Learning takes time and you lose much money in the process. Too much actually - not sure I have enough cash to afford such kind of "safe trading"
Learning takes time and you lose much money in the process. Too much actually - not sure I have enough cash to afford such kind of "safe trading"
Learning takes time and you lose much money in the process. Too much actually - not sure I have enough cash to afford such kind of "safe trading"
I think risk in trading is might trader will losing money, safe trading for trader is they tarde using bonus free no deposit or they become winner in contest demo, it will possible to makkng cash money with zero capital, but not easy
When you're just starting trading and do not have consistent results, your aim must be to survive in the game, to not wipe out your account. This probably means very small trades so that even if you have big winners in %age gain terms, the financial profits will probably be very small. So this cannot be an income during your learning time. But the objective is to have losers that are only a very small %age of your account, not to have winners that are a very high %age, that will come after you area consistently winning. The idea is to stay in the game long enough to learn its rules.
Understanding market behaviour and entry points from charts, etc. can be done well using demo account or donated money, but during this phase you are not learning much about yourself, i.e. how you will feel and react when in a trade and trying to manage it to completion. This has to be done with your own real money, probably which you have worked hard to gather together into the account and maybe the work was horrible and you even had to pay tax on poor money from a cr@p job. But that will just make your reactions more honest and real when you're in a trade.
This is important because it is the exit that is going to pay you, not the entry. And although all the world might see the entry signal on the chart, only you decide when to exit. The entry is you paying a deposit to the market. So if the trade goes into the money, how will you react? -
will you be frightened and get out with a tiny profit as soon as you can?
will you lie awake at night wondering if you will be gapped tomorrow morning and go back to entry price?
will you stop looking at the chart and just hope next week it will have gone your way by 100%?
And if the trade goes aganst you, how will you feel? -
will you panic and exit at the first volatility?
will you double your position size?
will you push your stop wider?
will you stop-and-reverse on the same market?
will you just stare at the screen when you should be asleep / doing other trades?
You will need to know / feel the answers to these questions and they won't come from a chart or a demo account or from trading someone else's money. We actually need to take some risk in order to become good traders and those risks will mean taking some losses. Without risk and losses, you will not last long enough to have wins.
Understanding market behaviour and entry points from charts, etc. can be done well using demo account or donated money, but during this phase you are not learning much about yourself, i.e. how you will feel and react when in a trade and trying to manage it to completion. This has to be done with your own real money, probably which you have worked hard to gather together into the account and maybe the work was horrible and you even had to pay tax on poor money from a cr@p job. But that will just make your reactions more honest and real when you're in a trade.
This is important because it is the exit that is going to pay you, not the entry. And although all the world might see the entry signal on the chart, only you decide when to exit. The entry is you paying a deposit to the market. So if the trade goes into the money, how will you react? -
will you be frightened and get out with a tiny profit as soon as you can?
will you lie awake at night wondering if you will be gapped tomorrow morning and go back to entry price?
will you stop looking at the chart and just hope next week it will have gone your way by 100%?
And if the trade goes aganst you, how will you feel? -
will you panic and exit at the first volatility?
will you double your position size?
will you push your stop wider?
will you stop-and-reverse on the same market?
will you just stare at the screen when you should be asleep / doing other trades?
You will need to know / feel the answers to these questions and they won't come from a chart or a demo account or from trading someone else's money. We actually need to take some risk in order to become good traders and those risks will mean taking some losses. Without risk and losses, you will not last long enough to have wins.
Oh wow, thanks for such an in-depth reply. I was kind of afraid of taking risks, that's why I've started this thread, but now I see that there is probably no way around it other than agree to take some. Those questions you've listed - I really don't know what are my answers to them. Though I'm not sure those emotions are that impossible to convey to demo trading - you really think they're that unique to live trading?
In demo account usually will free from emotion pressure, and very different with real account, but also will different since trader still beginner and trader that already have long years experience, might they can treat real account like as demo account and they can control their emotion better
Believe it, there is no harder lesson than when the market 'steals' the money you worked hard for. And a bad loss is an emotional experience - you can't know how to deal with it until you have to deal with it.
