I’m new to BabyPips.com and recently started doing the course. I’m finding it great so far but I can’t figure out which analysis to do? Fibonacci, Bollinger… WHAT? And all these wedge/neckline things, so much to take in! One of the first questions I have is about which analysis I really need? I currently have a demo account (no trades yet just using it against my coursework each time) and i’ve set up the Bollinger bands but to every single analysis it says it’s not 100% accurate you could still be wrong.
Next question is about margin/leverage. I definitely DO NOT want to trade with margin. Can I still make good profits? The company i’m with who do the demo account say I can message them to lower the leverage to 1:1, but what is that?
Very confused at the moment… But i’m sure you all understand.
NEXT! And last question… People suggest to do the buy low, sell high strategy, which I think is really good. Seems easiest. But what are you guys currently doing?
I would appreciate if you could all add something small to my research. Whether you can answer one question or all!
As the course often says, what is taught is not a step-to-step process. You’re not supposed to use everything everytime. BabyPips teaches you the most popular methods of analyzing the charts - among other things. It is up to you to create a trading strategy putting together what you liked the most. There are people who use indicators, others who trade naked charts, and others who don’t even know what Fibonacci is and still make money.
I suggest you finish the school first, as it is explained how you can create a trading strategy. If you’re still having troubles doing so, just go to the “Trading systems” section of this forum and sort by all time top. You’ll find plenty of strategies ready for you to test.
Well, I would go with “no” as an answer unless you’re already bloody rich. A microlot is 1,000 units, meaning that you would need roughly 1,000 dollars to open a position with such lot size. In order for that to be viable risk-wise, you would need a 100.000 dollars account (because 1,000 is 1% of 100,000, and that’s a safe risk percentage per trade). All that to trade a micro lot, which will give you roughly 10 cents per pip. Multiply everything by 10 if you want to make 1 dollar per pip.
Why don’t you want to use leverage?
If you know what you’re doing, there is absolutely no danger involved.
That’s not a strategy, that’s a principle the entire concept of trading is based on. A strategy is what you use to find said lows and highs, so that you can buy or sell. As for me, this is my trading journal. I’ve opened it yesterday and the first three trades were failures, but I currently have three more opened that are going great and I’ll post them once I close the positions.
Hi Giovanni! Thank you so much for clearing those things up for me. I appreciate that.
I see what you mean about the leverage. But I guess I still don’t understand how to use it. And i’m just not confident with it yet and don’t want to end up losing so much money or even becoming in debt from a losing position.
I’m still confused by a lot of things.
Hard to believe that in a few months you’ll look at yourself in a mirror and say. “did I really have a problem with that? I can’t believe it.” It’s very overwhelming in the beginning. Just keep reading practicing and asking questions, and then one day you wake up and it all makes sense; believe it or not. Just be patient.
As you get more into it, you will develop tendencies based on your personality. For example leverage, once you really understand it and how it works and that’s it’s a double edge sword you’ll be able to make the proper decision based on the information you have gathered (not someone else), then based on your personality you will or won’t and if you do how much and it will be based on the strategy you are developing specific to you.
Trading systems, analysis as well as indicators work some time; but nothing works all the time, So again based on your training, your experience and time you will hopefully gather relevant information use the options available to you to make a good decision based on the balance of probabilities. But again nothing works all the time. One reason why it’s so important to know your risk tolerance so you don’t risk more than you should
Buy low, sell high is not the only strategy and like I said everything works once in a while nothing works all the time. You could also instead of trying to pick high or low, pick profit in the middle. No matter what you decide, it will take you time, a strong foundation of knowledge and decisions based on facts, you options and picking he least of the evils. Right know try to be a sponge you’ll know when you’re are able to distinguish facts from opinions. Look both up in a dictionary and every time some one says something to you, decide 1st is this fact or opinion,; next what does this have to do with the question I asked or the answer I’m looking for.
Anyway, that’s my opinion and I hope it helps
Gp
Debt? Most brokers close all of your positions once your balance reaches zero. If you put 500 dollars in, that’s how much you’re going to be able to lose. Leverage does not affect how much you lose, but how quickly you can lose it.
You may find our posts in an earlier discussion helpful. Here we differentiate between your effective leverage and the maximum leverage available to you: Gold - leverage and profit
Get on your demo account (not a live account!). Without even opening a chart, I want you to take 10 trades on EUR/USD. All have a stop loss of 10 pips. All will have a TP of 10 pips. Record your win/loss results.
Now, open the E/U Line chart 15 minute timeframe.You’re still on your demo account. Look at the line from left to right on your screen. If it’s pointing up, take a long position. If it’s pointing down, take a short position. If it’s pointing sideways, wait until it either points up or down. Take ten trades this way using 10 pips SL and 10 pips TP.
Congrats, you have learned tech analysis WO indicators or even learning candlesticks! The point of this ex is to show that you really don’t need anything except price, direction and time (XY axis). The difference between #1 and #2 is about 50% probability versus 60%. That’s all you’re going to get anyway. Learn to live with that and you’re on your way to becoming a great trader.
Thank you to everyone who has commented so far. You’ve all really helped to clear some things up for me!
I’m still a tad confused about margin/leverage though.
Being slightly autistic, with all those ratios and numbers I find myself still struggling to ‘get’ what it’s all about when in reality I know it’s probably simple.
On my demo account I click ‘new trade’ and it says how much leverage is offered for each currency pair but it doesn’t say how much it’ll make my account double to from using leverage. Even though it’s a demo account I still haven’t made any trades because I don’t want to make any trades if I still don’t understand things.
And someone previous said you can’t get any debt? How is this so? Is it because they automatically close before they lose their money? I’d be happy if you could clear this up for me!
Also, should I trade an 15 minutes or hourly chart?
Under normal market conditions, most brokers including FOREX.com have monitoring systems in place that will automatically close your trade once your account falls below the minimum margin requirement. This is to reduce the chances that your account balance goes negative.
That said, you do risk incurring losses greater than your account balance, especially during periods of extreme market volatility. We discuss this in greater detail in the following post: Can I lose more than my deposit?
There is no real money at risk on your demo account, so we suggest placing some practice trades. Seeing how these trades impact your demo account balance can help you develop a better understanding of things.
Try looking at the same currency pair on 15-minute charts, hourly charts, daily charts and weekly charts. Each chart will show you a different perspective.
If you trade one micro lot (1,000 base currency units), then you are risking about 10 cents per pip. That means you could risk 500 pips on a longer term trade, and that would still be only $50. And again, this is all on a demo account right now, so no real money is at risk.
This is the time to experiment. Learn by doing. All the best!
Practice all of popular technical tools with the multiple trading pairs and end of the month, let’s count the monthly result! I don’t know, which technical tool will be profitable to you.
and I hope it helps