Essentials Of 'New to Trading'

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Old Nov 26, 2012, 10:48pm   #31
 
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Re: Essentials Of 'First Steps'

Thks so much for the information really appreciate your time would spread betting help reduce the commission? could it work maybe a couple times a year on the big events?
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Old Nov 27, 2012, 9:32am   #32
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Re: Essentials Of 'First Steps'

timsk started this thread Hi hmaster101,
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Originally Posted by hmaster101 View Post
. . .would spread betting help reduce the commission?
Yes and no! You won't have the formal commission charge that you'd have with a direct market access broker (DMA) - but you will have a wider spread. Whichever way you cut it - you end up paying one way or the other. And the spreads can be very wide indeed with some SB companies, such that the cost of trading with them could be higher than it would be trading via DMA.

It's hard to give a definitive answer because it depends on the broker, the instruments traded (a relatively small thinly traded company will have a much wider spread than a company like Microsoft for example), the time of day and the timeframe of the trade etc.

Quote:
Originally Posted by hmaster101 View Post
could it work maybe a couple times a year on the big events?
Yes, it could. However, if you trade it based solely on the information you've provided here, if it 'works', it will be the result of good fortune rather than skill and judgement. In other words, the next time you try it - it might not work. As it stands, it's not a complete strategy; it's a hypothesis around which a strategy could be built. If it's forward tested and produces a positive expectancy then, at that point, you may have a tradeable, potentially profitable strategy.
Tim.
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Old Dec 6, 2012, 12:12pm   #33
 
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Re: 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
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Old Dec 16, 2012, 7:16pm   #34
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Re: Essentials Of 'First Steps'

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

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Old Jan 22, 2013, 12:33am   #35
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Re: T2W First Steps Tips & Tools

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:

Quote:
Originally Posted by timsk View Post
INTRODUCTION
.... By far the most common trading vehicle for new traders is Spread Betting, followed by Contracts for Difference (CFD's), Options and Futures. .
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!
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Old Jan 23, 2013, 5:08pm   #36
 
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Re: Essentials Of 'First Steps'

Always remeber that you must be profitabel on a demo account before you even consider trading with real money!
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Old Feb 13, 2013, 11:00am   #37
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Re: Essentials Of 'First Steps'

timsk started this thread
Quote:
Originally Posted by akratic View Post
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
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.
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Old Feb 13, 2013, 1:03pm   #38
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Re: T2W First Steps Tips & Tools

timsk started this thread Hi Carlos,
Welcome to T2W.
Quote:
Originally Posted by Carlos Un-shackled View Post
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?
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!

Quote:
Originally Posted by Carlos Un-shackled View Post
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?
Please refer to the answer given to 'akratic', above.

Quote:
Originally Posted by Carlos Un-shackled View Post
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?
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.
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Old Feb 13, 2013, 1:12pm   #39
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Re: Essentials Of 'First Steps'

timsk started this thread
Quote:
Originally Posted by dante3 View Post
which book is the best in essentials point of view?
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.
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I'm New To T2W - Where Do I Start? - a must read for anyone new to T2W
I'm New To TRADING – Where Do I Start? - a must read for anyone new to TRADING
The Trading Plan Template - a must read for anyone without a proper TRADING PLAN
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Old Feb 13, 2013, 7:50pm   #40
 
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Re: Essentials Of 'First Steps'

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
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Old Feb 14, 2013, 11:40am   #41
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Re: Essentials Of 'First Steps'

timsk started this thread Hi knocklyonbohs,
Welcome to the site.

Quote:
Originally Posted by knocklyonbohs View Post
If I wish to trade indices live on a daily basis which time frame on TA charts is it best to set at.
If you mean you wish to open and close trades on an intra-day basis, then most traders tend to use timeframes of an hour or less. However, this is a generalisation and there's no particular time frame that's better than any other. Some traders prefer to dispense with time based charts altogether and, if they use charts at all, prefer to use non-time based charts such as Point & Figure or Renko. For more info' about charts, timeframes and TA, check out this Sticky: Essentials Of Technical Analysis

Quote:
Originally Posted by knocklyonbohs View Post
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.
No one can answer this for you. Your results will tell you if the idea has merit or not. Look at your success and profit ratios and work out whether or not you have a positive expectancy. If you have, you're in business. If you haven't, you will need to figure out why not and make any necessary adjustments which may (or may not) include the use of MAs breaking trendlines. If you're unfamiliar with any of these terms - they are all explianed in detail in this Sticky: Essentials Of 'Risk & Money Management'

