Within the last week and a half I’ve been interested in Forex as my dad (which I see every few months) took a course a few months ago from a well known trader, but doesn’t want to stick to trading. He told me about a few instances where he made a few thousand$ but he doesn’t like to “risk”.
I’ve been sucked into his little “short trading is the best” rants and now I’m confused if I should try position trading/short or both?
My first official question is something I came across today for the first time (Thank goodness I’m on a Demo account)
We had friends over and I stepped away from my Platform, 4 hour later my initial -2 (-) -10 Pip shorts had turned into four different -55 & -65 Pip positions.
I started at $5000
Currently: $5,414 Balance//$3,126 Equity
I usually can make a few good trades on some short term, but then my dilemma starts.
When I try and short a trade and instead the price goes up, I never want to accept the fact I made a bad trade and I end up holding onto my funds.
So Is it better to set a stop-loss (accept the loss, which with my $10 pip value takes a few trades for me to make back) or hold onto my bad trade and turn it into into a long term thing?
I looked at where I placed my trades (and by chance) when i expanded my chart they all took place at the exact middle of the overall resistance VS overall support of the EUR/USD. So theoretically the price should come back to one of those level right? I know it’s not a “smart” trading way to think but I guess it’s just the thought of a newbie :x .
Most of traders will tell you to trade will SL some will not. I do not trade with SL because:
SL will most of the time kick you out and later you will see the trend is reversing in your favor (if u were trading without SL)
If you do place a wide SL, that will not work as well for the same.
Trading without SL will give you the chance to exit at your will after seeing both sided trends and from where you will be able to understand which way the market is moving and you can exit will minimum loss.
But trading without SL requires Price action and fundamental knowledge and information and this works best for long term trades.
Personally the only time I trade without a SL is when position trading and that is because the % of my account that I use is much smaller and I’m looking to make hundreds of pips so I can take a small drawdown.
When scalping and taking trades that I hold for hours instead of days I always use a SL as I feel if you’ve entered at the correct point then the trade shouldn’t go against you too much anyway. For you it sounds like you need to use a SL because you are too emotional and can’t cut your losses, once you’re able to cut losses early then you can stop using a SL.
In short term trading, I have found trailing stops to be invaluable. On the EUR/USD 1 minute chart, I’ve been playing around with simply watching the chart and entering based on momentum when I spot a candle forming strong and fast in an area of interest. I set a 1.5 pip trailing stop and more often than not the momentum will pull my TS past break-even, so I’ve already profited regardless of future price action. It’s getting me a few pips here and there, and for the last month I’ve found it incredibly easy to make at least .25% profit per day with a few quick trades.
I’ve been playing with eur/usd 1 minute chart, all morning. Currently loosing, my speculations aren’t quite working. I’m currently looking for some strategies. It’s not that I’m greedy, I usually close my position when i hit 1.2-2 pips but the problem is that I cant figure out the sideways chart and my buys and sell always end up going in opposite directions of eachother !
Yes, the same thing happened to me when I first started trading the shorter timeframe. One thing of note, it’s a Friday, so liquidity is lower and thus spreads are wider, so it will be slightly harder to scalp.
It took me a few weeks of playing around on the 1 minute chart before it stopped seeming like I was picking the wrong position every time! Also, prioritize quality of trades over quantity. There are certainly trades which are much easier to spot, yet come around less frequently - watch for these! Once you can win any number of pips larger than zero consistently, you can use leverage to make the numbers more significant.
Hi Matty i think its cool that you are interested in trading at a young age which means you have plenty of time to get good at it.
I wouldn’t recommend scalping for beginners. I saw that you said you close your position when you make 1-2 pips. This to me does not sound like a viable strategy. Remember in real life that every time you open a trade you have to pay the broker a commission. You also have to take into account the spread( which is already 1-2 pips) and slippages. Making 1-2 pips a trade is not going to be enough to cover these costs.
If you want to continue scalping then you need to be aiming to make 10+ pips per trade.
I would recommend that you start as a position/swing trader. Take a slightly longer term perspective. Instead of trading on a daily basis where leaving your computer for a couple of hours can result in losses. Simply make 4 or 5 trades a month instead and let them run. It is less stressful and it gives you greater risk to reward ratios which are important for the long run. Trade a 4 hour or daily chart, not a 1 minute…
I’m pretty sure this is what you’re referring to. I have a trader that takes $7 commission for a single buy&sell. So at my 100K buy/sell mark my single Pip is worth $10 meaning my profit from 1 pip is $3 right? So if I see a strong trend then I usually hold to about 2 Pips (little longer if I see potential) meaning on a single trade I usually try to rake up between $3-$13. Not some huge money obviously haha, but Im still in school and I have small time frames to work with not really wanting to medium term/position trade.
yeah that’s what I was talking about. The problem is that not all your trades are gonna be winners. You have to pay commission on every trade including the losers.
So you might make $3 on one trade after commission. But if you lose you lose maybe 10 pips (not sure what your stop loss is but anything less than 10 probably wouldn’t work because the market is constantly moving up and down). So if you lose 10 pips and pay commission on the losing trade, in total that is $107.
Just something to think about. Obviously you are learning and experimenting which is good to do because you will learn quickly what works and what doesn’t.
Yeah, my problem is the whole SL thing because I can’t afford to loose when my profit margin is 1-2 Pip, so on my demo account I always have the problem of just holding onto my loss and turning it into a long term thing. Which results in -100 Pip losses and my account runs out of funds. I’m stuck now, I don’t understand how people can scalp and short with profit I’ve already came across so many problems now it’s just to slowly figuring out how to counter them.
well thats why scalping is hard because the risk to reward is usually 1:1 or less. For example, if someone is looking to make 10 pips then they need to risk 10 pips. It would be better to risk 10 to make 20.
Thats why I say new traders should learn to be position traders because it is more forgiving. You might be risking like 100 pips but you are looking to make like 300 pips which is 3:1. That means everytime you win, you would need to lose 3 times after that to get back to breakeven. This gives you more protection.
Anyway what is your trading strategy? You need to have a reason as to why you are buying or selling.
!