starting trading

H

harry8888

Dear elitetrader.com

I decided to go ahead and start trading. As I am in my mid 20's, I wanted to ask other traders what framework of education I need before I begin?

I have done basic stock investing but I want to go into futures.

Can anyone recommend any steps I need to take and specific books I can study from to prepare for trading?

I thank you so much for any feedback anyone can give me.

sincerely

harry
 
I am surprise Nodoji has not given you any advice.

She is usually very helpful. She is a nice lady.


Oh about your trading. My suggestion is: Don't start trading, forget it.

Trading has a 99% failure rate. So you are much more likely to fail than succeed. Many other things in life have much higher probabilities, such as running a red light and not getting caught by a cop. It's actually pretty safe to run a red light.

But trading, no, don't try it, unless you are already deep into it.

But if you want to take the 1% chance, you must be prepared to spend 5 years losing money. A very small percentage of the 1% successful traders didn't lose a big chunk of money. Actually it is not necessarily a good thing not to lose big money during your learning years. The early pain prevents later pain. I choose early pain. Later pain is much more expensive.

If you are still clueless after 5 years, you know you are not a member of the 1%. It's hard to accept the fact that you fall into the 99% failures, but the fact is, you are one of the 99%.
 
Quote from harry8888:

Dear elitetrader.com

I decided to go ahead and start trading. As I am in my mid 20's, I wanted to ask other traders what framework of education I need before I begin?

I have done basic stock investing but I want to go into futures.

Can anyone recommend any steps I need to take and specific books I can study from to prepare for trading?

I thank you so much for any feedback anyone can give me.

sincerely

harry
More...

learn some technical analysis, and put it to practice. Some people prefer to backtest, but I practiced paper trading every week for one year before I started trading with real money.

hope this helps.
 
Be careful whose advice you take, there are so many people writing books and talking on TV who can't trade profitably.
 
What makes a person be in the top 1% of traders? Speaking to other traders, they say, understanding how the markets work, macro-economics and what influences the market. I appreciate any help you can give me. H
 
Quote from harry8888:

Can anyone recommend any steps I need to take and specific books I can study from to prepare for trading?
More...

1. Memorize these patterns until you can identify them immediately on a daily chart and recognize them forming in real-time on an intraday chart (5-min chart is a common day trading time frame for futures): http://www.daytradingcoach.com/daytrading-technicalanalysis-course.htm

2. For 2-3 months, analyze charts of the futures contract you want to trade in the time frame you want to trade and identify which of these setups offer you the most opportunities and the best risk:reward ratios. For the highest probability setups, learn where to place survivable stop losses, and how best to determine profit targets. On strong price runs, make note of clues that the market was willing to offer more than your standard minimum profit target and add rules for letting winners run based on the appearance of these clues.

3. Choose a couple of the best setups your research provides and document the average number of opportunities you have to trade these setups in your particular time frame (per day if you're a day trader or per week/month/quarter if you're a swing trader).

4. Document the win rate % your analysis presents, and document your average risk:reward ratio (average $ loss vs. average $ gain per trade). From this information, determine how much profit you expect to make daily/weekly/monthly.

3. Define a set of written rules for trade entry, stop loss placement and profit taking for the setup(s) you choose to trade. Be sure to include filters you intend to use as well (example: "No trading energy futures during the weekly inventory report").

4. Trade your chosen setups in a demo account until you can trade every appearance of your setups and follow the rules, no exceptions, no cheating, for at least 3 consecutive months. If you violate any part of the plan, the 3-month count restarts at 0.

5. During non-trading hours, analyze the day's chart (or week's chart, if you're swing trading) to be sure you recognized and traded every appearance of your chosen setups. Make written notes about additional patterns you notice that may help you take larger profits, or cut losses earlier.

6. During non-trading hours read Mark Douglas' "Trading in the Zone" (at least 3 times). Once you have a couple months of screen time under your belt, start reading Al Brooks' "Reading Price Charts Bar By Bar". Start with the Glossary in the back of the book, then you can begin reading from the beginning, but only a few pages at a time.

7. Once you attain 3 consecutive months of trading all valid setups by the rules of your trading plan and you're consistently profitable at a level very similar to the level your trading plan predicted, you're ready to trade live and should be well-prepared to be one of the minority of consistently profitable traders.

I can assure you that very few, if any, losing traders have followed steps like this to prepare themselves for a trading career.
 
Doh! Nod, if i saw this 2 years ago, it will save me lots of money and time! Thanks you though.
Quote from NoDoji:

1. Memorize these patterns until you can identify them immediately on a daily chart and recognize them forming in real-time on an intraday chart (5-min chart is a common day trading time frame for futures): http://www.daytradingcoach.com/daytrading-technicalanalysis-course.htm

2. For 2-3 months, analyze charts of the futures contract you want to trade in the time frame you want to trade and identify which of these setups offer you the most opportunities and the best risk:reward ratios. For the highest probability setups, learn where to place survivable stop losses, and how best to determine profit targets. On strong price runs, make note of clues that the market was willing to offer more than your standard minimum profit target and add rules for letting winners run based on the appearance of these clues.

