How to start learning forex trading

Traderallen

Active member
248 41
Let's assume for a minute that you find yourself with a little extra cash and decide you want to start trading Forex. You could start by going to the web searching Forex trading where you'll find a wide variety of information some of the good most of it crap. Or you could try reading a book there are hundreds of them most of which I read in there again you have the same problem there some good information but most of his crap. Maybe decide to join trading room where you'll soon find just like the webs and books most are just crap. So maybe you'll just download MT4 and by a robot to do the trading for you received on your account will be wiped out because all robots free or being sold on the web are crap.
So how does our want to be Forex trader learn how to trade profitably? You could learn basic information about trading from baby pips for free that's better information than most books. You could buy some of the myriad of books on indicator-based trading however keep in mind you'll be getting into the trades way too late to make any profit. Same with pattern-based trading. Elliott wave forget it far too complex and subjective to really be of any use. So back to our question. How does our new Forex trader learn how to be profitable? First open an account with a good Forex broker. That's the first problem as most are scams and trade against you what our software is set up to make it virtually impossible for you to make a profit. However once you find that broker where you can get good fills screen time is the only way to learn. Pick one currency probably the Eurodollar for most and spend as much time as possible watching and learning the movements. Currencies are no different from stocks or futures they are people making trading decisions you need to watch the screen until you become familiar with those trading decisions learn where the buyers will be and where the sellers will be jumping ahead of the buyers or short ahead of the sellers. If you have a level II screen that's a plus learn to watch the order flow notice how when prices hit a certain level order flow picks up and prices reverse. For example. Watch for prices to pullback to a fib level don't just jump in at that level watch the order flow and see if the fibers are there. If they are and you will see them jump in and ride the wave up and get out where you know they're going to exit because you watch them many times. Or you may be watching for the big players where you'll notice when price reaches a certain level order flow kicks in and the price reverses usually but not always around round numbers, there's no magic it just easier for most people to think in round numbers. These two examples are more of scalping methods but the work the same on the daily chart. So my advice is to our new traders watch and learn watch and learn study the chart think where are the buyers where are the sellers that's what you need to know.
Of course that's just the tip of the Forex iceberg. Learning proper money management and how to manage a trade is a whole other rant. This is an excerpt from my blog WallStreet2easyStreet
 

ben dog

Junior member
18 0
Dear Traderallen, thanks for an interesting thread - and things to consider...

Ive just started (3weeks) and what you say makes sense to me. im doing demo on metatrader and in profit through luck, and making LOTS of notes. If i do this - this happens

Would it be okey if i asked you a few questions please? (or anyone reading this)

Ive got experience in staking plans from gambling, ive looked at different Indicators, EA's, read shed loads of web... but its left me with more questions than answers

TRADING
1. Do you have a clear simple way to explain how to use Mcad and Osma? when to buy, when to sell please

2. If everyone is using indicators to trade, then surely everyones waiting for the same moment … so why not trade before and after those points??

3. Do you trust EA's or do you do everything manually? I suppose this is something people work on over periods of years refining thier own EA's and anything given for free out there is ... not profitable

4. How do I recover if my trade is going the wrong direction and still come out on top? Example A wanted up, but A going down neg... do I open another B "sell" take the stop loss from previous A, and wait for the market to go down further where I "buy" back for B. Thus trading in that direction to recoup loss of first A? ... or is there another ways to come out on top?

5. Would you say its extremely rare or possible that someone can change 200 to 2,000 account in a year? or whats the recommended starter bank amount?

6. Is the goal to be a long trader 1st, then trade as a scalper as a lower priority, doing this when you have time to commit to sitting by computer?

7. It seems binary share websites (pretending to trade but actually gambling on stock price rise and fall) seems to be more profit per commitment - and best suited to staking plans. Are binary shares type websites a scam even if they are being regulated? Should i avoid?

