Things I wish I had been told when I first started

Beginner Questions
1

[B][B]1) Large Institutions move markets. Only trade when you know that they are there at their desks to press the buttons.[/B][/B]

I live in London, UK. My prime trading times are 6.30am to 10am UK time (look at a global clock to get your own timezone equivalents).
If a set up that you look for appears at 11am UK time then it might work. But this is a game of probability. In other words, it is less likely to move in your direction as it would at 7am as the traders aren’t around to drive the price. With a reduced probability of success, why enter?

US session for me= 12.30 - 4.30pm UK time. Personally, I trade very little in the US session. It doesn’t suit me too well-prices go crazy and I find them harder to read, but that’s just me, others do so very successfully. I recommend keeping notes on the what time you trade, and your subsequent sucess rates.
I only really trade the London session now and my performance has definitely improved.

[B]2) Don’t trade the news unless you’re an expert[/B]

So you think that the new Non-Farm Payroll figures will drive GB/USD lower?
That’s great, good analysis. The thing you NEED to be asking yourself is: “Will the institutions that drive the market think that the new figure will drive gb/usd lower.” That answer is impossible to know. Even if the price shows you what the market thinks, odds on you’re not going to get in, thanks to massively increased spreads and slippage on any orders placed. Stay away, let the big boys have their fun.
[B]
3) Related to 2). Always check the fx calendar before entering a position in case there is a major news announcement coming up.[/B]

forexfactory.com/calendar.php

Any major news coming out could affect the set up that you’re using in order to open a position. Unexpected numbers, or just the price spiking around major news announcements can take you out and render your set up meaningless. So don’t trade the news, but be aware when major announcements are occurring, either if you’re about to enter a trade, or are in profit on an earlier trade but haven’t taken any winnings off the table-might be an idea to partially exit.

Hope that helps. If you trade intelligently, and target those times most likely to get you in profit, and avoid those that will give you losses, then you’re on the way:)

2

There are somethings I would not have listened to anyway, I like to learn for myself in real time, BUT

Those demo accounts which brokers offer . . . huge leverage and any small amount to open an account ? ?

I tried the demo with a $50,000 account. I found it really easy to make $3000 in a weeks “gambling” and I say that because I knew nothing about anything to do with FOREX. I got excited, opened an account with real money, as I think any normal person would and consequently trashed my account.

People must be trashing accounts everyday on the FOREX, lured in by unscrupulous brokers. Now I am reluctant to blame the broker for my behaviour, but I don’t understand why they would lure people in with the prospect of making huge gains, when it is just as likely to make huge losses.

I read somewhere that some brokers benefit if I lose money on their account. Is this true ?

I have been practicing different ideas on the demo account with $3000, and 1:100 and 1:50 leverage as that is much more realistic for me now. I feel much more comfortable with it, and I will not invest any more money until I have a solid two months good record. I have been practicing three weeks now, and still not doing well, but the difference is now I understand why I am losing :slight_smile:

Mike

3

hey,

Common problem,

Brokers are guaranteed the spread when you take a trade,

but some will use stats and know a trader with a small account using high leverage is likely to loose his entire margin account, and they will take the other side of your positions knowing that money is going to be coming their way.

N

4

trade is not about to predict the next market move- is about to react to the previous market move.

open a trade is only a small part of trading (and the easyest part), after open the trade there´s still a lot of work to do.

bad SL is the biggest cause to losing trades. (in my case) so spend some time to find a way of improve the SL is a important thing to do.

and…
brokers are not my enemy… the more money i win the more trades i make and more spreads i pay to them, so they must be very interested in good traders that made good money and make a lot of trades.

5

I don’t totally agree with that… while yes the broker will make more money off your spread and such… I think that all traders should read “Beat the Forex Dealer” by Agustin Silvani! Most brokers know that the odds are not in the traders favor of making their first anniversary! So they are out to get every cent from you they can!!! So, in reality the broker is your worst enemy (besides yourself that is LOL)! Its like the book says… more often than not… your trade will never even see the actual market! With the delayed charts and such… they have an edge on every trade you place! If they are reasonably sure the trade will go against you… they take the trade and of course your money as well! Please don’t get me wrong… there are brokers out there that would love for you to succeed so they are sure of you continuing to place trades… providing them with more profits… but in reality… they know that the odds are just not there!

6

i´ve heard those words many times but i never saw any proof of that.
and as a prove i just need two charts from two differnt brokers with the same time zone that are differenf from each others.

show me that and i´ll start to believe in this conspiracy theory:D

until no one show me something like that i´ll continue to blame my self for my losses.:wink:

7

I’m not saying by any means that my losses are not my fault!!! I’m just saying that MM Brokers are not our friends… in fact with this type of market… everyone on the same trade is an enemy… at least temporarily that is LOL! But an easy example… look at EAs (I don’t use them!!) Forex Genius… the whole concept of this EA is playing off the lag time from different brokers (also known as fast trading)! That’s why most will not honor wins from that thing!!! There’s no conspiracy theory here… just knowing that brokers are in business to make money and not friends.

8

Unfortunately, “good traders” who “made a lot of trades” are like centenarians who smoked a lot of cigarettes.

9

The only way a broker acting as a market maker will be guaranteed the spread is if they match up two orders of the same amount for the same price at the same time. This does not occur very often which is why dealers have the ability to work orders to lock in their profit. It’s also the reason you get requoted when the market moves in your favor during a volatile market. The dealer is missing out on an opportunity to capture the spread because your loss (due to the spread) has already moved to breakeven or beyond by the time the dealer has time to react and hedge the order.

