Hi, I’m a newbie in this trading kind of world.
I’d like to ask a few things that maybe a lot of other people asked before…
Is there any trader (as a member of babypips) that makes a lot of profit until now? because i heard that lot of people are profit at first and then they loss all of the money after that, and they feel like trading is just like gambling.
i’m working in futures company in my country until now is 2 months… and I often hear my bosses said that in the end investor’s money will be gone… i wonder if that’s true or not? even they didn’t recommend me to invest in futures because of the risk (loss of money)
me, personally is really interested in trading forex and spot gold, because I see the chances and an opportunity to gain profit, but until now i demo trading is based on economics calendar, and i don’t really believe in technical such as indicators because I think that market prices is Controlled by fundamental and big investors in this world. what is your opinion and suggestion about this?
is it better Fixed spread or Floating spread?
what is the factor that makes the spread floating?
how much money are needed to make a safe zone if the leverage is 1:100? and how much for 1:500?
(example: 5k usd in order to be safe for trading with 1:100 leverage)
where to see brokers world ranks? or maybe suggestion for me to invest in which company.
I’m sorry if there’s any rant… I’m just a newbie with a tons of questions…
please Critics, suggest, enlightened me…
2 - yes, apparently 90% of those who start (as retail traders), end up failing and going bust.
3 - tech & fund both affect the forex market. some more, some less, depends on what it is and at what timeframes you are looking at. best to understand them all, don’t reject any, and use the ones you like the most as primary.
4 - typically floating (variable), since fixed is usually larger even when the market doesn’t need it. but it is a form of insurance for when the market needs a bigger spread (assuming your trades aren’t blocked / rejected during those volatile times)
5 - can’t answer
6 - i’m not sure what you’re asking. but i rarely use a position that is 10-times larger than my balance (eg. 1k balance means max 10k position, roughly)
Hi magnet, I’ve bought numerous courses on trading and Forex. Some on stocks and commodities and some of the older ones that are not Forex specific are the best. People think there is something unique about trading Forex but in general what works in trading works in any market.
The one that really helped me start seeing real profit and enabled me to finally quit my job was actually Trading Mastermind Forex course by Scott Shubert. Most people are not into doing what really works but thats good. The course used to be on forextradingseminar but I think its closed. I saw on a video that if you scroll down there is a button to get in but I don’t know if its still there.
So if 99% of retail traders fail or go bust how is it a £4trlllion a day market and assuming that most of the ppl in this forum are retail traders why do they all give a damn, surely if the failure rate was this high these ppl wouldnt even bother…
Its actually $4 Trillion a day, and about $1 Trillion is from speculators.
Like anything, people can make this worthwhile. It just requires dedication and focus. Alot of people come here looking for a quick buck not realising the amount of time it takes to master.
Its worth remembering that of that 4 trillion very little is pure speculation. Interbank needs to move money globally, corporations need to peg a megabuck deal to a contract, to name just two. Retail is small fry in the bigger picture.
Hi Magnet.
Question 6 asks how to manage risk with a $5,000 account starting balance, based on certain leverage levels. Most successful traders manage risk by risking no more than 2% of their bankroll on any one trade. But since the market moves in pips, not dollars, you need to convert this 2% number to pips (I will get to leverage at the end of this post) . So let us look at the numbers 2% and $5,000 generate converted to pips at risk. By “pips at risk”, I mean where you will put your stop loss, and how many contracts you can trade with this stop loss. Are you trading micro lots, mini lots, or full lots? I will assume mini lots.
You will first need to determine the value of 1 pip. BabyPips School gives a good explanation of this, so I will just sort of skip over a lot of the details…
In a mini lot, the value of 1 pip is one unit of the counter-currency. So for example, if the EUR/USD market is currently trading at 1.2250, this means that 1 Euro = 1.2250 US dollars. The last digit in 1.2250 is the single pip, which equates to one-ten thousandth of a dollar. Since a mini lot is 10,000 units of currency, this means that one pip is equal to $1.00 U.S.
Now to get the number of contracts you can trade with the aforementioned risk…
2% of $5,000 = $100. So you can risk $100.