3. Choose a couple of the best setups your research provides and document the average number of opportunities you have to trade these setups in your particular time frame (per day if you're a day trader or per week/month/quarter if you're a swing trader).

4. Document the win rate % your analysis presents, and document your average risk:reward ratio (average $ loss vs. average $ gain per trade). From this information, determine how much profit you expect to make daily/weekly/monthly.

3. Define a set of written rules for trade entry, stop loss placement and profit taking for the setup(s) you choose to trade. Be sure to include filters you intend to use as well (example: "No trading energy futures during the weekly inventory report").

4. Trade your chosen setups in a demo account until you can trade every appearance of your setups and follow the rules, no exceptions, no cheating, for at least 3 consecutive months. If you violate any part of the plan, the 3-month count restarts at 0.

5. During non-trading hours, analyze the day's chart (or week's chart, if you're swing trading) to be sure you recognized and traded every appearance of your chosen setups. Make written notes about additional patterns you notice that may help you take larger profits, or cut losses earlier.

6. During non-trading hours read Mark Douglas' "Trading in the Zone" (at least 3 times). Once you have a couple months of screen time under your belt, start reading Al Brooks' "Reading Price Charts Bar By Bar". Start with the Glossary in the back of the book, then you can begin reading from the beginning, but only a few pages at a time.

7. Once you attain 3 consecutive months of trading all valid setups by the rules of your trading plan and you're consistently profitable at a level very similar to the level your trading plan predicted, you're ready to trade live and should be well-prepared to be one of the minority of consistently profitable traders.

I can assure you that very few, if any, losing traders have followed steps like this to prepare themselves for a trading career.
More...
 
1) create a proven and definable edge in the market place
--preferably prove that edge out over a large sample size (like a 100 trades)

use of patterns is one way to do it; understanding macroeconomics is another way (fundamental vs technical);

2) make sure you can execute this system over and over; dont make things too complicated--there is no holy grail; complicated systems are difficult to consistently execute on

3) add in money mgmt and compound at reasonable levels

Reread what Notes123 said.
 
Quote from NoDoji:

1. Memorize these patterns until you can identify them immediately on a daily chart and recognize them forming in real-time on an intraday chart (5-min chart is a common day trading time frame for futures): http://www.daytradingcoach.com/daytrading-technicalanalysis-course.htm

2. For 2-3 months, analyze charts of the futures contract you want to trade in the time frame you want to trade and identify which of these setups offer you the most opportunities and the best risk:reward ratios. For the highest probability setups, learn where to place survivable stop losses, and how best to determine profit targets. On strong price runs, make note of clues that the market was willing to offer more than your standard minimum profit target and add rules for letting winners run based on the appearance of these clues.

3. Choose a couple of the best setups your research provides and document the average number of opportunities you have to trade these setups in your particular time frame (per day if you're a day trader or per week/month/quarter if you're a swing trader).

4. Document the win rate % your analysis presents, and document your average risk:reward ratio (average $ loss vs. average $ gain per trade). From this information, determine how much profit you expect to make daily/weekly/monthly.

3. Define a set of written rules for trade entry, stop loss placement and profit taking for the setup(s) you choose to trade. Be sure to include filters you intend to use as well (example: "No trading energy futures during the weekly inventory report").

4. Trade your chosen setups in a demo account until you can trade every appearance of your setups and follow the rules, no exceptions, no cheating, for at least 3 consecutive months. If you violate any part of the plan, the 3-month count restarts at 0.

5. During non-trading hours, analyze the day's chart (or week's chart, if you're swing trading) to be sure you recognized and traded every appearance of your chosen setups. Make written notes about additional patterns you notice that may help you take larger profits, or cut losses earlier.

6. During non-trading hours read Mark Douglas' "Trading in the Zone" (at least 3 times). Once you have a couple months of screen time under your belt, start reading Al Brooks' "Reading Price Charts Bar By Bar". Start with the Glossary in the back of the book, then you can begin reading from the beginning, but only a few pages at a time.

7. Once you attain 3 consecutive months of trading all valid setups by the rules of your trading plan and you're consistently profitable at a level very similar to the level your trading plan predicted, you're ready to trade live and should be well-prepared to be one of the minority of consistently profitable traders.

I can assure you that very few, if any, losing traders have followed steps like this to prepare themselves for a trading career.
More...

This is 1970s - 1980s style trading. The world has changed a lot since. Nowadays trading means algos at work. Whoever follows this style of trading (looking at screens real-time and analyzing formations) will end up a with poor vision, psychosis, hemorrhoids, ulcer and other potentially harmful diseases, some even fatal.

I don't believe it that in the days of cloud computing, someone recommends visual pattern recognition in real-time.

Do you have some algo? My grandpa was looking at screens.
 
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