My 1st trading experience. (How to correctly setup indicators and system following?)

[BetTreader]

Hello.

Yesterday I started trading on demo account I have made
few trades and i must say i didn't know exactly what i was doing
I have lost 2000$, fake money.


Today i tried to trade again.
I was trading the pair EUR/USD and I was holding an open position in the market more about 3 hours.
I have bought 2 lost (200000 USD) at 9:32 CET at price of 1.4602.
As soon i enetered the marked the price moved in opposite direction.
The price was fluctuating from 1.4570 to 1.4615.
I have closed the position at 12:47 CET at price of 1.4612 an made virtual profit of 200$.
If I would be entering and exiting the market in the right moment during this 2 hours i would make greater profit or if not that it would require me less time to make the same profit.
The problem is that I don't know how to correctly setup up the indicators to find out the correct entry and exit points.
In this trade i was using the:
MACD (first period = 12, second period = 26, signal period = 9),
SMA (period = 25, Shift = 0)
EMA (period = 26, shift = 12)
on 10min and 1hour charts

Can somebody explain what means the "signal period" in the MACD indicator and
what means the "shift" in the MA indicators?

How do you know if the indicators are set correctly for trading on a specific time frame chart?

Are those 26,25,12,9,0 the correct values to trade the 10min or 1H chart?

Should the values in SMA and EMA be equally set I mean if the period and the shift value in both should be the same?

How do you follow a trading system I mean
are you stuck watching the chart the whole day until the signal shows up?!
I find it boring to watch the price that goes 3pips up and 3pips down for an hour or so.

Thanks.

 

[pedro01]

The best thing you can do is take all those indicators off the screen.

There is a whole industry telling you that mathematical derivatives of the same data, when used in the right combination, will tell you how to trade.

Sadly, it is not true. You can fiddle with the MACD all you like and add stochastics and 10 moving averages with all kinds of lookback periods & it won't make you any money.

Take it all off the screen. There's a lot to learn but it isn't all of these indicators IMO.

You will probably waste as much time as I did on them if you make them the focus of your education. Better to learn about the structure of the market, what different types of markets there are, what the market makers do in those markets and then try look at things that 'supposedly' give you an edge. If it doesn't fit in with what you know about the markets, it's probably crapola.

 

[BetTreader]

Hello.

Thanks for your advice, but as beginner I don't really understand your answer.
What would give me an edge over the market?
Can you be more specific and give me some real life example?
Let's say in your opinion what would give an edge in trading the EUR/USD pair?

If I shouldn't use any indicator to trade in which way shout i find out when to buy or sell a currency pair or to not enter a trade in particular moment?!

Thanks.
Ciao.

 

[pedro01]

Indicators will only tell you what happened.

You need an understanding of the markets to figure out what is likely to happen next.

 

[gedward3]

Hello.

Thanks for your advice, but as beginner I don't really understand your answer.
What would give me an edge over the market?
Can you be more specific and give me some real life example?
Let's say in your opinion what would give an edge in trading the EUR/USD pair?

If I shouldn't use any indicator to trade in which way shout i find out when to buy or sell a currency pair or to not enter a trade in particular moment?!

Thanks.
Ciao.

Heres a start:

http://www.trade2win.com/boards/forex-discussion/54114-trading-price-wasp-stylee.html

Very good advice from WASP

 

[JHayzament]

While indicators are important, a good understanding of the fundamentals is necessary as well to follow signals correctly

 

[DaveJB]

There are NO correct values to apply to your indicators, should you decide to find out more about trading using them - it's a misconception to imagine that there is a set of 'right' numbers to put in that will ensure the signals go off at the correct time to enter and exit a trade. Thinking that there IS a 'correct' setup is a very common mistake for newbies, I would think, however as every book, article or thread that describes trading using some indicator or other is illustrated with examples of the method working beautifully.

If you continue with indicators you MAY find you are able to pick trades with their help, you MAY find that at times a specific set of figures seems to work particularly well - if that does happen then at some later date it'll probably not work as well as it turns out that the 'best' period to set on your RSI or whatever has now changed. Indicators tend to be designed to work in either trending or non-trending markets, so for much of the time any chosen indicator will give you endless bad signals regardless of whatever numbers you've set it to use.

Indicators can be used to help you form a quick assessment of a chart, an assessment that you could also make - and many would argue that it would be with greater understanding at least - by simply looking at the price bars without any further clutter.

I wouldn't agree that you should definitely ignore indicators and just trade off price, chiefly because trading is a personal journey and I believe that some people actually find indicators help them form a more accurate view of their charts, but I would suggest that spending a good while reading threads and articles on the subject of 'price action' would not be wasted.

For indicators you could read Murphy's "Technical Analysis of the FInancial Markets" or, more cheaply, any number of websites that carry educational sections that describe the indicators and their useage...such as the Incredible Charts: Home Page site under the 'Education' tab. (Which will probably do every bit as well as the book, and be somewhat cheaper!)

You will find quite a lot of indicator based get rich quick schemes on the web, telling you that all you need do is set up these three MA's and a stochastics set to X,Y,Z... some of these ideas can be made to work, but usually they take a lot of effort and I'd be surprised if the majority of people using them were making money from the experience. IIgnore them, you simply have to put long hours in learning the ropes - there is no quick way in, and trading before you really know what you are doing is ALWAYS disastrous.

Good luck, study hard!
Dave