TraderNumber7
Well-known member
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Hello and Thank you.
I just wanted to make this statement here, that way I can respond to each of you at the same time. Thanks for the private messages of encouragement and appreciation. I've tried to respond individually to those that have taken the time to write personally, but there really is no way for me to keep up with the PMs at this stage as that would be too time consuming on my end.
I typically come to one of my old stomping grounds once a year. I stayed longer than I thought I might this year, but that's ok by me. My time for this year has come to an end, but I wanted to leave the Newbies with this final message.
I appreciate the eagerness and the candor with which you ask your questions and I appreciate the fact that you are looking for answers as you start out on your journey to become a successful Trader. You will find those answers by not giving up on your quest and by doing homework on the data the market has provided you. The Market is your best Teacher! Listen to what She has to tell you. If you make the data that She provides, she will guide you in the right direction because She is never wrong. This is an Instructor that is always right and that should be a fact that you never underestimate and/or forget.
The answers are found not in me or in any "guru," but inside the data. You will develop the ability to interpret what your Master Instructor is telling you - remember, She is never wrong. Develop an understanding of Economic Indicators (Periodic Economic News/Reports) and how they affect the markets. Develop an understanding of the raw data itself and look for clues about why "Price" behaves the way it does. Look for patterns that consistently repeat and measure their attributes for Timing, Direction, Magnitude and their Probability.
Understand that smaller patterns found in raw data are connected to larger patterns in bigger time-frames that are also connected to raw data. Locate the synergies between increasingly higher time-frames and the smaller time-frames within which you execute your trades. Look for the cycles in the formation of the patterns you find in your raw data research. These cycles are the pulse of the market - tap them and you will discover a whole new way to trade. High Probability Pattern Recognition is vitally important to becoming a long-term successful Technical Trader. It is the quintessential skill that you either need to already have, or be able to develop over time with exposure to increasing levels of raw data research.
It would help if you could develop some spreadsheet skills as well. Excel, for example, allows you to conduct Rapid Change and Rapid Testing, so you don't spend a lot of time compiling and re-compiling code. TradeStation (for Development ONLY), is another tool for rapid development because of its fairly common Language Model that everyone knows as EasyLanguage. If you are already well versed in procedural code such as would found in MT4, then more power too you - you will be able to test patterns directly inside your charting package. However, out of all of them, Excel allows for 360-degrees of flexibility when testing new ideas and new concepts. You can do almost anything inside of Excel, so it might be worth your while to look into what it would take to get up to speed with the application.
Test and Verify your newly found patterns/concepts and make sure you test over a wide range of market conditions, from Vertical (Bull or Bear) to Horizontal (flat) market conditions. Your indicators and signals need to work across multiple market conditions. That could mean that you have a set of indicators and signals for use in Vertical markets and another (complete different) set of indicators and signals for use in Horizontal markets, with a neutral set of indicators and signals that tell you when market conditions are in a state of transition. The Market Moves in Three (3) Dimensions NOT merely Two (2): Up, Down and Horizontal. Thus, you need to locate patterns that function at a high level in all three (3) dimensions. And, you need to locate Transition Patterns that tell you when the market is moving from one dimension of behavior, into another.
You can do this. You can win in this business. You can be a successful Trader, long-term. Smile at the Naysayers and focus on the task at hand, which is building your knowledge to the point where you can conduct Trading Operations at an optimized level of performance and efficiency. That means that you have created a Revenue Model and fully integrated that model into your Trading System, complete with its own unique Money Management Strategy as part of the Revenue Model itself. The Revenue Model sets your expectations and it is dependent upon the accuracy of your trading AND the Money Management Strategy you use. Trading without a well formed Revenue Model is like flying an aircraft with No Navigational Aids - you don't know where you are going and you have no destination, so you won't know when you get there. Trade with a full suite of Navigational Aids. That means that you trade against a Revenue Model, to make sure that you are on course. This way, when you stray off course, you can make the necessary course corrections either inside your System or inside your Revenue Model or the Money Management component of your Revenue Model.
Be deliberate, consistent and confident AFTER you have developed the educational background, knowledge and skill necessary to enter this business with real cash. Respect the Markets - do not fear the Markets. When you find what works for you, be ruthlessly consistent in the application of your system towards the goal of extracting profits in accordance with your Revenue Model - as that model will be the thing that ultimately guides your revenue growth and delivers you to your expected revenue targets.
Find a good, reliable FX Intermediary. Stay AWAY from Buck Shops - you know how I feel about them. Trade on Platforms that give you access to the deepest pools of liquidity in the Retail space, until you develop enough capital to start trading on Institutional Platforms or through a Prime Broker who can give you the access to deeper liquidity and more flexible trading platforms without the usual headaches associated with trying to set-up a relationship directly with a Bank. A solid Prime Broker, can provide you access to truer Interbank liquidity, but you will have to grow your capital base sufficient to warrant doing business with them.
