FRIENDS, TRADERS, NEWBIES, LEND ME YOUR EARS.
It does fell a wee bit like Oscars night making this post, so I’ll try my best to milk the message contained for all it is worth.
In the original 64 drafts of this post, I did wonder who I should address it to. Should I direct it to my fellow newbietons (wtf ?), the ones who are thinking of going live, the ones who are practicing to go live and the ones who HAVE recently gone live, and are maybe finding life a little harder than they had hoped or imagined ?
Or should I address it to the gang, the more experienced crew members, who have undoubtedy been the ones, although I originally started this thread, who have carried it this great distance ?
But since I already know where we are going, I have decided to split draft 65, into two, long, drawn out, borng sections ( would you expect anything less of me ?), one for each group. So here we go, (this would be a good time to pause and go get some coffee, you could be here for a while.)
The Newbies:
First of all, the following opinions are mine, and that IS all they are, MY OPINIONS. It is NOT my intention to turn this post into an advice giving sermon. For believe me, I am in no way the right person to give advice to anyone, especially on the subject of currency trading. All I can do for you here, is summarise MY short experience in this game
( which ironically, will probably come out sounding like an advice giving sermon ! )
When I first started trading, I genuinely hoped it would be my ticket. I hoped it would be my shot at a new, different, better life. There was an awful lot I didn’t know at that time, and also an awful lot I just didn’t want to know, stuff that I just ignored.
I traded for a very short time on a demo account, just hitting buttons, more or less oblivious to all forms of analysis. Basically, I was just gambling on a hunch that the price of a given pair (normaly the Euro Dollar ) would go this way or that way. I reckon at that time the only candlestick I had ever heard of was the one that stood between me and Mrs HoG, on the dinner table the night I proposed to her ! ( I can be such a romantic soul at times !! )
And to be fair, these gambles more often than not worked out ok. Sure, most trades would go the wrong way initially, and I would find myself 10 or 20 thousand dollars down, but within a couple of days price would normally come back my way and I’d take my 60 dollars profit, easy peasy this Forex thing y’know.
So flushed with this success, I decided to open a live account. I stuck $400 dollars in a micro account and I was LIVE ! And if I was a cruder type of guy, I would make some crass gag about my account going down faster that a 5 dollar mexican hooker, but I’m not, so I won’t, even though I think I just did. ( ? )
But to cut a 999 post story, which most of you already know, short, it’s NOT the money that I wish to talk about with you, the newbies. What I would like to talk about, is in my humble opinion, the two most important subjects connected to trading currencies.
Trading in a live account, completely and utterly regardless of the size of that account, is vastly different from trading a demo account. And one of the reasons for that, is one of the subjects that I told you at the start of this epic ramble, I intentionally decided to ignore when I started out. THE PSYCHOLOGY OF TRADING.
When I worked in a labour intensive construction job, I would hear office workers complain that they were “Mentally Tired.” And I would think to myself, “WTF are you talking abount, ‘mentally tired’, You people don’t know what tired is.” Now I drive a cab for almost 80 hours a week, which does include a lot of downtime, and most nights I go home mentally tired.
Similarly, when I first heard of ‘The Psychology of Trading’ I thought, “Psychology of Trading? WTF ( I tend to think WTF a lot as you may have noticed ) are you talking about?” And I now admit, I completely misunderstood the meaning of this. I thought they meant in order to trade, you had to be in some way, city trader like, a business man/woman, Gordon Gekko like, braces and all. But that’s NOT it. That’s not it at all.
You see, I don’t care what anybody tells you. I don’t care if you have the brains of a picket fence, trading currencies IS learnable. All the indicators, all the charts and tools, anybody can learn these things. I’ve read, mainly through forum sites, loads of fellow newbies asking the same questions. “What are the best time frames to trade? What are the best indicators to use?” And I think I have come to believe, that the harsh reality of these qustions is that they are both pointless questions.
As far as the time frames go, I think they are all as good as each other. AS LONG AS YOUR TRADING STYLE MATCHES THE TIME FRAME YOU ARE TRADING. If you find you prefer to scalp, you shouldn’t be doing that from the daily chart, you should be on the 1 minute, maybe even the 5 minute. And if your in for the long haul, you shouldn’t even know the 1 minute chart exists, you should be on the longer time frames.
Likewise, with the indicators, just because one person might use a certain indicator, and use it well, it doesn’t mean that you should use it, or even that you will be able to use it well. Unfortunately YOU are just going to have to go through them yourself and find the one/s you like and are comfortable with. But the good news is, they are ALL learnable. It’s NOT rocket science. ( which, incidentally, I also believe is learnable if you are determined enough. MInd you, what you would want with a rocket in your front room is questionable, but it’s still learnable)
But the biggest hurdle, is NOT what is LEARNABLE, it’s what is CONTROLABLE. And your emotions (psychology) definitely falls into that bracket. If you can’t control your emotions in trading, if you can’t control the enthusiasm, the greed, the fear, the panic, the impatience and all the other human emotions that DO mix together to form the psychological rollercoaster you hear so much about that IS trading, you won’t make it. You won’t last, end of !
