What is the most important thing a beginer should learn ??

attila low

Active member
152 4
HI , i started trading in feb , and went through technical analysis quite a lot , i have a decent understanding about macro economics , i trade small cap stocks (learning fx)
i am doing a lot of paper trading and trying to code for back testing , im currently lost trying to figure out what should be given prominence i don think that one should learn how every indicator works and im not interested in esoteric indicators and chart patters , and for my swing trading i don't use much fundamentals (should i ?) , any way i fell like the rapid learning phase i had in the beginning is gone and im wondering what aspect should i focus on the most .
thanks .
 

1nvest

Active member
128 42
trying to code for back testing , im currently lost trying to figure out what should be given prominence
your starting point is made up of a few things to consider, if you haven't already worked these out..
1) how much time will you realistically devote to trading..is this part time for you or full time. this will likely dictate your timeframe. Choose a sensible timeframe. Intraday, daily charts, weekly or monthly.
2) which asset class(es) are you going to focus on, and which instruments within that asset class
3) once you've worked out your preferred timeframe and what you are going to trade you need to think about your entry and exit criteria. this too needs to be realistic. its one thing saying you will go by a moving average crossover, but you could be 35% down by the time the MAs cross. so you need an entry as well as exit as well crash type hard stop.
4) with your timeframe, and entry and stop you can work out how much you should be risking on each trade
5) now you're backtesting is going to be realistic..so backtest your entry and exit and position size along with number of positions. backtesting gives you a view of what likely to expect. in any market state. can you live with 10 losing trades on the trot, can you cope with a drawdown of 5% or even 20%. can you cope with a win rate of less than 50%. how does it perform in bull markets, bear markets
then you can begin to improve on your strategy. just be mindful of what is called curve fitting
6) now i'd be forward testing, using ideally a real but small account, with real life scenarios and fills. your backtest will give perfect entries and exits as though liquidity wasn't an issue, whereas in reality it is and slippage can be factored in
7) now your forward testing is matching (within a degree of comfort) your backtesting you begin scaling in to your account. if your forward testing isn't matching your backtesting you may need to think again whether your entry or exit was suitable in the first place.

you may find a prebacktested startegy, good, still follow the forward testing. if you didnt backtest it, you shouldnt be blindly trusting it. i dont trust anyone unless i've been through it, whether i backtested with a program, or i simply did it by hand
you should equally not trust anyone...ideas are great, backtest those ideas, can you improve on them.
some people aren't keen on backtesting, thats just a matter of opinion. I come from wanting to know everything about my strategy.

now finally
8) stick at your strategy. one of the biggest mistakes any new person makes is thinking that a losing trade means their strategy isn't working. everything needs time.

now that you have everything above, repeat it all over again with your second strategy, a 3rd strategy
I'd advise a portfolio of uncorrelated strategies and uncorrelated asset classes. when one isn't working, likely another is. just look at Modern Portfolio Theory and the relationship with say between bonds and equities. when goes up, the other goes down

good luck with the above and if you need help, after you've googled these yourself let me know
 

absence

Junior member
39 7
^ These all are very good points.
I think the beginner should set in their minds that they will not make a profit fortnight. It is not going to magically bring in all the money so it is important to make sure you can keep building your skill and correct your mindset before trading.
 

attila low

Active member
152 4
your starting point is made up of a few things to consider, if you haven't already worked these out..
1) how much time will you realistically devote to trading..is this part time for you or full time. this will likely dictate your timeframe. Choose a sensible timeframe. Intraday, daily charts, weekly or monthly.
2) which asset class(es) are you going to focus on, and which instruments within that asset class
3) once you've worked out your preferred timeframe and what you are going to trade you need to think about your entry and exit criteria. this too needs to be realistic. its one thing saying you will go by a moving average crossover, but you could be 35% down by the time the MAs cross. so you need an entry as well as exit as well crash type hard stop.
4) with your timeframe, and entry and stop you can work out how much you should be risking on each trade
5) now you're backtesting is going to be realistic..so backtest your entry and exit and position size along with number of positions. backtesting gives you a view of what likely to expect. in any market state. can you live with 10 losing trades on the trot, can you cope with a drawdown of 5% or even 20%. can you cope with a win rate of less than 50%. how does it perform in bull markets, bear markets
then you can begin to improve on your strategy. just be mindful of what is called curve fitting
6) now i'd be forward testing, using ideally a real but small account, with real life scenarios and fills. your backtest will give perfect entries and exits as though liquidity wasn't an issue, whereas in reality it is and slippage can be factored in
7) now your forward testing is matching (within a degree of comfort) your backtesting you begin scaling in to your account. if your forward testing isn't matching your backtesting you may need to think again whether your entry or exit was suitable in the first place.

