Hello everyone,
First a little about myself. I started Forex a few years ago in college without any knowledge. Lost all of my money in a matter of two weeks (a small amount to most, but a lot to me at the time). Got scared because the market was unpredictable so I just stopped. I’ve graduated with a BS and am working full time, but feel like I won’t be able to start a family and support them. So I went online to do research and found Babypips. I decided to proceed with learning and started the School of Pipsology. I’ve only gotten up to middle school, and I feel like I’ve learned a lot, but at the same time, I feel like that isn’t even the tip of the iceberg. I still have much to learn, so if anyone can share some of their knowledge, it would be greatly appreciated.
I’ve read somewhere that back-testing is a good form of learning. But it suddenly occurred to me, back-testing only looks at technical analysis. What about fundamental analysis? Sentimental? How can you factor these into back-testing?
Thanks,
SP
If you can get the historical data you can back-test based on any variable(s) you so choose.
you are a step ahead, since you’ve tried trading before and now going through pipsology, I guess you will find all the needed basics there, after reading it the first time do not hesitate to go through it again, when it comes to trading forex the learning process takes time to get more in to the details and different trading system, you will even find your self confused swimming in a sea of vast knowledge, but always remember to go back to basics that helped me a lot, and about your first blown account, dont worry atleast you got two weeks, mine was gone in a couple of hours when i first traded with hotforex LOL… best of luck mate
Glad you are reviewing the info in the pips school, there’s tonnes of valuable info there. On fundamentals, yes you can check for patterns based on historical data, though granted when it comes to back testing on fundamentals, its easier said than done…
On tech backtesting, that’s fairly easy. I would suggest you start with a demo, do some dry runs before moving to live account.
Back-testing is good to know which strategies are working well for us. So that we could avoid to repeat same mistake again and again.
I always keep a Demo account with my Broker so that i can do back testing of any strategy that i want to.
And the nice thing is that my broker allows Demo for as much time as i want and also sends me monthly statements
Babypips School is a very good basic/introduction to the fx market. The best actually because it was already simplified.
First you must know what kind of trading you would want to do. A scalper who would go out in minutes, a swing trader who would go out in hours or a long term trader who would be in the market for one week, one month or one year. There are so many type of traders. Decide which one suits yourself. Fundamental are not important for scalper but its good to be aware of it nonetheless.
Regarding backtesting yes it is always good to do research about everything. Backtesting is a good method to understand the logic of a strategy. If you don’t understand the logic of the strategy don’t bother trading it. I have tried thousands of system. Hmm forex is not easy but the persistent and determined would succeed.
My advise search for something simple.
Something that helped me very much was simplifying my system by throwing away indicators and using the raw data. This forced me to really study the price action and really analyze the market. This accelerated my learning substantially and allowed me to find my personal edge in FX trading .
Understanding Support and resistance levels (or Supply and Demand levels) is a major factor. Following trends and knowing when to enter and exit is very important. SR levels, chart patterns, candlesticks patterns, and recent wave patterns all provide clues upon when may be a good time to enter trades. Avoid entering on “maybe” mindset and enter on a “I’m pretty sure” mindset.
Personally, I find little value in Fibonacci levels. Elliot wave theory is good to have in the back of you mind but not essential. Dow theory is useful to understand. Studying chart patterns and candlestick patterns is also useful.
Tuning your own logic to the market is really what you need to do. Just look at the charts in weekly, daily, 4 hour time frames. Study the overall picture and scrutinize the details. Compare the price action between all the currency pairs. Which currency looks like the one you would be the most comfortable trading? Search for potential setups in trends and identify the key SR levels within the trend. Mark the potential setups that you see then you can decide which setup looks the best. Do all this in your best time of day say early morning after a cup of coffee. Never trade when you are tired or just not in the mindset to do so. You don’t need many hours a day to do this. 30 minutes in the morning to find setups and do a little fundamentals is all you need.
Only enter under normal market conditions. If the market is acting abnormal and volatile, it can be tempting to try and catch a large movement, but this is gambling. This type of trading will kill a new trader. There is so much money to be made avoiding strange market conditions just by keeping it simple and following a consistent method and sticking with it. If it don’t seem right then avoid the market.
I am still a fairly new trader myself, but have been successful by keeping it simple. The market is the best teacher out there. I love making mistakes because they expose my flaws which is by far the best learning tool I have discovered in Forex. Mistakes make you asses every aspect of your trading from a psychological perspective to a technical perspective. Applying the lessons learned from your mistakes can greatly bolster your personal trading method. Don’t get down about mistakes, because if you can define why your trade failed you are much less likely to repeat it.
Trading FX is really an art. Keep it a positive experience and don’t take it too seriously. Play it slowly and methodically, be patient and disciplined and you should find success. Only risk what you are fully comfortable with losing.
Think like a Jedi :51:
Thank you everyone for the advice. I have read a few threads and most of them have suggested keeping it simple and I think that is the route I am going.