What Every New & Or Aspiring Forex Trader... Still Wants To Know

Beginner Questions
3996

Aka,

This is a good question!!

I am starting a live account. I have just registered last week. Got the approval last Friday and I am ready to deposit fund.

I do think that the learning never end. There is always something that come across your eye & thinking that tells you to look into 'it.

My account size will be Micro. I did paper trade here in there without really taking it seriously. I did not filled a trade journal etc…

For me going live is the way of saying, playing around is done. Now we are dealing with real money and it is serious. !!! Discipline…

Presently, I am working on a spreadsheet that will represent my top / down analysis. In there I will have the Pivot point, Key level per TF etc… ( all the nice ICT stuff) That I will filled every day otherwise, I do not trade !!!

Also, I do believe that you need to build you account. Learn from your win/lost. This will eventually allow you to think in matter of PIP, %ROI. The dollars aspect can bias your decision very easily. So taking a 1% risk in a trade should be no different from a few hundred dollars account to a million$ account. The felling of the trade should be the same. So once you build your account over the years, I think you account grows at the same pace that your mind can absorb the Leaning / Fear / Stress and all related physiological aspect.

Good question

Regards,

3997

The recent spate of informative and highly explanatory posts is much appreciated, and earns my respect for its writers. It certainly puts to shame the excessively off-hand and jargon-laden material that prevailed a while back.

My general impression is that forex harbours many who have a little knowledge but act as if they have a lot. It makes sifting through forums a misleading and tiresome process. I am therefore all the more grateful to those who take the time to verify an observation or method as valid, and then go to further lengths to explain it clearly to others.

Cheers, Pajo.

3998

akeakamai,

I wouldn’t mind discussing with you the trading plans ICT has given us to trade with. Not sure what your thoughts were on getting together to discuss, maybe skype or some other form of discussion.

I have just started a micro account with $500 and will be only trading the Asian Sesssion and sometimes the London Open Session. I currently am unable to trade the other sessions due to the time I am at work, but when I get home I am going to go over them and look at them as if I was going to trade them all.

I am currently looking to double my account with an a calendar year. If possible and when my trading experience allows me, I would like to double my account every 3 months or so. For now I will just stick to trying my hardest to double it in one year.

I think getting together and discussing ICT concepts would be very benifital to me growing as a forex trader. I also need to get a blog and journal started.

Just let me know what your thought are for discussing, I will only be available from about 6pm-10pm EST. Not sure if this would work for you.

GLGT

3999

Just discussing on this thread would be good enough I think. I think your goal of doubling your account in 1 year is great, I have the same goal in fact.

Do you have a plan for if the account starts out in drawdown?

I never did before, and it’s something I’ve never seen talked about. I find it difficult to fully accept the risk of every trade when my account is in drawdown. I think risking profits to make profit is the psychological “high ground” in this battlefield.

I had the idea to never let my account drawdown below 5-10% (pick what you’re comfortable with) before RESETTING the account back to the original value.

If you think of that concept like a Stop Loss, and your objective as a Take Profit, you can see that the whole account can be treated like a single trade.

The idea of thinking of your trading account like that never crossed my mind. I had always tried to trade it back to B/E but now I see the weakness in that.

and then there’s the concept of a [B]Profit Buffer[/B]. I heard ICT talking about this in his recent videos. Once you have a little profit on the original balance, there is no [I]real[/I] risk on the account. Once you got that buffer built, you can take those “scary” trades that bring in the big big R-value rewards. And if you keep reminding yourself that you are simply risking profits on the trade, there should be no fear.

These are the specific ideas I want to discuss. I’m currently trading an account with these concepts in mind, and the improvement in my mindset has blown me away. I want to see if these ideas work for others, and perhaps get some insight on their potential improvement!

Does anyone see the power in this? Cheers if you do :wink:

4000

:slight_smile: Very good of you to encourage one another… I’m impressed with your selflessness and interest in the development of the other thread members.

Just a reminder for those who get involved openly… that is where the real learning takes place and the “Magic” happens.

