Newbie wanting to trade forex

[cashley]

Hello everybody my name is Cashley,

I have recently came across this website and it seems pretty helpful.

I have around 3000 to play around with and i am looking to learn how to start trading on the foreign exchange (Forex) due to it being open 24 hours. I know nothing regarding how to trade et cetera so i am completely fresh, does anybosy have any tips on where to start and any other helpful websites?

Thanks in advance

Cashley

 

[advfntrader]

never risk more than 2% of your total account on 1 trade. work out where you need to place your stop and then your required amount per point to mean 2% risk max. this is VITAL to stay in the game long term as you will suffer losses.

open a demo account and demo trade for upto 1 year until you are consistently profitable, not worth riskijng and losing money unless you have proven you can do it....

 

[Masquerade]

No dis-respect ADVFN, but with your track record and history are you really qualified to be giving tips on how best to trade?

I think demo accounts have very little value in them. Especially to do it for a whole year. Trading is largely about psychology and when you trade with stops it's whether you can take several stops and still find the courage to pull the trigger. As he's completely new to trading then maybe demo may be good for short term - but only to get a hang of the platform and figure out something that works and try to get a hang of looking at the charts.

As soon as you have done this, go live with a small account because chances are you will lose. Don't risk your 3k at once. As for any other tips: dis-regard conventional wisdom.

 

[GFSignals]

open a demo account and demo trade for upto 1 year until you are consistently profitable, not worth riskijng and losing money unless you have proven you can do it....

I completely agree. First you are to trade on demo and understand all the special points of the market. Reading books on the topic of trading is also quite a useful thing.

 

[Tenapenny]

Hello everybody my name is Cashley,

I have recently came across this website and it seems pretty helpful.

I have around 3000 to play around with and i am looking to learn how to start trading on the foreign exchange (Forex) due to it being open 24 hours. I know nothing regarding how to trade et cetera so i am completely fresh, does anybosy have any tips on where to start and any other helpful websites?

Thanks in advance

Cashley

Here's a good place to start Forex Training Online: Learn Foreign Exchange (FX) Currency Trading

Demo to learn the basics then start small.

Ken

 

[advfntrader]

I'm just advising him so he doesn't make the same mistake I made....losing the 3k plus margin calls for money he doesn't have !!

No dis-respect ADVFN, but with your track record and history are you really qualified to be giving tips on how best to trade?

I think demo accounts have very little value in them. Especially to do it for a whole year. Trading is largely about psychology and when you trade with stops it's whether you can take several stops and still find the courage to pull the trigger. As he's completely new to trading then maybe demo may be good for short term - but only to get a hang of the platform and figure out something that works and try to get a hang of looking at the charts.

As soon as you have done this, go live with a small account because chances are you will lose. Don't risk your 3k at once. As for any other tips: dis-regard conventional wisdom.

 

[Vaco]

by all means deo trade, when the urge to go live overwhelms you open an account with the min allowed. £200 with alpari, then trade the smallest size allowed. 0.001 lots. if you lose half of it go back on demo. after 3 months you are in profit top up the account with the same amount as you have made in profits.

This way you are rewaring yourself when you do well and giving yourself the opportunity to do larger size faster but you are punishing yourself when you do poorly by going back on demo.

 

[Masquerade]

I'm just advising him so he doesn't make the same mistake I made....losing the 3k plus margin calls for money he doesn't have !!

Do you think you lost because you risked more than 2%? Why 2%? Why not 2.46%, why not 3%, why not 10% and low leverage. Is there something magical about 2%?

 

[TAjammy]

Do you think you lost because you risked more than 2%? Why 2%? Why not 2.46%, why not 3%, why not 10% and low leverage. Is there something magical about 2%?

a lot of people see anything above 2% as a gamble, personally i think 10% with tight stops, 2% of 3000 is £60, how can one expect to live of a fraction of £60 every day? 10% (600) with tight stops is my advice. of course this is after you learn about trading ,TA, charts charts charts,look around for a system that suits you, backtest it, then demo trade with it. If that works, take the plunge into the markets

 

[advfntrader]

2% is widely talked about to remain conservative. I know why I lost....I didn't have a clue about TA, risk/reward, anything in fact. I was running an account on margin and I kept moving stops and averaging down a losing position......

Do you think you lost because you risked more than 2%? Why 2%? Why not 2.46%, why not 3%, why not 10% and low leverage. Is there something magical about 2%?

 

[Vaco]

a lot of people see anything above 2% as a gamble, personally i think 10% with tight stops, 2% of 3000 is £60, how can one expect to live of a fraction of £60 every day? 10% (600) with tight stops is my advice. of course this is after you learn about trading ,TA, charts charts charts,look around for a system that suits you, backtest it, then demo trade with it. If that works, take the plunge into the markets

I think you are misunderstanding the 1-2% rule on 3k at 2% risk your position size and stop loss should result in no more then a £60 loss.

think of it this way

1% risk = 100 losers in a row for wipe out (less in practice when you take margin in to account.

2% 50 trades

5% 20 trades

10% 10 trades.

Now once you have been trading consistantly for a at least a year you can look at your ave no of losers in a row and your maximum no of losers in a row to see how much risk you can lay on each trade to maximise the profit from your account.

most will average 2-3 losers in a row but its not unheard of to have a bad run of 7 or 8 and even then the next 8 may not all be winners.

At 5% risk your gonna be nearly 50% down on your account and thats if you have been scalling down your size after each loss!! Stress levels would go through the roof and your trading would be effected.

