small time trading

[FormulaOneFan]

I was playing with a demo account last week. It was EUR/USD. I was opened/closed each transaction very quickly. i.e. I was selling EUR/USD and everytime I see profit over 5 or 10 pounds I closed it and opened another one again. The same goes when it was a loss. So in the end I did about 25 transactions and endedup with 110 pounds profit.

Do people do real deals like that?

 

[virtuos0]

I was playing with a demo account last week. It was EUR/USD. I was opened/closed each transaction very quickly. i.e. I was selling EUR/USD and everytime I see profit over 5 or 10 pounds I closed it and opened another one again. The same goes when it was a loss. So in the end I did about 25 transactions and endedup with 110 pounds profit.

Do people do real deals like that?

No, people don't trade like that because what you did was achieved by luck, and is called gambling. No different than walking into a casino and making 25 punts on the roulette table. Sometimes you will come out ahead of the casino, but in the long-run you will end up with a screaming wife asking why you can't afford to feed the kids.

 

[FormulaOneFan]

No, people don't trade like that because what you did was achieved by luck, and is called gambling. No different than walking into a casino and making 25 punts on the roulette table. Sometimes you will come out ahead of the casino, but in the long-run you will end up with a screaming wife asking why you can't afford to feed the kids.

To be honest I did not gamble. You misunderstood what I'm trying to get at. I did a level of research, chart analysis (3 ducks method), news and other information. I admit I'm new to this and still have a long way to go before I start to deal with real money but it wasn't a guess. If I would have put just one deal (Sell EUR against USD) and left it for couple of hours It would have shown big profit (i.e. 500+) but I was closing as soon as it showed profit of 10+ pounds. All the 25 punts were to sell EUR. The objective was to pocket small profit so I could accumulate a small total profit. Number of times when it was showing below 10-20 pounds loss It closed it because I kept my stop loss too tight which it kept hitting easily. It was good learning exercise to be honest. I will play more with my demo account before I actually deal with real accounts.

I suppose traders attitude is different and won't make this many transactions? That's what I'm getting at.

 

[virtuos0]

To be honest I did not gamble. You misunderstood what I'm trying to get at. I did a level of research, chart analysis (3 ducks method), news and other information. I admit I'm new to this and still have a long way to go before I start to deal with real money but it wasn't a guess. If I would have put just one deal (Sell EUR against USD) and left it for couple of hours It would have shown big profit (i.e. 500+) but I was closing as soon as it showed profit of 10+ pounds. All the 25 punts were to sell EUR. The objective was to pocket small profit so I could accumulate a small total profit. Number of times when it was showing below 10-20 pounds loss It closed it because I kept my stop loss too tight which it kept hitting easily. It was good learning exercise to be honest. I will play more with my demo account before I actually deal with real accounts.

I suppose traders attitude is different and won't make this many transactions? That's what I'm getting at.

Sounds like you were trading on a strongly trending day, and you were using a trend-following method (3 ducks). In which case don't assume you have trading cracked based on that days results. In a choppy/ranging/volatile market you would most likely give back most of your gains.

Unless you can either learn to use a different method when conditions are not trending, or just stay out of the markets altogether in that period.

 

[Splitlink]

I was playing with a demo account last week. It was EUR/USD. I was opened/closed each transaction very quickly. i.e. I was selling EUR/USD and everytime I see profit over 5 or 10 pounds I closed it and opened another one again. The same goes when it was a loss. So in the end I did about 25 transactions and endedup with 110 pounds profit.

Do people do real deals like that?

From what I have read lots of traders do hundreds of trades per day. I am not one of them but not because it is wrong, just because I like an easier life. If, as virtuos0 suggests, you were in a trending market, you should have known it and, therefore, IMO, you were trading badly by giving the broker too much commission, plus losing on the spread. Automatic re-entry after profit taking is a senseless way to trade. There has to be a reason for closing. If it was a good one,what could be the reason for entering so soon? One of the reasons was wrong, but you did it 25 times!

Remember, with a demo account, that you could be learning bad habits, even though you are making money on paper, and there is no one to correct you. The broker, certainly. won't.

 

[FormulaOneFan]

From what I have read lots of traders do hundreds of trades per day. I am not one of them but not because it is wrong, just because I like an easier life. If, as virtuos0 suggests, you were in a trending market, you should have known it and, therefore, IMO, you were trading badly by giving the broker too much commission, plus losing on the spread. Automatic re-entry after profit taking is a senseless way to trade. There has to be a reason for closing. If it was a good one,what could be the reason for entering so soon? One of the reasons was wrong, but you did it 25 times!