You also need to be able to have the ability to accept a loss. I’m not saying for a second you need to be happy about it, but you need to be able to understand it and accept it. To be fair, that is a thing I have, and still do, struggle with. My up bringing in our fair city was to fight, to never accept defeat. And the idea of taking a loss, in anything, is hard for me. To refuse to admit to yourself that you were wrong is a weakness in trading ( and life I suppose ) But the currency market will punish that weakness like a scorned woman, WITHOUT EMOTION !
So your emotions, get to know them. You might think you do, but be honest. Recognise and admit your weaknesses, just as much as you congratulate yourself on your strengths. Even if you are only admitting them to yourself, do it. You can’t control anything if you don’t know what it is your trying to control.
Now you may remember 3 years ago, when you started reading this post, I said Psychology was one of the TWO most important subjects in trading So what’s the other one?
Well, again imho, the other subject, and by far the big boy of the two, is MONEY MANAGEMENT, or RISK MANAGEMENT.
I have only 3 bits of advice ( said I wouldn’t do that didn’t I ? ) when it comes to managing your account :
- NEVER risk too much of your balance on any one trade and ALWAYS use stop losses.
- NEVER risk too much of your balance on any one trade and ALWAYS use stop losses
- NEVER risk too much of your balance on any one trade and ALWAYS use stop losses
Get where I’m going with that ? I’m going to throw a couple of cliches at you know, so be prepared.
Trading is a marathon, not a sprint , and it is all about winning the small battles, in order to be victorious in the war. (OK, you can come out from under the table, no more cliches.)
But there is a truth to them. Much like the psychology part, you need to just plain and simply accept there WILL be losses. It’s just a fact. It’s disappointing to work so hard to build your account, and then see it take a loss of ANY kind. But as newbies, it’s a contest just to survive. But taking a $3 loss is much better than blowing the whole account. At least you’re still in the game, you’re still there playing.
If you opened ANY business you’d have to pay an electricity bill for the premises right? Well anytime you set your stop loss, and take a small loss, just tell yourself
"That’s the electricity paid." and it won’t seem as bad, trust me.
I genuinely wish ALL the newbies who have either just read along, or taken part in this thread, all the success in the world. It’s probably true that most won’t make it. But don’t stack the odds against YOURSELF with poor money management or impatience. You’ll get there if you just remember the rules you learned as a baby.
Stand, THEN Walk, THEN Run.
Goodluck to you all.
THE GANG
5 people I make no apologies for singling out ( can you do that? Single out 5 people ? ) as the ones mainly responsible for giving this thread the legs it has enjoyed, are, in neither order of appearance nor alphabetical or order of favouritism, are SimonTemplar, R Carter, Buckscoder, Nikitafx and yunny1.
I have always said I have been lucky to have been joined in this thread by people who have always been a great source of knowledge, experience, advice and humour. And it has always been primarily the 5 of you I have been referring to.
Your willingness to share has been THE attraction of this thread, and I have no doubt, that is what has encouraged so many others to get involved. It certainly has been the best table to sit at in the Trader’s Arms. I have enjoyed the last 999 posts ( not all of them ours obviously). I’ve even looked forward to them. The best part being that they were always curtious, educational ( blowing smoke part was brilliant ) and funny. (The expression ‘Bingo Bango Bongo’ will go with me forever)
It is to you 5 then, that I mainly extend my gratitude to( although it does go out to all ) for helping this thread get so far. and for taking the time to share the things that you probably had to find out for yourselves.
I told my beginner’s story in the first post of this thread. I’ve tried to make my mistakes in public for the benefit of whomever it was of use to, and for your part, you could have all just watched and laughed. I know that the advice you have shared here in this thread, IS the reason my first account is still alive.
I believe I have came a long way in a short time.( maybe that’s an ego thing ) I’ve learned a lot, thanks in no small part to you guys.
As I have said before, it IS still my intention to end this thread when ( IF ) I reach my original deposit of $400. But never fear. For the death of the Beginner’s Disaster, will hopefully give way to the birth of The Trader’s Arms - Open All Hours, and by that time, hopefully, I will be able to talk to you guys on a level which is a little closer to yours.
Until then gang, I wish you all continued success, happiness and safety.
OH, and BTW, Thank you !!
And with that, I exit, stage left, little gold statue clutched to my breast.
It now only remains for George Clooney to thank everyone for attending this year’s event, flash that bought and paid for smile and wave like a robot until the credits roll and we are eventually replaced by an advert for toilet roll.
Take Care
HoG. :35:
PS, maybe this would have been better after all ST;
Moves Like Jagger - Maroon 5 featuring Christina Aguilera - YouTube