I would say to start at 1% or less when you first start, the objective is to learn to be consistant through changing market conditions without having to add more funds to your account due to a bad run.

You need to learn to control your risk when your account is small in order to lay the mental ground work for when your account grows otherwise you will not be in the right frame of mind to deal with the losing streaks when the money has value to you.

 

[Masquerade]

2% is widely talked about to remain conservative. I know why I lost....I didn't have a clue about TA, risk/reward, anything in fact. I was running an account on margin and I kept moving stops and averaging down a losing position......

2% may be considered conservative by those who write books and so on. But it doesn't tell the whole story. Tell me, which is more conservative. 2% risk of account and a 20 pip stop. Or 10% risk of account and a 300 pip stop? Looking at it in % terms like that is very narrow-minded and is something that will damage an account very quickly if leverage is used incorrectly.

As for 10% with tight stops you have to be kidding. Send in the applications to Mcdonalds now if you're doing that because you'll be due to start in no time adopting that strategy.

I don't think you lost for some of those reasons ADVFN and averaging down can have it's time and place and be used as a successful strategy. Only reason people think it's bad is because the books say it's bad. Of course, leverage is a factor and when you have a £600 account and you're £1/pip long and £100 offside and then go average again at £1/pip you've now significantly reduced your chances of coming out on the other side as you've taken half your breathing space away and eventually it will move a large amount against you decimating your account. The problem is using too high leverage which I know you were doing.

 

[Masquerade]

I think you are misunderstanding the 1-2% rule on 3k at 2% risk your position size and stop loss should result in no more then a £60 loss.

think of it this way

1% risk = 100 losers in a row for wipe out (less in practice when you take margin in to account.

2% 50 trades

5% 20 trades

10% 10 trades.

I hate to be a pedant but i've got to.

If you risk 1% of your account per trade. 100 losers in a row does not wipe out your account. Your account will tend towards 0 but never actually hit 0. At least not in 100 losers.

Example: Start with £1000 and risk 10%/trade and you won't get to £0 in 10 trades.

Trade 1: Start with £1000 - 10% = £100
Trade 2: Start with £900 - 10% = £90
Trade 3: Start with £810 - 10% = £81
Trade 4: Start with £729 - 10% = £72.90
Trade 5: start with £656.10 - 10% = £65.61
Trade 6: Start with £590.49 - 10% = £59.04
Trade 7: Start with £531.45 - 10% = £53.14
Trade 8: Start with £478.31 - 10% = £47.83
Trade 9: Start with £430.48 - 10% = £43.05
Trade 10: Start with £387.43 - 10% = £38.74

After 10 losers in a row at 10% risk per trade we still have £348.68 of our initial capital remaining. Or ~35% left and 10 losers in a row is going to be highly unlikely. UNLESS we use tight stops.

 

[Vaco]

Thanks for that Masq,

I never had done the maths myself

tempting me to leverage more aggresively now

Most of the noobs would prob be starting with small accounts on min bets anyway so scaling down would not be an option for them meaning my example would still fit.

 

[cashley]

Thank you for your help do you know anywhere i can open up a practice account of somesort?

Also can anybody recommend any seminars or are they a waste of money?

And any Forex books would be helpful also.

Thanks in advance

 

[Masquerade]

Thanks for that Masq,

I never had done the maths myself

tempting me to leverage more aggresively now

Most of the noobs would prob be starting with small accounts on min bets anyway so scaling down would not be an option for them meaning my example would still fit.

Well the trick is to not over-leverage yourself. ie. Opening a trade with a stop of 10 pips and risking 1%. Your chances of making it become very tough. If you put a stop of 400 pips and use 10% - even 20% of your account you have a much greater chance of making it assuming you're not an idiot and go for some 2:1 r:r and take a more modest r:r which conventional advice will disagree with.

You can trade a £100 account and scale down your trades anyway. You don't have to go to IG and bet £1/pip or 50p minimum. You can go to Oanda and it will scale for you. There are always other options available.

Cashley: You can open a demo fx account at Alpari. I believe Oanda also offer a demo account. I think you'll benefit more if you invested your money in yourself than in seminars. Keep your money in your pocket.

 

[No one Knows]

Thank you for your help do you know anywhere i can open up a practice account of somesort?

Also can anybody recommend any seminars or are they a waste of money?

And any Forex books would be helpful also.

Thanks in advance

Im currently trying out the fxcm spreadbetting platform which is essentially the same as the forex platform, 30 day free trial. might be worth a try.

I myself have been trying to focus on forex but there are not many books on the subject, and the one book I did buy that cost £40 was rubbish. So now i avoid them like the plague. Plenty of older tried and tested books that are relvent for all markets.
Was recently rereading "Trade your way to financial freedom" by tharp, definately worth a read i would suggest.

regards

Mark

 

[Vaco]

Well the trick is to not over-leverage yourself. ie. Opening a trade with a stop of 10 pips and risking 1%. Your chances of making it become very tough. If you put a stop of 400 pips and use 10% - even 20% of your account you have a much greater chance of making it assuming you're not an idiot and go for some 2:1 r:r and take a more modest r:r which conventional advice will disagree with.

Wow Masq I never realised you had enrolled in to the spanish/dark side

The only trouble with that way of trading is if it goes against you from the off you could spend a long time off side before it comes back in and you have to be confident of getting it right 80%+

I'm not attacking the large stop, c_c405 uses 200 pip stop losses and does very well and it does mean you dont have to screen watch for the perfect entry, just place a n order at support/resistance and walk away