Hello people :)

[dbphoenix]

oh ok gotcha.

so if I want to buy £100,000 of GBP/USD I should deposit £100,000 into my spreadbet account before I do the trade?

"Should" has a number of qualifications. If one is a beginner and has no idea how the auction market works and has not read the terms and conditions of the contract he signs with his broker and has never heard of a margin call, knows nothing about risk assessment or trade management and on top of it all has not developed a thoroughly-tested and consistently-profitable trading plan, then, yes, though it's unlikely that a beginner would have that much money with which to trade.

Db

 

[highbury fx]

"Should" has a number of qualifications. If one is a beginner and has no idea how the auction market works and has not read the terms and conditions of the contract he signs with his broker and has never heard of a margin call, knows nothing about risk assessment or trade management and on top of it all has not developed a thoroughly-tested and consistently-profitable trading plan, then, yes, though it's unlikely that a beginner would have that much money with which to trade.

Db

ok. I understand. so instead of putting up £1,000 margin to do a trade size equivalent to £7 a point you recommend depositing £100,000 in to a company that probably only offers deposit protection of £50,000.

that's good solid advice. thank you for your help.

 

[dbphoenix]

ok. I understand. so instead of putting up £1,000 margin to do a trade size equivalent to £7 a point you recommend depositing £100,000 in to a company that probably only offers deposit protection of £50,000.

that's good solid advice. thank you for your help.

No, I recommend trading only what one can afford.

Db

 

[highbury fx]

No, I recommend trading only what one can afford.

Db

what you can afford to lose is the key. not afford to deposit. There is nothing wrong with leverage if you are sensible.

what you are advising is the same as saying don't ever get a mortgage, wait until you can buy the house cash. that's not really practical is it.

 

[dbphoenix]

what you can afford to lose is the key. not afford to deposit. There is nothing wrong with leverage if you are sensible.

what you are advising is the same as saying don't ever get a mortgage, wait until you can buy the house cash. that's not really practical is it.

Taking out a mortgage in order to buy a house is not quite the same as taking out a loan to buy stock.

Given the number of bubbles and crashes I've been through over the past forty years, I have a different perspective than most.

Best of luck to you.

Db

 

[highbury fx]

Taking out a mortgage in order to buy a house is not quite the same as taking out a loan to buy stock.

Given the number of bubbles and crashes I've been through over the past forty years, I have a different perspective than most.

Best of luck to you.

Db

It is the same. A mortgage deposit is your margin. if you buy a house for £100,000 and put down a 5% deposit and borrow the rest that is no different to establishing a trade with a notional value of £100,000 and putting £5,000 margin down. You are using 20:1 leverage in both instances.

given that you've done this for 40 years you should really know better. no worries though, we're all here to learn.

 

[dbphoenix]

It is the same. A mortgage deposit is your margin. if you buy a house for £100,000 and put down a 5% deposit and borrow the rest that is no different to establishing a trade with a notional value of £100,000 and putting £5,000 margin down. You are using 20:1 leverage in both instances.

given that you've done this for 40 years you should really know better. no worries though, we're all here to learn.

Except that the value of a house is not likely to drop to zero.

As I said, best of luck to you.

Db

 

[highbury fx]

Except that the value of a house is not likely to drop to zero.

As I said, best of luck to you.

Db

A house never drops to zero? maybe not, but it can get close, just as a currency pair is unlikely to drop to zero.

Advising people not to use leverage is not good advice. better advice would be to tell people to never use leverage greater than 3:1 for example.

good luck to you too

 

[dbphoenix]

A house never drops to zero? maybe not, but it can get close, just as a currency pair is unlikely to drop to zero.

Advising people not to use leverage is not good advice. better advice would be to tell people to never use leverage greater than 3:1 for example.

good luck to you too

You may want to talk to those who lost their shirts in '00-'01 and '07-'08.

And good luck to you, too.

Db

 

[highbury fx]

You may want to talk to those who lost their shirts in '00-'01 and '07-'08.

And good luck to you, too.

