Trend is not my friend. Please help

Archie_2001 · Jul 17, 2007

Hello fellows.
First I’ll introduce myself. This was about slightly before Christmas 2006, I met my friend, have not seen him for a long time, we met in a cafe, we drink coffee, and he told me that he is working in a solid bank as a trader and trades mainly in the forex? Told me that earns millions for his bank. I began to question him intensively about his work all over so that the next day I went with him to see his work, to watch how he makes money from the air for his bank. We came to his bank workplace that was just magnificent, a great room, four 19 inch monitors, highly spec computer "Yes, I thought, he was very appreciative by his superiors." He introduced me to his colleagues, told me about who is doing what. Analytical department where three people work drew my particular attention and I understood they do analytical forecasts for the bank. My friend saw that I look in the direction of the department and explained that these guys do forecast analysis for the bank's clients. I asked, "Do you use them for a trade analysis." My friend laughed and replied that he was not.

Next was the solemn moment, we went to his huge room his computer started loading windows XP and my friend said "Please, when I will trade you do not ask anything just watch, ask all your questions during lunch ". I don’t see any sense to talk what it was further…
By the end of the day a friend gave me two wonderful books and said," A gift to you, these helped me very much. "
A. Elder. Trading for a Living
Murphy, John-Technical Analysis of the Financial Markets
After all, I saw I thought that the money run as the river and it is not difficult to take them.

The next day, opened an account with a broker with 50,000 dollars. I’ll skip the rest of the installation, connection, etc. I skip because it is meaningless, and it is after all these procedures for installing and connecting my computer to software broker.

After three agonizing days, I could trade online giving orders to the broker.
So I began to remember and try to reproduce all the same as my friend did in his own work time, and in parallel read books he gave to me.
From the beginning, all went fine and just after 2 months I raised money to 100,000 dollars.
Has withdrawn 20,000 dollars, saying to myself about how beautiful life is by itself.
I thought that I have to increase market position size, as now I’m trading as a God.
It is very sad to tell that just in one month time I’ve lost all my 80.000 dollars, while 20 thousand that I successfully withdrew. I’ve lost them as well but not in three days but in three months.

I began to realize that there is a problem in that books, my friend gave me once, I have read 2-3 times, and each time could find contradictions from the authors, a sense that they have different languages spoken.

I did not understand how to determine the trend since it began.
My friend told me not once and I was reading in the book that "trend is your friend" and "buying cheap and selling dear”, but the trend was starting, I did not understand how to determine it and if I succeeded to start position early enough received small plus, close to the end then huge lost.

I will show on the picture as how I define the trend

In this currency pair, I want to make a Buy trade. The truth is that I have already done two deals but make only minus.
I did not understand how to determine a trend from the beginning?
Not in a place where it is already seen?
Can you advice me?

Sincerely yours.

Hoggums · Jul 17, 2007

Archie_2001 said:
I will show on the picture as how I define the trend In this currency pair, I want to make a Buy trade. The truth is that I have already done two deals but make only minus.
I did not understand how to determine a trend from the beginning?
Not in a place where it is already seen?
Can you advice me?

Sincerely yours.

A very expensive way to figure out trading is not that simple. I can't see your graph (it's filtered out here at work) I don't believe what you are trying to do is possible. There's no way to determine a trend as - or before it's started. The shorter the timeframe the harder it gets. Not with any certainty, there are tools & techniques you can use to make a good estimate (such as trend lines, fibs) but you are much better waiting for a trend to develop.

Besides identifying the trend is only one small part of trading. You should be focussing on money management & stops to prevent a repeat episode of the -$80,000 you experienced.

Personally I think you need to stop trading as your mind is probably focussed on trying to win that $100k back, so you'll over leverage and take risks to try to achieve it. Eventually you'll get burned again.

Glenn · Jul 17, 2007

Archie_2001 said:
Hello fellows.
First I’ll introduce myself. This was about slightly before Christmas 2006, I met my friend, have not seen him for a long time, we met in a cafe, we drink coffee, and he told me that he is working in a solid bank as a trader and trades mainly in the forex? Told me that earns millions for his bank. I began to question him intensively about his work all over so that the next day I went with him to see his work, to watch how he makes money from the air for his bank. We came to his bank workplace that was just magnificent, a great room, four 19 inch monitors, highly spec computer "Yes, I thought, he was very appreciative by his superiors." He introduced me to his colleagues, told me about who is doing what. Analytical department where three people work drew my particular attention and I understood they do analytical forecasts for the bank. My friend saw that I look in the direction of the department and explained that these guys do forecast analysis for the bank's clients. I asked, "Do you use them for a trade analysis." My friend laughed and replied that he was not.

