Essentials Of 'First Steps'

Hi
The "Essentials Of ..." are very helpful, after reading 2-3 books and losing some money on spread betting forex, this forum really opens my eyes. Still lots of reading left, but im keen to get started and the first problem i got is to decide what timeframe to choose as a begginer for my trades.
Because of my day job i have only 3-4 hours (realistically)a day for trading left so i guess day trading is not for me, scalping not for begginers, and with swing trading you still better to wait for right setup to come up.
Can you please advice me what timeframe would be optimal to get some experience in trading.
Thanks

The very very very important thing you have to understand is about probabilities. Forget indicators, software, Expert Advisors (EAs) and the such. Learn first what probability means and how it affects your trading! Forget "gurus" who sell you software/indicators with a "90% success rate"! You can lose even with such a "success rate" (when you always win only 2 pips but lose 200 with the remaining 10% of trades). And you can win in the long term if you only have a success rate of 30-40%.!! This is basic knowledge nobody teaches you at the beginning. Everybody only wants to sell you his products!

Regards
Thomas

What can I say fellas? Just very humbled by being lavished with all this information. I've been skim-reading for a good few months, and will go through all the links once over this week. Been wanting to get into Trading FAR longer than I care to mention, so I know I have the patience, I've got the money to do it comfily, without rushing, without dreaming, and I'm going to start it out right. And continue that way.

Now, a couple of newcomer questions, apologies if they've already been answered in the links:

1) Psychology - is it only during the paper trading stage that you find what kind of trader you are, or whether you're a trader?

2) Timeframe - how do you determine which is right for you? Having read a few charts I feel somewhat averse to intraday, I've always been more of a 'hunter' than a hyena. Again, is this something you determine during your paper days?

3) Spread betting, which I'd hoped to begin my trading career with. TIm writes:

However Paul writes:

.... " Spreadbetting is not a Newbie tool"

I appreciate the two stances are not absolutely mutually exclusive, but what is the situation for the newcomer?

Again, I am DEEPLY grateful for this site, gents. I know a couple of traders who have been burned badly overall, and one who has done very well overall. The first two did little or no research; I don't know about the successful guy, but I know I am going to do my homework.

Cheers!

Always remeber that you must be profitabel on a demo account before you even consider trading with real money!

Hi akratic,
Welcome to T2W and apologies for not replying sooner.

If you have 3-4 hours a day to devote to trading, that's certainly enough to day trade - if that's what you want to do. The caveat is that you'll need to choose a market that's open (obviously) and presents the opportunities that you require during the hours that you're trading. For example, I started out trading U.S. equities after I got home from work for the final 2 hours of the day - 7.00-9.00pm U.K. time. Keep in mind that different markets have different characteristics. For example, the tools and techniques applied to trade equity indices might not be suitable to trade Forex.

As a beginner, I'd advise against scalping as it's very unforgiving. To use a driving analogy, it's akin to driving fast in heavy traffic and poor weather conditions. Things can go wrong very quickly with disastrous consequences. Swing trading a longer timeframe will enable you to trade in a more relaxed way and be less liable to make impulsive decisions which you may later regret. Even so, things can (and will) go wrong but, generally, you'll have more time to evaluate the situation and respond accordingly.

Ultimately, timeframe is very much a matter of personal choice and reflects your attitude towards risk. Many trading books and websites describe day trading as being very high risk and swing or position trading over days or weeks as being (relatively) low risk. (NB: trading of all kinds involves substantial risks - especially when trading leveraged products such as derivatives.) However, some day traders will argue that the greater the time one is exposed to the market (i.e. having open trades) - the greater the level of risk. They don't sleep well for fear of a terrorist attack or the Asian markets collapsing overnight etc. For them, nipping in and out of trades intra day and being 'flat' at the end of the day (i.e. having no open positions) is the least risky option. It's horses for courses - only you can decide what's best for you.
Tim.

