Many years have passed since I decided to learn how to trade. It has been a long and sometimes ungrateful journey. One does not have reasons to be optimistic when it is about trading since maybe 90% of the aspiring traders merely fail. I will give you a few tips I won't extend if you are a beginner or are still struggling to find your edge in this complex business.
I won't spoon feed anyone nor answer any question that can be found on Google, here or anywhere else. Trading is a personal journey that demands high engagement and an extremely strong research spirit. I really do not mentor nor have any intention nor interest in doing it. So, please avoid contacting me for that, no second warning on this.
SIMPLICITY
Trading is improved by simplicity because the more complexity you add to your system, the more unknown factors you have to resolve each time you roll the dice. Trading is about repetition and averaging winnings with losers. The most important factor in trading is having one single pattern you master. One pattern that you know when it starts and where it ends.
REPETITION
You will feel confident once you have spent months or years repeating the same pattern over and over again, day after day. After a long period exposing yourself to the same asset class (preferably one single instrument and one single timeframe), you will start to interiorize what you see on your charts or your trading platform, whatever kind it is, and intuitively will recognize your valid set-ups. And you will also be aware of when your setup is invalidated by an unexpected change in the market structure and you need to cancel a trade anticipatedly. Months or more often years are required to complete this stage.
MARKETS
For non-foreign FX crosses, you must limit your trading between 5:00 and 15:00 GMT, normally from Tuesday to Thursday at the beginning. If you want to trade indices or shares, you may better focus on NY trading session hours. It is fundamental for you to study what your asset class does during each different hour because markets have cycles. I used to have a clock in front of me to see at what hours there was more activity and which kind of activity depending on the hour.
If you trade non-US assets, then you should shift your trading time to the hours your asset's market activity takes place.
METHOD
The key aspect of trading is your risk and money management skills. You need to learn what is the risk-reward ratio and how to deal with it. It is related to your accuracy. For very long-term investment you may be interested in traditional portfolio allocation based on returns and volatility, but that is not the most common case among retail traders. We usually are more focused on swing-trading and our risk depend on the structure of a price swing than on when a trend will be exhausted.
Compounding is also a key concept you have to study very well and how to apply it to your position size or, if you use stop-loss, to your stop-loss price. This aspect is critical and complex, but it is the difference between earning 10% annually or doubling your account in two months.
DETERMINISM
Uncertainty is the material trading is made of and that is quite opposed to the traditional way we understand the world. People tend to think that there are necessary or basic bricks the world is composed with. But the trading environment goes against it because it lacks of rules and there is nothing guaranteed at the end of the day, no matter how diligent you are or how hard you work.
There is nothing guaranteed for you. You throw off a cristal bottle and you get paid only if the bottle breaks in a thousand pieces. And you pay when it is not broken. That's it.
The only rules are your strategy rules:
- Execution: when you hold, when you enter and when you exit from a trade.
- Size: how you calculate your optimal entry and exit size and execution levels.
THE PATTERN
There are a million possible patterns. Both technical and fundamental trading are valid approaches because there will always be someone smart enough to find a repetitive behaviour to be exploited.
The only method I know to find a pattern is to study your charts until you realize something happens repeatedly. To note down the variations you find and then study these variations separately. While repeating that process, you will eventually come along with new problems you will have to resolve until that, in the end, something may start to form inside your brain and will reveal forms and structures to be traded on.
No other way other than repetition over a single pattern will lead you to quicker results after a considerable amount of hard work and dedication. During about a decade I have studied tens of methodologies and different approaches to trading. None gives immediate results and the more specialized you become, the better for you.
PSYCHOLOGY OF TRADING
Psychology represents about 70% of your trading success. You need to be smart enough or responsible enough if you want to realize that you have a brain that you need to take control of. Trading is an extreme experience that can only be overcome with an exceptional attitude. Read Trading In the Zone or Trading for a Living or any similar book if you want to improve your chances of survival in the markets significantly.
AN EXAMPLE
One of the best patterns to be traded are tops and bottoms. It is the same double, triple, head and shoulders; all are the same. If you learn how to trade these, you can build a career. They always appear in each market cycle, therefore if you are an intra-day trader you get trading opportunities every day with these. The advantage of tops and bottoms is that if you trade them correctly, you will be trading at the best possible prices every time.
The problem with patterns is learning how to recognize them. At the beginning you will identify mostly wrong structures, so you will need to spend a lot of time practising before being able to correctly identify them.
If you want to learn, I recommend you to use a demo account with Metatrader or the paper-trading features of TradingView. Spend one year studying a bottom pattern, trading it only. Examining your past trades when you succeeded and failed. Analyze how to improve your entries and exits.
Find others that are doing the same on forums, groups or telegram. Work together with others and you will see how beneficial is sharing your ideas and experiences as well as setting common goals with others like you.
Here is an example of how to identify a double top or bottom.
https://www.babypips.com/learn/forex...-double-bottom
The way they say it must be traded is incorrect in my opinion, so just focus on the pattern, do not follow the instructions given for trading it. That is your homework, one year demoing that or another pattern until you master it and can flow with it.
Another example, you may find more Googling for it.
https://www.investopedia.com/terms/d...and-bottom.asp
I won't initially add more information to this thread unless I realized I missed something important. You can use this thread to work on these ideas with other persons with the same interests or just ignore it.