Db

They didn't necessarily lose it because they used 3:1 gearing. You shouldn't point to 2 events in the last 15 years as a reason to absolutely not use leverage. I think offering people 500:1 leverage is nuts, I think the people that use 500:1 leverage are nuttier but you can't police people who are trading with money they can afford to lose.

How about the people that have lost money in trading companies that have folded? they would have wished they had used more leverage and deposited far less cash.

 

[Forexmospherian]

I think its OK to look at the past and give examples etc - but as far as I am concerned today and next week is just not the same as even 8 years ago in trading FX - never mind back in Wychoff or Livermore days - the world as moved on - and so its just not the same - again like comparing a Model T Ford with a Bugatti Veryon - both cars with 4 wheels and an engine - but world's apart.

Today we have broker offering negative capital balance protection - many only up to $50 k - but really what you do is just deposit $1k or $5k and then use leverage - agree risky using 500:1 - but 50 to 100:1 is acceptable and safe even for beginners as far as I am concerned

I have to fully agree with highbury Fx on this subject - I am in my 60's and so have also had loads of business experience of many years - but I will not let it cloud my "today" views - risk is risk however you look at - and if you dont want to accept losing $1k or $5k in total over 1 or 2 years - then you should not even think about trading

But no leverage and all this old stuff of the past is going back to the dark days as far as I am concerned - I certainly dont trust the Finance Industry etc - but please remember the 21st century is so different to 19th and 20th century - the internet can help the average joe find out as much as he need s to know -

That reminds me must open a $200 account with a FX broker with negative balance protection and 1000:1 leverage and milk it for a month - but then again - I am no novice - so I dont recommend that to any trading newbie

Meanwhile love both DB's and Highbury's comments

Regards


F

 

[dbphoenix]

I think its OK to look at the past and give examples etc - but as far as I am concerned today and next week is just not the same as even 8 years ago in trading FX - never mind back in Wychoff or Livermore days - the world as moved on - and so its just not the same - again like comparing a Model T Ford with a Bugatti Veryon - both cars with 4 wheels and an engine - but world's apart.

Today we have broker offering negative capital balance protection - many only up to $50 k - but really what you do is just deposit $1k or $5k and then use leverage - agree risky using 500:1 - but 50 to 100:1 is acceptable and safe even for beginners as far as I am concerned

I have to fully agree with highbury Fx on this subject - I am in my 60's and so have also had loads of business experience of many years - but I will not let it cloud my "today" views - risk is risk however you look at - and if you dont want to accept losing $1k or $5k in total over 1 or 2 years - then you should not even think about trading

But no leverage and all this old stuff of the past is going back to the dark days as far as I am concerned - I certainly dont trust the Finance Industry etc - but please remember the 21st century is so different to 19th and 20th century - the internet can help the average joe find out as much as he need s to know -

That reminds me must open a $200 account with a FX broker with negative balance protection and 1000:1 leverage and milk it for a month - but then again - I am no novice - so I dont recommend that to any trading newbie

Meanwhile love both DB's and Highbury's comments

Regards


F

Actually, it's exactly the same: beginners taking on far more risk than they can handle and suffering the consequences. Driving a Model T and a Bugatti off a cliff have the same result.

Db

 

[Forexmospherian]

Actually, it's exactly the same: beginners taking on far more risk than they can handle and suffering the consequences. Driving a Model T and a Bugatti off a cliff have the same result.

Db

Hi Db

I just cannot see how you can not see it better to open an account with say $500 with leverage and a negative balance guarantee - knowing all they can lose is $500 - ie their total risk - rather then have no leverage - and risking more capital to trade at same size - say $2k or $5k+ - and then risk losing that amount

Credit use correctly is the best business aid out there - even to help traders

People who dont have mortgages or credit cards etc are really missing out - yes they can also abuse it and end up in a big mess - but the majority of people do not do that.

