Hello there. I am new to this forum and a novice in Forex.
I started looking at trends and exploring via several demo accounts over the last 12-14 months. Many of the pointers I have been given are that you need to have discipline and not to let your emotions take over when trading in forex. Right now I am trying to learn as much as I possibly can around a full time job and was looking for some advice.
I have very little or no time in the day trading but would like to get to a point where I can do this full time. But to do so would like to get a degree of success doing it part time.
So currently I have time early mornings Tuesday-Friday’s (typically around 6am) and look for trends normally across 6-7 of the major pairs, entering trades (typically 0-3 per day) based on strong trends with tp’s of 20-30 points per trade, always entering with a stop loss. I only really get to check my progress through latest online charts during the day at work and usually the next morning when logging back in.
At first my stop losses were too close so I was hitting them very quickly. Now I use the negative’s in a trend to place more sensible stop losses (i.e. the low of a strong buy trend or vice versa) which seems to work better. Generally I have had success on this approach (usually hitting tp’s by mid-late morning) however there are occasions where the market moves against me, which obviously I cannot completely avoid. Two weeks ago I had 100% success in hitting my take profits in every trade but this last week I have hit my stop loss on two particular trades which has resulted in me losing my profits from the previous week and the majority of my account fund. So my questions are:
If the market moves against me and you are in the red what is the most sensible thing to do? How would I reduce my loss? I do not want my stop losses to be hit every time as they have been placed so that it reduces my loss but allows some fluctuation in the market too. I have found it difficult to strike a balance between the two when placing stop losses. Is there a sensible way of reducing my losses when in the red?
I trade on the MT4 platform and recently understood that trailing stops do not work unless you leave your PC on throughout the day (no problem in doing so). Why is this the case?
Do people REALLY make a profit from forex trading?
As I am new I do apologize if these are silly questions but wanted to get some advice/feedback from the forum. Any help would be great.
I’m pretty new to forex myself, but I’ll have a go…
1: It sounds like you might be over-leveraging? I’ve read many times that no more than 1% of the account should be risked per trade. The risk is calculated by multiplying the number of pips to your stop loss by the profit/loss per pip. For 1 lot, this is $10, for a micro (0.01 lot) this is $0.10 per pip. The most informative and least intuitive things I’ve learned have been related to risk management and money management.
2: The trailing stop in mt4 is client based not server based. I mean that your broker doesn’t know about it. The mt4 platform on your computer (the client) repeatedly resets your stop loss on the broker’s server while your computer is on.
3: Not me! (Not yet anyway ;)) No get rich quick schemes work, but there are a fair few people who make a decent living from trading. Apparently 95% of people lose money.
Incidentally, which time zone are you in?
The time of the trading day is more important than the actual time of day where you live. The Asian session (0:00 - 08:00 GMT) is apparently better for ranging sedate markets (and one survey has shown this to be the most consistently profitable session for independent traders), European session (08:00 - 16:30 GMT) is famous for large swings and New York session (13:00 - 21:00 GMT) is a bit of a mixture. The overlap between London and New York has most liquidity and volatility. I saw a decent video about this on youtube, but have lost the link.
Ill also say that you should always specify what time zone you’re talking about.
If your losses are taking away too much profit, you may have a few problems. The first is already mentioned: you don’t have enough consistency in your trades. You risk too much in losing trades and not enough I. Your winning trades. The other problem might be that your R:R is too low. Your stop loses might be 30 pips and your take profit is only 15. This is ok if your win rate is really high but as a novice trader you should be happy if you’re hitting 50-50. If you want more room for your sl, aim higher with your tp.
I do not use a lot of stop losses, I prefer to hedge my account first and then place a stop loss or a full hedge, but I trade for a living so I am following the markets. In your case, what time frames do you use to evaluate your trades? Keeping your stop loss tight has the benefit of reducing our losses while it will not allow you to benefit from market fluctuations. One thing you have to keep in mind is that you will never time a trade right, which means most of the times it will first move against you before turning a profit.
I think 20-30 pips is to tight for a stop loss. Either reduce your leverage or lot size you trade. I would also recommend that you stagger your trades. For example, if you want to trade 0.2 lots, instead of entering it all at ones I would recommend that you divide it into two or three positions, spread 25 pips apart (adjust this number according to your preference).
Pip Worm answered that for you :).
Yes, I have been doing so for several years. It takes a lot of time. Most forex traders do fail for various reasons.