sKaLpZ Currency Trading For Beginners
- Thread starter sKaLpZ
- Start date
1:50AM PST
*sitting down to a cup of coffee so hot it should be illegal*
OK, whuddah we got here... NFP numbers coming out in a few hours - market seems ripe for the picking....
Not nervous. Not skittish. Not jumpy.
Just hungry.
Real hungry.
Looks like the big EUR/USD is in a downward sentiment. I guess the euro-bulls figured out euro isn't going to 1.4500 this time either.
Imagine brought up a good issue, how does one learn to be a good trader?
By learning how to be a better trader.
No one, when they first come to forex trading, knows what to do. They're either trained (by who?) or they just take the Pain course, that is, trying to learn the language of forex, grappling with such words as:
a pair.
a pip (or, pip value).
a cent (as in "the market moved up [or down] a cent today.").
rate prices, aka, exchange rates.
Then there's the whole sea of indicators. THESE things really are rocket science. Commonly referred to as: Fibonacci Retracements. Created by Mr. Fibonacci himself.
There's also Momentum Oscillators.
Oh, and let's not forget MACD, that stands for Moving Average Convergence Divergence.
Yeah....
Why couldn't they just have Moving Average Convergences? Did they really have to look at the Divergences of the Convergences?
Apparently so.
Well, this is not about me, but rather my view on what a beginner can do to get into forex trading, based on what I know because I, myself went thru it.
It wasn't easy.
I started from the vantage point (disadvantage) of knowing more about subterraneous molten lava compounds on Pluto than I did about buying and selling global money.
Imagine asked, When you first started out, how did you come up with "ideas" for a system. Books? Other traders?
Let's break that down.
What IS a "system"?
Let's say you managed to download a demo from one of the numerous forex brokers who offer one.
You spend a few hours (or a few months) clicking things and pushing buttons until you are finally able to make a BUY trade, or a sell trade.
You did it! The pair you selected is now in play.
You used some of the money in your trading platform's Account Balance to engage the forex market with your particular chosen currency pair in a direction (either buy or sell) that YOU chose!
Well done.
Now you sit back dumb-founded as your pair floats further and further away from your entry price (the price you bought or sold it at) that is clearly shown on your platform's pip indicator (a pip is the same as a point, if that helps).
Guess what? THAT (the trade you just made) is your "trading system." It's elemental but nonetheless, that's what it is.
You could even name it: I (The Beginner) Just Entered The Forex And Am Now Sitting Here Dumbfounded Watching My Pair Sink Further And Further Into A Drawdown system.
If the market floats away from you 50 or 60 points during the next few days then turns back and heads in your direction, passes your entry point and continues on 380 points in your favor during the next 2 weeks while you had given up on "this dumb currency stuff" but, you had an extra minute before you went out to walk your dog 2-weeks later...
What would you do? Probably reach over and snap closed the trade, then in a gasp, glance over at your new Account Balance, beaming the +$3800 you just made, into your primal cortex.
Something deep inside your primordial self sends this message to your mind:
"That was the easiest money you EVER made."
As you reach for the phone to call your broker to request a check, it occurs to you, the $3800 was play money. Your trade was real. The market rate move was real. Your system was real. The money wasn't.
You pull back your hand and massage your crinkled forehead as you let out a sigh.
Reality is decisive. Your system ROCKS.
Deep in the real global money trenches, being able to bag 380 points (pips, tics, etc.) clean on a major pair is a most coveted feat.
Your trading "system" is clearly superior.
But wait, you didn't even DO anything!
Ah... now comes the harder part. Replicating a similar maneuver in your next trade.
"Well," you get an idea, "Since it worked once, why wouldn't it work again?"
You pull out your monthly planner calendar, point to a day two-weeks away, and mark in bright red letters,
WALK DOG - CLOSE TRADE FIRST!!!
With a lordly air you quickly enter the same combination then deftly snap your trading platform shut, letting out a laugh so loud it rattles the floor of the tenant living above you, as you leash up your faithful friend who is looking at you wagging his tail, knowing you finally cracked up.
The fateful day arrives, with a trembling hand you log into your demo account, as beads of sweat begin building...
Your eyes adjust to your Account Balance as you lurch forward in knee-jerk reaction...
-$5392.63
A chunk of something wet, cold and painful forces it way up your throat that you instinctively choke back. Your mind not wanting to receive the new primal message: "LOSERRRRRRRR!!!"
It's not IF I've had a similar experience, it's how many times. Hint: Too many times to count.
Can you think? Yes? Good. Then you can plan trade set-ups.
For one thing, you can coordinate a country's interest rate adjustment with the resulting climb or fall in its currency rate against another nation's currency.
You can think up ideas how you may more accurately align your next trade(s) with various other factors.
Factors you will become more and more aware of in the overall scheme of things in the forex universe.
Naturally you'll have questions. This is a good thing.
