sKaLpZ Currency Trading For Beginners
- Thread starter sKaLpZ
- Start date
Ha ha. Precious.
I often read this in books written for wannabe traders. But here.....o my.
Lesson on
High Risk and Dangerous Trading
It's commonly known that if you do anything with your money besides open a bank account, you're taking on "Risk."
Well, "Risk" of what?
Basically, it's a simple equation:
Risk + (your) Money = Loss (of your money).
Therefore, adding Risk to your Money always results in Loss?
No.
And if you don't Lose, you Win, by default.
Now, what does this next equation equal?
Winning + (your) Money = ?
Profits! (glad you're following along)
What you want to achieve in the trading world is this:
Profits + (your) Money = MORE Money (added to your account).
This is why people take their money, enter the Stock and/or Currency Markets and trade.
Sounds simple, eh?
It is.
Rather, it is much more simple than MOST people think.
If it is so simple, why do so many people Lose their Money in trade?
Because of having the wrong presumption and view about Risk. That's why.
What is having the wrong view and presumption about Risk mean?
It means, you can be delusional about Risk. It means, you can create realities in your mind that do not exist.
You may ask, "If Risk does not exist then how come so many people who trade Lose their Money?"
Good question (even though I wrote it).
Here's why. It's an equation:
False Perception/Understanding + Risk + (your) Money = Loss.
In other words, if you don't build the element of Risk correctly into your trading system the result will be Loss.
Your system most likely looks something like this:
(Your) Money + a trading account + a computer mouse (to click buy and sell orders with) + stocks and/or currencies market access.
Beyond that, and you pretty much only have 2 other items to add or not add.
They are Money Management, and Risk.
Therefore, if want to make Profit to add to your account you need to make sure you have built into your trading system Money Management and Risk.
If you don't, you're simply going along like a driver of a car on the freeway with blinders on, or with no rearview and side mirrors. Or worse, with no steering wheel.
What do you think will happen?
Right, Loss. Sooner or later.
Therefore, to add Profits to your trading account, make sure you are correctly assessing Risk. And make sure you also have correct Money Management built into your trading system.
The difference between having these 2 items built into your trading system, and NOT having them can be the difference between gaining Profit, and gaining Loss.
If you have these 2 things built into your trading system correctly, you can enter into High Risk and Dangerous Trades, and end up adding Profit to your account when they are closed.
You can build in all the emotional/psychological controls and fancy indicators you want to you but if you don't build these 2 items into your trading system, you are guaranteed to Lose your Money trading in the Markets.
Guaranteed.
sKaLpZ
High Risk and Dangerous Trading
It's commonly known that if you do anything with your money besides open a bank account, you're taking on "Risk."
Well, "Risk" of what?
Basically, it's a simple equation:
Risk + (your) Money = Loss (of your money).
Therefore, adding Risk to your Money always results in Loss?
No.
And if you don't Lose, you Win, by default.
Now, what does this next equation equal?
Winning + (your) Money = ?
Profits! (glad you're following along)
What you want to achieve in the trading world is this:
Profits + (your) Money = MORE Money (added to your account).
This is why people take their money, enter the Stock and/or Currency Markets and trade.
Sounds simple, eh?
It is.
Rather, it is much more simple than MOST people think.
If it is so simple, why do so many people Lose their Money in trade?
Because of having the wrong presumption and view about Risk. That's why.
What is having the wrong view and presumption about Risk mean?
It means, you can be delusional about Risk. It means, you can create realities in your mind that do not exist.
You may ask, "If Risk does not exist then how come so many people who trade Lose their Money?"
Good question (even though I wrote it).
Here's why. It's an equation:
False Perception/Understanding + Risk + (your) Money = Loss.
In other words, if you don't build the element of Risk correctly into your trading system the result will be Loss.
Your system most likely looks something like this:
(Your) Money + a trading account + a computer mouse (to click buy and sell orders with) + stocks and/or currencies market access.
Beyond that, and you pretty much only have 2 other items to add or not add.
They are Money Management, and Risk.
Therefore, if want to make Profit to add to your account you need to make sure you have built into your trading system Money Management and Risk.
If you don't, you're simply going along like a driver of a car on the freeway with blinders on, or with no rearview and side mirrors. Or worse, with no steering wheel.
What do you think will happen?
Right, Loss. Sooner or later.
