A few newbie questions

S

ShoeshineBoy

I just signed up for the fxcm demo (minis) and can't wait to get started, but I'm really curious about a few things:

1. How important is the news feed if you're going to do forex trading? Do I really need to sit nervously watching every major world event and economic report? Do these things move forex as much as they sometimes appear to with the equities markets?
2. How important is fundamental analysis? If you're going to swing trade, can't you learn more from TA?
3. Can forex produce nice steady profits (after some experience of course) with the minis using swing trading and basic technical analysis? I'm looking for encouragement/realism here.
 
Disclaimer: This is all my opinion. There is a risk of loss listening to me. Past results do not guarantee future success. I am widely hated and despised, blah blah blah...

1.0 Depends if you use Fundamental Analysis or not :D. Short-term trading, not so important. You can see trends happening regardless on your 5-minute chart. As you trade longer terms, news, interest rates etc. become more important to determine bull or bear pressure. But forex is very efficient, the big boys adjust their positions very quickly, which means the markets react to news quickly. Use every trick you can to stay alive. My favorite trick is paying attention.

2.0 I know lots of guys who have no problem trading short term using only technical analysis. One word of warning: don't trust these markets. They're sneaky. :p They don't reverse when you want them to reverse. They can just keep on going against you forever, or until you're wiped out, at which point they of course validate your original position. BUY STRENGTH, SELL WEAKNESS. These aren't dot-coms. They're currencies of massive countries. They're strong or weak for a reason. And you won't catch many tops and bottoms so just give up and relearn how to lay back and follow the trend.

3.0 If you're good, you can easily make more money on forex than the stock markets, because of long, sustained, beeee - yoootiful trends and insane leverage (which is deadly but fun). Unless you're on the other side of the trend, in which case you're worm food, of course.

It's not uncommon for someone with $100k to make $2-3k daytrading with half-decent money management (ie suicidal). Shoot for half that and you'll live longer.

Of course, I also have a friend who was trading for a government agency (this is a VERY VERY TRUE STORY) and she lost just under ***$1 Billion Dollars*** of taxpayer money on one highly-leveraged Yen trade a few years back (like 10 years). And they didn't even fire her. They didn't seem to care. It's not their money. It was the first story she told me when we met. What an icebreaker. Don't let it happen to you.

Trade the mornings. Get up early if you don't want to miss out on the best "action". And remember, tight stops, me boy, tight stops. Because once you start trading forex, you'll realize that you don't know anything at all about trading, and neither do I. Only the market knows what's going on. So listen close.

Oh yes, my usual offer applies: if you have a Silver Bullet that makes you a Billionaire, feel free to PM it to me. I will discretely put it to good use, I promise. :D
 
I have posted this before elsewhere, so I apologize for the redundancy.

Shoe', I seem to recall from other threads that you are a technical trader, versus fundamental. I will presume that is true. When you are looking at historical charts, say over the past 18-24 months, do you ever go to the news archives and look for some news that might have reversed a stock or future? I bet you don't. I don't. There is not one time that I have ever gone back to see 'what happened' when a high or low for the period was put in. Why should I. The chart tells all anyway.

Sure current events are interesting, but if you didn't look before, why look now? Trade the chart.
 
Thx for the ideas guys!

I was just chatting with an fxcm guy for about half an hour. Great customer service - it almost seems too good to be true. But then that's what I thought of IB.

Yes, I believe the charts reveal the fundamentals - I needed to hear that. However, I also know surfer kept a news feed on while he was learning (and he knows infinitely more than I do) and so I thought maybe it was considered an essential. But what you say makes a lot of sense.

Forex is kind of intimidating when you start out: it seems so friggin massive. It seems like you are jumping into the Niagara river enjoying the ride and hoping you don't hear the "sound of thunder"...
 


Disclaimer: This is all my opinion. There is a risk of loss listening to me. Past results do not guarantee future success. I am widely hated and despised, blah blah blah...
Don't worry about it. There's an even greater risk of loss listening to me.

Of course, I also have a friend who was trading for a government agency (this is a VERY VERY TRUE STORY) and she lost just under ***$1 Billion Dollars*** of taxpayer money on one highly-leveraged Yen trade a few years back (like 10 years). And they didn't even fire her. They didn't seem to care. It's not their money. It was the first story she told me when we met. What an icebreaker. Don't let it happen to you.
Wow! Losing one billion dollars. I guess Bill Gates and George Soros are used to it. So she worked for the govt? I'm surprised they didn't give her a raise and a promotion...

Oh yes, my usual offer applies: if you have a Silver Bullet that makes you a Billionaire, feel free to PM it to me. I will discretely put it to good use, I promise. :D
Now that's a deal!
 
Fundementals do have an impact, and also the likes of bank intervention which can dramatically change the price, e.g bank of japan doesnt like how strong the Yen is getting vs the dollar, the movements this can cause are huge, stops are always a must as in all trading!!

