Apparently Newbies Can't Make Money Trading Forex, But.....

[weisdaclick]

Hello to all on the board, I am new to this board, and to trading Forex.

I have started to look at Forex recently, I have a practice account which I am doing quite well with.

I am only interested in GBP/USD as I have some knowledge and interest in the two economies.

I have read many posts here that virtually everone loses money trading Forex, especially beginners. I am not looking to be a full-time trader, I would just like to make some money when I feel there are strong signals.

Is this a good idea or should I just keep the money in the bank?

 

[carlgreen]

Hi Everyone (and weisdaclick)
I am also a complete beginner and new to Forex and all it entails!
I also have a Demo account (with dbfx) and seem to be doing pretty well with it (I have increased my balance from 50,000 to 57500 since 16th October to date (USD) That seems pretty good to me but I would welcome feedback as to if it is or not)

I have studied countless posts and information on strategies and how to compile one, getting started, charts etc etc, however it all is still very confusing. I just don't know where to start regarding building a trading strategy to follow.

I have managed to build up my account (thus far!) by simply looking at the 5 min chart of any currency, seeing which one's have the greatest volatility and which way the trend is going (very short term, only over the 5 min period) and jumping on the band wagon for the ride.
I set a stop losses at the level of money I am prepared to lose on any given trade (typically $500) and see what happens.
If I get stopped out, I start again (within my limit of what I am prepared to lose that given day, normally $3000) and If I gain, I follow the trend until I get to a point where I take a profit (minimum $100 or just move my stop loss up, keeping it at @ 100 pips below the actual peak price) and up until I do get stopped out.

This seems more like gambling to me as I have NO idea of what I am doing but it appears to work. I realise that this is not a way to treat any serious investment but am finding it very difficult to come up with a better solution!
I do not understand all the indicators etc, maybe I will when a Layman's explanation comes on to the market, but until such time will just keep reading!

I know this is the simplest form of trading (or gambling!) and would welcome any suggestions of how to obtain a simple trading strategy that a simpleton such as I can understand and adapt to suit me.

Thanks

Carl

 

[Adamus]

trading plan template - good place to start

 

[weisdaclick]

Hi Carlgreen,

Does not seem like this post is attracting any responses from the more experienced members on the board (ahardy66 excepted).

I read the trading plan template and did learn some points from it. I have to say I do most of what is in there already as I am very disciplined with my money (that is I don't want to lose it!)

One thing I did read with interest in the trading plan: that many experienced traders have simple trading strategies with the minimum of indicators. I am taking time to learn all the indicators and working out which ones work for me. If it stops working then I'll change it.

I started a simulation with Saxotrader. In the last week I have added $11,000 but I am simulating with larger amounts than I would use in real life.

I was using market fundamentals as my main guide. Hit a problem doing that mid-week: the GBPUSD was strengthening due to the expectation of the Fed cutting US interest rates. When the rates were cut the GBPUSD fell, perhaps they were expecting a cut more than 0.5% ????

Perhaps someone can explain this. This trade was my biggest loser of the week. I do use technical analysis of charts as my main guide for short term trades and am getting pretty good results.

 

[timsk]

Hi weisdaclick and carlgreen,
Welcome to you both!

. . .I read the trading plan template and did learn some points from it. I have to say I do most of what is in there already as I am very disciplined with my money (that is I don't want to lose it!).

Spend any time on these boards and you'll read certain cliches time and time again. Right at the top of the cliche list is 'trading is simple, but it ain't easy'. Having a trading plan is your blueprint for taking money out of the market. If you've got one and it works, then you're ahead of most people. Unfortunatwely, that's the 'simple' part of the cliche. The hard part is following the plan to the letter. Once you can do that, you're laughing.

One thing I did read with interest in the trading plan: that many experienced traders have simple trading strategies with the minimum of indicators. I am taking time to learn all the indicators and working out which ones work for me. If it stops working then I'll change it.

It wouldn't be appropriate for me to advise against this as it may work for you. However, it a path that's well trod by countless traders before you and almost all of them ended up chasing their own tails, me included. No sooner have you found that holy grail indicator and you've enjoyed a few days, weeks or months of excellent results than the damn thing stops working. The most obvious example of this is moving average crossovers. They're great in trending markets but totally useless in flat or choppy markets. Professional graphic designers restrict themselves to a select number of fonts: amateurs throw in everything they can lay their hands on and the result is a dog's dinner. I'd suggest you play with lots of indicators to start with and then take a leaf out of the designer's handbook and focus on just one or two (three at most) and become experts in them. Know how they're constructed, what they're telling you and, more importantly, what they're not telling you.

I started a simulation with Saxotrader. In the last week I have added $11,000 but I am simulating with larger amounts than I would use in real life.

