Complete Newbie looking to start

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Old Jan 3, 2010, 2:24am   #1
 
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Complete Newbie looking to start

Hello

This is my first post, just looking to get some advice. In the near future (within this year) i will be coming into some money, approximately 20k but maybe more.

A bit about me, i'm 19, currently an IT student and i finish my course this year around Easter time.

I've always found ways of making money and had a business / investment side to me and now i'm finally coming into some money i want to do something with it unlike most people my age who'd simply blow it!

Someone i know left work to start as a forex trader and is doing relatively well for themselves - but they had a lot of help from someone with a huge amount of experience.

My thought is this, I'd like to learn as much as i can about forex trading and practice using demo accounts till around easter time, then hopefully i will have learned enough to invest a small amount of money in and see what happens. I'm not going to shove 20k in an account and hope for the best - before anyone tries to accuse me of that

I'm just looking for some advice, where to start, what options are good, good platforms etc. I did try a demo account on IG markets for two weeks and managed to double my starting money but that was mostly due to sheer luck and guesswork if i'm honest.

I did read a thread about books / articles to read and whilst i will definitely have a look through those, there were just such a vast number to choose from, so if anyone could maybe advise on something a bit more specific then that would be helpful.

Thanks
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Old Jan 3, 2010, 4:47am   #2
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Re: Complete Newbie looking to start

Hi,

Well, the best thing you can do is get together a methodology of what markets you would like to trade, and getting some money management skills. To do this, its inherent that you backtest a strategy (using patterns and/or indicators).

Once you have done this and happy with the potential win rate, should you go ona nd forward test (actual trading) with conservative money managment.

Kind Regards

V!P
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Old Jan 3, 2010, 12:05pm   #3
 
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Re: Complete Newbie looking to start

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Originally Posted by investme View Post
My thought is this, I'd like to learn as much as i can about forex trading and practice using demo accounts till around easter time, then hopefully i will have learned enough to invest a small amount of money in and see what happens. I'm not going to shove 20k in an account and hope for the best - before anyone tries to accuse me of that
Good man!

Demo with Alpari.co.uk (download Metatrader). Learn to use the platform. Risk only 1% per trade and if you can double the account, you're on to something. Then deposit £200 and trade at 5p/pip when you think you have something. If you can turn that into £400, then you may have something.
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Old Jan 3, 2010, 12:34pm   #4
 
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Re: Complete Newbie looking to start

I, myself, am also new to SB!

I placed my first trade back in October and lost several hundred trading the Gold...bad mistake. Lesson definitely learnt.... the hard way!

I'm currently writing my trading plan, which involves identifying the most successful, consistent and profitable trading techniques. I'm backtesting MACD, stochastic and RSI over a one month trading period on a 15 min time period. I will then use a demo account (TradeFair- fresh with the £10,000 they let you play with) and test my plan until I achieve 40 successful trades. Of course there will be changes along the way, and im expecting this to take several months. After this I will deposit an amount, say £500, into a live account and then trade using £5p/pip. Unfortunately I haven't the luxury of coming into £20000 haha!

Let me know your thoughts peeps!

Peace out ;-)
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Old Jan 3, 2010, 12:50pm   #5
 
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Re: Complete Newbie looking to start

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Originally Posted by Seanyboy123 View Post
I'm currently writing my trading plan, which involves identifying the most successful, consistent and profitable trading techniques. I'm backtesting MACD, stochastic and RSI over a one month trading period on a 15 min time period. I will then use a demo account (TradeFair- fresh with the £10,000 they let you play with) and test my plan until I achieve 40 successful trades. Of course there will be changes along the way, and im expecting this to take several months. After this I will deposit an amount, say £500, into a live account and then trade using £5p/pip. Unfortunately I haven't the luxury of coming into £20000 haha!
Well, definitely, take it slowly. The markets will always be there.
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Old Jan 3, 2010, 12:57pm   #6
 
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Re: Complete Newbie looking to start

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£5p/pip.
?
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Old Jan 3, 2010, 5:54pm   #7
 
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Re: Complete Newbie looking to start

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Originally Posted by Seanyboy123 View Post
I, myself, am also new to SB!

I placed my first trade back in October and lost several hundred trading the Gold...bad mistake. Lesson definitely learnt.... the hard way!

I'm currently writing my trading plan, which involves identifying the most successful, consistent and profitable trading techniques. I'm backtesting MACD, stochastic and RSI over a one month trading period on a 15 min time period. I will then use a demo account (TradeFair- fresh with the £10,000 they let you play with) and test my plan until I achieve 40 successful trades. Of course there will be changes along the way, and im expecting this to take several months. After this I will deposit an amount, say £500, into a live account and then trade using £5p/pip. Unfortunately I haven't the luxury of coming into £20000 haha!

Let me know your thoughts peeps!