[B]GLGT [/B]:57:

4001

akeakamai,

I can honestly say I have never thought of that before. That does sound really helpful. I will have to do some more thinking on this and come up with a plan that will work with my account. Let me sleep on this and I will get back to you on it.

I can see how this would help if my account went down 10% or more, I would try and hurry up to make that back as soon as I could. Where as if I refunded my account I would just be looking at it as starting over. I think that makes sense anyways. It’s late and almost falling asleep…lol

ICT,

Thanks for the kind words. I really need to get envolved with others that like to trade because were I am from I don’t know anyone that even cares or knows what trading is. So to find someone to throw ideas around with is next to impossible. I am hoping to find new friends in this field to help move my trading along. I know if I just went at this by myself without anyone to talk to about it, it would become very boring.

GLGT

4002


akeakamai,

I took your Account Building Contract and pretty much copied it. I guess there really wasn’t any need to add or remove anything in it so I just used it with a couple minor changes.

I will be starting a live account the First of the year, only because I believe I need some more study time. During now until the end of the year I will be trading demo with very few live trades. At the start of the year I will be jumping in with both feet.

I have more money to trade with, but since this is my first time trading I wanted to start low and then if my account goes down by 25% I will reset the account back to the initial deposit.

I will be starting with $500 account and trying to work towards doubling it by the end of the year.

Now until the end of the year I will be working on studying and watching charts daily. I am also going to be writing up a journal with a section for a trade checklist, keeping track of trades, keeping track of account, etc…maybe we can brainstorm on this idea and come up with a full excel workbook with everything.

ICT, I know you said something about giving us a checklist with everything so maybe you can be some help with us trying to create our journals. Any examples you got laying around?

Let me know you comments and what you think of this idea.

Thanks,

4003

I’ve been live for a while now lol

4004

I’m glad you liked the idea! please keep us updated on the experience.

I don’t keep track of my individual trades anymore. It’s something I dropped years ago. I analyze the trade after it is closed, and when I feel I’ve learned what I can if anything then I move on to the next setup. What I do record is my weekly and monthly performance. But the real message is that this area of trading is very specific to the individual trader. If you find the journal keeps you on track, then you should definitely pursue that :slight_smile:

and you like the “contract” idea? haha

I want trading to feel like a job. A job with lotsa freedoms, but still something that requires work and a deadline (oh boy…)
I like the structure of it. I know where I am going and how I am going to get there. There is a excel spreadsheet that goes with that contract, might as well show you since you like the contract idea :wink:

Buffer = consecutive losses I can withstand before having to reset the balance
Countdown = weeks left on contract
TWA = target weekly average
Projected value = Finishing account balance at 0 weeks and assuming TWA maintained throughout
Projected taxes = 20% tax rate on the net gain for the account (my estimate as a canadian citizen)

4005

akeakamai,

Nice I really like the look of that contract. Would you be willing to post a link to it for us? Looks like a good starting point for me.

GLGT

4006

It’s just an excel spreadsheet, only about 5 minutes work :wink:

4007

Yeah I started on it already, Only thing is I really suck at excel so it might take me awhile longer…lol…I will show my finished journal when I am complete.

4008

I hear some cries of frustration from members of the thread who want more solid examples of the ICT methods in practice. I completely understand, and apologise for any of my posts that you felt were unecessary ‘filler’. Here is something that I have been working on recently - I think it might be useful to some of the newer members trying to fit all the pieces of the puzzle together.

For 3 weeks now the Cable Commercial players have been hitting new one year highs in the COT report. Their net long position has risen from 75,542, to 83,678, to 88,682 contracts. At the same time the Non-Commercial players have been hitting new net short positions. The last time we were at these levels was May 2010 (look at your charts and see what this equates to). In addition, the indicators that I do use on my charts that look for confluence with COT extreme positions are showing oversold signals.

Bearing this in mind, let’s take a look at the Weekly USD index chart.