Let us say that you are using a 20 pip stop loss for this trade (which is $20 since one pip = $1). Since your total allowable loss is $100, you can purchase
$100/20 = 5 mini lots. Check that this is correct…
5 minis times $20 = $100. Thus you would want to purchase NO MORE THAN 5 mini lots to maintain a 2% risk.
Since you want at least a 1:2 risk:reward, you need to have an expectations that the price will go in your direction for at least 40 pips (2 * 20). If the trade looks like it will produce less than that, then the trade is not worth taking.
I don’t know if you already have a methodology that establishes your expected profit. If you don’t, I would suggest looking into Support/Resistance levels, trend lines, and Fibonacci Levels. Now let’s look at how this works with leverage. I will continue with the same contract, the EUR/USD at 1.2250 and the mini lot.
1 mini lot of EUR/USD = 10,000 euros = $12,500 U.S.
With 100:1 leverage, your account will be debited $125 for each mini lot; with 500:1 leverage, your account will be debited $25 U.S. per mini lot. If your trade wins, your account will be credited with the above amounts plus the amount you won. If the trade goes against you and your stop loss is hit, your account will drop from [U][/U][B]$5,000 to $4,900 [/B]regardless of which leverage level you use, since you were only risking $100.
So in summary, if you use 2% risk, you should be safe as long as you can win at least 33% of the time. You can test your skills by getting on a demo account for a few months, an excellent idea, I think.
In answer to question #7, I looked for a broker by going to Google, and searching for “Forex Broker Comparisons”. There are several good sites that I found, but I think I don’t have enough posts to post a link here. So you will have to look for yourself.
We — retail spot forex traders — amount to an [B]insignificant sliver[/B] of the mammoth, worldwide foreign exchange market.
Here’s a breakdown:
$4 trillion per day — the total size of the foreign exchange market
$1.5 trillion per day — the spot forex market (the rest of the $4 trillion is various classes of derivatives)
$135 billion per day — the retail spot forex market (the rest of the $1.5 trillion is institutional spot forex)
Note:
The $135 billion per day retail spot forex market is the market we trade.
[B]The retail spot forex market is less than 3½% of the overall $4 trillion foreign exchange market.[/B] When you hear stats like “90% of traders lose money”, those stats refer to this tiny corner of the market.
Fully 100% of retail spot forex traders could earn a million dollars this year, or lose all their money this year, and it would hardly make a ripple in the overall market.
As for the 90% figure which is bandied about, I think the actual figure is closer to 80%, based on the numbers now being reported by U.S. retail forex brokers. The U.S. CFTC now requires U.S. brokers to report their winner/loser percentages.
All the dollar-amounts shown above are notional amounts (what the BIS calls “turnover” figures). In other words, these dollar-amounts represent [B]position sizes[/B] (not account balances, amounts committed to margin, amounts at risk, or profit figures).
The numbers shown above are from the Bank for International Settlements (BIS) 2010 Triennial Central Bank Survey (the most recent survey conducted), and from private correspondence with Michael King at the BIS in Basel, Switzerland.
Hi, I will try to answer a few questions for you :):
I make my living trading. You will always have some trades which will not result in profits, but that is normal. Anyone who claims they make profits on all trades is most likely not telling you the truth.
It depends on, if they refer to them loosing money because they lack the knowledge than that is true, otherwise I it sounds that they suggest potential fraud and I would stay away. Risk is lack of knowledge and I hate people who refer to financial markets as being risky. They are not, your own lack of knowledge makes it risky to you, but only you.
Successful traders use technical analysis. Those who trade fundamentals are doomed to fail and will never be traders.
I prefer floating spreads as it reflects supply/demand better.
Supply/Demand
There is no such thing. Since you appear to be a newbie I can recommend you to open a micro account and fund it with at least $100, have 1:100 leverage and only trade 0.01 lots. A safe zone is a myth as regardless of how much you have if you are wrong and lack discipline you will end up loosing it all. The more you have in the account the longer you can live the illusion but in the end you will burn through your account unless you understand what you are doing.
I can recommend PaxForex. They offer several extra features and have a great $200 No Deposit Bonus which may be a good entry point for you. You can only trade 0.01 lots and if you earn money on that account it may be transferred to your real trading account. There are several websites out there with broker reviews, simply google it but be aware of those reviews.
