How can I lose?

This is a discussion on How can I lose? within the First Steps forums, part of the Reception category; I'm just about to start trading and I would like to know what are the classic mistakes new traders make? ...

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Old Jun 7, 2009, 4:17pm   #1
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How can I lose?

I'm just about to start trading and I would like to know what are the classic mistakes new traders make?
Also, what is the best way to get an idea of opening prices, I read a few ways but what,s the favourite.
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Old Jun 7, 2009, 4:36pm   #2
 
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Quote:
Originally Posted by samnakthong View Post
I'm just about to start trading and I would like to know what are the classic mistakes new traders make?
Far too many to mention here! Suggest you read through the forums beginning with the first half dozen listed after clicking "First Steps" on the home page. Then trade a virtual account on a demo platform until you start to earn money consistently (hint- this stage may take a few years or never happen).
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Also, what is the best way to get an idea of opening prices, I read a few ways but what,s the favourite.
Depends on the instrument you wish to trade. You will have to be more specific.
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Old Jun 7, 2009, 5:02pm   #3
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samnakthong started this thread Specifically ftse 100 with spreads. I think its beginners luck, but I made 700 quid last week whilst practicing.
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Old Jun 7, 2009, 5:06pm   #4
 
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This is a really good question actually; if anything it's the most important question. The number 1 aim of any trader has to be to avoid blowing up.

If you can't lose then you can only win.

There is so much that could be written about this, but it all boils down to this: Don't risk much on any one trade. Ensure you know what you are risking on any one trade. And if you can't afford to take the trade without that risk, don't take the trade.

Some will argue that you shouldn't risk more than 2% of your account on any one trade. I don't buy that, personally - in fact in certain circumstances I think it's reasonable to risk well over half your account - but I would say that you are much better off sticking to that figure (or try 5%) than not.

So use stops, work out where your stop will be, and then size your position accordingly
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Old Jun 7, 2009, 5:18pm   #5
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samnakthong started this thread That's good advice for me. I've been using 10 pound bets to win only 150 per trade with very tight stops with 70 percent success rate. I cant believe its can be that easy, as I said beginners luck maybe?
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Old Jun 7, 2009, 5:20pm   #6
 
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Quote:
Originally Posted by samnakthong View Post
I think its beginners luck, but I made 700 quid last week whilst practicing.
Lol well done. The operative word was "consistantly" though. See how you average out over a few months. Watch your money management too...£700 on a virtual account of £1000 would suggest excessive risk taking which will wipe the account sooner or later. On an account 20 times higher it might be a good result



Quote:
Specifically ftse 100 with spreads.
Look at the quotes being given by spreadbetting companies before the footsy open. They use the closing price from the previous day plus/minus an allowance for the overnight movements first in the US and then the Asian markets. You are unlikely to better their algorithms for calculating this. Once LIFFE opens the futures price +/- fair value will become the definitive guide.

edit... just seen arabianites post, agree, wot 'ee sed.
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Old Jun 7, 2009, 5:24pm   #7
 
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One other thing to mind, not that I've really been paying too much attention to FTSE, but it's been pretty docile during the last week - markets definitely go through different phases, not just in terms of raw volitality but in behaviour as well; you may find that you are doing something (at a guess a variant of mean reversion) that won't work most of the time.
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Old Jun 7, 2009, 5:33pm   #8
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samnakthong started this thread good call on the opening prices. AND as for just being lucky I was afraid of that. Although reading between the lines I think that market conditions last week were perfect for convinving a rank amateur that he'd come across a big fat hairy cash cow.
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Old Jun 7, 2009, 5:44pm   #9
 
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Of course, if you can find a way of identifying when what you are doing will work and stay out of the markets the rest of the time you've plenty of time to build up a nice big account
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Old Jun 7, 2009, 5:50pm   #10
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samnakthong started this thread No not reversion, more a quick in, quick out tactic based on the news and the fact that I thought profit taking would be quick since the day traders may be getting frustrated with the lack of opportunities during the week. NO GREED!
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Old Jun 7, 2009, 5:51pm   #11
 
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Originally Posted by samnakthong View Post
That's good advice for me. I've been using 10 pound bets to win only 150 per trade with very tight stops with 70 percent success rate. I cant believe its can be that easy, as I said beginners luck maybe?
£10 bets? You mean £10 per tick, obviously. How tight are your stops? You need to say 15 ticks or less or there is a big chance you are going to be up sh*t creek sooner or later.
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Old Jun 7, 2009, 5:53pm   #12
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samnakthong started this thread 10 a point assuming 5 point stop.
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Old Jun 7, 2009, 6:03pm   #13
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samnakthong started this thread A nights, maybe you're right. I was jumping on rare decent size movements in a quiet market. We're talking bet durations of less than an hour.
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Old Jun 7, 2009, 6:06pm   #14
 
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Originally Posted by samnakthong View Post
10 a point assuming 5 point stop.
What are you trading with a 5 point stop?
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Old Jun 7, 2009, 6:14pm   #15
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samnakthong started this thread assuming I can, the ftse 100, I'm not sure that's allowed.
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