Next was the solemn moment, we went to his huge room his computer started loading windows XP and my friend said "Please, when I will trade you do not ask anything just watch, ask all your questions during lunch ". I don’t see any sense to talk what it was further…
By the end of the day a friend gave me two wonderful books and said," A gift to you, these helped me very much. "
A. Elder. Trading for a Living
Murphy, John-Technical Analysis of the Financial Markets
After all, I saw I thought that the money run as the river and it is not difficult to take them.

The next day, opened an account with a broker with 50,000 dollars. I’ll skip the rest of the installation, connection, etc. I skip because it is meaningless, and it is after all these procedures for installing and connecting my computer to software broker.

After three agonizing days, I could trade online giving orders to the broker.
So I began to remember and try to reproduce all the same as my friend did in his own work time, and in parallel read books he gave to me.
From the beginning, all went fine and just after 2 months I raised money to 100,000 dollars.
Has withdrawn 20,000 dollars, saying to myself about how beautiful life is by itself.
I thought that I have to increase market position size, as now I’m trading as a God.
It is very sad to tell that just in one month time I’ve lost all my 80.000 dollars, while 20 thousand that I successfully withdrew. I’ve lost them as well but not in three days but in three months.

I began to realize that there is a problem in that books, my friend gave me once, I have read 2-3 times, and each time could find contradictions from the authors, a sense that they have different languages spoken.

I did not understand how to determine the trend since it began.
My friend told me not once and I was reading in the book that "trend is your friend" and "buying cheap and selling dear”, but the trend was starting, I did not understand how to determine it and if I succeeded to start position early enough received small plus, close to the end then huge lost.

I will show on the picture as how I define the trend

In this currency pair, I want to make a Buy trade. The truth is that I have already done two deals but make only minus.
I did not understand how to determine a trend from the beginning?
Not in a place where it is already seen?
Can you advice me?

Sincerely yours.

Archie
You have defined the Trend on the chart as DOWN, so you should not be buying, you should be selling.
You are trying to trade against the trend.

Don't try to find the beginning of a trend until you have the tools to do it (which are not in those books).
It is easier to trade an existing trend than to find the beginning of a new one.
Just trade the trend you see, and make sure the trend is in place in several timescales.

"I want to make a Buy trade".
The market does not care what you want. It does what it wants. You have to go with the market. The market does not go where you want it to.

Why not ask your friend to explain ? - show him you chart and your post.

And never ever trade with real money until you can trade consistently well using paper trading or a Simulator.

Glenn

Hunter FX · Jul 17, 2007

Archie_2001 said:
Hello fellows.
First I’ll introduce myself. This was about slightly before Christmas 2006, I met my friend, have not seen him for a long time, we met in a cafe, we drink coffee, and he told me that he is working in a solid bank as a trader and trades mainly in the forex? Told me that earns millions for his bank. I began to question him intensively about his work all over so that the next day I went with him to see his work, to watch how he makes money from the air for his bank. We came to his bank workplace that was just magnificent, a great room, four 19 inch monitors, highly spec computer "Yes, I thought, he was very appreciative by his superiors." He introduced me to his colleagues, told me about who is doing what. Analytical department where three people work drew my particular attention and I understood they do analytical forecasts for the bank. My friend saw that I look in the direction of the department and explained that these guys do forecast analysis for the bank's clients. I asked, "Do you use them for a trade analysis." My friend laughed and replied that he was not.

Next was the solemn moment, we went to his huge room his computer started loading windows XP and my friend said "Please, when I will trade you do not ask anything just watch, ask all your questions during lunch ". I don’t see any sense to talk what it was further…
By the end of the day a friend gave me two wonderful books and said," A gift to you, these helped me very much. "
A. Elder. Trading for a Living
Murphy, John-Technical Analysis of the Financial Markets
After all, I saw I thought that the money run as the river and it is not difficult to take them.

The next day, opened an account with a broker with 50,000 dollars. I’ll skip the rest of the installation, connection, etc. I skip because it is meaningless, and it is after all these procedures for installing and connecting my computer to software broker.