Hi Carlos,
Welcome to T2W.
Paper trading has its uses and, certainly, most members would advise paper trading before commiting real money to the markets. At the very least, it will enable you to become familiar with the trading platform you're using and the various different order types etc. Additionally, if your methodology is fundamentally flawed, it's best to discover this whilst trading paper money rather than trading real money. The danger comes when the new trader does very well paper trading and then thinks they'll replicate their success with their live account. They very rarely ever do. The reasons for this can vary but, as you imply, the most common one is the psychological pressures that traders tend to experience when real money is on the line. It's easy to remain calm and detached when trading paper money, less so when it's your hard earned savings. If you've not yet seen it, check out the Essentials Of Trading Psychology Sticky.

Ultimately, the only real way to find out how good your methodology is and how good a trader you are - is to trade with real money. However, make sure you start by trading the smallest amount that your broker permits and then build up incrementally, all the time adhering to your risk management strategy. For more on this, see the Essentials Of Risk & Money Management Sticky. Don't be tempted to throw large sums at the market after a short string of successful trades. That's a classic newbie error that almost always ends in tears. Needless to say, they are tears of pain, not joy!

Please refer to the answer given to 'akratic', above.

This is tricky question to answer! Paulds11 doesn't provide reasons as to why - in his view - spread betting ia a "sophisticated tool not a beginners tool", other than to say that spread betting firms profit when their clients lose. There are many threads that dissect this allegation every which way, so I recommend you check them out and try to come to your own view about the merits or otherwise of spread betting companies. Here are two to get you started:
Can you really make money spread betting?
Capital Spreads
The 2nd link is useful as the CEO of CapitalSpreads is a T2W member and answers a lot of questions about how spread betting companies operate and make their money.

Leaving the argument about whether or not spread betting companies want their customers to win or lose to one side, there are other reasons why spread betting might be considered unsuitable for newbies. These include:
1. Their product is leveraged, which means that profits and losses are magnified. New traders tend to focus on the former and pay scant regard to the latter.
2. Accounts are very easy to open and, generally, their trading platforms are easy to use. Many offer a 'golden hello' in the form of free trades or to partly fund your account when you open it. This can facilitate a gambling type of mentality and give the false impression that trading is easy - especially if the new trader does well with their first few trades.
3. Put 1 and 2 together, then add in the fact that many spread betting companies offer charting facilities that enable their customers to track the market by the second (not just the minute or hour!) and the result is that new traders quickly veer towards day trading without having the requisite knowledge, skills, experience or tools to do it well. As a rule of thumb, day trading is unsuitable for most beginners (but not all) and spread betting is rarely the preferred vehicle for those that do it.

For new traders who don't want to be tempted by all the things that might result in their downfall, then a small unleveraged account that doesn't allow day trading with a broker offering ETFs is one option that involves a minimal amount of risk. Again, all trading is risky and even cautious traders who go down this route can lose a lot of their capital. However, the fact remains that for better or worse, most new traders (in the U.K. at least) start by opening a spread betting account. If they are sensible and follow the advice offered in the FAQs, Stickies and from experienced T2W members, it can be a perfectly good starting point for many of them.
Tim.

Hi dante3,
Welcome to the site.

I'm not sure that I fully understand your question, but if you're wanting recommendations as to which trading books to read, take a look at this FAQ: Which Books should a Beginner Read?
Tim.

Hi i am only new to spread betting and also only new to this site. I must say the site is most informative and people are most helpful. I asked some questions but I was asking in experienced live traders section ,so hopefully I asking questions in right area now ie beginners .
If I wish to trade indices live on a daily basis which time frame on TA charts is it best to set at. Also is the M A breaking the trend line a good criteria to work on. I using the word trend line as in the line showing stock price movement. Am I mad considering trading indices with only demo account experience. I have been trading dax,cac,ftsi,dow and done quite well with above strategy. Seems a very basic strategy but maybe I lucky.
I hope my question makes sense as I say only new to whole game