At the Retail level, try to look for platforms that give you flexibility in Order Types. You should be able to trade Anonymously. You should expect Straight Through Processing and you should expect to be connected to something that approximates ECN type behavior/functionality. You should expect to NOT have your Intermediary trading against your position and you should expect your Intermediary to NOT manipulate either the spreads OR the price feed itself. You should NEVER be restricted in the size of transaction you bring to market - any Broker or Intermediary that does that, is putting a huge sign on their forehead that they ARE a Bucket Shop of the Highest Order. You should have access to liquidity at price levels inside your trading platform and you should be able to trade within the Bid/Ask when YOU want to. You should be able to trade ANY style you want from Swing to Scalp and NO ONE should mess with your trade execution because of the style YOU choose.
Make http://www.bis.org, the Bank for International Settlements your SECOND HOME. Get VERY familiar with this site. Make the entire site a serious study. Goto their Home Page and find the Statistic Tab (link) and click your way to Foreign Exchange link. Read their Triennial Report on Foreign Currency. Know who the real players are in the markets you trade. Know what real Interbank Liquidity truly looks like when you deal with your Broker/Intermediary. Educate and inform yourself that so that nobody can blow smoke in your face without you being able to detect it and correct it. Make the Bank for International Settlements a prime source of your research and reference going forward as an FX Trader.
Trade with the confidence (not cockiness) of know that you did your homework. Accept the losses when (not if) they come - they will come. Study Risk Mitigation and develop methodologies through your Money Management system to minimize the risk as much as possible on every trade you make. Don't take any risk, take ONLY calculated risk that your system understands well. Minimizing risk is the first step towards true long-term success as a Trader and you do that by doing your homework and finding those high probability (routine) patterns that like to repeat within the market on a consistent basis. How you find those patterns is something that I've tried to help you with - THAT those patterns exist within the market, is not a question. The exist - if they did not, I'd be in another line of business by now, most likely an Airline Pilot.
Keep dreaming, but when you wake up, work your butt off to make your dreams a reality! As always, you have my best as a Newbie and I look forward to seeing you and hearing about some success stories in 2011!
I just wanted to make this statement here, that way I can respond to each of you at the same time. Thanks for the private messages of encouragement and appreciation. I've tried to respond individually to those that have taken the time to write personally, but there really is no way for me to keep up with the PMs at this stage as that would be too time consuming on my end.
I typically come to one of my old stomping grounds once a year. I stayed longer than I thought I might this year, but that's ok by me. My time for this year has come to an end, but I wanted to leave the Newbies with this final message.
I appreciate the eagerness and the candor with which you ask your questions and I appreciate the fact that you are looking for answers as you start out on your journey to become a successful Trader. You will find those answers by not giving up on your quest and by doing homework on the data the market has provided you. The Market is your best Teacher! Listen to what She has to tell you. If you make the data that She provides, she will guide you in the right direction because She is never wrong. This is an Instructor that is always right and that should be a fact that you never underestimate and/or forget.
The answers are found not in me or in any "guru," but inside the data. You will develop the ability to interpret what your Master Instructor is telling you - remember, She is never wrong. Develop an understanding of Economic Indicators (Periodic Economic News/Reports) and how they affect the markets. Develop an understanding of the raw data itself and look for clues about why "Price" behaves the way it does. Look for patterns that consistently repeat and measure their attributes for Timing, Direction, Magnitude and their Probability.
Understand that smaller patterns found in raw data are connected to larger patterns in bigger time-frames that are also connected to raw data. Locate the synergies between increasingly higher time-frames and the smaller time-frames within which you execute your trades. Look for the cycles in the formation of the patterns you find in your raw data research. These cycles are the pulse of the market - tap them and you will discover a whole new way to trade. High Probability Pattern Recognition is vitally important to becoming a long-term successful Technical Trader. It is the quintessential skill that you either need to already have, or be able to develop over time with exposure to increasing levels of raw data research.
It would help if you could develop some spreadsheet skills as well. Excel, for example, allows you to conduct Rapid Change and Rapid Testing, so you don't spend a lot of time compiling and re-compiling code. TradeStation (for Development ONLY), is another tool for rapid development because of its fairly common Language Model that everyone knows as EasyLanguage. If you are already well versed in procedural code such as would found in MT4, then more power too you - you will be able to test patterns directly inside your charting package. However, out of all of them, Excel allows for 360-degrees of flexibility when testing new ideas and new concepts. You can do almost anything inside of Excel, so it might be worth your while to look into what it would take to get up to speed with the application.