After three agonizing days, I could trade online giving orders to the broker.
So I began to remember and try to reproduce all the same as my friend did in his own work time, and in parallel read books he gave to me.
From the beginning, all went fine and just after 2 months I raised money to 100,000 dollars.
Has withdrawn 20,000 dollars, saying to myself about how beautiful life is by itself.
I thought that I have to increase market position size, as now I’m trading as a God.
It is very sad to tell that just in one month time I’ve lost all my 80.000 dollars, while 20 thousand that I successfully withdrew. I’ve lost them as well but not in three days but in three months.

I began to realize that there is a problem in that books, my friend gave me once, I have read 2-3 times, and each time could find contradictions from the authors, a sense that they have different languages spoken.

I did not understand how to determine the trend since it began.
My friend told me not once and I was reading in the book that "trend is your friend" and "buying cheap and selling dear”, but the trend was starting, I did not understand how to determine it and if I succeeded to start position early enough received small plus, close to the end then huge lost.

I will show on the picture as how I define the trend

In this currency pair, I want to make a Buy trade. The truth is that I have already done two deals but make only minus.
I did not understand how to determine a trend from the beginning?
Not in a place where it is already seen?
Can you advice me?

Sincerely yours.

You Archie_2001 touched a very interesting theme.
Yes indeed, there are two old truths that came for long before us, but these two truths contradict.
In particular, "Trend is your friend" - all classic literature hold this phrase, but there is no clear and transparent criteria for determining the trend, if followed certain criteria will be – then there is a trend, if it does not – everything will keep running it in the same direction.
“Buy cheap and sell dear" is the axiom that need to buy / sell when the trend begin/ends, but how to find the end of the trend, and protect against losses at the entrance against the trend, this is not told.

Archie_2001 · Jul 17, 2007

That means I open against the trend?
I just want to take the whole trend from the beginning.
And what criteria do we need to see the end or the beginning of a new trend?
Explain please

fibonelli · Jul 17, 2007

Hi Archie 2001,

Firstly, I am very sorry that you have lost a lot of money.

I'm a newbie trader. My first trading strategy is a trend continuation one where I aim to buy the dips and sell the rallies in up and down trending markets respectively.

I think a strategy like this is potentially much more lower risk than trading counter trend and I feel it is ideal for newbie traders. In fact, my trading strategy will cause me to often miss a quarter of the trend (current backtesting results so far) but I will get a signal to trade the remainder of a clearly identifiable and often accelerating trend channel.

Good luck

Fibonelli

Paul Wilson · Jul 17, 2007

Hey Archie.

Thats a sorry tale you told. I guess some people learn the hard way.

I don't know anything about tradin forex, but I checked the graph out anyway.

Firstly I think the time scale of the graph is massive. If any forex traders want to put me right please feel free. I just can't thing what kind of information you are looking to get from a 6 year timeframe?

I have posted up my interpretation of the trendlines on the graph.

Firstly the main trend is downward. With this you need to be looking for selling opportunities. I have highlighted the main trend on the first chart.

On the second chart I have highlighted uptrend breaks. These are where you need to be selling.

I would have only hopped on this after Feb 04, once the main trend had begun to establish itself.

Again if any experienced traders would like to correct me feel free. I am still learning the ropes myself.

Cheers- Paul.

Paul Wilson · Jul 17, 2007

Archie unless you have a crystal ball you aren't going to get the start of the trend. It has to have time to develop.

fibonelli · Jul 17, 2007

I would have had a sell signal in June 2004 bar on the break of 13554 and again in Feb 2007 bar on the break of 11565. You would need very large stops to trade a monthly chart and a patience of a saint too!

Archie_2001 · Jul 17, 2007

Hoggums said:
Besides identifying the trend is only one small part of trading. You should be focussing on money management & stops to prevent a repeat episode of the -$80,000 you experienced.QUOTE]

I didn’t know that trend identifying plays not important role in trading.
I understand that in addition to trend exist many issues, like Money Management etc.
I’m interesting in question “how define trend” while “trend is my friend”.

Archie_2001 · Jul 17, 2007

Glenn said:
Archie
You have defined the Trend on the chart as DOWN, so you should not be buying, you should be selling.
You are trying to trade against the trend.

