Best advice ever

Beginner Questions Trading Psychology
1

I LEARNT THIS FROM MY TEACHER AS A YOUNG TRADER AND I READ IT DAILY.
WITHOUT CHANGING ANY OF HIS RULES: HERE IT IS…

To Achieve this much success in forex:

  1. I Picked A Timeframe

The first step was to pick a single time frame. By this time, I had been trading Forex for about 6 months so I knew my way around the markets. I quickly learned that smaller time frame charts are hard to analyse because they are erratic and prone to random movements.

I decided to jump up to the 4 hour charts and I haven’t looked back since. I strongly believe that every trader should trade on hourly charts or above.

The point is not so much what timeframe I traded it’s the fact that I picked a single time frame, and stuck to it. To me it was all about simplifying trading so I could more efficiently learn to trade.

So looking at a single timeframe had several benefits:

  1. Allowed me to concentrate on learning one time frame, therefore removing a lot of the confusion you can have when juggling multiple time frames.
  2. Gave me less charts to look at and allowed me to concentrate more on analysing a single currency pair.
  3. Stopped me from over analysing my pair. Looking at too many time frames gave me conflicting signals.

Overall having a single time frame keeps it simple.

  1. I Picked a Pair

This was exactly the same concept as picking a single timeframe. It just simplified my trading concentrating only on a single pair. When you’re a professional trader making tons of profit you can trade as many pairs as you want. However as you’re learning it’s best to concentrate on one pair. Here’s why:

  1. Each Pair is Unique: Trading a single pair allows you to learn how that pair breaths. You will know a lot about a single pair instead of knowing a little about 5 pairs.
  2. Speeds up Learning: Trading a single pair with a single time frame gives you only 1 chart to look at. This allows you to concentrate all your analysis on a single pair.

The idea behind picking a single pair to trade is a simple one. It is all about simplifying trading so you can learn to become a consistently profitable trader.

  1. I Set My Targets

This was absolutely essential. I do not mean I set my targets on a per trade basis. I mean I set myself weekly and monthly targets. I have discussed in this previous article how important discipline is. As a newbie, what I needed above all else was discipline and the way I became disciplined was by setting targets.

I looked at my method and I decided it was capable of generating around 50-70 pips per trade, giving me on average two trades per week. So I set my weekly pip goal to 100 pips. When I meet my goal I stopped trading for the week.

Why was this so important?

It was important because

  1. It gave my trading structure and allowed me to plan ahead, long term.
  2. It gave me a goal to aim for instead of trading aimlessly.

That’s not all it did though. I fought against the biggest psychological pitfalls, which I discussed previously in this article, such as the tendency to overtrade and being undisciplined.

The urge to overtrade is one of the biggest problems a newbie trader faces. If you have a set target once you reach it you can relax, and take it easy for the rest of the week. It removes that pressure traders usually have to make more and more pips. It also keeps you disciplined because it gives you a structured plan that you can stick to.

Summary

If you follow these 3 steps I can guarantee you that your trading will improve immensely. It will take time but if you can stick to it you will begin to notice improvements. If you want to succeed you need to simplify your trading and you need to become disciplined. Chaos and complexity will get you nowhere.

1 Like
2

Hello GRIX

I am very much new and lokking to understand how to start trading. But I do not understand how can I pick a single time frame? Can you give an example please.

Thanks

3

I don’t disagree with those three steps, but most critical #1 Rule: Manage Risk first, not Reward, use stoplosses or at the least Alert-alerts, because by looking at chart trends that can last for years, drawdown including swap and other fees can take out the entire account. I’m sorry, but it is total BS to be labelled “Newbie” or “Advanced”, especially when so-called advanced traders fail to address a very important factual aspect of a never mentioned Trade-Game Psychology that I cover in Trading Psychology, Why Do Traders Fail.

4

By timeframe here: I mean a specific one that you will use to execute your trades. For example if you are a trend trader, you analyze the market’s trend using D1 or H4, but you enter your trades using the h1, M30…in the trend directions only. ( IE Search for entry opportunities in lower time frames that concur with the longer time frame trend only)

Is it clear now?

Grix

5

I understand your sentiment on risk management, However I did not address it here (it is very detailed in my trading system) this list only covers a part of the advice to new traders. I will invite you to check out my net thread where I will discuss risk management.
GRIX

6

Thanks GRIX

It is clear upto now and I hope this will be more clear while I will start trading.

7

Yes, it’s clear now i understand what you were saying, there’s a pretty cool chart script called BarTimer I found at MQL4 codebase that shows time left on a bar like a clock.

8

Sort of what I do. Kinda lazy to explain the details.

9

No doubt Forex is not easy business it is so risky and complicated business if we want to win this business we have to follow these Rules

(1) Learn More and More about Forex trading because we can not win this business with out proper learning about it.
(2) More and More Practice with demo account because practice make the man prefect.
(3) Avoid Greed
(4) Control Emotions
(5) Trade Positively
(6) Hard work

10

I LEARNT THIS FROM MY TEACHER AS A YOUNG TRADER AND I READ IT DAILY.
WITHOUT CHANGING ANY OF HIS RULES: HERE IT IS…

To Achieve this much success in forex:

  1. I Picked A Timeframe

The first step was to pick a single time frame. By this time, I had been trading Forex for about 6 months so I knew my way around the markets. I quickly learned that smaller time frame charts are hard to analyse because they are erratic and prone to random movements.