Thanks for your essential thread.Actually every newbie has this type of question .For getting knowledge they follow lots of tips and here i get lots of beautiful and also essential tips and solution .
I give especial thanks for starting this essential thread
i’m working in futures company in my country until now is 2 months… and I often hear my bosses said that in the end investor’s money will be gone… i wonder if that’s true or not? even they didn’t recommend me to invest in futures because of the risk (loss of money)
… what TheLastBear says is very true. It is estimated that 80% or 90% of Forex traders lose money. But, this is not because Forex trading is particularly dangerous, it is because most people entering the Forex world are not adequately prepared. You say, “… in the end, the investor’s money will be gone”, and this is because the new investor simply hasn’t done the work necessary to be profitable. Look at his competition; the new investor is not only competing against people who have worked Forex for many years, the new investor is also up against the big banks, sovereign wealth funds, hedge fund managers - a lot of sharks in the sea. The new Forex Trader is like a pilot fish who must swim next to the shark’s mouth, but if he makes a wrong move, he becomes an appetizer.
You can learn to avoid the shark’s teeth by demo trading, reading the many threads and blogs available on the Internet, and by watching the various videos available on YouTube and at some websites. I have gotten a lot from videos and forum posts by Inner Circle Trader (ICT), PeteFader, and TradeGuider. ICT and PeteFader have long threads in this forum. Also on YouTube, you will find many good videos by other people at a more basic level, such as how to read candlestick patterns, how to analyze price action, varous Forex strategies and chart formations that others have found to be profitable.
A word about myself, since I’ve posted quite a bit on your thread here… I have been investing in stock markets and mutual funds for about twenty years. During that time, I have done a little speculations in commodities, futures, and options. I started looking at Forex trading around June First of this year, so I’m quite new to Forex. I am finding it’s a whole different world from the long-term, buy and hold strategies I used in stocks. I am just now starting to demo trade Forex, and I expect I will do it for several months before I “go live” with a micro or mini account. I believe this is how to become a successful investor instead of shark bait.
As to your bosses comment that you shouldn’t invest in Forex because of the risk of loss, isn’t this true in any endeavor? What about the person that spends $50,000 (or more) on a college education so that he can become an engineer, doctor, or lawyer? Isn’t $50,000 a LOT to “gamble” that you will be successful? After all, you could become a carpenter, a chef, a truck driver - you risk a lot less money in these educational pursuits.
I think that any endeavor in which you could gain involves risk; you simply must ask yourself if the reward is worth the risk. To minimize that risk, you must educate yourself, and then gain experience by risking only small amounts (micro or mini lots, depending on your economic situation). And you must understand risk management - the 2% risk of loss I explained in my first post on this thread and how this relates to a stop loss in pips. This is how you put yourself in that top ten or twenty percent who can swim with the sharks whle avoiding the teeth.
Also, just for the record, I am using a 1% risk, not a 2% risk. I used 2% in my example in my first post only because most people seem to prefer the higher number - you get stopped-out less often. The main thing is that you want to be consistent. Don’t use a 2% risk on one trade, then if it loses, you go to a 10% risk to “make up for the loss”, and then a 30% risk if the second trade fails. This risk escalation approach will almost invariably result in “financial suicide”.
I may be new to Forex, but most of what I said in this and the first post are based on my twenty years of investing, not all of it successful.
Hi Magnet,
I have not heard of Vince Stanzione, but I will definitely look him up. It may be awhile before I get to it, however; I am busy reading the PeteFader threads on VSA, the DannyK Threads on VSA, and the NikitaFX thread on price action. I am also reviewing the ICT videos, the PeteFader vidoes (YouTube) and other videos around the Internet. So not much time - I spend about ten to twelve hours a day on this, starting a month and a half ago. I need to keep my focus on the VSA + Price Action right now, or it might all get jumbled up in my head (information overload). However, I’ll take a look at Vince’s videos later this month; I am close to understanding VSA to where I can start demo-trading it - I am already paper-trading it with mixed results. I am also focused on learning trade discipline, as I outlined in my several posts on this thread. Your questions, and my answers help me to clarify my thinking, so thank you. Will get back to you about Vince’s videos later this month.
