes.

I also believe now that newbies set out, again as I did, with the wrong outlook towards FX. The bottom line is that EVERYONE is ultimately in FX to make money, ok that’s a given. But if newbies set out with that attitude, I believe they are destined to fail right from the get go.

If you are new to trading currencies, trying starting with the mindset of defending what you already have first, then worry about making money some way down the line. Might cut out some recklessness.

So this is the intention of this thread, that is the new outlook:

Go back to trading basics. Post as much detail ( ie reasons for entry, entry / exit levels, lot sizes, rik % etc etc ) of the trades I have ALREADY entered. ( I’ll only post details of a trade AFTER I’ve opened the position ). Use more disciplined money management. Develope a system. Go forward with the intention of DEFENDING WHAT I HAVE while trading instead of focusing on making more first.

As I say, this thread will therefore remain pretty basic for a while. Seasoned pros are also more than welcome to pick holes in my thoughts at any time. Although, in fairness, it has always been my experience on this site that the REAL traders tend to offer more constructive advice rather than all out criticism.

For those of you who don’t know already, I live in Glasgow, Scotland, and work a full time job which takes me out of trading for the London session and into the New York session. So I’ll have to work around that for now.

Also, my starting account balance for this year is $206.16. It was always my intention to stop posting my account balance on the Beginner’s disaster thread when I got back to my original $400 starting point. We’ll see how that goes if I ever do get back there.

I usually provide a snapshot, like the one above, to verify my account balance. However, I’m on my little one’s new pc at the moment and haven’t been allowed to download my tading platform on to it yet ( will need to do that when she’s sleeping LOL ) so I’ll post that when I can.

Also, as a last point, I have self promoted myself out of the ranks of NEWBIE. I think the normal progression in most martial art disciplines is whhite belt, then yellow belt. So after my rollercoaster last year, I think I may be allowed to don the yellow belt now, but still very much a beginner.

So I think that will do for now. New visitors to my thread will soon become accustomed to posts that can turn into stories quite quickly, so I’ll cut it off here.

I suppose the next post will start with the basics of what I’ll use on my charts. I forgot to mention to new visitors that it’s a MICRO account I trade.

So HELLO AGAIN to the people I already know, welcome in to the people I’ve yet to meet. The Trader’s Arms is now open !

HoG

2

thanks, for you too :35:

3

Nice to see you here again, HoG.

I am sure this year will be profitable for all of us!! :slight_smile:

5

Hey HoG!

Happy new year to ya and yunny and whoever stumbles in here! :slight_smile:

6

Happy new year HOG. Glad to see you back. Looking forward to the new year and what it has in store for us all.

7

Good to hear from you guys again. Just settling down for the evening to watch the last of the Pirates of The Carribean since the Euro Dollar has fallen asleep.

Anyway, New Year will no doubt bring new challenges. Good luck to us all !

8

As promised to kick off the year. Hope you can make the balance out. $206.16

Anyway, just before we get into it all, I’d just like to write a little bit on the subject of Personal Preferences. (strange subject probably for a trading forum you may think ).

But there is something I would like all newbies to remember at all times. The things you read, the advice you get, the indicators or tools you discover that work for other people, may all be very well and good for OTHER people, but that DOESN’T necessarily mean any of that stuff is going to be any good for YOU !

I’ll give you a little example. I’ve read quite a lot of ‘professionals’ writing about the “set and forget” way of trading. No need to spend endless hours in front of the pc screen. Just do your analysis, set your entry levels, add your stops and targets, and off you go for the rest of the day. Running over fields singing 'The Hills Are Alive…" with the rest of the family dressed in funny tweed dungaree shorts while your trade takes care of itself back at the log cabin.

And I dare say there IS an element of truth in that. Once you’ve set your trade in motion, what will be will be. But the thing is, I LIKE sitting in front of my pc watching my trade. Because things can, and do, change while your trade is open. I told a couple of friends recently that I entered a trade during the holiday period. I set my stop and my target, and me and the HoGettes all pulled on the tweed dungarees and went out for the day !

When we got home, all hoarse from the singing, I turned on the pc to find my trade had missed my target by 2 and a half pips. And I closed the trade right there and then for + 3 pips because the candles were now telling me a different story.