8. What causes traders to think or feel that a position is cheap and want to buy it, and then at the top what makes them think or feel that its high so they want to take profit and sell, which causes it to drop? ... *Ive thought about people buying on a small upturn, some sell which causes a small low, but others wait causing it to still go up cos more want to buy in. By this point your getting small zigzags, so why wait til it max's out... and pos fail due to greed, sell as its moving to the position you wanted it to go to then step back. So what if after pulling out, it goes up more, youve still reached your profit and there always another wave to catch... or am i barking up wrong tree?

NEWS
1. Does everything revolve around the news? as in to be a succesful trader do i have to follow everything thats going on and be on the pulse at all times. Or can i just go with staking plans and predicting the charts?

2. Is there a way to interpret the news? or just an insider know how, experince thing. Like if google bought ups postal service = good thing = people trade up. Or gas leak in umptown = bad = trade goes down? just curious ... refining what i mean: am i looking at the news in terms of what would impulse me to buy more stocks, or sell up quick out of worry of downturn.

3. On google finance, I noticed today that FTSE 100 jumped up 6543 to 6569 in one movement right after "Ex-divs to take up to 1.4 points off FTSE 100" and at EXACTLY the same moment FTSE 250 did the same "Com***center rises on contract win" ... so is it the news doing this? if so why did the breaking news happen at the same moment?

4. Is there some secret network of "breaking news" that i should be joining thats getting these breaking news before hand?. Do professional stock people phone each other about things before doing big trades to get ahead of home traders like me? I understand that one might be controversial heh.

... thanks everyone for any help, great received - all the best (y)
 
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Dameon

Junior member
31 1
If everyone is using indicators to trade, then surely everyones waiting for the same moment … so why not trade before and after those points??
Trade with the crowd ( higher trading volumes= increased price and tendency to follow expected patterns).
 

pboyles

Legendary member
8,072 1,301
Trading forex is a guaranteed way to lose your extra cash very quickly. Wise up and don't waste your money on this nonsense.
 

timsk

Legendary member
7,057 1,861
Yes it's a very bad idea, just forget about it, you won't make money.
Hi ben dog,
pboyles is T2W's resident pessimist and sceptic. To be fair to him, many new entrants to the trading arena are naïve, and arrive with grossly unrealistic expectations. They are all too easily mislead by the countless scoundrels and rogues out there who are very adept at fleecing the unwary and gullible of their money.

However, be that as it may, there is nothing wrong in taking an interest in this field and learning as much about it as you can and, if and when you do decide to trade a live account with real funds, you do so in a sensible fashion with sensible expectations. Moreover, should disaster strike, you are fully cognisant of the possible consequences. In other words, understand fully all the possible down sides and the full extent of the risk you're taking.

You may not make any money, but you are no less likely to make any than you are if you start any other kind of business. Potentially, if you're sensible about how you go about things, if you lose and give up, you could lose a lot less (and possibly nothing more than your time) than you'd stand to lose with almost any other type of business. Yes, this business is extremely tough and very, very few that try their hand at it succeed. But, if you've resolved that this is what you want to do - go for it - and don't let anyone deter you from your goal.
Tim.
 

ben dog

Junior member
18 0
Thanks timsk, i see, lol. Im greatful for your concern and ill be very careful thanks. Id only risk £200 to start. Im avoiding online "buy this sytem" adverts and going to forums and pdf's. :) ... if youre up for answering some of my questions id realy appreciate your experience.

Sorry Traderallen... this thread isnt about me - i was intending to seek advice about the questions ive raised in the hope that any answers would not only be useful for me - but all other newcomers reading your threads name.

All the best
 

Traderallen

Active member
248 41
I'll do my best answer some of your questions using the knowledge that I have gained over the years of teaching myself how to trade.
1. MACD AMD OSMA are no better than trying to use a moving average system in my opinion you will always be entering the trades late by the time you get the signal to buy most of the buying will already be done. Sellers will start taking the profits and you end up with a loss. All indicators of this type including stochastics and RSIs all repaint. If you're not familiar with repainting just keep in mind there based on mathematical averages so as the new information comes in and the old information goes out the plot changes so in hindsight they look real good on a chart and are an easy sell to newbies, but in reality trading on the right-hand side of the chart their all but useless.