Peace out ;-)
£500 @ £5 a pip. Account will be blown in no time. Try to learn a bit more first. Take a look here. http://www.babypips.com/school/
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Old Jan 3, 2010, 6:15pm   #8
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Re: Complete Newbie looking to start

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£500 @ £5 a pip. Account will be blown in no time. Try to learn a bit more first. Take a look here. http://www.babypips.com/school/
Agreed, do the IG trade sense programme, start of with ten pence bets, build it up to 50p after 6 weeks. I think you can stay on 50p on forex for a few months thereafter...can't honestly think of a better way to attempt to learn the trade with real money...
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Old Jan 3, 2010, 9:35pm   #9
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Re: Complete Newbie looking to start

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Originally Posted by investme View Post
Someone i know left work to start as a forex trader and is doing relatively well for themselves - but they had a lot of help from someone with a huge amount of experience.
A correct education in this field is very hard to come by. You are extremely fortunate indeed if you are taken in hand and shown everything correctly by one of the few who are truly proficient.

It is possible to learn without such assistance of course, but it is a route open to the very special few. I am sorry to have to tell you that you are unlikely to have the levels of awareness required to self generate the correct thought to progress. It will become clearer to you when you have more life experience.

It is unlikely that a truly proficient trader would wish to mentor someone of your age. If you are truly interested in this profession, I suggest that you look for jobs within the industry which will give you exposure. Think of learning rather than earning at this stage. In the future you may find a mentor - focus on finding work within the industry and learning all you can.

I do not recommend that you think of actively trading your capital. You have an opportunity to save and invest it wisely so it is available to you when the right circumstances present. When I started trading I supported myself from savings for almost three years before I was ready to trade live. During this time I worked almost all day every day developing my understanding of the markets.

If you are fortunate enough to find a mentor later you will be very pleased to have £20,000 or more to support yourself when you are learning to trade, and through your paper trading also.

I recommend that you do not take any heed of the recommendations made to you on this thread which involve treating trading as a hobby, opening betting accounts, "starting small" when you should not be starting at all, etc. If you wish to have a hobby this is a poor one to pick. More or less all hobbies will cost you money, but you will receive nothing enriching by losing money in the market as a hobby.

I am sorry that this is not the response you would like to hear, but it is an honest one given with the benefit of experience (and dare I say from someone older and perhaps wiser). If you wish to succeed in this profession you have been given a frank and honest start.

I trust this assists you, to your benefit and my satisfaction.

Very kind regards
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Old Jan 3, 2010, 10:04pm   #10
Joined Nov 2008
Re: Complete Newbie looking to start

alternatively you could ignore Nicorette's *advice* above and just give it a go...
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Old Jan 4, 2010, 3:03am   #11
Joined Feb 2009
Re: Complete Newbie looking to start

I Second that above comment made by Black Swan. Only to far as to say to experiment with building a strategy and seeing whether it generate a return.
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Old Jan 4, 2010, 3:51am   #12
 
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Re: Complete Newbie looking to start

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Originally Posted by ccclarette658 View Post

I recommend that you do not take any heed of the recommendations made to you on this thread which involve treating trading as a hobby, opening betting accounts, "starting small" when you should not be starting at all, etc. If you wish to have a hobby this is a poor one to pick. More or less all hobbies will cost you money, but you will receive nothing enriching by losing money in the market as a hobby.
including this one

what is this? what are you saying man, its one of the best ways to start to learn

if you want to succeed in this business, it will require LOTS of hard work, motivation, discipline, education, practice and ultimately experience......and even then there is no gaurantee that you will be successful.

good luck and read this sticky

http://www.trade2win.com/boards/firs...-know-now.html
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Last edited by jiggly; Jan 4, 2010 at 4:06am.
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Old Jan 4, 2010, 4:36am   #13
Joined Apr 2008
Re: Complete Newbie looking to start

My $0.02, a still learning semi-noob myself.

1.) This is a professional profession that will take a similar amount of effort to get professional at as any other professional job (think lawyer, medical doctor, engineer.) It is not a shortcut to easy street. Banish any such thoughts from your mind. This will take serious persistence and serious application.

2.) There's a lot of questions to be anwered, some of which are actually quite hard to answer. For example, what style of trader are you? (Scalper, Day trader, Swing trader, Position trader, multiple styles? Answering this question implies you'll need to learn what all these things mean.) What instrument do you prefer to trade? (Stocks, forex, futures... )

3.) Learn that your first job as trader as risk manager. Do not gloss over this point, it is crucial. If your first concern is not staying in the game, then you will not stay in the game and are guaranteed to blow it all sooner or later. This means your first responsibility is that you need to trade in such a way that you'll be here to trade again another day, every day and you need to manage your "risk of ruin" as a first priority.

3.) Following on from 3, at some point you *will* have a surprising/unexpected/unlikely run of losses (say 10 in a row but it may be longer), no matter how good on average/in general your system is. You need to account for this as something that *will* happen sooner or later and that you must be able to survive. This means your system/trading system/trading style will need to be able to bounce back from such an event without too much trouble.