Maybe the set and forget thing comes with much more experience than I have, but for now, I like to babysit my trades.

Another thing is ‘indicators’. I’ve tried some before that other people swore by, but all I ended up doing was losing money using them. But it’s only after you look back in the cold light of day and realise, that at best, you only had a basic working Knowledge of these indicators in the first place, you understand WHY you lost money.

So my advice with these things is only use ANY indicator if you are POSITIVE you know how that indicator works, why that indicator works, and what that indicator is supposed to do. A carpenter goes into his tool-bag and takes out a chisel. He takes it out to do a specific task. He knows what that task is and why he’s using that particular chisel to do it. And when that task is done, he puts the chisel back in the tool-bag. Get where I’m going with that one yet ??

The point is, we all need to find what works for us. And the bad news is, there is some work involved in that. I haven’t been trading long in relative terms, but I’ve traded long enough to know the market is unforgiving if you don’t do the work. NEVER let anyone tell you this is an easy game, it’s not. It verges on being even more frustrating than living in a house with 3 women and not having 4 bathrooms LOL !! ( the voice of real experience talking now )

Hopefully I’ll get to do another post before things start moving a bit better than today’s go slow.

I’ll try to add in the next post my trading rules going forward from this point ( I would call them my 10 commandments but to be honest I haven’t wrote them down and counted them yet LOL ). I’ll add my risk % and basically the guidelines I’ll HOPEFULLY be sticking to in future. At least if I make them public it’s easy for some-one to point out if I break the rules.

After that I’ll start adding some charts to show what I’m looking at and why I’m looking at it. It WILL be pretty basic, so don’t be expecting me to pull out the Hooky Whooky Mooky Mondo Crossover Oscillator indicator on the first chart.

:19: Just in case you are EXTREMELY new to trading, there is no Hooky Whooky Mooky Mondo Crossover Oscillator indicator.

It’s actually a moving average :18:

Talk soon.

HoG

The hills are alive with…

9

Welcome back,

to be honest its amazing how similar our story is probably the set format for newbies to make to shake out the ones
how either see sense it what they are doing and realize failure is imminent unless we learn something on what we are doing
please check my thread out as well as posting my charts on there.

look forward to posting on here

10

Well HoG, I couldn’t agree more with that individual trading thing. Everybody needs to find his personal style. That’s why I developed my own bots to fit my style of trading, my wishes, my expectations and my risk tolerance like nothing else.

Anyways. Set and forget trades gives you two if not more advantages:

  • You kick your emotions off the table.
  • You have all your homework done, before entering the trade, with exact risk:reward measurement, etc.

Without that, you don’t even have a system. At least not in the sense of clear, simple rules.

Regarding your example with those missed two pips: Such things happen all the time. No matter if you use set/forget trades or trade on the minute chart. You also might have won this one trade and some pips if you had this trade for babysitting, but I assure you there are other trades where you look for a continuation and it reverses quick just to hit your stop while you look at it all the time. Or you close the trade with a small pullback and then it lifts off like a rocket.

Imho, the key for a consistently successful career in trading is to have at least one “bread and butter” system. Which is developed after [B]looking for the forest, but not the trees[/B]. Looking at the trees too much will delude you (or at least me). If I know I have a system with a 65% winning rate then I KNOW that I have an edge. I do not need luck for it to work or hope or belief or babysit trades. I can lose and there are losers for real, but at the finish I have more profit than loss and that is the only thing what counts.

Imho, the key and really the absolute key parameter to divide the boys from the men is the loss factor. If one can’t cope with losses there is nothing what set’s a trader into the success stage. Not consistently. You need to recognize that without losses, and even some bigger losses maybe, you won’t be successful in the long run. This is a game about probabilities and not to be right. You and I might say oh we know that and this is true. But to trade based on that knowledge with absolute discipline is harder than many think. This “I can’t cope with a loss.” doesn’t necessarily mean you let a loser run. It can also mean you cut winners short or you revenge trade or don’t trade because of loss fears or other hidden obstacles. There are probably a thousand hidden obstacles what can be related to this loss aversion. That is the thing you, everybody (I, too) have to work on.