2. I would say your correct that most newbies learning to trade are trying to use some kind of indicator that's why 95% of them lose. I'm betting it's more than 95%. And you're right again it be much better to jump in before them and jump out before them.
3. I played with meta-trader for a couple years and tested and modified many EA's trying to come up with something that works and I can tell you this. There are EA's that work the problem is none of them work all the time they do not adapt to the market so your only hope is to make lots of money with them when they do work and be able to get the stop button quickly when the market changes and they fail. This would be an almost impossible task. I found in order to get a decent when loss ratio your stop has to be extremely wide so the EA performs well but when it loses they lose big. Better to learn to trade on your own in my opinion.
4 the answer to this is keep it simple know what you're wrong and close the trade when you're wrong. The first question to ask yourself assuming you want to go along is where are the buyers, where are they going to want to buy? The second question if my trade plan is incorrect where do I close the trade? Third question cannot afford that risk if not skip it. The third question if I get into the trade is there enough room for it to get me into a good profit before running into resistance? If not skip it. Now the hard part wait. Watch the order flow for the buyers if you see buyers coming in and of the trade. If not look for the next set up.
5. I think that would be unrealistic for starting out. I recommend opening of the micro account with 500 to 1000. You only need 10 to 20 pips today focus on that. As you trading improves and is making money on its own it's okay to add extra and start trading a little larger until you're up to mini's.
6. This was more personal preference I prefer scalping. I use a method that we talk about on another thread here. You have to use a style that fits your personality that is a must. I like small quick profits, get in grab a handful pips get out. I do hold trades for longer but I'm very picky when it comes to these.
7. These are all scams forget their scams I don't care what anybody says their scams
8. What you're saying here makes things way too complicated that's another reason why most traders fail keep it simple buy support sell at resistance buy support sell at resistance repeat this phrase every day until it's ingrained into your head. If you want to make money buy at support sell at resistance.
News questions
1. Fundamentals rule the market do you have to pay attention to every little detail no. Do you have to be aware of when major news is going to be made public. Yes.. If you're new to trading never hold a trade during US nonfarm payrolls i.e. NFP Fridays you will get whipsawed like hell out of your trades.
2. It's impossible to interpret the news for example you would think that good United States news would cause the US dollar to rise and it might however large traders may think hey the US is doing great that means the rest of the world will follow suit let's by the euro it's cheap. So there's no way to accurately tell which way the markets going to move in my opinion
3 I cannot answer this question.
4. What you're asking here is 100% illegal. There are few exceptions where big-money players are able to pay for news a few seconds before comes out but you and I will never have enough money to join the crowd.

Whether people agree or disagree with my statements here they have their own opinions just as I have mine. I hope this helps to answer some of your questions and get you on the road to trading profitably. Remember nobody cares about your money is much as you do.
 

timsk

Legendary member
7,057 1,861
Hi ben dog,
Okay, here are my answers to your questions . . .

1. There are very few hard and fast rules in trading. Indicators merely indicate a market state, i.e. moving averages indicate that an instrument is trending up, down or sideways. How you use this information is up to you and will vary from one trader to the next. For ideas on how to use MACD, check out this link: MACD. For ideas on how other traders use OsMA, this thread may be of interest: Trading the OsMA

2. Firstly, not everyone is using technical analysis indicators (e.g. MACD and OsMA) to trade. In fact, in recent years, there's been a strong trend away from TA indicators altogether, with a focus on price action alone. Your idea of trading before indicators indicate whatever it is that they are designed to indicate - is great in principle, but a little tricky in practice. It's a catch-22: if you know that your MACD lines are going to cross before they actually do then, arguably, you don't need the indicator in the first place! Waiting until long after they've crossed before entering / exiting your trade could mean you're too late to the party or the last one to leave.

3. I've never used them and know nothing about them. That said, Traderallen's answer to this question strikes me as being pretty much spot on.