You can post on trading message boards. Since there invariably are people who have already been where you are many of them are more than happy to share their knowledge with you.
Books! People, come on, get serious! There are so many books written by and about master traders, it's pathetic.
If you can get ONE good idea or principle out a $20 book it is WELL worth the price!
Trading rules. The Internet is filled with them. I've even started threads on trading rules that trading forum members have posted on.
I'm manic when it comes to reading new "trading rules." I'll search the world over for one.
Like hot sex with a beautiful woman, I can't get enough. Of course, being able to ever find a woman I could get some with, would help. But that's another story.
(Anyone knows any sites that might have stories like that, msg me.)
*ahem*
I think Imagine's question was covered here without writing a 300-page novel.
Any additional questions on this, links anyone has to good sources or books or links for beginners you've found are beneficial please post them (unless Magna feels otherwise
).See yah in the market,
sKaLpZ
thanks for the response and would appreciate it if you would elaborate a bit more.
My personal experience, was basically the first month I made money. And just like in your post " it was the easiest money I ever made". Ohhh the dreams I had and still have.
Fast forward a few months, " I suck". The easiest money I ever lost. It has become fairly obvious to me that if I continue what I am doing, I will just keep adding to my capital rather than just trying to preserve it.
Can you please provide insights to the following:
A.) while you knew about Pluto - did you also know that you wanted to trade for a living? Living being the key word, with rocks on Pluto being the hobby.
B.) when you first started out - did you continue to trade based on your first successful trades until you knew it was not the best trading plan? or how was your first six months different?
C.) Give some personal experiences when you said to yourself ( if this has happened with you ) STOP. I need a system or a better way of doing what I am currently doing.
D.) based on point C above, what did you do to STOP and your thought process and actions on how you came to your system.
I know my post sucks but basically it would be great to hear on what your were thinking when you were first starting out and what you think when you have made it as a successful trader ( i assume this is the case
)
Again, thanks for the effort.
My personal experience, was basically the first month I made money. And just like in your post " it was the easiest money I ever made". Ohhh the dreams I had and still have.
Fast forward a few months, " I suck". The easiest money I ever lost. It has become fairly obvious to me that if I continue what I am doing, I will just keep adding to my capital rather than just trying to preserve it.
Can you please provide insights to the following:
A.) while you knew about Pluto - did you also know that you wanted to trade for a living? Living being the key word, with rocks on Pluto being the hobby.
B.) when you first started out - did you continue to trade based on your first successful trades until you knew it was not the best trading plan? or how was your first six months different?
C.) Give some personal experiences when you said to yourself ( if this has happened with you ) STOP. I need a system or a better way of doing what I am currently doing.
D.) based on point C above, what did you do to STOP and your thought process and actions on how you came to your system.
I know my post sucks but basically it would be great to hear on what your were thinking when you were first starting out and what you think when you have made it as a successful trader ( i assume this is the case
)Again, thanks for the effort.
Am i correct in interpreting the above as meaning:
If you are a beginner, you should "research" as many trading rules as you can. These trading rules, will prevent many early mistakes, if you FOLLOW them.
As you progress with your own personal trading experience, the trading rules will become your own rather than just plagerized from the net or from various books.
The rules that become your own will develop as you start to define your own system. Only experience will allow you to define a system. But for a beginner, some simple rules may help as these rules apply to every successful trader?
The keys to progressing as a beginner are simple.
Read, study, trade, test and expose yourself to the market (just make sure your drapes are closed so your neighbors cannot look in and see you when you do).
Sure, why not take 100s of successful trading rules and try applying them to your system.
Hey, they may give you some better ideas!
It never hurts to educate yourself, right?
Follow them, reverse them, twist them, break them down, re-build them. You know, they're only guidelines.
Whatever you need to do to win. Because winning rocks!
s
I need to limit the focus on me, bro.Quote from Imagine:
thanks for the response and would appreciate it if you would elaborate a bit more.
My personal experience, was basically the first month I made money. And just like in your post " it was the easiest money I ever made". Ohhh the dreams I had and still have.
Fast forward a few months, " I suck". The easiest money I ever lost. It has become fairly obvious to me that if I continue what I am doing, I will just keep adding to my capital rather than just trying to preserve it.
Can you please provide insights to the following:
A.) while you knew about Pluto - did you also know that you wanted to trade for a living? Living being the key word, with rocks on Pluto being the hobby.
B.) when you first started out - did you continue to trade based on your first successful trades until you knew it was not the best trading plan? or how was your first six months different?
C.) Give some personal experiences when you said to yourself ( if this has happened with you ) STOP. I need a system or a better way of doing what I am currently doing.
D.) based on point C above, what did you do to STOP and your thought process and actions on how you came to your system.
I know my post sucks but basically it would be great to hear on what your were thinking when you were first starting out and what you think when you have made it as a successful trader ( i assume this is the case
Again, thanks for the effort.
Remember, all the globe is reading this.
I hope that means Brooke Shields and Paris Hilton are too.
