New and looking for feedback on my education and approach

Beginner Questions
1

Hello everyone!

So, I have been revisiting Forex on and off for two years. Asides from playing on a demo account I have done no trading because I have been travelling. Now I have time to focus on it. This is how I am approaching Forex, and I am looking for feedback from people who know how to do it.

Firstly, I just want to say I am not expecting a lot to happen in the first year. I think some people approach Forex thinking they will make hundreds every week. It’s a marathon, not a sprint. In terms of success, I am going to judge it % and not $.

I know I need an education, and BabyPips is great for this. In addition to this, I am currently reading this book, which I have found very useful so far. I also watch Andrew Mitchem’s videos on YouTube. - have you guys heard of him and if so is he a good source to learn from? Do you have any other sources for one to learn from?

Moving forward, I’m going to use a demo account where I will use one strategy at a time at equal lengths to see which works for me and which do not. I plan to do this until I have found one which I am comfortable with using and which consistently returns more wins than losses and only then will I slowly transitioning into a live account.

I know psychology plays a big part. We all know it, yet people still fall victim to it. One of the things I have done is I have changed the depreciating candlestick on MetaTrader to blue as opposed to red, as colours have a psychological impact and red is seen as bad, stop, negative etc. Does anyone have anymore recommendations?

I also plan to focus on two currency pairs, the EUR/USD and GBP/USD, instead of jumping from currency to currency and looking for an opening. If I can’t see one on these two, I will leave it and wait. I think this might help with the psychological aspect of trading too.

When it comes to risk, I plan to risk 5% of my capital. So that in each trade I know I will not lose no more than 5% of what I have. Is this too high?

There is one question I have which I believe I know the answer to but I just want to make sure. I think it surrounds leverage. Ignoring stop losses for a second, if you place a bad trade and it drains your account, will it stop at how much capital is in your account or can you go into debt and owe money to a broker?

I know this is a bit of a Q&A and I wish I could give something back, and I will do so in the future once I have knowledge to share. Any feedback would be amazing and truly appreciated. :blush:

2

Are you definitely committed to day-trading? Day-trading is the hardest for of trading to be successful at from a standing start, and its often said that trading is the hardest thing any of us have ever undertaken. When most people do or say “trading” they mean day-trading, and since 90% of traders fail very quickly, this doesn’t look like an easy way to make money.

As far as capital risk per trade is concerned I don’t say 5% is too much on its own, but bear in mind that the two pairs you list are highly correlated. So 5% capital risk per trade is probably going to mean 10% capital risk per basket at any one time. Adding other EUR or GBP-based pairs or USD counter pairs only makes this worse and it would be easy to run risk up to 50% over the basket of trades. Caution is needed.

3

I like your approach. Really forex trading is a marathon race not sprint that just you come into the market and will start earning. In the beginning I have totally dependent on BabyPips and some other online resources. But I had not gone through any trading books. Yes, I have seen Andrew Mitchem’s videos, those are very helpful for learning. Also demo trading helps you to learn I guess you already feel it.

4

Just to clarify. Have you finished the school of pipsology here on baby pips?

5

Yes, BabyPips school is the most useful one! If you didn’t, then go for it, you’ll be benefited for sure.

6

Good thing is that you are not expecting a lot. The poverb Slow and Steady wins the race is very much applicable in trading. Yes prove your strategy on demo first. I usually use black and white candlestick, as it looks good to me. Yes 5% is a bit high. But it’s better to experiment with demo.