“Every march begins with the first step”: so said a well known leader.
And my first steps in fx trading are starting here, having read a fair amount on this forum and in particular some of Jacko’s ideas on trading.
Being new to fx I am probably the most inexperienced on the forum as I write this. My intention, at present, is to write a journal about my practice trading. Why so? Well, a few comments on what I am doing might be of interest but it may attract some advice as to what I am doing wrong and what I should be doing to make profits. It may illustrate the problems that new traders have – and remind those more expert of where they started months or years ago! There are always newbies to the game!
Initially, then, some thoughts on the first problems leading to a trade. This is all on “paper” at this stage. I don’t even have a broker nor am I connected to one, but I can receive live up to date fx data. A broker and demo a/c come later.
Advice given in this forum (Jamie16) is to practice demo trading for 3 months and make a profit each month before going live, then use only half my ultimate investment for 3 more profitable months in a row. No doubt sound advice, but the question is whether I have the patience / discipline and / or success to wait 3 months before trading live.
I have looked at one or 2 robots and concluded (without paying out anything) that they do not work. On close enquiry not one single person has been able to show that, where they have subscribed to a “service”, they have had a good service and made money. When the “service” is asked to be put in touch with, say, 3 clients to hear their comments directly the response is: “ No can do. We’re not allowed to disclose clients’ contact details.” Am I a sceptic?
This will be quite a learning process as I am a rookie! For example some abbreviations were not known: EA (expert advisor), ECN (electronic communication network), scalping (taking small profits?) but now I’m wiser.
Other questions: size of a lot, how to set entry orders if not at “market”, limit and stop / trailing stop orders, how to integrate MT4 with my selected broker (does ECN come in here?), broker’s commission and any other fees.
Now, to some nitty gritty:
I am taking as my “pot” US$2000 to trade in the EURUSD pair, max risk at 5%, thus $100 and 20 potential losses in a row to lose my initial investment. I’ll come to calculation of lot size and risk later……
Looking at 4hr chart on 9 Dec I see the trend is down since 1 Nov (and indeed since Apr 2011). To trade with the trend (using MT4) 1st problem is where to enter so I select 50% Fib on 4hr chart (with 100% based at low of 1.32881 on 8 Dec), ie 1.34174. Reason: 50% is a little below the trend line and often, it seems, a turn around in direction occurs about there.
If I place my stop loss (s/l) at 50 pips above that’s a small move against me especially as the 1 day ATR is 73 pips, ie 1.3467.
I’ll set no profit target now; will see what the trade does.
At the time of this decision 1 euro buys US$1.33817 at close at 2300hrs CET. So I’m not even in the market but am supposing the price will rise to fill me before it falls.
We’ll see what happens on Sun night / Mon.
If traders would like to comment / help, please do so. There may be a few or many. However, I do not promise to answer all or any as my aim is to learn how to fx trade and, I hope, not to waffle too much (as I have now)!!
Hi GB
This is an excellent start and approach.
The idea with paper trading and later trade on a real account is good. If you think you do not have the patience this is ok because I think that you already have some trading knowledge. Where it is absolutely imperative is when you need to learn how to open and close the trades. It is stupid to trade 10 lots instead of 0.1 lot, or forgetting a pending order without stop loss etc.
So you can start with a live account but instead of risking 5% of your capital you can risk 0.1% of your capital for 2-3 months and if things go your way then why not increase your risk.
So if you open a 0.1 lot and put your stop loss at 50 pips this is 50 dollars, which in my opinion is not negligible. So you should look for a micro account where trading a 0.01 lot would result in a 5 dollar loss with 50 pips stop loss, or even better you could open a 0.02 trade and "manage" it by closing half after a certain movement, move your stop loss to break even and let the remaining run. This is one approach to trading.
Some traders do the opposite. Instead of opening a larger position as soon as price moves in their direction they keep adding new trades in the same direction and finally some traders open and close the trade with the same amount.