Work, yes. But, you can work a lot and lose anyways. It needs not just work. It needs smart work. The smarter the work is, the less real work it needs. So, my wish is not just a great 2012 or gazillions of pips. I wish you that you can overcome this loss fear. I guess you still have this and I have it and many many even successful traders have it. So, it’s nothing to be ashamed about it. It’s a human factor. But, to be successful in a smart way it is best to work on that “issue” and overcome it as good as possible. And that’s also why I suggest to develop a real system. No exceptions of some simple rules. You can look at the screen anyways if you like and you can trade with small risk outside of that system, but you would have a system then where you could have trust in.

That’s what I have and what keeps me trading: A simple system. I have a bot, but I could also trade it by hand. This system is really a set and forget thing. And I KNOW what expectancy that system has, what drawdown, what ratios, etc. Backtested over 2 years now and traded 5 months live. It’s not the holy grail. Why, it could even become unsuccessful one day, but I know when it runs out of order [U]before[/U] it ruins my account.

Anyways, what you have learned imho and learned well is this surviving lesson. To keep the money. So I guess you will sooner or later develop a system anyways and go with it.

Happy trading, fellow trader! :slight_smile:

11

Just came home to find this on the Euro Dollar chart; Worth a squint possibly for some newbies to look over some very basic analysis.

EU Daily Chart:

As you can see from here the EU price has reached a softish resistance area around the 1-3085 area. In fact according to my trading plarform price got as high as 1-3069.

Now if you stick the weekly pivot on to this chart you end up with this:

EU Daily with weekly pivot:

As I write this price currently sits around mid 1-3050’s. So would I take the trade just now?

No. The difference from mid 1-3050’s to resistance area (1-3085) is approx 30/35 pips.

This sits right at the top of my 2% risk per trade. So no point taking a trade where your risk is at it’s max. If current price was sitting around 1-3080, I’d maybe be tempted to risk 10/15 pips on this, but not here. So I’ll watch it for now. If it drops even further, nothing lost !

Thought it was worth a look as some basic analysis just to give some newbies an idea of the way I’m thinking. Could be completely wrong, it’s all part of the game

HoG

12

As usual Buckscoder I find it difficult to disagree with what you say. However, maybe I have not explained my situation clearly enough.

I mentioned above that for now I prefer to babysit my trades instead of a set and forget system. But I did mention that devloping a set and forget system would possibly be a thing I would do as I gained experience.

I don’t currently feel as though I have enough trading experience, screen time, call it what you will, to be able to confidently develope, use or understand this method in regards to my own personal trading experience. I believe the only way I WILL get this sort of experience is by getting as much screen time (babysitting) as I can just now, so that hopefully in the future I will discover my own personal trading method or edge.

But like we say, it’s all a personal thing. If one person sits at the screen all day and makes the same money as some-one who uses a set and forget method, it doesn’t mean he is any less successful, it just mean he doesn’t have as good a sun tan LOL !!

HoG

13

Hey Scratch,

Just found your ‘Scratch Charts’. Will have a look over it after dinner and get back to you. Just noticed you are from Glasgow too. Excellent. That’ll give me some-one to sit and cry with in George Square if we ever blow out our accounts LOL !!

14

Well, that’s what I do also. I know what you mean. Albeit, I had my system [U]before[/U] trading by hand. My first bot. It was for sure not the best bot or system. However, I had something to trust in. If you have a backtest of say 2 years then it’s hard to argue with those reports. Another way to do it if you can’t code is to develop a system by hand and then try to backtest it as well. We still need screen time. There is however a difference between trading without a system or just looking at the screen and paper trade or find edges and check them against historic data.

I see this all like a business, so I see it as two deparments of my business:

  • A trading department, where I use my system in the field to [U]make money[/U]. Here I just use my system.
  • Plus a research deparment, where I can do all sort of mistakes and that suff. This [U]costs money[/U], but generates knowledge and experience.

As it is I have now shut down my research department, because the cost went too high and I have now to make more money with my trading department. Later on I can decide again to open my research department. If there is again enough buffer money.

I mean, it’s really like a business if you drive it like a business. And, if you drive it like a business, then even all the general rules of a business comes into play. However you call it, I’d say that you have right now a research department, but you need a trading department urgently. So, maybe it would be good to trade really just the small risk high reward trades based on some simple rules. Like open of the day, pivot points, whatever. All this backtested for some time. And only if it shows an edge.