Let me think over a few of your questions and see if I can reply in a general as it pertains to a new trader manner.
s
Sounds good!
I finally closed that short for 44 points. Not the 100s I had imagined.
I too took a long. Mine at 1.2855. It's currently sitting -44. I suspect it will drop over a cent before it sees daylight.
It's almost pure speculation, the EUR will indeed see 1.2900.
See yah, Adrian.
sKalPZ
current market: 1.2816
Hello Imagine,Quote from Imagine:
thanks for the response and would appreciate it if you would elaborate a bit more.
My personal experience, was basically the first month I made money. And just like in your post " it was the easiest money I ever made". Ohhh the dreams I had and still have.
Fast forward a few months, " I suck". The easiest money I ever lost. It has become fairly obvious to me that if I continue what I am doing, I will just keep adding to my capital rather than just trying to preserve it.
Can you please provide insights to the following:
A.) while you knew about Pluto - did you also know that you wanted to trade for a living? Living being the key word, with rocks on Pluto being the hobby.
B.) when you first started out - did you continue to trade based on your first successful trades until you knew it was not the best trading plan? or how was your first six months different?
C.) Give some personal experiences when you said to yourself ( if this has happened with you ) STOP. I need a system or a better way of doing what I am currently doing.
D.) based on point C above, what did you do to STOP and your thought process and actions on how you came to your system.
I know my post sucks but basically it would be great to hear on what your were thinking when you were first starting out and what you think when you have made it as a successful trader ( i assume this is the case
Again, thanks for the effort.
Well, I could begin my reply by writing the opening paragragh of my new novel, or by just supplying a couple general one-liners....
...
It was a dark and stormy mid afternoon. She finished choking down the hot goo, grudgingly, although she knew she had no choice due to being locked in chains.
*ahem*
Onto your questions...
A.) No, I did not know I wanted to trade for a living. I was just looking for a new career - clicked on a link about "forex" - the rest is history.
B.) From my very first view of a "trading platform" to the last short I opened on EUR/USD my efforts, failures, progress and advancement were pretty much seamless.
C.) This was pretty much an ongoing process. I never settle for "good enough." If I have a good trade set-up, structure or system, I am still not satisfied. I must do better.
Consequently, I am always testing new strategies on demos, even live on sub-accounts albeit by making ultra-small trades so if I do have to scrap the trade(s) the loss will not wipe me out.
Example: When first developing my Deep Hold Trading system I dropped several hundred tics down into a cable (GBP/USD) trade going long on my live account as the rate tanked.
I had a general idea what kind of results I wanted and knew they were attainable.
However once I was about three-quarters into the trade, it was so hairy I dumped the position at a small loss.
Right after I did, GBP/USD spiked 1800 points up - I would have tripled my money exposed to the market.
I later went on to perfect that system.
D.) Usually by making simple modifications/adjustments in the system and/or set-up being tested.
My mental process is usually pretty upbeat, positive and optimistic that, if there is a way, I will ultimately uncover it.
My focus is on low-risk trading methods. Gambling does not inspire me. Making profit by sensible trading methods does.
I think the forex is so chock-full of risk by nature, why increase exposure to loss by taking on risky trades?
Much of it has to do with simply trading in direct proportion to your true account size.
Margin and leverage gives the beginning trader a sense of unequaled ability to get money.
But the sword cuts both ways.
Usually the other side of the blade is only realized once a huge loss is taken.
These losses can wipe out a trader's emotional, psychological and mental equipoise.
So, it is well worth creating systems that are based on better trade, risk and money management techniques to begin with.
Risk level can always be adjusted later but without building in sound, sensible, practical and effective basic trading components, making true gains is more difficult.
Something to keep in mind when building / testing a trading system or trade set-up: Will it be effective and still work in a slow market, in a fast market, in a short, medium or wider trading range? Will it still be effective in a trending market or in a tight exchange rate band?
Example. One of my first successful trade set-ups was trading short to medium range break-outs. I got very proficient at it.
But on one particular trade, everything changed. It was an AUD/USD interest rate adjustment set-up.
The moment the news came out on the Australian central bank's website I was ready.
Presuming a rate hike would slow the economy and stagnate the nation's growth I was set to short AUD/USD even though the rate may first climb a cent or two.
The interest rate announcement hit the globe - they raised it!
I shorted it.
AUD/USD took off and I continued shorting it... and shorting it... and shorting it... while the price climbed over 200 points (2 cents).
The problem was it was a "trending market." AUD/USD went up over 800-pips the next 8 weeks.
I got a margin call. Good thing it was a demo account.
I took that lesson and immediately went on to the same trade set-up on GBP/USD - they also announced their interest rate adjustment. They raised it!
This time I opened a MASSIVE long trade. Sure enough the rate spikes up 50-points... then dropped and continued falling and falling and falling.
Another blown demo account.
Oh well, live and learn.
Regards,
Sam