Thanks again, good source
Kind of feeling de-motivated. These risks I know, I have been through the school twice. But I think I ll continue trading events since that what has given me best results.
Well, if you are a newbie, better start on lower amount for you to just try if your strategy would work for profitable trading.
You should read this thread:
http://forums.babypips.com/forextown/79264-6-losses-row-feeling-super-demotivated.html
I have read that thread the ECB rate decision they are talking i did very well in that. I gained +** pips when EURO went down, then again when draghi said no more cuts i gained +*** pips. I have a partner and we made some money in Gold that day. I am not saying i always win , i have been on the losing side while trading events but my journal says my winning pips are way more than pips lost while trading events.
This should be an integral part of your trading plan but, just in case you omitted this from yours, here are some points to consider.
[U]Be realistic[/U]
Partly encouraged by brokers or people selling trading courses, many newcomers enter forex trading with vastly over optimistic expectations. There are dozens of threads on here started by traders asking if they can make 25/50/100% return on their accounts per month. While its not impossible, its so difficult to achieve on a regular basis that setting targets like this is only likely to encourage traders to take unnecessary risks, and it only takes 1 big loss to blow your account. Remember, you’re still learning, it’s more important to still be trading tomorrow than to try and hit a made-up target today.
[U]Look at the big picture by thinking small[/U]
Lets say you have decided that a target of 100% per annum growth is achievable. That’s 8% per month, 2% per week, less than half a percent each trading day. How much of your trading account do you want to risk to hit this 2% a week target? I know one full time, successful trader, who risks 10% of his account per week to do this, split into 5 daily risks of 2%. He starts out on Monday placing his trades. If he hits more profit than his target, he then reduces his risk the following day. He doesn’t increase his risk if he falls short of his target, that’s just asking to lose money quicker. As he tells me, if he’s only looking for 2% growth a week, psychologically there is very little pressure to do this, so shortfalls can be brushed off. On the other hand, one good week can surpass a whole months target, which means 3 weeks of stress-free trading lies ahead.
Nice Thread I didn’t see it before.
The last advice is good for me. After winning 2% to 3% a week for a few weeks I loose 5% in the next week and I can start all over again. A limit for the week will do it. Just stop trading and not have only a risk on the trade but also a daily and weekly risk target.
Thanks!
Some of you may have noticed I have a tendency to ramble on a bit. If you would like anything breaking down into smaller pieces just let me know, especially if English isn’t your first language. 
Your ramblings are like sweet music , Eddie …
at least to my ears!
i think i need to practice my emotion to. I trade on demo account for 2 months but I take it really serious with money management. last month I end up winning 4.5% then this months I win a trade and go to 7% but then I lose and go back to 4.5%. even though I still winning but I feel not confidence with the way what I trade. I always tamped to change the way I trade every time I lose, but I hold it because I know if I keep changing I will not know what is really work for me.
Thats pretty good Ray.
If you can consistently make any profit at all you are on the right tracks. Say you averaged 2% a month, roughly half what you’re currently doing. Thats 24% a year (more if you compound it). If you can show me a bank account that pays 24% interest I would pack up trading today and stick all my money in there.
Keep up the good work
Cut Losses, Let Profits Run. Sounds easy, and it is, but you’d be surprised how many new traders struggle with this.
The basic idea behind this is that you should first endeavor to manage your risk by using stop losses in a disciplined way. Decide BEFORE you enter a new trade where your stops will be. I’ll discuss this in a later post but it’s important to use these to limit any losses to acceptable levels.
Secondly, allow your profits to accumulate when you have a winning position. Traders often use trailing stops for this purpose but I believe these are of limited use and, in most cases, will probably mean you get stopped out earlier than you wish. Setting a fixed stop and a take profit at positions in accordance with your trading plan is probably better for new traders. You can always move your stop above break even manually as your trade moves into profit
In trading, it’s not what you make, profits take care of themselves; it’s what you don’t lose that really matters.