Remember, with a demo account, that you could be learning bad habits, even though you are making money on paper, and there is no one to correct you. The broker, certainly. won't.

That is an interesting comment. I'm looking for information like your response. Thanks for the info. Like you say I lost 2 spreads plus commission every time I opened and closed. 25 x 2 that's 50 pips. As a beginner my thinking behind it was: OK. After the graphs and other info I know it is going down but if I leave it all in one transaction and 'what if' it spikes the other way? I will lose what I have gained. That's why whenever I was able to see double figure profits I closed and opened another one again because I know it is going down.

Is it typical beginner's thinking or is it just playing it safe or is it paranoid trading? I know it was demo account but I was thinking it as real account and I just want to grab those double figure profits and rushing to click close.

 

[Jason Rogers]

I was playing with a demo account last week. It was EUR/USD. I was opened/closed each transaction very quickly. i.e. I was selling EUR/USD and everytime I see profit over 5 or 10 pounds I closed it and opened another one again. The same goes when it was a loss. So in the end I did about 25 transactions and endedup with 110 pounds profit.

Do people do real deals like that?

People do trade like that, but keep in mind that in a demo, it doesn't simulate slippage or potentially requotes if you are trading through a dealing desk broker. I would say to have a surer understanding of your strategy and why it made money. If this type of trading works for you, then great.

 

[Splitlink]

I'd say that it was anything but typical thinking by a beginner. Most beginners lose their money by watching their trade reverse into loss. You have a system based on paper profits. However, would you stick to that system with real money? If you have the ability to identify direction of a price and the abilty to fix a stop loss that is not so close as to get triggered by "noise", then you have the basics for successful trading.

I suggest that you have read that forex traders do dozens, even hundreds, of trades a day. These are scalpers but trading does not have to be like that, I don't think. Try the longer plays.

Just read Jason Rogers. If the demo does not include slippage, etc., then a large part of your training is being missed

And the broker is teaching you to trade as he wants.

 

[jason1818]

i used to trade a lot using indicators that generate many trading opporutnities. but at the end of the day, i'm not actually accumluating any profit, at times, incur losses... so i revised my trading stretagy to only a few trades week, and the result is significantly better than over-trading.

catch the big fish, let the small ones pool together, and scoop them all.

 

[a_gnome]

That is an interesting comment. I'm looking for information like your response. Thanks for the info. Like you say I lost 2 spreads plus commission every time I opened and closed. 25 x 2 that's 50 pips. As a beginner my thinking behind it was: OK. After the graphs and other info I know it is going down but if I leave it all in one transaction and 'what if' it spikes the other way? I will lose what I have gained. That's why whenever I was able to see double figure profits I closed and opened another one again because I know it is going down.

Is it typical beginner's thinking or is it just playing it safe or is it paranoid trading? I know it was demo account but I was thinking it as real account and I just want to grab those double figure profits and rushing to click close.

If I understand correctly what you are saying then you are closing out a position with a small profit and then immediately opening a new one with a new stop loss which is small relative to the new opening trade price and the reason that you are doing this is to avoid giving back all your profits. Might I suggest that it would be simpler and more profitable to simply move the stop loss of the original position as your trade moves in profit until eventually you are stopped out for a much larger gain. That way you don't pay the spread each time and the net effect should be the same. If I've misunderstood what you are doing then perhaps you can explain in more detail.

 

[willfx]

Some sound advice has been offered and I can only echo this sentiment - move your stop to break even and avoid paying the additional spread. I know people who do trade as you do but not only off a moving average three ducks system. In the long run most scalping systems fail when the adverse moves destroy any gains made that day.
Personally I hate seeing price move against me and i trade purely off price action. I enter off 1-5 minute charts and keep positions open for potentially days. I manage my position by moving my stop loss. Ultimately your biggest enemy is your own psychology, learn to let your profits run. A three duck system ultimately means that both the long and short term trends are in your direction, the trend is your friend and you have to lose the attitude that it may suddenly end. The fact is trends go on far further than most people imagine, of course they eventually come to an end but it's best to maximise your profits in this trending time and then cut your losses when the time comes. Drawdowns are managed by a strict learning of price action and the use of the basics like trendlines/SR and fibs to an extent.