Therefore, to add Profits to your trading account, make sure you are correctly assessing Risk. And make sure you also have correct Money Management built into your trading system.
The difference between having these 2 items built into your trading system, and NOT having them can be the difference between gaining Profit, and gaining Loss.
If you have these 2 things built into your trading system correctly, you can enter into High Risk and Dangerous Trades, and end up adding Profit to your account when they are closed.
You can build in all the emotional/psychological controls and fancy indicators you want to you but if you don't build these 2 items into your trading system, you are guaranteed to Lose your Money trading in the Markets.
Guaranteed.
sKaLpZ
Hey Skaplz, I enjoy your beginners journal and have learned alot from it, I opened an account with Oanda and have been trading on demo and getting a feel for the Oanda platform and how the Forex operates(I love it by the way), my question to you is and I don't want nor do I expect you to tell me your trading stradegy or system, I am willing to do the work to create my own but where the hell do I start in developing my own system? Should i learn candlesticks, MACD, ema,sma, rsi, fundementals, I have read so much the last month or so since I first emailed you I don't know where to start for my own system.
Can you point me in the right direction.
Can you point me in the right direction.
This is a good point, Joey, and one I'd like to talk a little about now, that is,
What Exactly IS a Trading 'System' and How Can I Get One?"
I was right where Joey was 2 years ago. I had never even heard of a currency "pair" let alone be able to grasp the concept of buying and selling money.
All of it was as foreign to me as foreign currencies.
Dark circles that eventually turned black formed under my eyes as I relentless spent days and nights straight for weeks with so little sleep I often didn't know what day it was.
Sometimes the forex would close (Friday at 5PM ET) and I would just sit there for an hour staring at charts waiting for the next tic (price move) before I realized that the market wasn't open.
I don't trade "for a living."
Yes, I trade a live forex account full-time and have for one-and-a-half years (the first 6 months previous I spent training on demos) but do not live off the money I earn trading currencies.
The reason being, I have a "micro-cap" account meaning under $100,000 (in my case WAY under).
My trading "system" is 100% scalable, that means I can adapt my current trade size (number of units in trade to account cap size) to a larger account.
As of now the best I've been able to do is to "re-invest" earnings.
This is because I have money coming in from another source... since that part is private let's leave it at that.
What is a trading system?
A trading system is nothing.
WHAT?? Correct.
If you can get to the level where you can click open a buy or sell trade and hit Enter, that is your trading system.
It's just that simple. There's nothing more to it.
Why, then, have I spent 2 years bettering my trading system, and developing additional trading "systems?"
Because it is what you do after you click open your buy or sell order that matters.
Ah... now you've GOT a system, Joey!
The next issue is, can you win the trade you just entered by just clicking CLOSE after 5 minutes?
If you can, then you know what? You got an awesome SYSTEM.
Well, let's say Joey pulls out his expensive Casio watch, clicks open a buy order on EUR/USD at 1.1935, then clicks the stop watch to tic off 5-minutes.
5 Minutes Later...
Hm... Joey notices the price of EUR/USD has FALLEN 15-pips, the rate now beaming 1.1920 back at him.
Painfully, he glances back at his Casio where the timer just went to 5:04, he reaches over, grits his teeth and clicks close.
Settling back in his chair he drags his eyes across his trading platform to his Balance... that just went down.
Feeling his lunch stirring to make its way back up to the land of the living he says to himself, "That sucks."
(Actually, he said something else but I edited it.)
He now realizes his Casio 5-Minutes To Riches, Fame and Glory trading system doesn't work.
He quickly moves on to a much more sophisticated trading structure. One where he will count the actual number of pips (points) that he will allow his trade's entry price to move against him before he reaches over and once again kills his trade by clicking close.
Long (buy) trade entered at 1.1940 (yes, the price retraced while he was out of the market), mental Stop Loss (SL) set 20 points down at 1.1920.
Perfect execution - he grins a winner's smile.
It takes 3 hours but the price drifts down to 1.1920.
You know the rest.
He now realizes THAT system is no good either. Mainly because he lost.
Somewhere in the deep recesses of his inner nature he knows that one must WIN a trade(s) to be successful.
Over the course of the next several weeks, Joey frantically opens trade after trade, trade after trade, longs, shorts, shorts, longs, different pairs, at diferent times, at different news announcements, with different SL and TP ("take profit") numbers, in different market sentiments, in different market environments, in different market climates, with different market fears, different market panics, different market manias, using different pair-trading direction combinations, different numbers of units....