I know many people, some most successful, that never look at fundementals however. While I belive it IS of some use, ForEX is great for TA and I base my trades off both (mainly TA however). If its a big news day I will sit out until something is mentioned then look where the price is going (you will often find price fluxuations drop off as the big players also slow down, wary of what will happen, day or two before Fed Greenspan speaks etc). One thing to look at however is the longer term outlook rather than any particular day/news event. Price may move one direction but then quickly resume its longer trend e.g interest rates cuts/rises in a country do have an effect but rarely does it lead too anything major outside an initial movement (i.e either confirm the trend direction or retrace it a bit before resuming).

At end of the day however my MAIN news source is the chart, I follow it before the news as my meazly account doesnt matter in the grand scheme of things, i just try and go where it goes and not second guess what the big guys are going to do, I find the trend lines and supports/resistances etc override any underlying news.

E.g Greenspan spoke a while back (15/7) Euro dropped about 200 pips in a day (in direction of the short term month or so down trend) but movement stopped after hitting a trend line that was from the current bull trend of Euro rising vs the dollar (that goes back about 2 years) and then rose 400 pips before Fib provided resistance. Just showing even after the US economy supposedly getting better, and forcing the Euro down from its all time high reached a little while ago, the longer term trend line held (it also formed a very nice hammer on the daily).

It all depends on your timespan, while you may not hold your trades for days/weeks at a time, keep your eyes on the big picture also.

I find this site informative (http://www.dailyfx.com/) they give commentary on both, fundementals with strong bias towards TA, aswell as "charts of the day".
 
Quote from ShoeshineBoy:

I just signed up for the fxcm demo (minis) and can't wait to get started, but I'm really curious about a few things:

1. How important is the news feed if you're going to do forex trading? Do I really need to sit nervously watching every major world event and economic report? Do these things move forex as much as they sometimes appear to with the equities markets?
2. How important is fundamental analysis? If you're going to swing trade, can't you learn more from TA?
3. Can forex produce nice steady profits (after some experience of course) with the minis using swing trading and basic technical analysis? I'm looking for encouragement/realism here.
More...
Hello ShoeshineBoy.
This is only based on my xp-ce, and I am trading this market for 6 years now. I tried FA, TA, combination of those two; day trading, positional trading...Lost couple acc and kept loosing (of course after minis became avaliable, I began trading minis, but back then there were no minis). Untill 2 years ago I realised there was no use in trying to do a thing with FA and all the news we have coming out. So I began developing my own system - pure TA. Tried intraday - didnt work, finaly positional trading is what was looking promising - now its popular to call it swing trading...whatever. Many ppl know this story, but I never posted on this forum, so here it is.
Nowdays I am trading "swing", and am pretty happy with it. At the moment I am building myself track record to be verifiable, and then its all matter of time untill it gets serious enough...Well, little off the topic. So, now to your points:

1. These things may move market, but you never know for sure which way, and if at all. And no - I give it no importance. I dont even know what news are due today, tomorrow or the day after.
2. Swing trade or not - TA works (at least for me), but I would like to say that as good as any system can be, its worth nothing withut experienced trader. At least thats the way I work, and I doubt there is any 100% mechanical system. Trader is part of system. Feeling the market is also something to help trader, and thats something only time can bring.
3. Minis...well, it depends. I mean what good is it to trade minis. For start of course I would say mini, as untill you gain some experience - why loose money when there is mini? Its not about mini or not mini. Its about way you trade.
here's little discussion we had lately about "Profits per week / month" :
http://www.moneytec.com/forums/_showthread/_s-/_threadid-4139

Good Luck,
Rezo.
 
Quote from izeickl:


At end of the day however my MAIN news source is the chart, I follow it before the news as my meazly account doesnt matter in the grand scheme of things, i just try and go where it goes and not second guess what the big guys are going to do, I find the trend lines and supports/resistances etc override any underlying news.
More...

This happened to me today. It's often puzzling to go back and look at the news that generated your trade..."I made money off of that?"

This time it was a 7.0 earthquake off of New Zealand that put a big downspike in the AUD. <shrug>
 
Thanks guys for all the comments/encouragement. I believe that I'm getting the idea that I can be successful with just good TA and money mgt alone and that's what I needed to hear. I was getting hung up with the idea that I couldn't really be successful unless I had deep behind-the-scenes knowledge. Time to start simulating...
 
Quote from ShoeshineBoy:


2. How important is fundamental analysis? If you're going to swing trade, can't you learn more from TA?
More...


I dunno squat about Forex (and there are those who would say I don't know squat about anything :D ), but I gotta say that you want some basics in Fun Fer Mentals. Pick up some basic Von Misses. Realize that freedom, property rights, and limited government is what makes countries do well. The advanced stuff might help ya, I dunno. But yer gonna be dead in the long run if you fail the basics, IMO.
 
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