Many traders will advise against this. The reason is that when you use real money you'll be bored by making a mere £50 a week after 'making' £50k on the sim' account. It'll mess with your head and you'll be inclined to take larger risks and deviate from your plan. If anything, I suggest you use less for sim' trading than you intend to use when you go live.

I was using market fundamentals as my main guide. Hit a problem doing that mid-week: the GBPUSD was strengthening due to the expectation of the Fed cutting US interest rates. When the rates were cut the GBPUSD fell, perhaps they were expecting a cut more than 0.5% ????
Perhaps someone can explain this. This trade was my biggest loser of the week. I do use technical analysis of charts as my main guide for short term trades and am getting pretty good results.

If you're strategy is based around predicting the news and how the market will react to it, then I'm afraid you won't be trading very long. Leave that game to the city professionals. Most peeps here will advise staying out of the market ahead of economic releases. If you're already in a trade and it's comfortably in profit, then it may be okay to stick with if so long as you watch it like a hawk and get out pronto if the market moves against you. The solution to this dilemma is to trade the reaction to the news and not the news itself. In the example you give, you'd have waited until the announcement was made, seen that the market wasn't overly impressed and started to fall. At that point you could grab its coat tails and see where it took you. As to why it fell? Who knows, who cares!
Tim.

 

[carlgreen]

Hi Timsk (and everyone else)
The Trading plan template is very good. I have read and implemented (most) of it now and it has given me clearly defined objectives and made me re evaluate my goals. (Thanks )

I am still struggling to come up with an actual strategy though??? I have ordered "Technical Understanding of the Financial Markets" which will hopefully give me a direction to follow (I actually ordered it the other day only to find out I ordered the wrong book....I got the Study Guide to it. so at least I will know most of the answers when I read the real book! )

Again, thanks for the template and the pearls of wisdom.

Carl

 

[timsk]

Hi Carl,
I'm glad the template has been useful to you. I've not read Murphy's? book but, even so, I somehow doubt that it will provide any strategies as such. It could well give you ideas to develop a strategy of your own - perhaps this is what you meant? Anyway, failing that, there are a number of good basic strat's available for free right here on T2W. Why not take one of those as a stating point which will save you having to re-invent the wheel? Some threads you might like to look at if you've not seen them already include (in no particular order):
http://www.trade2win.com/boards/for...5-phil-newton-s-range-break-out-strategy.html
http://www.trade2win.com/boards/forex-strategies-systems/26464-3-duck-s-trading-system.html
http://www.trade2win.com/boards/us-stocks/38036-how-make-money-trading-markets.html
http://www.trade2win.com/boards/forex-strategies-systems/33407-can-anyone-recommend-strategy.html
http://www.trade2win.com/boards/first-steps/26947-making-money-trading.html
and . . .
http://www.trade2win.com/boards/general-trading-chat/32991-potential-setups.html
There are loads more, but this little lot should keep you amused for quite some time.
Enjoy!
Tim.

 

[Ingot54]

Great Strategies and Methods List - any more?

Hi Carl,
I'm glad the template has been useful to you. I've not read Murphy's? book but, even so, I somehow doubt that it will provide any strategies as such. It could well give you ideas to develop a strategy of your own - perhaps this is what you meant? Anyway, failing that, there are a number of good basic strat's available for free right here on T2W. Why not take one of those as a stating point which will save you having to re-invent the wheel? Some threads you might like to look at if you've not seen them already include (in no particular order):
http://www.trade2win.com/boards/for...5-phil-newton-s-range-break-out-strategy.html
http://www.trade2win.com/boards/forex-strategies-systems/26464-3-duck-s-trading-system.html
http://www.trade2win.com/boards/us-stocks/38036-how-make-money-trading-markets.html
http://www.trade2win.com/boards/forex-strategies-systems/33407-can-anyone-recommend-strategy.html
http://www.trade2win.com/boards/first-steps/26947-making-money-trading.html
and . . .
http://www.trade2win.com/boards/general-trading-chat/32991-potential-setups.html
There are loads more, but this little lot should keep you amused for quite some time.
Enjoy!
Tim.

Hi Tim

Thank you for compiling this list, but I am sure there are many more links to useful methods and threads hidden on the boards. Perhaps people should submit links which could be added to your list, provided they pass a simple "work well" or "don't work at all" test.

While I am posting here, I came across an idea I use to view long threads.

As you know, when trying to get through a thread like Trader_Dante's:http://www.trade2win.com/boards/us-stocks/38036-how-make-money-trading-markets.html "How To Make Money Trading The Markets" and it does take quite awhile for each page of posts to load. These days all browsers have a Tab Function, whereby it is possible to have 2 copies of the site running simultaneously on each Tab.