( Only between 9 and 15 households out of 10,000 household go bust due to overuse of credit in UK )

Any person looking at trading in the markets needs to accept risk

Give me leverage and negative balance guarantee any day of the week

Regards


F

 

[dbphoenix]

Hi Db

I just cannot see how you can not see it better to open an account with say $500 with leverage and a negative balance guarantee - knowing all they can lose is $500 - ie their total risk - rather then have no leverage - and risking more capital to trade at same size - say $2k or $5k+ - and then risk losing that amount

Credit use correctly is the best business aid out there - even to help traders

People who dont have mortgages or credit cards etc are really missing out - yes they can also abuse it and end up in a big mess - but the majority of people do not do that.

( Only between 9 and 15 households out of 10,000 household go bust due to overuse of credit in UK )

Any person looking at trading in the markets needs to accept risk

Give me leverage and negative balance guarantee any day of the week

Regards


F

Yes, anyone looking to trade must accept risk. But few understand it or know how to assess it. They think they've accepted it until it all goes wrong,

As for leverage, those who are under-capitalized have no business trading in the first place. Becoming leveraged in order to create the illusion of being capitalized is irresponsible.

I understand you don't see it as I see it, but perhaps you haven't read enough journals of those who keep hammering away at this year after year, up to twenty years, without ever doing much better than break even, if that, taking perverse pride in the number of accounts they've blown up, the amount of money they've lost. This is not to say that a few don't leverage themselves to the tits and come out winners, but this is rare, and beginners should not be encouraged to believe that they "have what it takes" when so few of them even have the barest bones of a trading plan.

Db

 

[Forexmospherian]

Yes, anyone looking to trade must accept risk. But few understand it or know how to assess it. They think they've accepted it until it all goes wrong,

As for leverage, those who are under-capitalized have no business trading in the first place. Becoming leveraged in order to create the illusion of being capitalized is irresponsible.

I understand you don't see it as I see it, but perhaps you haven't read enough journals of those who keep hammering away at this year after year, up to twenty years, without ever doing much better than break even, if that, taking perverse pride in the number of accounts they've blown up, the amount of money they've lost. This is not to say that a few don't leverage themselves to the tits and come out winners, but this is rare, and beginners should not be encouraged to believe that they "have what it takes" when so few of them even have the barest bones of a trading plan.

Db

Hi DB

With regards to the highlighted part - have to disagree strongly.

I agree with so many of your other comments on why so many traders fail - I think you sum that part up well - although again I don't think trading is really simple or easy - but it can appear so if broken down into phrases like - "buy when price rises and sell when price falls".

Its a bit like summing life up in a short paragraph - ie

You are born - you grow and walk and talk - you go to school - you go to work - you get married - you have children - you retire - you get old - you die"

Now that can take anything from 60 to 80 + years to occur - trading is also a journey - but the "journey" today being taken by newbies is totally different to the "journey" of newbie traders 50 or 25 years ago.

Everything learnt from the past - can be improved - but that does not mean newbie traders can go from knowing nothing to becoming a competent consistently profitable trader within 6 months or 2 years - everybody is different and so some learn quite quickly along withe the markets being kind to them in that period - whilst other do not want to go the 5 or 7 years plus to start to understand how they can continually gain.

Only 2 or 3 years ago you just could not get brokers offering negative balance protection. That to me is a major change and again please recognize and acknowledge you are far better to risk $500 and use leverage than use $5k or more of your own money - and face the same risk - that you could lose it all.

Now in my world I would prefer to only lose $500 to $5000 ?

That's no illusion

There is also another gentleman member here on T2W from the US who has a similar problem with credit and borrowing etc - not realising how important it is for mere mortals to grow their trading and business.

Even Donald Trump got into massive problems being over leveraged at one time in his real estate business - but that does not mean you should not borrow - so many billionaires would have never made it without a simple loan.

I agree if newbies are reckless and over leverage etc - they will fail and could lose a lot more than they thought. Maybe brokers need to do more to explain this in more detail

Finally - I do have respect to Livermore and Wyckoff and other well known trading characters of the past .

Trouble is in those days they would not be competing with the WWW / supercomputers/ HFT / new manipulation methods / dark pools/ bent banks etc etc.