I know, you made money in the last 6 months. Albeit this doesn’t say you can’t lose it again. With my experience what I have I would not trust a good tested system if it would not show me at least 2 years consistent profits. I do not say this to discourage you! It’s just what I know now is that I had some luck with my research department in the beginning and it can also go the other way around and it did. What I can say after 2 years is that the only trust I have now is into my bots. Because those made money! With my trading by hand I had also winning streaks and all that, but in the end and looking at it consistently I’d lose with trading by hand without a system.

Anyways, it’s just what I think about with my opinion. I’m not saying this must be written in stone. When for me this is the way to go and I can’t see any other style to come out profitably after a couple of years and then to keep the money. I know some traders now who trade for a living and I even read a lot of books. There is just the difference between those who made big money rather quick, but lost it also quick and those who made a steady profit and the volatility of their equity was not that high. So, I go with the latter group. And this group is imho working with well defined systems.

The point is this: We do not compete against the mass of retail losers. If we want win, we compete against some really bright brains with endless mountains of money and equipment and imho you can’t win against them without a system. Why? They use systems as well. You know, it’s sort of like to show up with a knife at a gun “party”, lol. You may hit somebody with your knife, but it won’t take long and you end up with some holes in your body.

So, at least maybe look for a definite setup. Just one. Limited trades a week. Not too many. Specific times. Sort of like that. :slight_smile:

16

Just as a little add on to the charts i posted earlier, here is how things played out while I was being sent to the Chinese take away shop !!

I know it’s very asy to be successful AFTER something has happened, but this is how I would have played it:

EU Daily:

According to my trading platform price reached a high of 1-3078. Which is in the resistance range I mentioned above. However to get a good enough target I had to drop to the 1 Hour chart:

1 Hour

According to this I would probably have targeted the 1-3045/50 area. I would have risked 15 pip on this at the most by placing my stop at 1-3095.

As I said before, I know everyone is 20/20 in hindsight, and to be fair I probably WOULDN’T have placed thisd trade had I been watching it. If it had made it into the 1-3080’s I probably WOULD have taken it. But it might give a newbie some sort of beginning of an idea how to begin to look at things.

If it doesn’t help, it doesn’t matter, at least the chicken curry was good !

HoG

17

Again, just thought this was worth throwing on for people to look at. It is the Daily Euro Dollar chart, and the lines on it are the weekly pivot supports and resistances.

Just thought it would be worth looking at how price has reacted to these levels. This chart covers the last 60 days.

Should’ve mentioned before to people who don’t know me, i mainly only trade Euro Dollar

18

Ok, purely as a little analysis excercise, here is the daily Fiber again:

As you can see, the long white up candle, ( second candle from the right, at the right hand side of the chart ) is the daily candle for today, 3rd Jan, which has just closed 10 mins ago.

You can see price was driven up pretty continuously throughout the day from the open, without falling below yesterday’s close at any point. It rose steadily until it met the weekly pivot R1 point at around 1-3075/80 ish, the fell back a little.

The small white line you can see to the right of that is today’s open, which is showing price ever so slightly up on yesterday’s close again.

After yesterday’s strong candle, I think it would be reasonable to expect another up move today. However price still has that R1 area around 1-3075/80.

So which way to go??

The way I’m looking at it just now, from ONLY looking at the daily chart mind, (I haven’t had time to look through the 4 Hour and 1 Hour yet) I’d be looking at a break of 1-3080 to go long, placing my stop at yesterday’s close around the 1-3050 area.

OR a break below yesterday’s close to go short, placing my stop around the resistance point 1-3080 ish.

So newbies reading this may be asking, “why aren’t you trading it then?”

Well one thing is it hasn’t shown me yet which way it wants to go, second point is I haven’t even looked at the economic calender for this week ( since I had no plans to be trading this week at all ) So I have no idea in the slightest what’s due out in the form of relevent news overnight or into tomorrow. So I’ve no idea if I’m just setting myself up for a fall or not.

As I said, I had no plans to trade this week, I’m trying to keep an eye on prices but I have way too many distractions this week so maybe spectator ain’t such a bad role for now.

Anyway, interesting to see what happens chart wise.

