Hello all,
As the title suggests, I’m new to forex (been trading for about 3 weeks) after making a transition from securities (I was rather inexperienced there as well). Anyway, I’ve been finding myself on the losing end of trades more often than not lately, and I’ve started revenge trading. Just like all the literature and pros say, this has been a very, very bad approach for me. I’m starting to question the validity of all I’ve read about chart patterns. I seem to notice the entry and exit points, but when I actually enter, the trade has a habit of moving against me, or if I’m lucky, I walk away with a very minimal profit.
Is it really possible to become profitable using TA and just a bit of FA? My head is telling me that TA is more the luck of the draw than anything else.
Please help!
Hi Rhomman,
It’s normal to be frustrated when you first start trading. There are a lot of things to learn before you can be make profits consistently. So be patient, hone your skills and learn as much as you can from traders who have been there, done that and make all the mistakes that can be made.
The most basic advice I can give you before you do further damage to your account is, never argue with the markets. Lose your opinion, not your money. It’s our nature to want to be proven right. But if you want to be a good trader, you have to stop fighting the markets and learn to accept what the markets are telling you.
One of the things you should know about the profitable trades that are shown in the TA books is that they are cherry picked to show the ideal cases. It’s like a list of the greatest hits without the duds. In the real markets, it’s not that simple.
There are many strategies to trade the market. You job is to find the right one to suit your personality (e.g are you a conservative trader or a risk taker etc). Test the strategy with back dated data, make sure it works and under what conditions. Once you have a profitable system, apply it over and over again with the smallest position size you can take. When you become better, you can always increase your position size. At this stage, your objective should not be to get rich fast but to find a way to make money consistently. If you can make $10 consistently, then you can make $100 consistently and repeat that many times, the sky is the limit.
But first, you must find your edge. The edge must be proven to work in the past. Everything else is secondary. If you don’t have an edge, no matter what you do, you will eventually lose.
Good luck.
Thanks ChartCatcher,
It’s always nice to hear some encouraging words when you’re feeling less than competent. I’m with you on the baby step approach ($10 consistently, then onward and upward). I’ll continue to study the charts to see what signals work for me, then back test and back test. Just exited a nice little trade for 45 pips a few minutes ago. Amazing what an occasional winner can do for the psyche. Now I just need to figure out how to reproduce those effective trades, and more importantly, manage my emotions when things are moving against me.
Hi Rhomman,
That’s great.
One thing I find helpful in controlling the emotion side of things is to have some structure to your trade plan. It’s a set of predetermined rules that you have to follow. It’s a like contract you have signed with yourself and you agreed to abide by the rules (to protect yourself against self harm).
So for every trade plan, you should have a setup, a trigger and a follow through.
For example, a typical setup could be when prices approach a resistance or support trendline. The trigger is when the prices break the trendline and you enter the position. The follow through is where you place your take profit target and stop loss level.
Stick with the plan and don’t interfere. The stop will protect you if you are wrong. And if you have done your homework, you will have the confidence that your plan will have more wins than losses over many trades.
If you follow these steps every time, then you have remove the emotional factor in your trading. It is as simple as that.
^ i’m new to forex as well. i haven’t begun any demo accounts yet, still on the kindergarten courses of pipsology… but thanks for the advice on a trade plan. everyone does stress the fact about how emotions will ruin the trader… thanks for shedding some light on a practical system 
Hi Rhomann,
ChartCatcher posts contain some very good advice.
Specially regarding trading plan.
Also I highly recommend to start keeping a Journal now.
Lot of people think that “demo trading” is a waste of time. Yes IT IS - if you don’t do it properly.
As soon as you start keeping your Journal, and open any trade-positions ONLY when you have already a trading plan - each of your “demo-trade” (even the ones with stop-loss) - will benefit you. As at this point - each of your trade will give you experience (cost-free by the way). At your learning stage - “experience” is your profit (not the actual money).
In regards to that:
My personal opinion: it is definitely possible to become profitable using TA and just a bit of FA. I will say even more: almost any trader [B]who has a clear “online” understanding[/B] of what is going on on the market will tell you: usually market is “prepared” (from TA point of view) even before the actual announcement of some important FA news.