Essentials Of 'First Steps'

What is trailing stop? How to place it? can any body describe in full?

Trailing Stop

Whilst demo accounts are totally the right way to start the 'feeling' you get inside when you are trading live is quite different. It comes down to your confidence and belief in yourself and your trading strategies.

You make a lot of very good points, Tim. (I have tried starting a new thread for another discussion and it says I do not have permission. Can anyone offer advice as to how I can/why I cannot?)

Good writing and philosophy. You're dishing out good nuggets for new traders to embrace. I'd like to comment on your opinion on "gut instinct" and just point out a benign contradiction with what you said yourself: "Nothing works for everybody, and everything works for somebody." I'm sure is is all just wording and semantics, but I mean, what if that "gut instinct" is based on calm and rational decisions?

I realize the point you're making, and you're right, if I'm right about your point; watch the charts and try to take a guess as to where price is going and you will be astonished with how often you are completely wrong - no, I said that wrong. I meant to say, "you will be astonished with how often you take a loss." But that goes to the old adage you've advocated very well: "plan your trade and trade your plan." Just because you are in the red at the moment does not necessarily mean you were wrong. How many of us have taken our loss and the market magically started going our direction?

But to get back on topic, since I've been staring and staring at my charts for years on end, sometimes 80 hours a day (feels like, especially while in a position), I feel I have uncanny intuition, or "gut-feelings" right down to when the bid/ask will change and in what direction. While I do not trade based on that, I have found, through actually "tracking" my gut instinct, which I encourage all new traders do, that it would have been in my service if I had actually "listened to my gut," which refines itself more and more.

Through my personal "gut instinct" research I have come to find that, in my case, there are characteristic emotions I feel when I'm correct. When I say "correct" I don't mean the "trade" is correct, but whether I will win it or lose it. We all know it when we're hoping against hope in a hopeless trade, even before we're stopped out, and I think it would be good to learn to listen to that emotion. So if we learn to recognize those "characteristic emotions" I think we have a very powerful, and inimitable tool at our disposal, but this brings me to another point.

And I believe it helps explain why people "do so well in demo and then crash and burn live." It's called desire. Maybe we can start a whole new thread as to why, but most have trouble making money on the markets because they want to make money. I have a theory that if the were incentive to lose all of our money, it would be easy to make: if you tell a man who has never traded before that you will cut off his fingers if he does not lose all of his money on the markets in a week, he'd triple his account in 3 days. Just a theory.

Very useful thread. I am newbie here, and am a part-time trader. But i intend to go full-time once i feel confident enough! Hope that happens soon

I have a tough time finding the right exit points. Quite often, i enter a trade, and it immediately moves in my direction. But instead of taking profits, i sit tight, hoping for the 'home-run". And then it reverses and hits my stop-loss! And this leaves me wretched. I now realize, i need to work hard on my exits. . Bad exits can make a good entry look bad and good exits can make a bad entry look good.

Your exit calculations can vary according to the strategy you are trading. I would definitely not try and look for a home run all the time - instead have a specific target exactly in the same way as you have a specific stop loss. Otherwise you are not trading, you are betting.

This information is extremely helpful and I've bookmarked this site. What is the typical progress for a newbie in trading? Does one usually start w/ stocks then move on to futures and options? Does anyone have any suggestions on what is the best plan to become a knowledgable trader?

Hi awesomo4k,
Like moths to a flame, the typical progress for most newbies is to be attracted by what promises to make them as rich as possible in the shortest time possible. Currently, the bulk of ad's offering untold wealth recommend trading Forex. When I first started out it was options and then stocks.

I suggest you ignore the fads and follow the info' provided in this Sticky and the Trading FAQs. This will involve learning a little about all the markets and different mechanisms for trading them. Once you have a broad foundation of knowledge, you'll be better placed to make a decision about which is best for you.

As for becoming knowledgable, if you read the threads I've mentioned and follow the links provided in those threads, you'll end up with a very good base from which to build. Enjoy!
Tim.