4.) Recovering from a such a "maximal negative excursion event" is obviously increasingly harder the bigger the absolute % of loss in account equity is. Consequentely, you must ensure that the total % loss of such a run is till one from which recovery is still relatively easy. To wit:
% lost % gain needed to recover
1.00% 1.01%
2.00% 2.04%
5.00% 5.26%
10.00% 11.11%
15.00% 17.65%
20.00% 25.00%
30.00% 42.86%
40.00% 66.67%
50.00% 100.00%
60.00% 150.00%
75.00% 300.00%
90.00% 900.00%

Clearly, the larger the loss, the harder it becomes to recover. Lose 50% of your account and you have to make 100% just to get back where you were. If however your worst case likely/expected loss can be limited to around (say) 10%, then you only need 11.1% to recover, which is much easier than 100% needed if you lose 50% or 900% if you lost 90%!

5.) The above implies placing limits on the size of your trades/bets. If your worst case expected series of consecutive losses are, say 10, and you want to limit such a run to 10% of account equity, then it follows that you need to ensure that your trades sizes/stops are such that 10 successive trade losses will not exceed 10% of account equity. It then follows that no single trade may risk loss of more than (about) 1% of account equity, for example. (The actual maximal number of consecutive losses will vary based on trading system/strategy, so in reality you will need to deteremine a safe number based on the realities of your trading style/system with some safety factor included. You will consequently have to do research to find out what the maximumal number of consecutive losses actually seen for your trading strategy is in various markets to help you put a realistic estimate on this value for your trading system.)

6.) Supposing you've decided on 1% equity risk per trade (expecting say a 10x worst case consecutive loss run) the question still remains about where to actually place your stop in a trade. Obviously, the closer you place your stops, the more likely it becomes that you will get stopped out due to market noise, so you can't just use your entire account/all available margin and then place your stop loss based on how much a 1% movement would be -- you have to decide your stop position based on market realities/your system only (e.g. lower/higher than major recent swingpoint or whatnot) and then only determine what position size to trade to comply with said the stop level and maximum % risk per trade allowed, which is 1% in our example. Doing this, means you will only lose a predefined amount of account equity if you lose, and that this will only happen if the premise for the trade is proved false by an unexpected adverse market move into your stop loss, and not due to market noise hitting your stop accidentally.

7.) Buy good books and read them. It is cheap compared to what you can lose in the markets through lack of knowledge and discipline (but don't think books alone are sufficient.) My most recent one is "Trading in the Zone" by Mark Douglas. Others are "Come into my Trading room" by Alexander Elder useful, as well as Van K. Tharp's "Trade your way to financial freedom" and Brian Shannon's "Technical Analysis using multiple timeframes". Another book in my queue is Ashraf Laidi's "Currency Trading and Intermarket Analysis".

8.) Some might disagree with me, but I recommend starting a *small!* live account relatively soon (which you should write off and expect to lose as an educational cost, but which you should of course try not to lose.) There's a world of difference psychologically between paper/demo trading and trading actual money. In Forex, I suggest Oanda as broker due to their flexible position sizing which will allow you to employ proper money mangement whether you have a $5 or a $50,000 account. (On most other brokers you have fixed lot sizes which can make proper money management impossible on very small accounts.) I do suggest you put some of your own earned money (that you can afford to lose) into the account (and not any of the 20k) so you'll go through the neccesary emotional development.

And after all that I've not even said anything about actual trading systems (range based, trend based), expectancy and/or average profitability, avg profit:avg loss ratio and wins:losses ratio and a host of other things...

OK, for now that's my noob's $0.02 worth, hope that helps.
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Last edited by wprins; Jan 4, 2010 at 4:42am.
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Old Jan 4, 2010, 10:46am   #14
 
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Joined Nov 2009
Re: Complete Newbie looking to start

Thank you for your inputÖ this really is a huge learning experienceÖ but if youíve got the drive and determination surely anyone can make it, at the end of the day money isnít selective or discriminatory?

To be honest Iím struggling with writing the trading plan and generating profitable ideas, at the moment it seems Iím placing my stop at the same level I take my profit (donít want to get stopped out of a trade to soon), so if I win one and loose one trade, Iím only breaking evenÖ any thoughts?

And can anyone shed some light on the combination of indicators Iím trialling? (MACD/ RSI and stochastic)Ö pros and cons, limitations etc. Thereís so much to read on the internet but without speaking to someone who has put this into practice its hard to establish each technical indicators boundaries.
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Old Jan 4, 2010, 11:38am   #15
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Re: Complete Newbie looking to start

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Originally Posted by Black Swan View Post
alternatively you could ignore Nicorette's *advice* above and just give it a go...
I am with black swan on this one... give it a go!.. expect to lose some money though but just consider it as a tution fee!...better to lose a couple of grand trading and learning rather than spending it on any courses.. trade small and use stop losses and keep a diary listing the reasons why you traded and what you learnt.You will lose money to begin with but dont let that put you off.. eventually you will come up with a consistant strategy that suits your personality.. good luck!
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