Scalping is trading in shorter time frames for small gains.
And there are ECN traders (at least this is what they say) that offer Metatrader. Generally speaking when you trade mini and micro lots you have against you the broker. With larger positions the ECN broker will usually direct your order to the bank flow.
I had a disillusioning experience today (11 Dec) while doing my due diligence and research into trading styles, people / traders and their comments, and sites. “Already,” you say, “on day 2 ?” Well, yes. I’d found on another forum I’d been looking at where I discovered simple trading methods which merited closer examination. It turned out the thread I was centred on was huge, thousands of posts (on one thread!) over some 5 years and the principle “guru” - whose trading methods seem good – has scammed other forum followers out of money, in some cases quite large sums. My research there is not complete but allegations made are that he never posted his trades in advance so followers could never verify the truth of his trading and his stated gains. Subsequently, he invited readers to subscribe, at $700, to his trading methods; there were losses, money not returned and, in consequence, very unhappy traders.
Thank you Capsmart for your comments. I’ll remain with the “paper” trading till I find my feet but your suggestions to size of trade are noted for use later.
I do have trading knowledge: stocks / shares, spreadbetting, commodities on a limited scale but fx is new (with one exception some 5 years back; a story on that at a later date if can recall the facts.).
I do have trading knowledge: stocks / shares, spreadbetting, commodities on a limited scale but fx is new (with one exception some 5 years back; a story on that at a later date if can recall the facts.).[/QUOTE]
Well, my advice is hear all, see all, say a lot. The folks in these forums have amazing skill and knowledge and if you want to get a command of real people trading, here is it. If you are not a member of Forex Mentor, do it now.
Journal of a rookie fx trader – D 3 (12/12/11) – D5 (14/12)
On EURUSD did not get filled at 1.34174. Price dropped away; order cancelled Then watched 1.3214 as it was close to R line at 1.3202. Price might rebound, ? up to Fib 38%, or fall. Decided to place short at 1.3214 at 0915hrs 13 Dec. Short filled at 131000 (on H1 chart). S/L moved to 1.3018 at 1715 hrs 14 Dec. Reason: my lower trend (descending) line is at 1.2942, therefore placed s/l 50 pips above this possible turning point. If price breaks thru down will move s/l down tomorrow; if not, paper profit will be taken.
Am finding the 5th place of decimals v annoying as one only trades at the 4th place!
Grateful if somebody could advise on a point of procedure with MT4. I can place Fib retracements on the chart but cannot figure out how to change their colour. They default to yellow which, against a white background, makes them impossible to see. I want them blue.
Steve: tvm for your comment. I’ll see about mentoring when I ‘m a bit more familiar with terms and procedures in this new environment.
Hi Gb1
Well done.
A good idea is to add a chart every time. It will make things for us easier to follow your reasoning. You could also draw arrows at the important candles.
Concerning the fibo after drawing it you double click on it to select it and then right click on the diagonal line of the fib and select fibo properties.
Now you have some tabs. From the first tab (Common) you can change the color of the diagonal line and from the second tab (Fibo Levels) you can change the color of the horizontal lines. From now on all your fibos will have those colors.
You can have a look in the following links Metatrader Tutorial - How to Add the Exact Price to Fibonacci Retracement Lines - YouTube
S/L hit at 1.3018 at approx 0900 15 Dec. Paper profit: 196 pips.
Fib lines drawn from 1.2956; will make next short entry at 50%, ie 1.3193 with s/l 50 pips above at 1.3243. 7 day ATR at about 51 pips.
Time now 1730 15 Dec.
I am using Daily, H4 and H1 charts to decide on what to do next.
(I cannot be posting this on the i-net each time I make a decision, hence the time given!)
Suggestion from Capsmart that I put up charts. Good idea: but failed to get it to work: copying from a programme (Irfan) failed to produce it here. Fib now sorted: tvm.
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