Gosh... It's scary how many people convince me that to learn trading you need to lose more and more money. At least most of them agreed some of the loss may be avoided by demo trading, but now you come and add me even more of a depression
Well, I guess there's no lesson better than hard one.Hi,
To me a safe way to trade is to always understand Money management and Risk management!
Strategies are there to help you trade, but without proper risk/money management, you might lose more than u gain! hope this helps!
What exactly do you mean by this? In my vision money management and risk management are both part of a trading strategy.
Yeah, it's obvious that without risk management it's impossible to trade safely. The actual question is HOW to manage risks in the safest way possible. Any suggestions?
Thanks for details! At last I got some from this tread, gosh... Well it's a nice risk reward ratio, isn't it difficult to achieve such? Everything else seems quite legit.
Dinos
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There has to be a risk involved, you cannot get away from that fact, strive to use a Risk / Reward ratio of 1:2, do your homework/studies, determine what you are from Long term down to scalper, determine your time frame, devise,develop and fine tune your trading system. If you get a system that is at least 50% accurate with a R/R of 1:2, you will be making profit, your then building the risk into the trade.
Thanks, I've more or less figured out what risk rate I'm tolerable with. Now I'm more concerned with the other part of your advice: "Develop and tune your trading system". As you might have guessed from this thread, I like to hear different opinions first before developing my own. So, perhaps you could hint me in the direction I need to take to make my own Perfect Trading System?
Like some resources on this topic, books, interviews or perhaps articles?
NVP
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if your risk preference tends to zero , boy are you in the wrong place here .....
..............pick a half decent managed fund and dump all your cash there .......or put it in a low interest account with a bank . building society N
NVP
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r:r
Lots written on this in text books and educational/training material. Most of it is very similar, you must strive for 1:2, 1:3 is better, never accept 1:1 etc. Much of this originated in the US, mostly from the great stocks bull market that ran through the 80's and 90's. This was when trading reached the masses. But beware, there are unspoken assumptions in the words of wisdom -
1. calculated r:r came from stocks: maybe you trade in indices, forex or commodities so how applicable is it there?
2. the stocks studied were US stocks, nothing in the FTSE, certainly nothing in the Nifty 50 or Japan etc.: see above
3. most of the stocks were galloping, that's why they were interesting - so, tech stocks, IPO's, private investor fascination stocks, gold miners, oil well drillers etc. - we're not talking Severn Trent here
4. we're only talking going long - there was previously no mass market way of shorting US stocks, and who wanted to anyway?
5. one r:r rule applies to all trade/entry patterns, and also to long-term swing trades and also to 10 minute daytrades - why?
Occasionally, very very occasionally, you see a trader recommending 1:0.5 or 1:0.25 for a specific purpose. I'm not able to say what's right or wrong for every trade for every trader, but I can say there's room for debate and different approaches.
Lots written on this in text books and educational/training material. Most of it is very similar, you must strive for 1:2, 1:3 is better, never accept 1:1 etc. Much of this originated in the US, mostly from the great stocks bull market that ran through the 80's and 90's. This was when trading reached the masses. But beware, there are unspoken assumptions in the words of wisdom -
1. calculated r:r came from stocks: maybe you trade in indices, forex or commodities so how applicable is it there?
2. the stocks studied were US stocks, nothing in the FTSE, certainly nothing in the Nifty 50 or Japan etc.: see above
3. most of the stocks were galloping, that's why they were interesting - so, tech stocks, IPO's, private investor fascination stocks, gold miners, oil well drillers etc. - we're not talking Severn Trent here
4. we're only talking going long - there was previously no mass market way of shorting US stocks, and who wanted to anyway?
5. one r:r rule applies to all trade/entry patterns, and also to long-term swing trades and also to 10 minute daytrades - why?
Occasionally, very very occasionally, you see a trader recommending 1:0.5 or 1:0.25 for a specific purpose. I'm not able to say what's right or wrong for every trade for every trader, but I can say there's room for debate and different approaches.
Don't trade, that's the safest one.
If your risk tolerance tends to zero. You can never be a trader rather you will tend to lose more money everyday in order to recover losses....
If you can except a loss & live with it. Then you will be a better trader & on next day you will make money.
Telling you from my experience.
if your risk preference tends to zero , boy are you in the wrong place here .....
N
Well, that's a plan. Guess it's one of few decent advice I actually got from this thread