Just thought I’d check this out. Just curious, what (other than go through the school thing here, I’ll start after work tonight) should I do to do this right? The one big problem I have that I know is that I work during New York market hours. I’ll really only be able to do anything from about 8PM-2AM Central time. But other than that, I’m not educated in this at all (I know the basic terminology, that’s about it), and I want to know what is it that people should do to make sure they’re doing things right? Is there a good beginners book that can get me to the point of not losing my shirt whenever I try, or is that impossible?
I intend to focus on technical analysis, at least in the beginning. If I can do well with that I might look into studying up on fundamentals, but at this point I think that’s too much for me. I have never done technical trading before, so this will be entirely new to me.
Additionally, I looked at some of the exchanges. Oanda looks good because their spreads look to be right around 1 pip or slightly over for EUR/USD. Is there another I should look at though?
In terms of amount, I can commit to this. I have about 30K I could commit to this, but I’m hoping to hold off and start with maybe 3K to get my feet wet, and start with micro-lots. I know I’m not going to make any money doing that, but this is just for education, not money.
I am a gambler so I do understand that I’m very open to losses. No warning needs to be given there. I’m looking for another smart thing to do with some excess money I have rather than dumping it in an index fund.
Read this- understand the underlying concept in-and-out before placing a single trade with $0.01 of your own money.
Check this- piggy-backs the leverage concepts in the above link, plus talks about realistic goals and journaling trades.
Go through all the educational material on this website at least once, to begin a knowledge-base foundation.
You sound smart, so, I’d say your 50% ahead of the curve. You’ll want to explore as many strategies as you can in the early stages to try and define which speak to you as a person. The journey is long, and there are zero shortcuts. Shortcuts simply lead to quicker failure- if that’s even a term.
Before considering a broker, you’ll want to understand the mindset of a professional trader and how to approach the markets. There are boatloads of providers out there, so don’t rush. You may learn faster than others, which is great, but, I’d be cautious in being over-confident and risking your own capital.
Again, I’d say you’re getting a bit ahead of yourself by determining account size, what type of positions you’re going to trade- I’d ask, do you understand the term “effective leverage” and how it relates to trading and risk management? I’d assume no. That being the case, you’re simply trying to run before you crawled and learned to walk- feel me?
Not trying to limit you at all- enthusiasm is a requirement when it comes to learning how to trade on the FX market. Just don’t let your enthusiasm get the best of your bank account. While learning, try to be as honest as you possibly can with yourself. It sounds weird now, but, you’ll understand it one day.
Once you’re comfortable with a basic understanding of how the market works, psychological aspects, risk management, strategies, etc, trade with a demo account. It’s free, and is a great way to learn how to execute.
As for what effective leverage, I am assuming that is how much leverage I’m actually using (as opposed to the max the broker will allow me), and lower effective leverages means you’re risking a smaller percentage of your capital with trades. For instance, trading if I have 2K in capital and have 1 micro-lot open, my effective leverage would be 5:1, even if the broker allows me 50:1. Using a lower effective leverage means I’m taking less risk on swings and am less likely to be margin called. I might have missed a detail but is it something like that?
Either way, I’ll look into it later tonight.
Is there a good place to find an overview of different technical strategies? Basically the one I’ve heard of is find ceilings and supports. I’ve got 0 knowledge on the subject, so an overview would be very helpful.
Additionally, what I read was that trading on demo accounts isn’t a realistic substitution for trading for real, because they don’t slip. I don’t want to practice the wrong thing. How realistic of a concern is that? I’m willing to lose some money in the beginning if it means a better education.
Specifically, as for what I can tell at this point that I would want in a broker is low spreads (because that’s what kills money) and after hours trading (because that’s all I can ever do - I’ve got a day job and all). What else do people look for in a broker?
Timeframes etc… You can trade a daily chart, or a 4 hour chart, or if you want to sit in front of the box, a 5 minute chart. Any chart or timeframe is all about ‘R’ return, ie: if you want to risk $10, how much you can make back? $10 or $100?
So 10 small 1R trades on a 5 minute timeframe is the same as 1 x 10R trade on a larger timeframe, so don’t feel too restricted by your available trading times.
You’ll need to go through a few basic strategies and find something that suits your personality, risk appetite etc. All strategies involve: Trend (trading direction), Entries (when, how), risk management (taking profit & managing a loss). And keep in mind demo trading is always a free to get your feet wet. Typing “0.1 lots” instead of “0.01” lots into a broker and taking a loss can easily shake you up, so demo trade as a minimum to get used to position sizing etc.
Best of luck, the forums here are always good for advice etc.
Don’t think there is anything I could add to the above. These are quality posts! Perhaps just one further thing? Do not get discouraged at the start with what might seem like information overload. The terminology alone takes awhile to learn. Strategies and systems longer and to get to consistently profitable, way longer. But if you have determination to see it through (most don’t) the personal and financial reward more than compensate.
Since you decide it to go with technical analysis you should visit this link: StockCharts.com - ChartSchool and read everything about that. It can definitely help you.
Yes you’re right about the demo. If you are risk averse, I will advise you to place smaller amounts in real account instead of demo. Believe me, it will make a lot of difference once you trade larger lots. Personally, I use demo only to test the platform and its features.
Yes, we should use demo account for practice in forex. We can try to apply what we’ve learn in forex. I also try to maximize what have been provide by demo account and until now i still using it to understand more about market forex.
I’m still going through it all. I did open a demo account just to get a feel for what kind of things I’m doing, not real practice.
