Newbies are Lucky

[theroguetrader]

I just wanted to make a quick post to all the newbies out there because you are actually very lucky. You have not yet been poisoned with hopes of magical indicators to tell you what to do. This allows you to look at the markets with a fresh set of eyes and I would like to share with you all that you will ever need to know to be a successful trader.

Forex has been my main job for the past 5+ years, I had my ups and downs in the beginning and I wasted A LOT of time looking for 'something better'. It's just human nature and psychology that end up being what makes trading difficult for most people. Trading itself, it turned out, is very simple.

I will list here all you will ever need to learn and you need to trust me,
I speak from experience and I am a teacher of many traders so this is proven fact.
My current favorite hobby is to help people become successful traders.

1. Support/Resistance (Also know as Supply/Demand)

2. Trend Lines (Drawing these is an art)

3. Candlesticks (valuable information in picture format)

4. Risk/Reward (The art of never risking more than you are trying to gain)

5. Money Management (don't be greedy)

These 5 items will make you as much money as you want but only if you allow 1 thing not to get in your way. That thing is of course your very own brain, you will be your worst enemy. Understand that you will NOT win every trade, it is NOT possible and it will NEVER happen. Accept loss as part of your success because with correct Money Management and Risk/Reward loss will not effect you.

Now, this post is not very detailed but if you concentrate on learning these 5 things in depth then you will succeed.

I wish you all the success in the world

(4) - RISK/REWARD - " THE HOLY GRAIL OF TRADING " - !!
ALWAYS aim for a profit 2/3 x your risk = you can be wrong on HALF your trades
& you will still be in PROFIT - " OVER TIME " .... !!

 

[tkpower8]

Hi there
I tend to think Candlesticks -- especially for Newbies are a confusion.

For Newbies I would recommend starting with LINE GRAPHS of purely the End of Day CLOSE and then you can add your Moving aveverage and other indicators on the graph very easily.

TOO MUCH data is only a confusion when people are just starting to learn to trade. A simple LINE graph of the CLOSE value is very simple and uncluttered. Most beginners work with End of Day data anyway so the CLOSE is probably the most useful value per day.

The rest is GOOD advice.

I'd add a VERY IMPORTANT ONE HERE -- NEVER EVER CHASE LOSSES -- this is a 100% losing strategy -- biggest error for beginners (and I'm sorry to say sometimes even experienced traders do it too).

If you are in a losing or Bad position -- CLOSE ASAP even if you take a hit -- then forget it and concentrate on the NEXT trade -- as if NOTHING HAD HAPPENED.

Don't alter plans such as trying to recover the loss from the previous trade -- each trade is a NEW one. If the share you sold at a loss suddenly goes up DON'T EVER THINK =="IF ONLY I'D HELD ON". -- Each trade is a NEW ONE - independent of the previous one.

You must be cold and unemotional when trading - sentiment will LOSE you money very fast.

Cheers
jimbo

Well said Jimbo.

I do use Candlesticks as part of my entry trigger, at the correct location knowing these patterns are golden so I would say to anyone following Jimbo's advice and using a line graph... study candlesticks a little on the side so you can bring them in a bit later.

 

[tkpower8]

(4) - RISK/REWARD - " THE HOLY GRAIL OF TRADING " - !!
ALWAYS aim for a profit 2/3 x your risk = you can be wrong on HALF your trades
& you will still be in PROFIT - " OVER TIME " .... !!

It's amazing how many people ignore including this part in their trading plan!

 

[Shakone]

With regard to the risk:reward issue and statements such as "never risking more than you are trying to gain"

Risk:reward is not static. Suppose I enter at 100, with stop at 80, target at 140, then as soon as the trade has moved to 120, from that point I am now risking 40 for a further profit of 20. IF you only risked less than what you are aiming for, you would be out of that trade, or would have moved stops and/or targets.

I agree with wanting your average winner to be more than your average loser, but risk:reward targets don't make a lot of sense to me.

 

[jimbo45]

Well said Jimbo.

I do use Candlesticks as part of my entry trigger, at the correct location knowing these patterns are golden so I would say to anyone following Jimbo's advice and using a line graph... study candlesticks a little on the side so you can bring them in a bit later.

Hi there

Nothing wrong per se with Candlesticks -- all I was saying that for beginning traders having TOO MUCH info can obfuscate the real issue -- so a simple line grapgh of the CLOSE gives you a decent simple graph on which you can add all the indicators you want.

Once you get further interested into Technical Analysis Candlesticks are great -- but my advice to beginners is learn to walk before you can run . A simple Line graph of the shares CLOSE PRICE will quickly without any complex analysis show you the the resistance points.