4. Basically, you're asking 'how do I trade'. Essentially, your question is what every single T2W member plus everyone else in the world is trying to figure out! If you've not seen them already, read the first two FAQs in my signature, they should give you some ideas on where to start.

5. Extremely rare - but it's been done. However, it won't help you one bit to think in terms of potential profits at this stage. Focus on trading well and the results should follow. As for a starting capital - check out this FAQ: How Much Money Does a Trader Need To Start Trading?

6. As a rough rule of thumb, newbies are advised to trade longer time frames initially and only move to shorter ones as and when their knowledge and experience grows. Think of driving a car. You can have a fatal accident doing 20mph. But, unless you're Jensen Button, driving at 100mph will increase the risk of a serious accident ten fold. Start with weekly or daily timeframes. If you must trade intra-day, resist the temptation to go shorter than hourly. As for the goal - it's to make money any way you can!

7. I can't comment on binary as I've never tried it. However, at the moment, it doesn't get good press. Arguably, all trading is gambling, but binary sites do appear to be aligned to the casino type sites rather than the pure trading sites. Some will say there's no difference, but anything that encourages a 'shoot from the hip' or 'go for broke' mentality is best avoided, IMO. Certainly, it's not going to be any easier to make money trading binaries than it is with 'regular' brokers and, potentially, you could lose a lot more a lot faster. Best avoided until you know your ar$e from your elbow trading wise.

8. Traders tend not to think in terms of value; that's the domain of investors. So, they aim to enter a long trade when they perceive that selling pressure is waning and that buyers are coming back into the market. It doesn't matter to them that price is at or near an all time high. As with question 4. - how you go about doing this is what this site is all about. There are no quick fix cookie cutter solutions that I'm aware of. Sorry!

NEWS
1. Let me deal with your comment about 'predicting charts' first. If you can do this - good on you! Most traders can't and, certainly, that's not the purpose of technical analysis. Learn the basics about TA in this Sticky: Essentials Of Technical Analysis

Don't try and trade the news itself and, whatever you do, don't try to be clever and predict it. Predicting the news can - on occasions - be very easy. How the market reacts to the news is another matter entirely. It's not necessarily the case that the market will rise on good news or fall on bad news. If only it were that simple, lol! Know when key news releases are (they're published in advance) and make sure that you're positioned accordingly so that you won't be affected - regardless of the announcement and the market's reaction to it.

2. The best advice I've ever received about news is this: don't try and trade the news, trade the reaction to the news. So, take the NFP release that Traderallen mentioned. If, after the figures are released, the market shoots up on momentum, look for an opportunity to jump on board for the ride. Or alternatively, look to fade the move and short it at the point where all the longs are closing out for a profit. Much easier said than done of course, but it's safer than trying to play the news itself.

3. This is tricky to explain. Basically, the jump in price compensates index futures traders for the lost dividend that they would have received had they been trading the underlying stocks that make up the FTSE 100 itself. And no, before you ask, there isn't a service which tells you when to trade the index - allowing you to front run the move!

4. :LOL: That's the stuff of Hollywood! That said, there are any number of scammers out there who will offer you something along these lines: 'inside information', 'secrets only known by the pros' etc. Don't waste your time - let alone your money - on rubbish like that.

Hope that helps.
Tim.
 
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ben dog

Junior member
18 0
Thank you both for your advice, nice one. Heres some thoughts.

Dear TraderAllen:

Indicators “you will always be entering the trades late by the time you get the signal to buy most of the buying will already be done” … interesting, I see your point. So would you say I should consentrate on interpreting the movement of the charts myself, and make a notes of the reasons why I want to make a trade at that point, sell at that point… and monitor my performance. I’m finding out a lot about how to make trades, and the terminology, what the terminology does, by reading about how to use indicators. I recommend readers to do the same, read up on indicators youll get a lot from it… but I feel your pointing at not relying on them as a mechanical means of judging when to make a trade.

