It'll be ok man
TheWolf said:
You have to start some point I guess. I am not going live yet, as I am spending another half a year or so doing more research, and carry on trading on my demo account. Thankfully, my dad who is a fund manager - could help me along the way as well.
Thanks for your encouragement + advices guys.
and no i dont take out personal loans lol. I don't wanna lose more than what I can afford, esp at this stage.
I want to teach you something Wolf.
I want to point this out to everyone also. I am only 19. I'm the straight-A college dropout type. I just couldn't find something that I wanted for a career (I was a kitchen manager; $1125 bi-weekly for a 19 year old is all right, but the 10 hours a day, 6 days a week was not. Also, I love computers, but I hate fixing them for idiots, etc.).
ANYWAY, as I started learning about forex, I began to love it. I mean, like I actually find it fun.Pips are like points to me, winning a game, getting the high score, or losing - the game is still fun. Money for me right now is only an afterthought. It has to be that way.
I started off with a surprisingly good source of information regarding trading strategies. It was very low priced compared to most courses, so much so that I feared it to be "snake oil", but to my literal amazement it was not. I opened a demo account that had $50k to start with. After 2 weeks I had 56.5k. WhaaahT? So I opened a real mini, started off with $350. Lost it all. Put in another $250. Lost it all. Another $150. Lost it all. At this point I realized a couple of things. For one, I didn't really know jack about technical analysis. I had learned to follow the strategies designed by technical analysis though, so in theory I should've been ok. But the problem was, I wasn't following the strategies. Moreso, I didn't have the discipline, I didn't have the patience. Discipline and patience are two super-ultra important factors in trading successfully. Part of my zeal was due to the fact that I worked 60 hours a week - I didn't have time to watch good trades develope, I'd just try to jump in wherever I could in the most rediculously rationalized way, and just hope for something good to happen. Stupid, stupid, stupid.
So then came my first critical revalation. My risk/reward ratio was rediculous. I was putting 15 pip stops on trades I'd hope to make like 6 or 8 pips on. Wtf is that? So I made a rule not to take any trade that didn't have at least a 1.5/1 reward/risk ratio. End Zeal.
Next rule. If, in my very limited time to watch the markets, I only even caught one good trade developing a week, so be it. A little profit is better than loss. End Impatience.
Once I analyze everything and decide its time to enter a trade that seems ideal, I do it (with an entry order, not a market order). I set my reasonable stop, and my limit, and walk away, don't watch it.. unless you are scalping (you are new to trading, don't EVEN worry about what scalping is) End emotion.
If you are aiming for larger trades, such as 80-120 pips (which shouldn't be until you have plenty of equity and some more experience), you should check it a couple times a day. If it raises above a key resistance line (for a -sustained- period of time, not a tag), raise your stop to just below that resistance line, which will hopefully at least be near your open price, for a risk-free trade. There are other things you can do with this, like once you hit 50% of your target, raise your stop to lock in 25% of your targeted profit, and 50% when it hits 75% of your target. Make sure you don't raise your stop so high that you get stopped out during momentum-consolidation.
Read the FA news (ex. the squawk box on the FXCM station). It is not wise to trade against the news. On the other hand, it is clear to me that depending on the news won't get you anywhere either. In the end, technical analysis is stronger. Keeping track of the news can give you a little edge, but most importantly keep you from getting burned. Especially when you don't have a lot of equity to work with. Think of it this way. You can turn on the radio and hear that there is a lot of traffic congestion on the highway by the exit to get onto "main street". BUT, you can figure that out on your own, by considering its 830 in the morning, and the masses of people will probably all be heading to work as usual. Thats technical analysis. But one day you might hear that an 18-wheeler transporting propane has jacknifed across the middle of the highway. Better stay away. Thats what FA news is good for. If a big FA is coming (esp 830 am EST on the 1st friday of every month) you shouldn't have any positions open unless you are sitting there, watching it like a hawk. That particular FA almost always whips at least 50+ pips in both directions, on every USD pair, over the course of minutes. Its a good chance to make good money really fast, but beware. Aside from world-changing events like 9/11 and the tsunami, this is the most likely time your broker will suffer from slippage. Even the best brokers. Also remember, for all those people cashing in big on those huge, hyperfast whips, an equal amount of money is being lost.
MASTER technical analysis. The "basic idea" of an indicator is often far from its ideal usage, or sometimes just plain useless. Us young people are always anxious to learn the general idea as rapidly as possible. This worked fine for me inside the public education system, but I learned the hard way that it is absolutely unacceptable in FOREX. (Tangent: the more indicators you use is not always for the best, as some can help confirm others, and some just create jumble and nonsense, this is something you need to learn) Bollinger bands are a good example of this. The first thing I read about BBs basically said "when a candle tags (closes above) the band, and the second candle closes below the band, the trend will reverse." This is sometimes true, but its actually not what BBs were designed around. After learning a LOT about BBs (and I recommend you do to, IMO they are the best indicator to master, along with their proper accomplice indicators) my response to whoever wrote that "basic idea" would be something like.... dfuighsdfGKLJRWIERNIN!!!IJGIOJER@#!!! Yeah, that. I have to recommend the book "Bollinger on Bollinger Bands". Why not learn a system from the man who invented it. There is nothing better. Read that book. Memorize it. Seriously.
Aside from my recommendation to master the technical analysis yourself instead of just following someone else's system (proven or not), whats absolutely most important is your emotion. Even following a foreign system, you'll be all right if your emotion can be kept in check. Especially regarding money management. In gambling you need to win more than 50% of the time to profit. In FOREX, you can profit even if you're only right 1/3rd of the time. But to do that requires absolute mastery of your impulses. If you're using a system, don't change it on-the-go. Because that means you are acting on impulse. Smarter traders are making money off of people doing things like that.
As for me, I want forex to be my life. Its the first fun way to make money I've ever heard of. After learning what I have, I'm starting to make modest profits instead of throwing out $150 a week. The beauty of forex is the fact that the more you have, the more you can make. DEFINITELY start by only trading 10,000 lots by the way. But even if you can only average 20 pips profit per week, which for you would be a mere $80 a month, it could eventually become $800 a month, and then $8000 a month. Yeah, that would take years. Decades even. But its still better than say, working 20 years for a company, with only $60k/yr to show for it. And its WAAAY better than those jokes of interest rates banks offer in a savings account. Just keep that in mind, even though, IF you can stick with it for a couple years, by then you'll be able to do better than 20 pips a week. We're lucky to have this while we're so young.
I'm now making enough breadcrumbs that I was able to get off my 6 day a week 10 hours a day salaried job. I still work, but at a video store (which was my first ever job), which is somewhat enjoyable for me (esp compared to working in a kitchen) and only about 25 hours a week. With all that extra time to study the markets, maybe in another 6 months I'll be able to modestly live completely off my trading. Maybe in another year or 2 I'll be able to buy my "dream car", a new acura rsx type s, and pay for it in full right then. And maybe, just maybe, 5 or 10 years from now I'll be able to buy one of those nice houses along a not-yet-commercialized beach, and go on vacations pretty much whenever I want. 10 years sounds like a long time. But hey, I won't even be 30 yet. Be patient. Be persistant. We're lucky to be young. Stick with it. I'd like to see how you're doing. If you want, I use AIM, my SN is maverick7h. We can talk anytime. Good luck to you.
And as those foolish network marketers say (those people who work their ***es off with no hope of ever making what a trader can),
Health, wealth, happiness!
- Nick