Quote:
Originally Posted by knocklyonbohs View Post
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.
There's nothing wrong with 'basic' - most experienced traders advise keeping things as simple and as straightforward as possible. If what you're doing works for you - stick with it and don't worry about what other people think. If you get stuck, you can always ask for help from fellow T2W members. There's a good recent example of the sort of feedback you can expect in this thread: Stuck

Tim.
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Old Apr 8, 2013, 3:14pm   #42
 
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Re: Essentials Of 'First Steps'

Hi Tim,

Having traded with many companies over the past 7 years, would it be pertinent at all to advise new and existing traders of some of the pitfalls of spreadbetting, as some of these companies employ tactics that hinder traders. It would be helpful to educate them (particularly newbies) to overcome some of these pitfalls? If not here, could you please suggest where it would be appropriate to do so. Thank you, Richard

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Old Apr 8, 2013, 6:29pm   #43
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Re: Essentials Of 'First Steps'

timsk started this thread
Quote:
Originally Posted by richarda47 View Post
Hi Tim,

Having traded with many companies over the past 7 years, would it be pertinent at all to advise new and existing traders of some of the pitfalls of spreadbetting, as some of these companies employ tactics that hinder traders. It would be helpful to educate them (particularly newbies) to overcome some of these pitfalls? If not here, could you please suggest where it would be appropriate to do so. Thank you, Richard
Hi Richard,
Welcome to the forum.

The short answer is 'yes'! The more we can do to educate and inform our members about the perils and pitfalls of trading - regardless of whether they trade via direct market access or a spread bet broker - the better. Some of the tactics that SB firms allegedly employ to hinder traders have been discussed at length on numerous threads. Less common is discussion offering practical steps to help traders overcome said tactics (other than not using SB firms). So, if you'd care to start a thread offering your insights - that would be great! As and when I get around to writing the Essentials of Spread Betting & CFDs Sticky, rest assured this topic will form a substantial part of the main post. In the meantime, if you do a search and find a quality thread that encapsulates the main issues, bring it to my attention and I'll add it to the Best Threads in the Spread Betting & CFDs Forum Sticky.

Thanks for your post.
Tim.
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I'm New To T2W - Where Do I Start? - a must read for anyone new to T2W
I'm New To TRADING – Where Do I Start? - a must read for anyone new to TRADING
The Trading Plan Template - a must read for anyone without a proper TRADING PLAN
Please note: I am part of T2W Admin' Staff - I am NOT a Moderator!

Last edited by timsk; Apr 9, 2013 at 4:35pm. Reason: Grammar
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Old May 8, 2013, 6:44pm   #44
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Re: T2W First Steps Tips & Tools

Many, many (belated!!) thanks for that comprehensive reply Tim ! I hope with my late reply you can see I'm in no mad rush to get on the markets. As for timeframes, I can foresee trying out both intra and interday in my paper phase to get an idea of which one I'm best suited to.

Now I've read extensively (both in content and time) about money management, the importance of stop losses, cutting losses, letting profits run etc etc, and feel a bit like the learner driver who has passed the Highway Code, but still hasn't sat behind the wheel yet, and am wondering what my psychology is going to be like !!

Seems to me that the next phases are
1) Build a strategy (which requires a lot of research I imagine);
2) Learn how (not the when, just the how) to actually enter and exit trades, place the stop-losses etc,
3) Backtest,
3.5) Revise, if necessary
4) Paper trade.
5) If successful at this point, go live incrementally

Questions:

1) Building a strategy, any good, meaty articles (or preferably Youtube vids) I can watch that guide through the process? Preferably via spreadtrading? I know there's a PDF on here but that talks mostly about the money management side and like I said I want to go for a test drive!! Also, how long does building a strategy typically take for an experienced guy?

2) I know Americans aren't allowed to spread trade, BUT I will be over there this summer, if log in from there will I be allowed to trade, or do the UK brokerages firewall off any traffic from US IP's even though I'll be a legit client?

Cheers,

Carlos.

Last edited by timsk; Jun 6, 2013 at 4:54pm. Reason: Monthly Housekeeping
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Old May 23, 2013, 10:32am   #45
 
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Re: Essentials Of 'First Steps'

These steps are great. Really useful for traders. Thanks a lot for your advice.
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