How can I lose?

samnakthong · Jun 7, 2009

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.

peto · Jun 7, 2009

samnakthong said:
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).

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.

samnakthong · Jun 7, 2009

Specifically ftse 100 with spreads. I think its beginners luck, but I made 700 quid last week whilst practicing.

arabianights · Jun 7, 2009

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

samnakthong · Jun 7, 2009

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?

peto · Jun 7, 2009

samnakthong said:
I think its beginners luck, but I made 700 quid last week whilst practicing.

Lol well done. The operative word was "consistantly" though. :cheesy: 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

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.

arabianights · Jun 7, 2009

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.

samnakthong · Jun 7, 2009

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.

arabianights · Jun 7, 2009

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

samnakthong · Jun 7, 2009

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!

trader_dante · Jun 7, 2009

samnakthong said:
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.

samnakthong · Jun 7, 2009

10 a point assuming 5 point stop.

samnakthong · Jun 7, 2009

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.

trader_dante · Jun 7, 2009

samnakthong said:
10 a point assuming 5 point stop.

What are you trading with a 5 point stop?

samnakthong · Jun 7, 2009

assuming I can, the ftse 100, I'm not sure that's allowed.

samnakthong · Jun 7, 2009

Something else I hadn't considered. That's why these forums are great if you're a muppet like me. After about 2 seconds research on google I've discovered stop point of 5 is absolute garbage.

samnakthong · Jun 7, 2009

OR have I misunderstood that as well. Some brokers appear to mislead you into thinking that some things are possible when there not. Like stop loss orders at any level. I think it was finspread that lead me down the garden path there.

danpayne · Jun 7, 2009

stopl loss

Another way to keep stop loss tight on ftse is (asuming you enter at the right point)
have a mental stop untill move in your direction then bring your 5 point stop into play ,now market as moved the spread movement will allow the stop you entered trade with in mind
just at thought :idea:

what time frame are you using for your trades ?

mrsoul · Jun 8, 2009

samnakthong said:
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.

The biggest mistake that you can make is discovering that what was working on your demo account does not work live and then getting frustrated and butchering your account.

There are many reasons that what worked on a demo does not work live.
i.e.= insufficent sample size
There are other reasons too.

Many traders have had the same experience; they think they have it after some testing only to find out that it blows-up when trading live.

When you start trading live, if your demo method does not work, DON'T force it.
Just go back to the drawing board.
This way your stake will be protected.

advfn2828 · Jun 8, 2009

mrsoul said:
The biggest mistake that you can make is discovering that what was working on your demo account does not work live and then getting frustrated and butchering your account.

Mr Soul makes a really good point.

There is a big pyschological difference between demo trading and live trading as fear can often impair your judgement. And of course as people have said already money management is crucial.

I only trade Forex at the moment so dont feel qualified to comment on the trades you are making, but I would say that 5 pips seems too close (as you have recognised already I think) as normal market noise could take that out is a blink of an eye.

Best of luck anyway

Graeme

How can I lose?

Member

Established member

Member

Legendary member

Member

Established member

Legendary member

Member

Legendary member

Member

Veteren member

Member

Member

Veteren member

Member

Member

Member

Member

Well-known member

Junior member

Similar threads