Do real people trade as you do? Sure they do, I occasionally trade the 10s charts and here I trade for even smaller profit targets than you do. It can work but mentally it's more challenging than a buy and hold strategy with adequate in trade management. Obviously if you're serious about scalping you also need to consider spread, and as others have mentioned- slippage, re-quotes, fixed or variable srpeads etc.

 

[Claudia123]

Good luck, but do what split says earlier - look at trading less. Presumably you use a spreadbet firm for the demo? Trade 25 times a day in real life and your account will be gone in days (if not day!). You will end up chasing losers all over the place. As these guys say you hit a trending day by the sound of it.

Will made some good points. One adverse move against you (maybe just a news release) can be the end. Sideways markets (like today) will eat you alive and the frustration lol. Believe me very few retail traders make money trading your style. Slippage, requotes etc will kill you.

I know from experience and cost. Now trade for a living - trade maximum once a day in forex and is much more relaxed and more important - profitable.

Sorry to be negative but scalping is for the very experienced with big accounts to start with. If you are spreadbetting you not only playing against the underlying market but against the firm you trade with - odds are heavily against you.

Suggest look at longer trades - certainly to start with.

 

[Jason Rogers]

Good luck, but do what split says earlier - look at trading less. Presumably you use a spreadbet firm for the demo? Trade 25 times a day in real life and your account will be gone in days (if not day!). You will end up chasing losers all over the place. As these guys say you hit a trending day by the sound of it.

Will made some good points. One adverse move against you (maybe just a news release) can be the end. Sideways markets (like today) will eat you alive and the frustration lol. Believe me very few retail traders make money trading your style. Slippage, requotes etc will kill you.

I know from experience and cost. Now trade for a living - trade maximum once a day in forex and is much more relaxed and more important - profitable.

Sorry to be negative but scalping is for the very experienced with big accounts to start with. If you are spreadbetting you not only playing against the underlying market but against the firm you trade with - odds are heavily against you.

Suggest look at longer trades - certainly to start with.

I would agree with Claudia. I mentioned that people do trade with scalping strategies or short term, but I wouldn't necessarily recommend it. The strategy reminds me of the phrase "no one ever went broke taking profits", but often times traders take it to the extreme taking a lot of small profits and going broke taking large losses. What you will need is the discipline to let your profits grow instead of cutting yourself short.

 

[Pippy5000]

Yes, people do that... it's called scalping, but what the first guy said is true.. it was luck and you are gambling.. If you are interested in trading Forex you should only trade the daily charts.. win big or lose big, but you have no hope on the smaller time frames.. If new traders would only trade the dailies there would not be a 95% failure ratio.. Las vegas games have a 7 to 1 ratio.. Forex a 20 to 1..

 

[fxmonk]

The more trades you make, the more of a cost the spread becomes for two reasons:
1. You are likely trading with higher leverage to make it worthwhile to capture smaller and more frequent moves
2. You are paying the spread several times.

There is a tendency to believe that you have to make short, frequent trades to compound your money faster and make bigger gains. Nothing could be further from the truth. Less frequent trades will help clear your mind, and by taking bigger profits, you make the same or better gains as for high frequency trading- all with less stress.

 

[neil]

I want it NOW !

Yes, people do that... it's called scalping, but what the first guy said is true.. it was luck and you are gambling.. If you are interested in trading Forex you should only trade the daily charts.. win big or lose big, but you have no hope on the smaller time frames.. If new traders would only trade the dailies there would not be a 95% failure ratio.. Las vegas games have a 7 to 1 ratio.. Forex a 20 to 1..

As this trader and Claudia state...longer time frames are better for many people but many find they must trade every few minutes and lack the discipline to sit on their bum, to watch and wait .

 

[montmorencyt2w]

The more trades you make, the more of a cost the spread becomes for two reasons:
1. You are likely trading with higher leverage to make it worthwhile to capture smaller and more frequent moves
2. You are paying the spread several times.

There is a tendency to believe that you have to make short, frequent trades to compound your money faster and make bigger gains. Nothing could be further from the truth. Less frequent trades will help clear your mind, and by taking bigger profits, you make the same or better gains as for high frequency trading- all with less stress.

Kris - nothing to do with this particular post (although I agree with it), but I just happened to look at your website. Some pretty interesting videos. I'm not a "fundamentalist", but it's good to take a broader view from time to time.