As you can see from the above image I placed my Fib on the high that was put in place in the summer of 2010, and marked off the retracement level of 38%. I then brought my Fib down and placed it on every other important high since then, noting retracement levels and an interesting OTE zone. Now let’s zoom into that OTE zone and take a closer look.

1023×552

As you can see on the above H4 timeframe, price came down off the top of the blue box (a 79% retracement level) and then spiked back up to the purple box that signifies the OTE zone within the higher time frame OTE. This spike occurred on Thursday, and forms part of the Top Down puzzle that we will continue to examine on the Cable charts…

(sorry, I have to do this in parts because Babypips has a history of rejecting my longer posts)

4009

Now looking at the Weekly chart, we should have key levels marked. The level that interested me was the 1.5300 level set in September last year.

800×600

Moving down to the H4 chart you can see that we were in a dealing range with a low just above the 1.5300 level and a high just above 1.5700. Stops would be placed below this short term range, just as they would be placed below the longer term support level.

800×600

The coloured lines you see on this chart are the Weekly pivots. If you need examples of how often price responds to these pivots then I am happy to supply another screen shot. So, we anticipate that the big boys may want to gun these stops by forcing price out of the range and then quickly turning on their heals (Turtle Soup).

Now, and only now we say ‘well if this is going to happen, then I would like to see it happen in a Kill Zone’. Cue to the lower TF charts…

800×600

As you can see there is a scary looking bearish candle plummeting to the ground during London morning session. If you were just looking at the M15 and M5 chart then would you want to stand in the way of that? No way! But what have we learned from all of that study on the higher time frames and from analyzing the COT data…we have learnt that this could just be an engineered sell-off before price goes higher. Anyway, price pulls up, retraces back to an OTE (purple box) within kill zone, and away we go.

This is the type of thought process I am developing, and these are the types of trades I am focusing on. I hope this helps others to understand how some of the tools can successfully fit together.

Regards

4010

Alishijo,

This is a nice meaty post! Thought-provoking, too. You correctly draw parallels between the last few weeks of COT data and that of May last year, when the GBP/USD subsequently set off on a big rally. I think I am right in saying that when the Commercials build a large long position on a commodity it is generally an indication that it is a good time to buy; and this would suggest that they anticipate another long strong rally on the GBP/USD. There seems to be a good correlation between COT and the pair at these high time frames.

I am a bit less clear about why one would do Fib analysis on the USDX, though. I understand that it is actually tradable, but it is surely driven more by the real exchange rates between the USD and its basket of currencies than it is by pure trading? OK, I know that Fibs are used in trading precisely because they have a recursive nature, and presumably if Fibs work on all the relevant USD pairs, they will work on the USDX, too; it is a derivative of them. Still, it seems one of the less convincing hypotheses, to me. But, anyway, what you seem to be implying is that the USDX is heading for a downturn, which lends weight to the idea of a GBP/USD rally.

I follow the reasoning about stops being placed below 1.5300, too. But would we really anticipate that the banks would aggressively drive the price down nearly 200 pips in a minute or so, purely on the evidence of COT, USDX, and the recent dealing range? Maybe, but I would be really sceptical if someone popped up and said that they had been all set up for it!

I’ve read that banks use news events to mask large transactions. By opening their big positions at the instant of a news event their hand in the market remains undetected (or at least much harder to ascertain). I can see that this would be advantageous to them. So, that may explain the dramatic leap in price that we saw last week. However, there is another explanation - simply that the news that the Bank of England was going to magic another 75 billion pounds out of thin air made everyone nervous about the extent to which the currency would be devalued. I am inclined to accept this straightforward explanation rather than the suggestion of bank machinations. Here’s another reason: the pound moved even more against other currencies (200+ pips against the Franc, 200+ against the Aussie, for example). A simple reaction to fundamentals therefore seems to explain all these phenomena happening in one minute better than a planned assault on GBP/USD. Of course, the markets move so incredibly fast these days that you could argue that these other price reactions were driven by the GBP/USD action. I can’t deny that that might be possible. We can only speculate; we do not have the facts, after all.