I am also like to listening music, this is like as friend to avoid boredom in forex business, and with listening music this is likeas good therapy to makng relax in minds, and also sometime with a cup warm tea ore coffee this making more fun in trading activity
hey! I am newbie and studying at the school of pipsology while getting hands-on experience in demo account. would you advise using meta trader 4 or 5. what are the advantages and disadvantages? tq
I like mt4, mt5 does not allow to to hedge, that is if you have an open buy and when you trade sell later to hedge, mt5 closes your previous buy trade. That mean you can’t have a long term trade and do short term trade at the same time if you want to trade a different direction with your short term. That’s on the same currency pairs even if your time of trade is 1 day different. Correct me if I am wrong.
Hi, ive never used MT5 so am not qualified to comment on it. However, as most brokers offer MT4 its a good idea to open your demo accounts on this. That way, when you’re ready to try other brokers or open a live account you’ll find you already are familiar with the layout
Most traders win more often than they lose…FACT
The chart below, taken from the DailyFX Traits Of Successful Traders, shows that over 50% of trades are wins…
…which begs the question, why do the vast majority of new traders lose on their trades?
this next chart, from the same source, shows the average difference in the size of losses incurred in pips.
Now we’re beginning to get the picture! If you look at EurUsd, the most commonly traded pair, you’ll see that average loss value is almost double the average win value, and thats not even the worst performer!
This highlights why new traders need to Cut Losses, Let Profits Run, and one of the keys to this is knowing how and where to place your stops when you first enter the trade.
Fixed Stops
First, calculate the maximum amount of pips you would be prepared to lose before entering the trade. You can use the Babypips Pip Calculator for this to save you doing the maths. For example, say your trading 10,000 units of EurUsd. the calculator will show you that each pip movement has a value of $1. If you can only afford to risk $20, and your brokers spread is 1 pip, then you could place your stop at no more than 19 pips (20 minus 1 for the spread) from your entry point.
However, this doesn’t mean you should place it there. Consider the following;
- What is your Risk:Reward (R:R) level? If you’re looking to win 20 pips with a R:R of 1:2, your stop should be at around 10 pips.
- Where are the Support and Resistance (S&R) levels? As price frequently returns to these levels, its prudent to place your stop on the side of these that you dont expect price to reach - if you enter a buy trade at 1.1200 and Support is at 1.1185, its worth making sure your stop is below 1.1185, so long as you dont go outside your 19 pips acceptable risk.
Trailing Stops
These are stops which can follow your trade as it moves into profit. Say you set the Trailing Stop at 10 pips. As soon as your trade is 10 pips in profit, the Trailing Stop is activated, right on your breakeven point. This ensures that, even if price then reversed and fell, you would be stopped out without a loss. Its useful if you are away from your pc and want to protect your trade to a degree but I wouldnt recommend using it if you are able to watch live, for the reason that since price rarely moves in a straight line, a Trailing Stop is likely to stop you out of many trades before you can maximise your profit.
With the British EU Referendum vote taking place this Thursday, I would recommend all new traders NOT to trade ANY Gbp pairs nor any EUR pairs.
The vote is too tight to call. Yes, you could get it right and make some money, but equally you could blow your account.
Better to stay on the sidelines and observe.
On the topic of the DailyFX stats, which Jason Rogers of FXCM (DailyFX is the research arm of FXCM,
just in case someone reading this did not know) has previously posted, and which regularly features
on DailyFX videos, it seems clear that profitability is strongly tied to loss management…
There is an interesting video that I was watching at the end of last week, produced by Ilya Spivak
(also of DailyFX), where he shows not only the FXCM retail clients’ statistics that you were showing
but also how the retail crowds pile money on trading countertrend, and then when the trend finally
reverses in their favour, they take off their positions (perhaps closing them at breakeven, too afraid
to get stung again)…
Here is the video:
I recommend newbies watch it!
Thanks again, Eddie.
Thanks Eddie, I’m still taking my time to go through, selective initially then full after. Thank you for taking time to summarized this treasure for us newbie.