An STP broker doesn’t have to worry about this since the trade is offset with another market marker and a commission or pip mark-up is charged instead.

10

A broker will quite happily hedge your risk if you are too highly leverage with low capital, why … they know that sooner or later your capital will be transferred to their accounts and they will be distributing it to their sales reps and their marketing wizards for yet another job well done!

N

11

About trading times. I only would consider a trade between 8am and 11 am London time. Why?
It seems to me that the indicators work purly on information from the recent past and work better when they have more information to chew on.
At 11am the “boys” in town seem to back off, this causes two problems. Firstly as OP points out if the big dogs aren’t barking then the markets don,t move, and secondly it starves our indicators of the info they need, making them unreliable. Personally if I see an oscillator swing full range with a price movement of very little then that’s a signal to stay out.

12

I should add a number 4) to the 3 points that I’ve already listed, so here it is:

  1. Don’t get bogged down with petty arguments/ side issues that drain your time and take your focus away from trading.

What I attempted to do in my original 3 points was to provide a tight focus for newbies. Trade those London times, that’s the really important one. It’s all about focussing your time and energy.

And it’s somehow got into an “are brokers out to get you” conversation.

Give
It
Up

Focus.

6.30-10am session today. Were you trading? Did you go long on GBP/USD?
If not, why not? Was it your broker who may or may not be trying to rip you off that stopped you?
Or did your trade system/edge not give you a signal?
Or did it give you a signal and you didn’t take it?

Clue-the last 2 are important, the first one isn’t.
Even the worst broker in the world would be showing you a healthy profit today.
Yes brokers are important, but don’t get bogged down, there are plenty of ok ones out there, and there are plenty of discussions about who they are. I’m not going to say any more about them.

Focus on what is important. Trading 6.30am to 10am UK time is important.

El Toro, I respect what you say, but the fact of the matter is that European markets open at 7am UK time, and things can definitely start their moves around this time. In order to ensure a better risk/return ratio and avoiding wider stops, I think it is essential to get in a trade early. I like to be up and have analysed my charts before 7am, prices will make their move at this point. I do agree that 8am is when the even heavier volume kicks in, but most of the time you will get in at a much worse price, and will need a wider Stop Loss to avoid any pullbacks.

I was in GBP/USD at 6.54am today at 6639. If I had waited until 8am UK time (do you actually mean 7am though?), entry would have been around 6695, with most of the move expended by then.

13

No I do mean 8am, but despite what I said I took the trade at 7 today only because my indicators had been screaming for half an hour. Ordinarily I would wait.

14

Good job El Toro.
Every day is different, sometimes the price waits, sometimes it doesn’t.

The clincher for me is down to probabilities which is what fx is all about.
If you’re ready to trade by 6.45am you’ll cut down your chances of missing a move, but if you’re only ready to trade at 8am then you’ll miss plenty.

For the record, I HATE getting up early, I loathe it with a passion that cannot be adequately expressed with mere words.

15

LOL I hate getting up early too, but I start at 4:00am :o

16

I often do, but my trades are reliable. I had to go out this morning so broke my own rules. Cardinal sin I know, but sinning can be good sometimes.

17

El Toro, good for you once again on the trade this morning.
Kockneerebel-I’m speechless:)

For Newbies, what I’m trying to do is give some structure to trading.

El Toro knows what he’s doing, and says that he violated his rules when entering a position this morning.

Unless you know what you’re doing, then don’t violate your rules.

Main rule-be ready to trade from about 6.45 UK time to 10am UK time.
Don’t trade around news times.
Watch prices move, hopefully in the direction you picked, and smile.

18

Here’s another I wish I’d have know. Brokers cheat.
Maybe cheat is a bit strong, but none the less I call it cheating.

  1. At times when a big move in the market is obvious they constantly update the platform which freezes it and makes trading not possible.
  2. Changing spreads and minimum stop losses when they feel vunerable.
  3. Only allowing telephone trades when they feel vunerable.
  4. Price not available on accounts that guarentee forced closing prices.

AND I have a trading manual from my broker that descibes examples of a number of hyperthetical trades, all winners of course. After 6 months of study I realise that these trades are in large suicidal, but in their senario massive winners.
Training seminars from your broker, by enlarge garbage, showing perfect set ups and nothing marginal. I don’t believe my brokers is my friend. They phoned me a bucket of times until I actually deposited some money. I then went live and lost money at which time I stopped to have a rethink. Guess what? The phone calls and emails started coming in asking me why I had stopped trading? Well isn’t that bl…dy obvious? I’m lossing money. Not my friends.

19

The one thing that would have saved me hassle and blood pressure medication:

Trading daily candles and above is actually a lot easier and much more profitable and predictable than trying to scalp the time frames below that.

20

If you hate to get up early here is what I do.

I trade based off of the start of the daily candles. I’ll normally enter either right at the start of the daily candle or at max 1-2 hour before or after. For me this is 6 PM central time.

Basically getting my entries in the asian session. Depending on the pair and whats going 9 & 11 PM seems to sometimes have large sudden moves. But, often it will just tick along slowly.

This usually keeps my entry out of wild market moves and news spikes. I can oftens see part of my profit before the AM or at least set my trade to BE and protect myself from wild spikes.

It is quite a bit slower moving than the 6-11 AM market overlap though. But, with trading daily candles you aren’t scalping so you don’t need sudden movement and are not always looking to be in and out within minutes or hours. some of my trades go all week, and I’m out by friday the latests, sometimes with a few hundred pips.

All the while I slept in compared to some traders. I usually make it a point to be in front of the screen by 8 am as my first profit target is usually hit and I lock it in with postive SL.