i am a new trader but have been losing money with ig index.
i have been using simple moving averages - 20, 40 and 100.
i have problems getting in at the right time.
basically i need some trading advice.
all help appreciated.
stephen.
Unless you get in on a strongly trending market moving averages may not be that effective. Don't even attempt to trade them if the price looks like it is going sideways on the chart. They lag price action, so in these situations you usually end up entering the market right when it changes direction.
My advice would be to stop trading real money at the moment, or if you absolutely must trade real money (i know how hard it is to resist) keep the amounts very small. Also put a tight stop loss on the position- it may mean you lose trades that eventually would have gone in your direction- but the person who cuts losses quickly lives to survive another day. That is all that counts when you are learning.
Secondly, now you are limiting your losses, focus on how much you are expecting to gain on each trade. You should have a target before you enter the trade and ideally the target should be greater than your stop loss. (e.g. stop loss 15 points away, target 25 or 30 points away). The exact figures you lose for stop loss and targets is dependent on the market you are trading. If there is a lot of movement then you can go for larger stops and targets... or if there is little movement the target and stops need to be less.
Thirdly, work on honing a strategy. This is a never ending task. As you are new, you need to focus on one thing at a time. Moving averages are good, but as i said above they are not great in markets that are moving sideways. Once you feel you have a grasp of moving averages and have practised on a demo account move on to add another bit of knowledge. Perhaps look next at determining support and resistance levels and how price interacts with these. (support and resistance is very effective in the aforementioned sideways market).
I've not even touched the tip of the iceberg here there is so much i was writing then decided to delete it- but anyway...
make sure whatever you do you have a clear plan.
Don't guess.
Know what markets you will trade.
Know your stop loss.
Know your target.
Know the time frame you will be using.
Know how long you want to hold each trade.
Practise.
Hone your strategy.
Practise some more.
And more.
And more.
Once you discover you have a winning edge, trade some real money.
Suffer drawdowns and many consecutive losses.
Accept that losses are an important part of trading and you will always have them.
Go back to practising.
Hone the strategy some more.
Think you have solved it.
Go back to trading real money.
Get wiped out because the market changed and your strategy is no longer effective.
Go back to demo.
Practise some more.
Trade real money and make 300% in a week- feel euphoric.
Lose it all the next week.
Go back to demo.
Keep repeating the above until you are successful.
Hope i haven't put you off!
Good luck!