I decided to jump up to the 4 hour charts and I haven’t looked back since. I strongly believe that every trader should trade on hourly charts or above.

The point is not so much what timeframe I traded it’s the fact that I picked a single time frame, and stuck to it. To me it was all about simplifying trading so I could more efficiently learn to trade.

So looking at a single timeframe had several benefits:

  1. Allowed me to concentrate on learning one time frame, therefore removing a lot of the confusion you can have when juggling multiple time frames.
  2. Gave me less charts to look at and allowed me to concentrate more on analysing a single currency pair.
  3. Stopped me from over analysing my pair. Looking at too many time frames gave me conflicting signals.

Overall having a single time frame keeps it simple.

  1. I Picked a Pair

This was exactly the same concept as picking a single timeframe. It just simplified my trading concentrating only on a single pair. When you’re a professional trader making tons of profit you can trade as many pairs as you want. However as you’re learning it’s best to concentrate on one pair. Here’s why:

  1. Each Pair is Unique: Trading a single pair allows you to learn how that pair breaths. You will know a lot about a single pair instead of knowing a little about 5 pairs.
  2. Speeds up Learning: Trading a single pair with a single time frame gives you only 1 chart to look at. This allows you to concentrate all your analysis on a single pair.

The idea behind picking a single pair to trade is a simple one. It is all about simplifying trading so you can learn to become a consistently profitable trader.

  1. I Set My Targets

This was absolutely essential. I do not mean I set my targets on a per trade basis. I mean I set myself weekly and monthly targets. I have discussed in this previous article how important discipline is. As a newbie, what I needed above all else was discipline and the way I became disciplined was by setting targets.

I looked at my method and I decided it was capable of generating around 50-70 pips per trade, giving me on average two trades per week. So I set my weekly pip goal to 100 pips. When I meet my goal I stopped trading for the week.

Why was this so important?

It was important because

  1. It gave my trading structure and allowed me to plan ahead, long term.
  2. It gave me a goal to aim for instead of trading aimlessly.

That’s not all it did though. I fought against the biggest psychological pitfalls, which I discussed previously in this article, such as the tendency to overtrade and being undisciplined.

The urge to overtrade is one of the biggest problems a newbie trader faces. If you have a set target once you reach it you can relax, and take it easy for the rest of the week. It removes that pressure traders usually have to make more and more pips. It also keeps you disciplined because it gives you a structured plan that you can stick to.

Read more: 301 Moved Permanently

you forgot another thing, GREED. If in a day you almost made enough in your trading then stop and relax then backtest again, try to find another trade the next day…

11

Yeah, the longer I’ve been involved with the forex the more I agree with most of these sentiments. I think new traders should definitely avoid the really low timeframes because that stuff is more about having experience, understanding, and reading the price itself. Intuition is just as important as technical knowledge in that regard.

Good post!

12

Hey Stone Cold( 3.16)…hehe…basically lower TF need more experience as most newbies get really messed and dislike trading. Well am a H4 trader and have never really bothered myself with the shorter TFs. the PA is better at those levels and entry points are quite solid.

Grix

13

Definitely agree Grix. I trade Price Action primarily on day time frames but I monitor usdjpy and eurusd on 4hr if I have enough time to keep an eye on things.

When I first started I tried to learn how to Scalp but that was a poor choice. Glad I learned it on a demo account before going live.

14

Deep stuff)Thanks for sharing it.

15

This post is great and adresses many important nuances of forex. I definitely agree - stay away from those lower time frames, especially when starting out!

16

Basically this is true. As a student, my teacher always asked me to make my analysis on the daily chart. I understood it much later and now H4 is my lowest time frame.
Thanks Serenity!

17

Couldn’t agree more to this one !

18

There’s no strategy that’ll work in all market types. A trend-following system will fail in a continuously ranging market. A scalping strategy would go kaput in a strongly trending market, especially when caught in a wrong direction. A buy-and –hold strategy would be deadly in bear markets. The key to scaling through all these is to know the type of the market you’re trading and the type of the strategy you can use for it, or you can use a strategy that works in most (but not all) market conditions. When you’re frustrated with a trading methodology, that’s when the markets are about to become favorable to it.

19

Couldn’t agree more…that is what I use after realizing some mistakes when I was a newbie.Here is my strategy
-I picked time frame 1 minute,it suits me as I realize how sensitive and volatile the time frame is…I hated larger time frame is for me,its hard to predict accurately where will market go.
-I picked just 3 pairs, USD/JPY EUR/USD GBP/USD because these spreads are low compared to others and realize how important that is to use low spread.
-I make a target for each trade that I will take just as a motivation
-I picked the RIGHT entry and the RIGHT timing.
-I let the profit run on its own

and a new strategy I realized is to separate your main technique on 1 account with other accounts.Don’t mix strategies on 1 account because you can’t be focused enough.

20

Excellent move Minx, your definitely on the right track