Good Luck all

Jimbo

 

[tkpower8]

With regard to the risk:reward issue and statements such as "never risking more than you are trying to gain"

Risk:reward is not static. Suppose I enter at 100, with stop at 80, target at 140, then as soon as the trade has moved to 120, from that point I am now risking 40 for a further profit of 20. IF you only risked less than what you are aiming for, you would be out of that trade, or would have moved stops and/or targets.

I agree with wanting your average winner to be more than your average loser, but risk:reward targets don't make a lot of sense to me.

I think you will find that if you learn how to judge logical and conservative minimum expected profit via price action concepts, then use that minimum expected target as how you judge risk/reward, and have it be a minimum of 1:1 you will understand more my approach. It is such a long explanation for me to share my insight into each and every aspect of my trading approach so I have started a new thread here to begin the process

It is called "ElectroFX Pure Price Action Trading"

and I do agree with you btw that your initial reward point may alter during a trade if for example; you are in a buy and an new area of resistance is created and then retested and it holds, clearly you would be happy to take less profit. This is not beginner level discussion though.

There is no point entering a trade without a complete plan for the whole thing... including reacting to what you see if necessary.

 

[BeginnerJoe]

I am curious. If you know how to trade, why do you bother teaching ? It seems to me any working system will fail to work once too many people are using it. So divulging your trade secrets works against your own trading.

 

[tkpower8]

I am curious. If you know how to trade, why do you bother teaching ? It seems to me any working system will fail to work once too many people are using it. So divulging your trade secrets works against your own trading.

Price Action will never fail and not enough people will do exactly as I do anyway so it's just plain fun for me... I have a live room etc and teach a nice group... some get it faster than others but we all have fun with the process and like I say... we are all retail traders not making much of a dent in the huge market Trading price action is just a way to follow the big money traders faster than those who wait for indicators

I've started the thread to teach in more detail but it is just a few minutes of my day here and there... if I can help other normal folk like me then why not is what I say

 

[BeginnerJoe]

Do you teach here as well as in your trading room ? I'd certainly be interested in this price action you are talking about. Is that to do with certain patterns on the candlesticks ?

As for the fun element of a trading room, can't say I see too many advantages. It's would be no more fun going down with the ship together with a bunch of people than going down with the ship by oneself.

 

[tkpower8]

Do you teach here as well as in your trading room ? I'd certainly be interested in this price action you are talking about. Is that to do with certain patterns on the candlesticks ?

As for the fun element of a trading room, can't say I see too many advantages. It's would be no more fun going down with the ship together with a bunch of people than going down with the ship by oneself.

Sorry, bad wording... it's not a trading room Joe, it's a live classroom where people can interrupt and ask questions live but I do post my charts throughout the week to help people with TL's and seeing the trades I teach etc... I also hold webinars on the weekend if I am not busy

I am teaching here also, if you click my username and search threads created by me it is the one that says "ElectroFX Pure Price Action Trading"

 

[BeginnerJoe]

Thanks. I had a look and it looks pretty heavy duty. I'd certainly take a second look once I am out of my own ideas. I prefer the lower volatility of large cap equities. I am sure the candlesticks will apply equally well for them.

 

[tkpower8]

Thanks. I had a look and it looks pretty heavy duty. I'd certainly take a second look once I am out of my own ideas. I prefer the lower volatility of large cap equities. I am sure the candlesticks will apply equally well for them.

Not a quick fix for sure ... but it is a real and complete approach.
There is no quick fix I am afraid ... or everyone would be doing it.

 

[BeginnerJoe]

Well, if this works, it wouldn't matter how complex this is. My current interest is in amalgamating fundamental, technical, and market-environmental signals to come to a trading decision. So a system based purely on technical patten recognition would have less pull for me. But, it's interesting nevertheless. Although if it requires a large element of 'artistic' interpretation, the system would be too variable for me.

 

[tkpower8]

Well, if this works, it wouldn't matter how complex this is. My current interest is in amalgamating fundamental, technical, and market-environmental signals to come to a trading decision. So a system based purely on technical patten recognition would have less pull for me. But, it's interesting nevertheless. Although if it requires a large element of 'artistic' interpretation, the system would be too variable for me.

This is just my opinion on the matter:

Fundamentals move the markets for obvious reasons.
But to follow every aspect of the fundamentals for 2 countries per pair would be a massive job and completely lose the free time appeal that I have achieved trading the way I do with a VPS and trade managing EA's. Good technical analysis will allow you to read what the reaction to the fundamentals is as a whole and on a global scale with less effort.

I always have a newsreader chart on my screen so I am aware of major news releases, previous, expected, and then the current numbers are available to me at a glance but I have noticed that most of the time the news is baked in to the technicals even before the release. On the major releases I just wait till the initial reaction settles and get back to reading the charts (unless I already am in a trade in which case I just move to BE right before the news release in case the markets were wrong about what everyone expected)