Novice Trading Forex

[bertie123]

Hi People,

Is there anyone who has recently started trading the forex who can give any general advice? I am demo trading it at the moment and would appreciate comments from other newbies\experience traders.

 

[JillyB]

Hi Bertie,

Are you new trading as well - or have traded before, but just not on forex?

I traded shares and indices and found the forex market very different.

 

[jacinto]

sent you a PM with a link. have a look.

 

[Trdr]

http://www.forex-tsd.com/

 

[lurkerlurker]

Hi People,

Is there anyone who has recently started trading the forex who can give any general advice? I am demo trading it at the moment and would appreciate comments from other newbies\experience traders.

I have considered the forex, but I've had losses on indices so far (spreadbetting) and consider the forex a more advanced market which I am not ready for. This may not apply to you.

However, before trading the forex, I would pick just one currency pair to trade. Then try and learn as much as you can about the economic fundamentals which move the market. Look at historical charts, find out how the market responds to particular news announcements etc.

How is your technical analysis? Currencies can trend quite well, so TA is important here, even just to catch good entries in a trend.

Finally, even before demo trading, consider your money management. What is the most you can risk per trade? Consider how much you will fund your initial account with (be prepared to lose it all), and then consider what amount you would risk on each trade. Use the same levels on the demo account.

For example, if you intend to start with £1,000 on the forex, with 2% risk per trade, that means you cannot have a stop larger than 20 pips. Stick to this when paper trading. Backtest a system, learn the ideal parameters for entering and exiting a trade. Make your system as mechanical as possible. Before entering each trade, when you are not committed, write down the plan for the trade. Under what conditions will you exit? Where will you take a profit? Stick to your stop loss. Plan the trade, trade the plan.

Try and treat each demo trade as if it were real money. Set yourself a daily loss limit. Stick to it. Start a journal here, and post your observations. The comments I have received from other traders have helped me more than I can explain to you.

Make sure you do all this for a considerable period of time before risking capital. When you have a solid system with positive expectation, you should then commit only the capital you can afford to lose. You may make 200+ pips a day on paper. When you involve real money, be prepared to have problems. Be prepared for them, but try and keep emotional involvement in each trade to a minimum.

Before you trade, use some of your trading pot to buy "Trading in the Zone" by Mark Douglas. That is my only recommendation regarding literature. Read as much as you can get your hands on. Make sure you understand it. Read as much as you can (yes, I did mean to repeat that). Read these threads, find common trading mistakes, try not to repeat them.

When you go live, even if you break your rules (which we all do), never break your money management. Never move a stop away from the market. And never, ever, average down (add to a losing position).

Be careful with leverage also - make sure you use stops. Forex is highly leveraged and major news can move the market. You can lose more than your initial deposit.

Finally, I feel I need to say this. No disrespect is intended, but I do not know how much research you have done. I am speaking from personal experience. If you are serious about this, it may well be the most difficult job you ever do. Be prepared for emotional pain and financial loss. Be prepared to lose money consistently for months. I have been day trading indices since last November and have lost around £1,500. I've been to hell and back in my own mind - failure, despair, fear, greed, etc. It is a long road, but the rewards at the end make it worthwhile for some. Be prepared for 50 losing trades in a row. Be prepared to doubt yourself. Read Mark Douglas before risking real money. Choose your broker carefully - there are recommendations on this site. Above all, do not let your sense of self worth be tied up in your trading results. You are not your trades. Finally, if you intend risking money on this, tell as few people as possible - in fact, keep it on a need to know basis. If you are successful, people will be jealous. If you lose money initially, people may well berate you for "gambling".

You have a long road ahead before you go live, but I wish you all the best. It will be hard, but challenging, and eventually if you progress, worthwhile. Welcome to T2W, and good trading!

 

[bertie123]

Lurker,

Many thanks for your response - much appreciated. I will not be risking real money until I am confident about what I am doing. One more point: how and where do you backtest a system?

 

[fxwinner22]

question:

why do people who openly admit that they lose - give advice?

bertie, my advice to you is to learn patience - something which is clearly lacking at the moment judging by the abundance of posts from you asking for help

Patience is prob the foremost skill a trader can aquire.

 

[bertie123]

winner,

point taken - suppose I am at that 'it's all new and exciting' phase - will try and develop patience and make constructive points. Thanks for your input.