Hello all. I’m new to the world of Forex. In all my reading I kept seeing the advice to find what type of trader you are. So I decided to run a no rules experiment to see who I was and where the flaws were. Boy was it a (short) journey. I hope this post will provide some chuckles to the veterans and insight to the newbies.
I started by searching for the highest margin broker I could find to take a US customer that didn’t seem like they were running out of their basement. This was done to see if I could manage the account funds “properly” with the lure of big leverage. This did not work for more than a day or two of trading.
I thought I would enjoy pouring over the chart data and news and then setting up trades to last days, weeks, etc. Although this was fun it quickly got in the way of the rush I enjoyed from fast (5min - 2hrs) trades. Scalping was not appealing to me. The individual profits/losses were too small in size.
I also had a hard time stepping away. When I got myself on the wrong side of a breakout I obsessed. I struggled with applying stop losses. After little sleep over 4 days my decision making went down the toilet. I became delirious and started making moves and reversing positions just because I could convince myself of anything.
The whole thing reminded me of that guy at the roulette table at 3am who’s a little drunk and is blowing through a fat stack he amassed earlier.
I learned a lot about myself when I let go with no rules. I quickly let greed and delirium take over.
I wanted to see where and what type of trading would be my down fall so I can apply rules that would not allow me to become my own worst enemy.
So far I’ve come up with using ~2% of account balance for carry trades. Set a take profit point and/or date to close them and then leave them alone period. For these I think the situation will dictate the type of stops used.
I truly enjoyed active trading so I will go with ~3% of account balance. I will actively trade for no more than 3hrs in a 24hr period. Anything above that and my decision making became suspect at best. I will include tight stops during these sessions. I will only hold one position at a time. I need a lot more experience before I can handle several active trades at once.
I still need to do some thinking on leverage. I didn’t feel that it was a bad thing by itself. I felt if used properly it was an advantage. The problem was me and greed.
Welcome to Forex. You’ll learn a whole lot about yourself in pretty short order trying to get these things figured out. I see a lot of myself in your statements here so maybe I can provide some insight.
Like you, I:
-did not like the idea of small gains and losses in short-term trading. Thus, I primarily trade day and 4h charts and aim for much higher targets. I strive to only take one OPTIMAL trade per week. Sometimes it’s more, sometimes there’s nothing. I spend maybe an hour a day actually looking at the charts. At this point, I know exactly what I’m looking for so I can just glance at a chart and know if there is a potential that needs deeper inspection.
-have a tendency to obsess over things if I let them. I settled on a strategy called Price Action. In this strategy, your Stop goes RIGHT behind the candlestick formation signal. The signal is considered valid until it’s broken. Every time I gain the amount of pips from the entry to the original stop, I advance my Stop until I either get stopped out or see a reversal signal. No muss, no fuss.
I look forward to the day I can just glance at a chart and know anything. I’m about to dive into some technical analysis learning. I’m building my spreadsheet for regression analysis via ETFs while I wait for some study material to arrive. I purchased a used copy of [I]Technical Analysis The Complete Resource for Financial Market Technicians[/I].
Thank you for the ideas on stop application. I’m still struggling with them.
Yeah, I use a checklist mentality for looking at things. It looks something like this…
When I look at a chart; I simply look for one of the candlestick formations I trade. If there is no formation, I move on. If there is a formation I look at the following:
Did it form with the trend or against? (I only trade with, so this answer needs to be yes)
Is it on a point of former S/R? (Answer should be yes)
Can I potentially take 2:1 at minimum before I hit a new level of S/R? (Answer should be yes)
Are there any major news announcements coming up related to the pair? (Answer should be no)
If all the answers come up appropriately; then I have an actionable signal. If not, I just wait for the next opportunity. Stop is determined by the formation. So if it’s 80 pips to get just get behind the candlestick then I want to make sure I can take at least 160 from the trade. And I adjust my volume so I’m always trading the same amount regardless of the pip count.
You may also want to check out Youtube for tutorials on various aspects of technical analysis. There’s a bunch of good videos up on a variety of relevant subjects.
Thanks for all the tips and advice. I never thought to look at Youtube.
The more I’ve thought about it I’ve come to the conclusion that my biggest problem with setting stop losses is that I’m trying to use a trading style that doesn’t match my bank roll.
When I started forex I had no financial education not hope I will do good in forex. It prove easy for me to understand forex trading. I am happy with my trading results . Now I can confidently face market . I had find my inner trader who thinks logically .I do trading as market run not on my own wish.