you may find a prebacktested startegy, good, still follow the forward testing. if you didnt backtest it, you shouldnt be blindly trusting it. i dont trust anyone unless i've been through it, whether i backtested with a program, or i simply did it by hand
you should equally not trust anyone...ideas are great, backtest those ideas, can you improve on them.
some people aren't keen on backtesting, thats just a matter of opinion. I come from wanting to know everything about my strategy.

now finally
8) stick at your strategy. one of the biggest mistakes any new person makes is thinking that a losing trade means their strategy isn't working. everything needs time.

now that you have everything above, repeat it all over again with your second strategy, a 3rd strategy
I'd advise a portfolio of uncorrelated strategies and uncorrelated asset classes. when one isn't working, likely another is. just look at Modern Portfolio Theory and the relationship with say between bonds and equities. when goes up, the other goes down

good luck with the above and if you need help, after you've googled these yourself let me know
thanks can you recommend some trusted strategies for swing trading mid /small cap stocks ??
 

1nvest

Active member
128 42
thanks can you recommend some trusted strategies for swing trading mid /small cap stocks ??
"Trusted"...trust noone
the concept of swing trading requires you to have defined three things
what is the current underlying trend in your timeframe, and then what constitutes a swing, and then thirdly your entry point

what ways do you know of defining the trend, and what constitutes a swing for you? remember this is yours not mine

a trend is by definition, higher highs and higher lows.. can you spot them on a chart?
indicators that help to plot a trend, macd, moving averages, ADX, momentum, ichimoku clouds there are loads loads more
start with one. YOU, start with one. plot them on your chart, look good? no, choose another, do you need more than one
but indicators will often tell you something that isnt there. its a starting point..you are the special ingredient
my favourite are averages and momentum..thats your trend

what constitutes a swing..look at a chart, plot it YOU tell me the characteristics of a good swing, then replicate it

great indicators telling me that a swing is in place..stochastics. love them for short term pullbacks
just a couple of ideas, start with those..and backtest it
 

J Livermore

Active member
122 34
HI , i started trading in feb , and went through technical analysis quite a lot , i have a decent understanding about macro economics , i trade small cap stocks (learning fx)
i am doing a lot of paper trading and trying to code for back testing , im currently lost trying to figure out what should be given prominence i don think that one should learn how every indicator works and im not interested in esoteric indicators and chart patters , and for my swing trading i don't use much fundamentals (should i ?) , any way i fell like the rapid learning phase i had in the beginning is gone and im wondering what aspect should i focus on the most .
thanks .
I believe that the most important thing for new traders to start with is a good risk management plan. Experienced traders too.

Back in the 1990’s I knew of a medical doctor who would trade the futures markets and he not only had stop losses on his positions but he would have (mental) stop losses on his trading account. He would only allow his account to lose a certain amount of money per month. In the event his stop was hit, he would stop trading for a month and go back and study not only his past trades but the markets and his strategies too.

He also had a stop loss for the year too. In the event he lost X amount of money within a year he would stop trading for a whole year while he took time to do yet more studying. He had the time to do all this too. Being a doctor he probably didn’t need the money from trading but treated it as a 2nd source of income.
 

allstock

Newbie
8 0
I don't mean to denigrate any of these ideas or the people suggesting them. All of it is usually good , but you'll find the same info on each of these forums.

This is for all of you that are really thinking about taking on trading.

The first and foremost you should be at researching at the very least concurrently with all else that is ancillary in trading is the and YOUR psychological aspect of trading.

You really won't know the extent and direction exactly in terms of your individual psych portion of things until you start getting your feet wet. Even still, this is and always should be the pinnacle of your learning.

There is a profound difference in doing this as a hobby vs as your living. Almost all of you will never experience trading for a living if you aren't that type of person. Personally I believe you really can't claim to be one if it's a "side gig" and not your only source of income if you are even profitable. The psychological aspects are even greater if it is.

Good luck
 

1nvest

Active member
128 42
I don't mean to denigrate any of these ideas or the people suggesting them. All of it is usually good , but you'll find the same info on each of these forums.

This is for all of you that are really thinking about taking on trading.

The first and foremost you should be at researching at the very least concurrently with all else that is ancillary in trading is the and YOUR psychological aspect of trading.

You really won't know the extent and direction exactly in terms of your individual psych portion of things until you start getting your feet wet. Even still, this is and always should be the pinnacle of your learning.