He actually manages to lose 100 straight trades in a row that levels his account balance to that of a tall, Hollywood actor-wannabe snail.
He smashes the snail under his foot as he goes out for an evening stroll.
Under the moonlight he thinks over the last 100 trades and something occurs to him...
"I entered EVERY direction possible with all the major pairs... and used every combination of units, news, times, SLs and TPs I could think of. And yet I still LOST every trade."
Is Joey a loser?
No.
Why?
Money in the forex fluctuates. It's pure liquidity.
The mystery of the forex is that 10,000,000 people can all enter only two directions - long or short - at the exact same time, yet they can all lose.
Imagine that, a market where the price can only go up... or down. Yet 10,000,000 people open trades to buy or sell... and they ALL lose!
Listen, Joey, nobody lost more trades than me (on demos).
But after 2 years of making 100s and 100s and 100s and 100s and 100s and 100s of trades both live and on demos (I typically have more than a dozen demos running in the background testing various structures) I can win 100 trades straight in a row and end flat (all trades closed) on EUR/USD.
My advice is, just keep going. Keep testing trades, tactics and set-ups in your "system."
Keep bettering yourself. Keep trying to progress. Continue studying. Keep watching the news and its effect on currencies.
Look at the major eco numbers that come out.
You'll lose. Everyone does. When they first start. Will you advance? It depends on you. Your trading system should progress... in time.
Stay on a demo(s) until you have several winning structures and trade set-ups that work under a number of market environments.
Only then consider putting your money in open live trade.
And once you do, make small trades. Get the pips - the money will follow.
Folks, Joey has agreed to be interviewed. Although he asked that I send a "hot blonde" over to interview him, I'm going to conduct the interview right here on the board (sorry, Joey, then again, I'd rather interview Brooke Shields).
Joey's interview (and hopefully Brooke's) will happen a little later.
The Coin
Thanks that clears things up a bit. I know now that my "system' is more or less one I create out of alot of trial an error till I can consistently be profitable.
P.S Brooke shields works for me.
P.S Brooke shields works for me.
TACTICS are everything. 10% of the trades are great 10% of the trades are awful and its what you do with those 80% of trades in the middle that determines whether you win or lose.
BTW in with you on the USD/JPY short and puking my guts out daily but have my avg up to 111.80 and perhaps next week brings us some relief.
Great journal may you get 50000 views.
BTW in with you on the USD/JPY short and puking my guts out daily but have my avg up to 111.80 and perhaps next week brings us some relief.
Great journal may you get 50000 views.
Wow, amazing how you're trading and claiming to make soo much money and yet .... refuse to show people your P/L when asked for. Can't believe you people are falling for this crap.
This was my worst trading week since I closed my EUR/USD short I bled in for 8 months, finally breaking even.
my live trading account actually managed to book a less than .04% loss after adding in winning gains for the week.
pathetic.
the GBP/USD long trade I got has been sucking my blood out.
it just goes to show that trading IS risky.
forex trading is more risky.
trading the British pound with its 2000+ point "silver spikes" is extremely risky.
I get the feeling things will get worse before they get better....
my live trading account actually managed to book a less than .04% loss after adding in winning gains for the week.
pathetic.
the GBP/USD long trade I got has been sucking my blood out.
it just goes to show that trading IS risky.
forex trading is more risky.
trading the British pound with its 2000+ point "silver spikes" is extremely risky.
I get the feeling things will get worse before they get better....
Thanks.Quote from jbt:
TACTICS are everything. 10% of the trades are great 10% of the trades are awful and its what you do with those 80% of trades in the middle that determines whether you win or lose.
BTW in with you on the USD/JPY short and puking my guts out daily but have my avg up to 111.80 and perhaps next week brings us some relief.
Great journal may you get 50000 views.
You're shorting USD/JPY??
You got balls, dude.
Good average price, though, better than mine at 111.33.
As crazy as this market has been lately I have no doubt we'll climb another 200-points just for the Hell of it.
I think ultimately it will be a good and profitable short though the trade does have elements of substantial risk built into it.
Just manage your account money like a mofo in case the pair decides to take a long overdue vacation to 118 before retracing.
Across the board, I don't see a better trade than shorting USD/JPY, though it could be 90-days before green starts accumulating.