Ea’s ok, heres the thing they are very similar to bots that you programme for betting sites and their streaming data. Lots of them work as you say, but eventually the data will produce a losing streak that eats into your bank, no matter what combination of bets you make. The longer you play, the better the odds of encountering the big losing streak. Then people say the websites a scam or the Bot didn’t work, it did, its just you played it for too long. So taking this as an example, its knowing when these EA’s are “most effective” and don’t trade at times when they unlikely to give a profit. Knowing that is half the problem I guess, and lots of research later. Having a large bank to cope with EA’s liability is exactly the same for gambling bots then, I see.

“Never hold a trade during US nonfarm payrolls i.e. NFP Fridays” thanks for the warning, although don’t know what youre on about haha… ill have to understand what you mean first, so ill look into it, chears.

Ok so the breaking news does effect the stock markets, but it wont help you predict in which way it moves, makes sense. News does however alert you to take notice of what your long’s are doing, and gives you opportunities to make new trades. Interesting, simple. I guess having a RSS feed of news would be useful, especially to your mobile. Can you recommend one, if you use them? …. And you you recommend the use of VPS (Virtual Private Server) hosting allows Forex traders to run automated bots or complete transactions (sell points, stop loss) on your behalf, 24hrs a day.

“Buy at support, Sell at resistance” ill add it my mantras list nice one.

Good advice on “Recovering from wrong direction“:
>The answer to this is keep it simple know what you're wrong and close the trade when you're wrong (ok lol… at this point do you try to recoup the loss with subsequent trades or just let it go, accept the loss and trade on?. I guess trying to recoup can lead to frustration and wild trading leading you further into exponential risk)
>Where are the buyers, where are they going to want to buy? (Im taking this to mean buy on good support and sell on good resistance. Understanding this is going to be a journey of experince)
>If my trade plan is incorrect where do I close the trade? (At the point at which it crosses your resistance line, or at a stop loss level which is a percentage of your bank, or percentage of the trade itself … again experience I suppose)
>If I get into the trade is there enough room for it to get me into a good profit before running into resistance? If not skip it. Wait and Watch the order flow for the buyers if you see buyers coming in and off the trade. (is the order flow something like volume, sentiment, macd?) If not look for the next set up. (Ah spot good room for potential. Ok something to think about... this lead me on a journey to look at: Breakway Gaps, Common Gaps, Exhaustion Gaps, Measuring Gaps)

Thanks for your reply, im enjoying this conversation, all the best

###

Dear Tmisk thanks for your links, will be extremely useful, thanks for your time spent.

Its interesting to hear professional traders are stearing away from indicators, and just trading the charts.

“Trade long times frames first, then moving to shorter as gain experience level“. Very good idea, ill do that. Ive been doing 5min trades on demo and taking notes on my performance, what does what when this happens. But when I change to real money ill definitely start at 1 days. Im learning as I go and wont enter into real money until ive at least traded on demo for a month, maybe 2 lol, and feel confident. I feel that ill end up being a scalper as a preference. For 1 day trades ive been looking at technical analysis charts of the previous day, and trying to sus out the buy and sell point.

It seems then that Binary Share “gambling” sites are not the way to go then. Pitty I was doing quite well with my roulette staking plans on demo lol £10000 to £39560 in two weeks. ::: I read these “gambling” sites can set their own closing price if they choose to. Meaning any form of staking plan is going to get scupperd at some point if they send their “version“, I also feel the frequent crashes of error connection right at the point I needed to place a bet is fishy. Regulation means business practice, it does not include any form of revenue management to customers. Some companies have three businesses in different countries so that they can pass the buck around, so that banned bits of legislation can be covered by the other country and visca versa. Don’t get me wrong, im still like the idea of giving it a go with £100, but its worth mentioning here.

“Don't try and trade the news, trade the reaction to the news” wow im added that one to my mantras list thanks. Yes totally see now. So have finger on the pulse of the news, but don’t be obsessive about it. I presume “key news releases” are an expensive service.

“The jump in price compensates index futures traders” … hmm I see, more to learn, more to look up. Thank you Tmisk
 

ben dog

Junior member
18 0
Traderallen I hope you don’t mind me suggesting things, but id like to include this to help others who are just starting out like me who may be reading this. Heres the things ive found useful so far. There are probably loads of topics that i havent discovered yet, but its a start :)

ADVICE & FORUMS:
Trade2Win awesome!