What I suggest is to open two copies of the thread you wish to view and on one Tab you have running the next page you wish to view. Before you move from one Tab to the next, simply leap-frog the page numbers and click. On one Tab you will open even numbered pages, and on the other Tab you will open odd numbered pages.

While the next page is loading into the Tab you are just leaving, you can be already viewing the next post on the following page, on the other Tab. No waiting whatsoever!

Hope that is clear. With a trial and practice you will get the idea. Even with very long threads like the one I referred to, you can scan through the posts much more quickly. If you save 10 seconds per page, that is 600 seconds for 60 pages saved! Or one minute for every 6 pages loaded. Quite a time economy there.

I was having to wait too long for the next page to open, so I opened another copy of the thread in another Tab. It was easy to just click to open the page to return to, just as I was clicking back to the other copy of the thread.

With best wishes

Ivan

 

[foredog]

Few different strategies in the link in my signature.

Hope it helps.

 

[timsk]

What I suggest is to open two copies of the thread you wish to view and on one Tab you have running the next page you wish to view. Before you move from one Tab to the next, simply leap-frog the page numbers and click. On one Tab you will open even numbered pages, and on the other Tab you will open odd numbered pages.

While the next page is loading into the Tab you are just leaving, you can be already viewing the next post on the following page, on the other Tab. No waiting whatsoever!

Hi Ivan,
Good idea.
Ideally, you'd have a 21 inch screen so that you can view the two pages side by side.
Tim.

 

[disi]

Hello to all on the board, I am new to this board, and to trading Forex.

I have started to look at Forex recently, I have a practice account which I am doing quite well with.

I am only interested in GBP/USD as I have some knowledge and interest in the two economies.

I have read many posts here that virtually everone loses money trading Forex, especially beginners. I am not looking to be a full-time trader, I would just like to make some money when I feel there are strong signals.

Is this a good idea or should I just keep the money in the bank?

Hello. I am newbie to driving cars. I have just bough my first car. I have driving license already for 2 months now. I would like to drive as fast as Lewis Hamilton. Should I push the throttle and drive 200 miles per hour?

My answer. Start driving karts. Then go to formula Renualt or British F3. Take step after step - after 12 years you will be 'good driver'.

Do you get my point? Don't trade LIVE account until you can set up DEMO account with 10, 000$ and make it growing month by month. If you can do that it means that you "can" earn money. Then open LIVE account - trade as little positions as possible. When you see that you do not go bunkrupt and you actually earn you can start trading bigger positions. Step by step. Ok - I know you will probably ignore my help. I did the same 9 years ago...if you do that..go back to this thread in 5 years. You will see some 'wisdom' in it which you can not see now as newbie.


Good luck!

 

[Daniel Webb]

Hello to all on the board, I am new to this board, and to trading Forex.

I have started to look at Forex recently, I have a practice account which I am doing quite well with.

I am only interested in GBP/USD as I have some knowledge and interest in the two economies.

I have read many posts here that virtually everone loses money trading Forex, especially beginners. I am not looking to be a full-time trader, I would just like to make some money when I feel there are strong signals.

Is this a good idea or should I just keep the money in the bank?

Forex Trading offers unique opportunities in the current economic climate of providing substantial financial income with relatively little risk. You can buy large amounts of currency with only a small deposit. Investing in forex involves but it also means that if you invest well in forex, then you will be able to double your money faster as compared to letting it sleep in the bank.

 

[aj2121]

Keeping money in a a bank is foolishness
If you have the guts then do something great of it.

 

[dealer911]

Hello. I am newbie to driving cars. I have just bough my first car. I have driving license already for 2 months now. I would like to drive as fast as Lewis Hamilton. Should I push the throttle and drive 200 miles per hour?

My answer. Start driving karts. Then go to formula Renualt or British F3. Take step after step - after 12 years you will be 'good driver'.

Do you get my point? Don't trade LIVE account until you can set up DEMO account with 10, 000$ and make it growing month by month. If you can do that it means that you "can" earn money. Then open LIVE account - trade as little positions as possible. When you see that you do not go bunkrupt and you actually earn you can start trading bigger positions. Step by step. Ok - I know you will probably ignore my help. I did the same 9 years ago...if you do that..go back to this thread in 5 years. You will see some 'wisdom' in it which you can not see now as newbie.


Good luck!

I used to agree with this but I think you learn so much more with a real money account - i would use the demo account to get used to actually trading (so you know how to buy and sell etc..) then set aside a couple of hundred quid a month for trading - you will probably lose this every month for a year but for just over £2k you would have been on the best trader training course there is and you wont forget a single lesson you have learnt along the way - trade/lose/learn - thats really how it is done!