There is a profound difference in doing this as a hobby vs as your living. Almost all of you will never experience trading for a living if you aren't that type of person. Personally I believe you really can't claim to be one if it's a "side gig" and not your only source of income if you are even profitable. The psychological aspects are even greater if it is.

Good luck
The first and foremost you should be at researching at the very least concurrently with all else that is ancillary in trading is the and YOUR psychological aspect of trading.
you could have the strongest mindset in the world, you could have the most positive self affirmations being regaled to you 24/7. none of this is going to change your moving average crossover strategy from a negative one, to a positive one
the only time my mindset changed was when i was comfortable with strategy i was using. this of course is just my experience. a losing strategy doesnt become positive with positive affirmations
so first and foremost for me is always the strategy, and there are steps within the strategy that help take the subjectivity away, which is one of the other primary causes where the psyche gets unnecessarily involved
we all have different experiences in life which is what makes us human i guess
 

allstock

Newbie
8 0
you could have the strongest mindset in the world, you could have the most positive self affirmations being regaled to you 24/7. none of this is going to change your moving average crossover strategy from a negative one, to a positive one
the only time my mindset changed was when i was comfortable with strategy i was using. this of course is just my experience. a ....
So by your explanation your psychology was affected once you got your head wrapped around it...

The psychological fortitude required goes beyond positive affirmations and mindset. That's doing a disservice to anyone that thinks this way and believes they can become the best trader they can be or person for that matter that superficially. It definitely goes beyond any technical signals given by indicators. That may get you through a few profitable trades, but alone will definitely not get you through the year or a trading career. The mental aspects go beyond the realm of trading and deep into the individual psyche.

It's easy to distinguish people that aren't professional independent traders on all these forums. Even a full-time trader that isn't profitable will learn to see this.

Trading on the side or buying and selling fractional lots with your retirement isn't trading. It's a tale of two cities when you put full time trading side by side. There's a big curve to get over for anyone that attempts this. Till then that person can't call themselves a trader. That has to be earned.
 

1nvest

Active member
128 42
So by your explanation your psychology was affected once you got your head wrapped around it...

The psychological fortitude required goes beyond positive affirmations and mindset. That's doing a disservice to anyone that thinks this way and believes they can become the best trader they can be or person for that matter that superficially. It definitely goes beyond any technical signals given by indicators. That may get you through a few profitable trades, but alone will definitely not get you through the year or a trading career. The mental aspects go beyond the realm of trading and deep into the individual psyche.

It's easy to distinguish people that aren't professional independent traders on all these forums. Even a full-time trader that isn't profitable will learn to see this.

Trading on the side or buying and selling fractional lots with your retirement isn't trading. It's a tale of two cities when you put full time trading side by side. There's a big curve to get over for anyone that attempts this. Till then that person can't call themselves a trader. That has to be earned.

no, my psychology became easier once i was comfortable with what i was doing
and no, im not a professional trader, I doubt anybody here is but im certainly independent. and yes ive had to earn it
however, the argument is not whether the mind is important, im not (necessarily) disputing that but ive never felt the need for help in that matter. what im disputing is the order of one's priority
you think and stated, "the first and foremost" is the mindset
however, and i'll state again, your losing moving average crossover strategy is not going to improve with your mindset
your mindset is also not going to get you through the year or trading career.
so first and foremost..ditch the moving average crossover strategy
 

NVP

Legendary member
37,535 1,988
the most important thing any trader can learn is this .....

you are going to lose a sh*tload of money and expend huge amounts of time and resources on the journey before you get anywhere.....fact

forget all the BS youtube videos, academies and gurus holding your hand and offering you guaranteed shortcuts ..they are lying through their teeth ...and taking your money for free stuff all available online if you look hard enough

the secret is in that head of yours ....feed it loads of information 24/7 , Trade a lot , research , experiment , lose money and learn learn learn

a few years time you may start to see some decent results if you have worked hard and followed the generic rules to being a good trader

N
 
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Beast45

Junior member
33 4
Beginners should always be careful about knowing all the basics first and then giving it a try here. Many of them directly start trading without the much needed research and learning, which is wrong.
If the basic know-how is what a beginner lacks in, forex would become too difficult for him/her.
 

No Quarter

Member
55 6
1. Never invest more than you can afford to lose
2. Learn money management, e.g. always have Stop Loss and never move it. Thereby avoid the very bad days (I never lose more in a day than I know in the morning that I'll risk)
3. Close your losers, let your winners run...
 
 
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