TRADING COURSES
Articles - Getting Started - Getting Started
What is Forex? | What is Forex? | Learn Forex Trading - Great start to understand trading
Forex Walkthrough - Great training, plus trading stratergies
Active Trading Videos | Investopedia
http://www.forex-rewards.com/The_8and8_ebook.pdf

ARTICLES
2013 - Trading tips, search articles to find interesting info.
Forex: Gauging Forex Market Sentiment With Open Interest
MQL4 Articles: automated forex trading, strategy tester, expert advisors and custom indicators
MACD (Moving Average Convergence-Divergence) How to Use MACD in Forex Trading

INDICATORS
MACD (Moving Average Convergence-Divergence) How to Use MACD in Forex Trading
MQL4 Code Base: custom indicators for MT4 - downloads for metatrader, *.mq4 files
Technical Indicators and Overlays - ChartSchool - StockCharts.com - extensive list and shows how to use them
Metatrader 4 Indicators MT4 | Download Forex Indicator | Great Trading Systems

TRADING STRATERGIES:
Articles - Trading Strategies
Simple strategies | Forex Strategies & Systems Revealed
123 Trading System
15 Minutes Trading System

EA’S ROBOTS:
Best Expert Advisor Trading Robots Always google for a *name* review, and *name* scam before buying an EA
MQL4 Code Base: expert advisors for MetaTrader - downloads for metatrader, *.mq4 files

TECHNICAL DATA:
Forex Market @ Forex Factory
(untitled) DOOOG
 

ben dog

Junior member
18 0
Sharing some of my research:

Support = A support line is where you place a line on the chart underneath several peaks on the downside of a trend line. Buy a stock when it crosses your line, this is called Breakdown. A support level is a price level where the price tends to find support as it is going down. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, it is likely to continue dropping until it finds another support level.

Resistance = A resistance line is where you place a line on the chart on top of several points on the up points of a trend line. Sell a stock when it crosses your line, this is called Breakout. A resistance level is the opposite of a support level. It is where the price tends to find resistance as it is going up. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, it is likely that it will continue rising until it finds another resistance level.

Stop loss = A point at which youre willing to cash out before any further damage can be done to your bank account. If buy, then it would be a percentage underneath your support line, or minus percentage of your stock. If a sell, then it would be a percentage above your resistance line, or plus percentage of your stock. Probably other ways to do it too.

Trailing stop = As your position is gaining in profit in either direction, this means your stop loss can also move along with it and “lock in” a profit as you go.

Google image “support and resistance”
 

timsk

Legendary member
7,057 1,861
Hi ben dog,
Glad there were a few useful answers.

“Don't try and trade the news, trade the reaction to the news” wow im added that one to my mantras list thanks. Yes totally see now. So have finger on the pulse of the news, but don’t be obsessive about it. I presume “key news releases” are an expensive service.
No, key news releases are available for free on the web. Some are specific to certain markets, but the main ones like NFP can send ripples across the board. I'm loathed to direct you away from T2W but, if you trade Forex, then another community forum produce a good calendar

For trading US equity indices, I find this one is perfectly adequate: MarketWatch Calendar I'm sure a Google search will reveal others. If you trade individual equities, you'll need to know when they release their earnings reports and when they go ex-dividend. Ignore this at your peril - especially if you're day trading or even swing trading over a few days. If you know what market you intend to trade, then members can make other suggestions.

“The jump in price compensates index futures traders” … hmm I see, more to learn, more to look up.
Yes, indeed. Me too to be honest as I'm not sure this is correct! It relates to the ex-dividend dates of the underlying stocks which drop in price according to the size of dividend paid out to investors. Hopefully, someone with a better understanding of how this works will chip in with an explanation. Where's barjon when you need him, or Shakone, Liquid validity . . . Anyone!
Tim.

P.S. Ben - Non Farm Payrolls
 
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