Don't try to find the beginning of a trend until you have the tools to do it (which are not in those books).
It is easier to trade an existing trend than to find the beginning of a new one.
Just trade the trend you see, and make sure the trend is in place in several timescales.

"I want to make a Buy trade".
The market does not care what you want. It does what it wants. You have to go with the market. The market does not go where you want it to.

Why not ask your friend to explain ? - show him you chart and your post.

And never ever trade with real money until you can trade consistently well using paper trading or a Simulator.

Glenn

You look how many trend has passed, soon should be the trend reversal. And if I will trade now on a sell, how many it will proceed?

Glenn · Jul 17, 2007

Archie_2001 said:
You look how many trend has passed, soon should be the trend reversal.

That may be your opinion but it means nothing. You have only one vote and there are many many other voters.
The market will do what it likes no matter what you think it should do. It may reverse now or carry on going down. Anything can happen.
You must stop trying to predict what the market will do and let the market tell you what it is doing.

Archie_2001 said:
And if I will trade now on a sell, how many it will proceed?

To answer that would mean doing a lot of work on an instrument with which I am not familiar. And if I gave you an answer what would you do with it ? You must learn to rely on your own judgement, not that of other people.

From your questions it seems that you are very new to all this and looking for easy answers which don't exist. Most people fail at trading because they don't take the time to learn about it, and it is a complicated job. Don't fall into the trap of thinking this is easy.
I don't wish to appear negative or rude, but all the signs are that you know nothing at all about the markets and you have a long way to go before you can confidently and successfully trade with real money.
Glenn

Paul Wilson · Jul 17, 2007

A trend is just and indication of the direction of the market. Up, down or sideways. It doesn't tell you what the market is going to do tommorrow, or next week, or ever. It is just a tool some of us use to gain a better understanding of what we think the market may do, by looking at what it has done in the past.

You cannot trade by just using trend lines.

I agree with Glenn on this one. Seriously don't punt anymore money on the markets until you have got a bit more of an understanding of what is actually going on.

Splitlink · Jul 17, 2007

fibonelli said:
Hi Archie 2001,

Firstly, I am very sorry that you have lost a lot of money.

I'm a newbie trader. My first trading strategy is a trend continuation one where I aim to buy the dips and sell the rallies in up and down trending markets respectively.

I think a strategy like this is potentially much more lower risk than trading counter trend and I feel it is ideal for newbie traders. In fact, my trading strategy will cause me to often miss a quarter of the trend (current backtesting results so far) but I will get a signal to trade the remainder of a clearly identifiable and often accelerating trend channel.

Good luck

IFibonelli

I agree with you. On the charts provided earlier, the trend is down, as I see it. Therefore the trades with least risk are the rising bars and these should be shorted - Actually, they are beautiful, textbook, charts. I wish mine were always like that!

Archie, you must not anticipate the market. even if you think that the trend has been going on long enough, it's still short . You say that the trend is not your friend but you are trading against it.

Split

Hoggums · Jul 17, 2007

Hoggums said:
A very expensive way to figure out trading is not that simple. I can't see your graph (it's filtered out here at work) I don't believe what you are trying to do is possible. There's no way to determine a trend as - or before it's started. The shorter the timeframe the harder it gets. Not with any certainty, there are tools & techniques you can use to make a good estimate (such as trend lines, fibs) but you are much better waiting for a trend to develop.

Besides identifying the trend is only one small part of trading. You should be focussing on money management & stops to prevent a repeat episode of the -$80,000 you experienced.

Personally I think you need to stop trading as your mind is probably focussed on trying to win that $100k back, so you'll over leverage and take risks to try to achieve it. Eventually you'll get burned again.

Oh dear - I've just seen your graph - you are trading monthly bars. So your stops have been too tight if you ran out of money in a month!

You need to look at the daily and weekly charts, trade the monthly by all means - it's a very easy way to make money if you have the patience. (I trade weekly myself), but look on the smaller time ranges for confirmation of a trend - you should see the pattern emerge sooner - beware of false signals though.

Last - reduce your trade size. If someone was trading on 5 min bars and ran out of money in 5 mins you wouldn't have much sympathy would you? The same goes for you.

StupendousTrader · Jul 17, 2007

You are not trading, you are gambling

Hello Archie_2001:

Looking at your USDCAD Forex Chart, I see no reason why you should have lost any money at all. My first impression is that you do not understand candlestick signals. First of all, you are showing a Candlestick chart with a time frame 6 years, 2001 to 2006. That's too long a time frame and it is useless for swing trading.

