I traded a demo account for a few months. Experienced some success so decided to throw away $500 into a real account.
I have to say, trading a demo account is NOTHING like trading a real account until you learn to separate your emotions from trading.
Here are a few things I have learned from my mistakes. By no means am I an expert, I am a noob just like you guys. I started a few months ago and am currently in the negative compared to when I started. But I am making profitable trades and when I make all my money back I will finally be a profitable trader.
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[li]Not setting stops and limits. There were countless times that I was up 50 pips and felt that since I was watching the charts actively, i didnât need stops and limits. Boy was I wrong. A 50+ pip position would turn into a 150- position for me. The importance of S/L when you are actively watching charts is not to catch your trades before they lose or locking in profits. The importance is that it provides you with targets to stick by, removes the emotion out of your trade, and forces you to adhere to a risk management technique.
[/li][li]Dont trade only one timeframe. When i first started, I thought I had a solid technique and would see it in one timeframe and trade it on the spot. WRONG! You can see a setup in one timeframe, but expand out into a broader timeframe and notice your trade might go against a greater trend or movement. Make sure your entries hold consistent over different time frames or at least make sense on different time frames
[/li][li]Dont be greedy. Just as you manage your risk, you have to manage your profit. If your goal is 50 pips, take your 50 pips and move on. Donât sit around saying âI think it might go to 60 pipsâ if you have no solid proof. Rule of thumb, donât hold on to a trade hoping for it to move if you wouldnât open a trade at that moment with the same outlook of movement.
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Yeah, point 2 is definitely very important. A lot of people donât realize theyâre trading against the general trend when trading a lower time frame. That one can definitely get you in a lot of trouble. Especially if you didnât adhere to the first point and place your stops!
A good post and I get the general idea of what you are saying. However, all three points you have mentioned should have all been tested in the demo account prior to opening a real account.
You were trading in a demo account without stop losses, thatâs rather loose, even in respect to it being a practice account.
Its good you have found out a few of the many mistakes at an early stage, but they really shouldnât have cost you $500, they should have been included in the demo account for free. I personally would find it very hard to not find an article for beginners on trading the Forex where is does not mention any less than two out of the three points you mentioned.
Maybe you should do a little more reading and research before depositing any more funds. [B]Remember, cleaver people learn from other peoples mistakes!!! [/B]So donât make them first hand, and then find out that you could have seen them coming if only you had done a little more research.
Point 2. If you trade a short frame with a long one you might get burned.
I know this is over the top but it shows you what I mean.
The pound has been loosing ground against the dollar for years.
Are you only gonna short it tomorrow?
I also focus on the 5min chart alone. I tend to find that no matter what the longer term trend, there is always enough movment on the 5 min to warrent a trade in either direction.
I always hit my most aggressive targets in my sleep. Pretty hard to shake me outta the trade when Iâm passed out dreaming about birthday cake and whatnot
I also prefer to trade the 5M chart as I make mostly sub 50 pip trades. 1M is too sporadic and zoomed in and 15M is just a condensed 5M without really giving you a much larger perspective. TBH I use all 3, but my 5M charts are open more than any other I would say.
Funny enough, I was trading a demo account and was VERY profitable doing scalping. This gave me enough confidence to jump into the real money account. However, as I got into it with real money, my trading strategy moved from scalping to more long term trades. This is what caused me to relearn things. I should have went back to the demo but I didnât.
I have lost $208 but so far Iâve gained back $50 and Iâm well on my way to getting it all back.
Iâm sorry guys, I cannot agree with the 5m and 15m bias so far on this thread. As a trader whoâs been in this game longer than most I can tell you without fear of contradiction that the MOST consistant and successful traders trade the longer time frame charts. Typically the daily with timed entries and exits off the 4h. The âTurtlesâ⌠legends in this market, traded 50 day breakouts.
5m and 15m might work some of the time but I doubt you will be around after a year of trading still using them. Its a learning curve I suppose that most must go through. Its no accident that the 90% plus loosing figure so often quoted is almost exclusively new traders. Those that do survive and go on to become professional traders wonât be trading 5m & 15m. In fact in pro circles its hard to find any trader using less than 1h.