I’ve been reading a little on Fibonacci to get a better understanding of it, but I can’t find a real explanation about why these resistance levels work or anything like that. Does anyone have one? Also, there’s no way to draw the fibonaccis on the mobile app, why is that? What indicators do people like? I’m currently using the Commodity Channel Index (just as practice in how to use some indicator) and the momentum. I’m longing when I see something is oversold and momentum is declining, and shorting when I see something is overbought and momentum is declining. This doesn’t seem to really yield what I would expect though. Just curious if someone could give me an idea why.
There’s no real reason why Fibs work. Some say it’s because a lot of people are watching those levels so they become self-fulfilling.
Personally I think in most cases Fib levels are a load of crap. People see what they want to see. If you’ve got a Fib retracement indicator with 6 different ratio levels on it, of course it’s going to look like one of them is holding as a support or resistance level when the price turns around.
Do you understand what your indicators are telling you? That’s probably why it doesn’t work. Yeah, it’s saying “overbought” or “oversold” but by what definitions? Who’s to say it won’t just continue being bought or sold?
Forex isn’t that simple. I’d advise you to toss the indicators. Learn price action and thus how to read what the market is telling you. Add the indicators back in later as a visual shortcut when you understand what they actually mean and it’s relation to the market.
Great advice. Very sound way to learn how to trade- the same approach I took.
Confidence is huge when it comes to trading.
Having confidence in your ability to analyze the charts and execute when the time calls.
I bought Japanese candlesticks by Steve nison and it really helped understand price action. I have taken notes and go through charts applying what I have learnt through the book.
Looking back though , someone in here has a PDF link and the post ‘pure price action’ by Chris capre on here will help you immensely. He explains things really well and the post helps differentiate between a decent opportunity and a great one.
I started around a year ago but had to stop. Just back at it this month. Trading the daily timeframe using the highest probability price action tools learnt from the resources above has been successful for me.
Unfortunately I do not have 30k but still making a solid return on what I have and doing that slow and steady . Like posters above have said, focus on the process and try to enjoy it and almost forget the money.
Also, I just started looking at some of these EAs. Specifically Daily-F, Toms EA, and Forex Envy look strong on myfxbook. I imagine since no one said anything about them their reception here is probably pretty poor, but I was wondering if you guys have tried any of those or any others and what your experience was with them?
I know that they are based on martingale though, which can be very risky, and they they could have just deleted their failures, but if this was done on a small account size and funds were withdrawn periodically, would that make sense?
I’d be incredibly wary of using Martingale. If anything you should be [I]decreasing[/I] position size during a losing streak, not increasing it. Although it may work fine with very low risk per trade like 1%, depending on your system.
.36% weekly from Toms EA? That’s pretty pathetic.
Forex Envy’s site “guarantees” to grow your account, a claim that should set off alarm bells. No strategy works 100% of the time.
Ask yourself, if these people really had a winning system, would they need to sell it?
It’s just more money to them if they do sell it. And it’s not like these realistically make huge amounts, looks like 3% a month might be realistic, but nothing more. Still a lot nicer than my mutual funds so far this year.
I think the guarantee is just that they will refund your money if you don’t post a profit using the recommended settings in 60 days. It’s not a guarantee of “We’ll replace all your losses” or anything like that. A lot of EAs make the same guarantee. And my bet is that using their standard settings it probably just makes low risk trades so you have a low but positive upside.
When you say 1%, do you mean where the base trade (the initial trade - not sure the word for it) a trade for 1% of your capital (so if you have $13,900 it would be fine to use martingale for a starting size of 1 micro-lot? I understand what the martingale is doing but I don’t clearly see how determine the riskiness of it.
Anyway, another thing I saw was using signals (Real - Trading Signals for MetaTrader 4 Social Trading) I guess the reviews need to be read for these though because on one of them apparently because the trades are so short the lag time between when the provider makes the trade and when the user gets the trade makes profitable trades unprofitable.
Additionally, is there ever a chance of arbitrage? Like if GBP/USD is trading at 1.70, EUR/USD is trading at 1.40, and EUR/GBP is trading at .85, you should theoretically be able to short EUR/GBP and GBP/USD, and long EUR/USD for guaranteed profit (Take 1 USD->.7143 EUR->.6071 GBP-> 1.0321 USD) but it seems like the broker would just have you at 3 open positions which seem independent? I don’t know how you would take advantage of that.
I noticed that if the spreads were 0 (so everything at the bid price) the broker was off by 0.5 pips on what EUR/GBP should be (EUR/USD at 1.39211, GBP/UST at 1.69609, EUR/GBP at .82072 - should be .82077) in a screen shot I took.
You might be right about the EA. It’s hard to find one that actually works amongst all the junk ones people are pushing out though. So most of us just take to avoiding them altogether.
Yeah, 1% as the base trade risk. If you know the win rate of your system, you can calculate the probability of losing a certain percent of your account. If you have a win rate of 60% with 1% base risk, then using Martingale the probability of losing 15% of the account (4 losing trades) is 2.6%.
The short answer for the arbitrage question is no. As a retail trader you will never have a chance of arbing spot Forex. Arbs are exploited (and thus corrected) by institutional traders with far cheaper spreads than we will ever see. So the theory behind it is sound but in practicality it will never work for most of us simply due to transaction costs.
Are the probabilities independent (empirically)? Like, if you’ve lost on the martingale twice, is the chance that you win on the 3rd time still 60%, or does losing twice give evidence that the market is just behaving counter-intuitively (or counter to the algorithm for some reason) and that the chance is actually lower than 60%? Or maybe it’s higher because there’s more reason for the price to change direction than there was before? Or what?