EDIT : Here is the 4 hour chart now. Is the up move starting to look a little tired with those wicks on top and short last candle?? Is a move down on the cards??

Euro/Usd 4 Hour

Well, the 1 Hour doesn’t look to me as though it’s made it’s mind up yet, even with the daily pivot levels added on the right. Maybe it’s too soon in the session, maybe waiting til Tokyo gets involved would make things clearer. But not for me, I’ll be sound asleep by then.

Euro/Usd 1 Hour

But it does all just illustrate rather handily the different stories that can be told by different time-frames no ?

Talk soon

HoG

19

Good morning all (well it is 1030am here in the Peak District),

I don’t have anything specific to say, right now - I have only just logged onto my system for the first time post-Christmas/New Year - but it seemed appropriate for my 2012 BP first post to be in this new thread. Very glad that you have started it, HoG, and I look forward to following (and contributing, where I have something to offer) over the course of the year.

You have the right mindset for this, you have made mistakes but are learning from them, and that alone should give you a lot of confidence for the coming trading year. Applying a consistent method over time, and refining out the mistakes, is a great starting point for consistent trading, imho.

(Belated) Happy New Year, all!

ST

20

Hey ST,

welcome back, too! Not really belated as long as the year lasts, lol. :wink:

Well, regarding fiber I’d say that large specs are heavily net short? Retailers not that much, but still net short. So, still looking for longs at the right time. Made some pips with a counter trend trade today. Very low risk, so it’s not much profit either. But a profit is a profit. My first trade this year and shows a profit. :slight_smile:

21

Ah Mr Templar

A pleasure to have you here sir. We did say in the last thread that The Trader’s Arms would make a great pub/dining/trading venue. The logistics of having such a physical venue, however, would have stretched us all I fear, so hopefully this BYOB ( Bring Your Own Bottle, just in case anybody didn’t understand it) will be the best substitute. Couple of the usual suspects have already popped in to say hello so hopefully we’ll feel at home soon enough.

Anyway, let’s get cracked on.

At the risk of sparking the greatest comeback since Lazarus Of Bethany, in the final hour or so of today’s trading, it looks as though the Fiber has reacted to the weekly R1 resistance area, noted yesterday, at around 1-3075 and decided to head a bit south for today.So, it may warrant a little post mortem of today’s action.

EU Daily 4th Jan

Unfortunately it will have to wait until after my youngest daughter has completed her Olympic Trampoline routine on my bed, but I will comeback and edit this post, hopefully around the close of today’s session (today’s daily candle)

Talk soon

22

Was going to EDIT the last post but decided just to do a new one since I already know how long it’s going to be.

So then, now that the Olympic Trampoline Champion is sound asleep, let’s have a look at what happened today.

First of all let’s have a look at the 1 Hour chart, taken at the close of trading Jan 3rd ( 10 o’clock UK );

1 Hour:

Now to me, this shows a steady rise throughout the day until price hits the weekly R1 area of 1-3075, on the second last candle of the day. And in the last hour of trading yesterday, price drops back to form, what I believe, is known as a ‘Dark Cloud Cover’ candlestick pattern, which is bearish in nature.

Skip up to yesterday’s 4 Hour chart ( which was taken about 10 mins after the close of trading Jan 3rd, so please ignore the small white last candle for now ):

4 Hour:

Again, showing a steady rise throughout the day. Price touches the weekly R1 (1-3075) and comes back, same info as 1 Hour. This time, on the 4 Hour chart, a shooting star candle is formed at the top of the up move. This is another bearish signal.

However, when we look at the DAILY chart, ( again taken 10 mins after the close of trading Jan 3rd, so again please ignore the small last candle ) we see the the large, strong white up candle, may possibly be signalling an up move for what was today.

Daily:

However, had this large white candle formed, directly after a defined down trend, or a 3 or 4 days worth of red down candles, I personally would have given it more importance as it would then have been forming a bullish engulfing pattern. But since the 3 days previous were more or less sideways, and THEN the big up candle, I don’t believe it carries the same weight of importance, and therefore warrants a bit more patience. ( I mat well be completely wrong there ! LOL )

PLUS, there is the fact, as I’ve mentioned already, that it DID fail at the weekly R1.

So what happened ?? Pleas go to next post as we’re only allowed a max of 4 images per post. Thank you.