EDIT: It goes something like this. You will get more trades on the shorter TFâs but more reliable trades on the longer TFâs. Quantity does not equal quality nor for that matter profit.
Trying to word this without sounding rude, but this is a lot of opinion wrapped up as fact. I agree with you for the most part, but it still doesnât change the fact that not everyone has the same personality and trading style.
I always reference a higher time frame and always trade into the general trend, but use 5M for entry/exit. I know others that also do this and are successful as well. I agree itâs more reliable to trade using a higher time frame, but some people (myself included) have systems based around trading 5M and are still making reliable trades. To each their own, no?
I scalp all the time, I also look for longer term trades, but I rarely dip below the 1 hour chart. There is just a lot more truth in the charts on the longer time frames.
A âbetter entryâ on a 5 minute chart is an incomplete candle on a one hour chart. Itâs tough to decipher the possible intent of price without a full picture.
Certainly ârattledâ a few cages with my last post.
The stats donât lie folks. An extremely high percentage of losing traders are both Newbs and 5m and 15m chartists (they go hand in glove).
Ok a few numbers: Say I enter long on any given instrument and stay in for a week. I pay one typical 3 pip spread. Lets say I make 500 pips. You have seen the potential longer up move on the 5m or 15m (doubtful⌠but more on that in a minute). So you too go long off the 5m or 15m. But using the 5m or 15m TF for trades your happy to get out with your 20 pips or so. Ok thats fine. Lets say you get real lucky and get long ten times over this 500 pip move for your 20 or so pips. Great you made 200 pips. But you paid 10 X 3 pip spreads = 30 pips. So you really made 170 pips on a 500 pip move and thats only if you got real lucky and picked ten longs on the bigger move without loss. Much more likely a scenario would be you would have gone short into the pull backs looking at a 5m or 15m chart at least some of the time. This is common practise with retail traders. Looking to the 5m, 15m, 1h⌠perhaps even 4h and PA comes over the top after a decent long move and their short only to get stopped out when PA resumes the longer momentum move.
Seeing the bigger picture. As stated above its doubtful you will spot this being zoned into the shorter TFâs. No offence intended⌠its easy to miss even looking to the 4h and daily TF. Big money knows this make no mistake. Iâll see if I can find a pro chart and post it later. It shows clearly that dispite price falling on the longer TFâs (day/week) there will be three in four retail traders long⌠its gotta turn right? This happens ad infinitum.
Theres a well respected trader on this forum using a long time 15m strat. He typically trades for 15-30 pips a trade and states a 60% win rate. Thats great. But a few days ago he posted saying that he missed the recent 250 pip GU move south as it was not triggered on his system.
I have since becoming a member of this forum attempted to draw peoples attention away from the shorter TFâs. I can report its been a futile exercise. Half of me is sad to see the 5m and 15m TFâs so prevelent on this forum, the other half happy⌠I need someone on the other side of my trades to turn a profit. For that you have my gratitude.
I didnât say I couldnât trade the shorter TFâs my friend. The question is why would I want to? Clearly your a smarter and more successful trader than I ⌠err⌠âperiodâ.
Please be kind enough to let me know where you trade as a pro⌠the bank/ hedge fund? I would love to call in at your convenience and watch you work your trades.
Canât it be that a successful trader can use both long & short timeframes⌠use the longer timeframes to get the âbig pictureâ of where the more key support & resistance areas are, and then once price gets there, zoom down to the shorter timeframes (which can be compressed to cover more time) to try to determine their entries better and lessen the stop loss distance? As in not exclusively using either the longer or the shorter time frames for both analysis and trading.
My initial comment was on traders using 5m & 15m strats in isolation. In my opinion (better state that⌠hehe) use the daily TF with a 200ma for trend direction and cherry pick the best trending instrument⌠theres always one⌠currently four (in FX they can last years). Then take trades with the trend off the daily/ weekly i.e. in my case trade the weekly and enter/ exit off the daily (typically trades of 250-1000 pips). But plenty trade the daily and enter/ exit off the 4h.
Point two particularly so.