Anyway, it is very interesting to discuss these matters. Are you taking a long position on the cable, with a TP set around the 1.7000 mark, and hoping for a merry Christmas? :slight_smile:

Cheers, Pajo.

4011

You correctly draw parallels between the last few weeks of COT data and that of May last year, when the GBP/USD subsequently set off on a big rally. I think I am right in saying that when the Commercials build a large long position on a commodity it is generally an indication that it is a good time to buy; and this would suggest that they anticipate another long strong rally on the GBP/USD. There seems to be a good correlation between COT and the pair at these high time frames.

Correct. But I would caution against assuming that a ‘long strong rally’ will ensue.

I am a bit less clear about why one would do Fib analysis on the USDX, though. I understand that it is actually tradable, but it is surely driven more by the real exchange rates between the USD and its basket of currencies than it is by pure trading? OK, I know that Fibs are used in trading precisely because they have a recursive nature, and presumably if Fibs work on all the relevant USD pairs, they will work on the USDX, too; it is a derivative of them. Still, it seems one of the less convincing hypotheses, to me.

I’ll leave this one for ICT to answer in detail. He has used it in his protrader club videos and I have incorporated it successfully with my Top Down Analysis. I am presuming that if you are trading Cable, the USDX will be highlighting that there is also Fib resistance/support on, most notably, the Euro, but also on the other pairs. I would say that most financial professionals are watching the index and analyzing it, and in that respect it adds more weight than just looking at how Cable sizes up to Fiber.

I follow the reasoning about stops being placed below 1.5300, too. But would we really anticipate that the banks would aggressively drive the price down nearly 200 pips in a minute or so, purely on the evidence of COT, USDX, and the recent dealing range? Maybe, but I would be really sceptical if someone popped up and said that they had been all set up for it!

I agree that 200 pips is a lot to drive price down, but if you can accept that Turtle Soup patterns set up on M15 time frames with 30 or 40 pip swings, I don’t think it is unreasonable to suggest that the same patterns could also set up on the Weekly chart with 200 pip swings.

A simple reaction to fundamentals therefore seems to explain all these phenomena happening in one minute better than a planned assault on GBP/USD.

Are the two mutually exclusive?

Anyway, it is very interesting to discuss these matters. Are you taking a long position on the cable, with a TP set around the 1.7000 mark, and hoping for a merry Christmas?

I have learned through past mistakes never to look that far ahead! COT has been known to set up rallies that exceed well over 1000 pips, but also as little as 200. Will the powers that be engineer a ‘risk-on’ rally going into Christmas? It is not out of the question.

Please bear in mind that I am also learning. I do not profess to have all of the answers and I never hold myself up as a beacon for others to follow. I think all any of us are doing is trying to apply the tools that ICT has given us, and if you see them working more often than not, then that has to be a good sign.

Regards

4012

I am not sure I remember this correctly, but didn’t ICT use USDX pretty much as a straight indicator - and wasn’t it others on the thread who took the next step and introduced the notion of looking for support, resistance and Fib patterns in it, and then inferring GBP/USD price action from them?

As to there being no reason why bank machinations and market fundamentals shouldn’t be coincident and mutually reinforcing - that’s what I was getting at when I raised the idea that banks might deliberately time their price drives so as to be inseparable from news reactions.

Cheers, Pajo.

4013

I can’t find the Pro Traders Club where he used the USDX, but I am working on it! For now please take a look at the PTC dated 05-16-11 at around the 4 minute mark. This is where ICT first mentions the Turtle Soup pattern. Depending on how big your monitor is you may or may not be able to see the price levels on the right of the screen. If you can, then you will note that the run up started at around the 1.4185 figure, and topped out at around 1.4335, before bringing price down by around 300 pips. Now this is not the typical Turtle Soup that I have been seeing at strong support and resistance levels, but it is the example ICT used. The sharp run up was one of 150 pips.

Regards

4014

PTC 06/15/11 For USDX analysis

4015

Thanks. I had a look at it - and ICT is indeed doing Fibonacci analysis on the USDX! I’ve watched all the videos twice, and overlooked this completely.