Yes the basics are still there - "buy when price goes up - sell when price goes down - take profit - repeat" etc - but its really just not that simple - just like summing life up in one paragraph has I have done earlier on

Keep the good work up

Regards


F

 

[dbphoenix]

Unless the beginner is distracted by all the bright, shiny objects, there's no reason why he can't become a consistently-profitable trader in a year if he's willing to study, practice, test, and put together a professional trading plan.

But you're entitled to disagree. We'll just have to leave it at that.

Db

 

[Forexmospherian]

Unless the beginner is distracted by all the bright, shiny objects, there's no reason why he can't become a consistently-profitable trader in a year if he's willing to study, practice, test, and put together a professional trading plan.

But you're entitled to disagree. We'll just have to leave it at that.

Db

Hi Db

Forgetting our slight disagreement on "leverage" in today's 2016 markets - I would also have to disagree with the part of your comment I have highlighted.

I would say unless you had a 1Q of over 125 - a first class degree in a science subject - the added edge of a photograhic memory and then at least 2000 hrs available in the year to study and watch charts - there is absolutely no way you can be consistently profitable within a year.

Most part time newbie traders with average intelligence and say only 10 to 20 hrs a week to study and learn need a minimum 3 years to get to a minimum 3 month plus profit consistency levels and many as we know are still not there after 5 years - maybe because the have been diverted my so many different ways to trade and not stayed with one long enough to make it.

There will always be the exceptions - ie some clever newbies making it within 12 months and other even cleverer and with more time on the hands needing over 2 years.

When I say clever - I dont really mean just brainpower - its also being in control of your own mindset along with the right winning personality of being patient - consistent - dedicated and committed enough to read through so many average professional trading plans that could hinder rather than assist you in finding success.

Obviously the Industry want newbie traders to feel it possible to get there with 6 to 12 months - but the real 5-10% of successful traders who have got to a consistently profitable trading level know that is so far from the truth.

Regards


F

 

[dbphoenix]

Hi Db

Forgetting our slight disagreement on "leverage" in today's 2016 markets - I would also have to disagree with the part of your comment I have highlighted.

I would say unless you had a 1Q of over 125 - a first class degree in a science subject - the added edge of a photograhic memory and then at least 2000 hrs available in the year to study and watch charts - there is absolutely no way you can be consistently profitable within a year.

We'll have to disagree on this as well.

 

[Forexmospherian]

We'll have to disagree on this as well.

With all due respect Db - and I do like your work and contributions - I do however think you are living in a "time warp " and not in today's 2016 markets

Even Banks and larger commercial Institutions who only hire the very best and talented expect over 1 year ( and they might be doing 50 -70 hr working weeks )- with many organisations saying they might peak within 5 -7 years - and be burnt out within 10 to 15 years - its such a pressurised environment doing it day in day out fulltime.

Ok retail day traders can set their own standards and so adjust to their own levels - but then as we know - can they stay in the 10% successful bracket?

http://www.investopedia.com/video/play/how-become-day-trader/


Regards

F

 

[dbphoenix]

With all due respect Db - and I do like your work and contributions - I do however think you are living in a "time warp " and not in today's 2016 markets

Even Banks and larger commercial Institutions who only hire the very best and talented expect over 1 year ( and they might be doing 50 -70 hr working weeks )- with many organisations saying they might peak within 5 -7 years - and be burnt out within 10 to 15 years - its such a pressurised environment doing it day in day out fulltime.

Ok retail day traders can set their own standards and so adjust to their own levels - but then as we know - can they stay in the 10% successful bracket?

http://www.investopedia.com/video/play/how-become-day-trader/


Regards

F

If perhaps one is scalping, but daytrading does not necessarily mean scalping. Even scalping shouldn't take that long. If one doesn't have it in a year, he ought to quit (what investopedia has to say about it is not necessarily pertinent).

If you want to pursue this, I suggest you explain exactly why it should take 5 to 7 years to understand why price goes up and down when children get it right away.

Db