Test and Verify your newly found patterns/concepts and make sure you test over a wide range of market conditions, from Vertical (Bull or Bear) to Horizontal (flat) market conditions. Your indicators and signals need to work across multiple market conditions. That could mean that you have a set of indicators and signals for use in Vertical markets and another (complete different) set of indicators and signals for use in Horizontal markets, with a neutral set of indicators and signals that tell you when market conditions are in a state of transition. The Market Moves in Three (3) Dimensions NOT merely Two (2): Up, Down and Horizontal. Thus, you need to locate patterns that function at a high level in all three (3) dimensions. And, you need to locate Transition Patterns that tell you when the market is moving from one dimension of behavior, into another.
You can do this. You can win in this business. You can be a successful Trader, long-term. Smile at the Naysayers and focus on the task at hand, which is building your knowledge to the point where you can conduct Trading Operations at an optimized level of performance and efficiency. That means that you have created a Revenue Model and fully integrated that model into your Trading System, complete with its own unique Money Management Strategy as part of the Revenue Model itself. The Revenue Model sets your expectations and it is dependent upon the accuracy of your trading AND the Money Management Strategy you use. Trading without a well formed Revenue Model is like flying an aircraft with No Navigational Aids - you don't know where you are going and you have no destination, so you won't know when you get there. Trade with a full suite of Navigational Aids. That means that you trade against a Revenue Model, to make sure that you are on course. This way, when you stray off course, you can make the necessary course corrections either inside your System or inside your Revenue Model or the Money Management component of your Revenue Model.
Be deliberate, consistent and confident AFTER you have developed the educational background, knowledge and skill necessary to enter this business with real cash. Respect the Markets - do not fear the Markets. When you find what works for you, be ruthlessly consistent in the application of your system towards the goal of extracting profits in accordance with your Revenue Model - as that model will be the thing that ultimately guides your revenue growth and delivers you to your expected revenue targets.
Find a good, reliable FX Intermediary. Stay AWAY from Buck Shops - you know how I feel about them. Trade on Platforms that give you access to the deepest pools of liquidity in the Retail space, until you develop enough capital to start trading on Institutional Platforms or through a Prime Broker who can give you the access to deeper liquidity and more flexible trading platforms without the usual headaches associated with trying to set-up a relationship directly with a Bank. A solid Prime Broker, can provide you access to truer Interbank liquidity, but you will have to grow your capital base sufficient to warrant doing business with them.
At the Retail level, try to look for platforms that give you flexibility in Order Types. You should be able to trade Anonymously. You should expect Straight Through Processing and you should expect to be connected to something that approximates ECN type behavior/functionality. You should expect to NOT have your Intermediary trading against your position and you should expect your Intermediary to NOT manipulate either the spreads OR the price feed itself. You should NEVER be restricted in the size of transaction you bring to market - any Broker or Intermediary that does that, is putting a huge sign on their forehead that they ARE a Bucket Shop of the Highest Order. You should have access to liquidity at price levels inside your trading platform and you should be able to trade within the Bid/Ask when YOU want to. You should be able to trade ANY style you want from Swing to Scalp and NO ONE should mess with your trade execution because of the style YOU choose.
Make http://www.bis.org, the Bank for International Settlements your SECOND HOME. Get VERY familiar with this site. Make the entire site a serious study. Goto their Home Page and find the Statistic Tab (link) and click your way to Foreign Exchange link. Read their Triennial Report on Foreign Currency. Know who the real players are in the markets you trade. Know what real Interbank Liquidity truly looks like when you deal with your Broker/Intermediary. Educate and inform yourself that so that nobody can blow smoke in your face without you being able to detect it and correct it. Make the Bank for International Settlements a prime source of your research and reference going forward as an FX Trader.
Trade with the confidence (not cockiness) of know that you did your homework. Accept the losses when (not if) they come - they will come. Study Risk Mitigation and develop methodologies through your Money Management system to minimize the risk as much as possible on every trade you make. Don't take any risk, take ONLY calculated risk that your system understands well. Minimizing risk is the first step towards true long-term success as a Trader and you do that by doing your homework and finding those high probability (routine) patterns that like to repeat within the market on a consistent basis. How you find those patterns is something that I've tried to help you with - THAT those patterns exist within the market, is not a question. The exist - if they did not, I'd be in another line of business by now, most likely an Airline Pilot.
Keep dreaming, but when you wake up, work your butt off to make your dreams a reality! As always, you have my best as a Newbie and I look forward to seeing you and hearing about some success stories in 2011!