You need to work with the following Candlestick time frames to see the direction of the main and minor trends. Let the weekly time frame show you the direction of the main trend and the daily candlestick chart the direction of the minor trend. Even then you still need to zoom in further to check the direction of the trend at the 4-hour, 1-hour and sometimes the 15-minute time frames. Your best opportunities to enter the market are when the main and minor trends, 15-minute, 1-hour, 4-hours, daily and even the weekly are all aligned in the same direction. In this case, jump in with both hands and feet. You will always make money in such an alignment, although it's not very common.

The above is a brief of following the trend or making the trend your friend. This in itself is a very tiny aspect of trading.

Before you initiate any trade, first establish your stop limit or how much you are ready to lose, if the market goes against you. And be ready to lose this money as part of your trading. You must always set your risk level with stops. If your stop is hit after entering the market, do not hesitate. Simply get out of the market, relax and reevaluate the situation before reentering. The most important thing is knowing where to place your stop. This you can easily do, if you understand candle stick signals very well.

The next problem I saw in your trading is lack of a money management system. If you have $100,000 as your capital, the maximum amount you should have traded with as a newbie with little or no experience is 5% or $5,000 leaving a cushion of $95,000 for protection against your errors. With $5,000, you can buy 5 lots which you can parlay into $100,000 profit if you are in the direction of a good trend. You should also have put your stop limit at $3,000. This means that if the market turned against you and you lost $3,000 out of the $5,000, you would have automatically been taken out of the market. As you gain more experience and make some profits, you can increase your trading amount to $10,000 or 10% of $100,000 or whatever amount you have at the time. You must do this very carefully because the larger your contracts, the faster you will be wiped out if the trend unexpectedly turns against you. Sometimes, there are gapdowns that suddenly drop below your stop. You have no control over such occurrences. Your only protection in such instances is the amount of cushion or reserve funds you have to protect you.

Finally, you must be very disciplined to follow all your rules for the market, no matter the situation. If you do not have any trading rules, that's the first thing you should create to protect you. You must also discipline your self to manage your emotions. Always be calm, relaxed and neutral to all your trades. In fact, have fun trading and flow with the trend or market, while following all your rules especially relating to money management and stop placement.

If you follow all the above, you will start seeing profits.

Good luck.

laptop1 · Jul 17, 2007

Looking at the chart, I be selling it...."Take this tip" its never to low to sell or to high to buy a market. For swing trades, scale in. Always have a stop in place.

Quit worrying about looking for a start of a new trend. That's a mugs game looking for bottoms...Good luck

StupendousTrader · Jul 18, 2007

laptop1 said:
Looking at the chart, I be selling it...."Take this tip" its never to low to sell or to high to buy a market. For swing trades, scale in. Always have a stop in place.

Quit worrying about looking for a start of a new trend. That's a mugs game looking for bottoms...Good luck

Laptop1:

Your response showed me that you do not trade Forex. If you did, you'll not make such a statement. The upward price movement (volatility) of a 15-minute candlestick chart within a down-trending daily chart can easily hit your stop and kick you out of the market. How much more a yearly trend and even worse, a 6-year trend. You must surely be a genius to sell the USDCAD contract based solely on a 6-year major downtrend. Wow!

It's much more than "never too low to sell and too high to buy". You must have an idea where the market is going based on what it's doing at the moment of entry. If you don't, you are just gambling. It's always easy after the fact.

damianoakley · Jul 18, 2007

Wow - I've just read this thread and I'm still trying to take this in.

You met with a friend who trades, had a coffee, watched him trade, read a couple of books..........and then deposited $50,000 and started trading???!!!

STOP TRADING. IMMEDIATELY.

You are way underestimating how difficult this business is. It's one of the most difficult businesses to operate consistently in the world. If you wanted to open a business, you wouldn't just think about it casually one day and then start running it the next........you would spend time learning and planning every last detail......or at least you should if you want that business to be successful.

STOP TRADING AND LEARN HOW TO TRADE BEFORE YOU RISK A SINGLE PENNY.

Thanks

Damian

Crap Buddist · Jul 18, 2007

hmm, well reading Archies posts, I do end up smiling, I think theres a tongue prodding cheek somewhere. Cheers Archie.

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