For trading patterns, you do not need additional indicators, only your OHLC or candlestick bars. Trading is all about past and future pricing levels and areas and all that information is already printed in your chart. You do not need it does not mean that you may not successfully use them. It is all about how you prefer to trade.
But remember: once you make a decision, stick to your decision until you finish your training period of six months to one year. Try to keep things simple.
Good luck.
I won't spoon feed anyone nor answer any question that can be found on Google, here or anywhere else. Trading is a personal journey that demands high engagement and an extremely strong research spirit. I really do not mentor nor have any intention nor interest in doing it. So, please avoid contacting me for that, no second warning on this.
SIMPLICITY
Trading is improved by simplicity because the more complexity you add to your system, the more unknown factors you have to resolve each time you roll the dice. Trading is about repetition and averaging winnings with losers. The most important factor in trading is having one single pattern you master. One pattern that you know when it starts and where it ends.
REPETITION
You will feel confident once you have spent months or years repeating the same pattern over and over again, day after day. After a long period exposing yourself to the same asset class (preferably one single instrument and one single timeframe), you will start to interiorize what you see on your charts or your trading platform, whatever kind it is, and intuitively will recognize your valid set-ups. And you will also be aware of when your setup is invalidated by an unexpected change in the market structure and you need to cancel a trade anticipatedly. Months or more often years are required to complete this stage.
MARKETS
For non-foreign FX crosses, you must limit your trading between 5:00 and 15:00 GMT, normally from Tuesday to Thursday at the beginning. If you want to trade indices or shares, you may better focus on NY trading session hours. It is fundamental for you to study what your asset class does during each different hour because markets have cycles. I used to have a clock in front of me to see at what hours there was more activity and which kind of activity depending on the hour.
If you trade non-US assets, then you should shift your trading time to the hours your asset's market activity takes place.
METHOD
The key aspect of trading is your risk and money management skills. You need to learn what is the risk-reward ratio and how to deal with it. It is related to your accuracy. For very long-term investment you may be interested in traditional portfolio allocation based on returns and volatility, but that is not the most common case among retail traders. We usually are more focused on swing-trading and our risk depend on the structure of a price swing than on when a trend will be exhausted.
Compounding is also a key concept you have to study very well and how to apply it to your position size or, if you use stop-loss, to your stop-loss price. This aspect is critical and complex, but it is the difference between earning 10% annually or doubling your account in two months.
DETERMINISM
Uncertainty is the material trading is made of and that is quite opposed to the traditional way we understand the world. People tend to think that there are necessary or basic bricks the world is composed with. But the trading environment goes against it because it lacks of rules and there is nothing guaranteed at the end of the day, no matter how diligent you are or how hard you work.
There is nothing guaranteed for you. You throw off a cristal bottle and you get paid only if the bottle breaks in a thousand pieces. And you pay when it is not broken. That's it.
The only rules are your strategy rules:
- Execution: when you hold, when you enter and when you exit from a trade.
- Size: how you calculate your optimal entry and exit size and execution levels.
THE PATTERN
There are a million possible patterns. Both technical and fundamental trading are valid approaches because there will always be someone smart enough to find a repetitive behaviour to be exploited.
The only method I know to find a pattern is to study your charts until you realize something happens repeatedly. To note down the variations you find and then study these variations separately. While repeating that process, you will eventually come along with new problems you will have to resolve until that, in the end, something may start to form inside your brain and will reveal forms and structures to be traded on.
No other way other than repetition over a single pattern will lead you to quicker results after a considerable amount of hard work and dedication. During about a decade I have studied tens of methodologies and different approaches to trading. None gives immediate results and the more specialized you become, the better for you.
PSYCHOLOGY OF TRADING
Psychology represents about 70% of your trading success. You need to be smart enough or responsible enough if you want to realize that you have a brain that you need to take control of. Trading is an extreme experience that can only be overcome with an exceptional attitude. Read Trading In the Zone or Trading for a Living or any similar book if you want to improve your chances of survival in the markets significantly.
AN EXAMPLE
One of the best patterns to be traded are tops and bottoms. It is the same double, triple, head and shoulders; all are the same. If you learn how to trade these, you can build a career. They always appear in each market cycle, therefore if you are an intra-day trader you get trading opportunities every day with these. The advantage of tops and bottoms is that if you trade them correctly, you will be trading at the best possible prices every time.
The problem with patterns is learning how to recognize them. At the beginning you will identify mostly wrong structures, so you will need to spend a lot of time practising before being able to correctly identify them.
If you want to learn, I recommend you to use a demo account with Metatrader or the paper-trading features of TradingView. Spend one year studying a bottom pattern, trading it only. Examining your past trades when you succeeded and failed. Analyze how to improve your entries and exits.
Find others that are doing the same on forums, groups or telegram. Work together with others and you will see how beneficial is sharing your ideas and experiences as well as setting common goals with others like you.
Here is an example of how to identify a double top or bottom.
https://www.babypips.com/learn/forex...-double-bottom
The way they say it must be traded is incorrect in my opinion, so just focus on the pattern, do not follow the instructions given for trading it. That is your homework, one year demoing that or another pattern until you master it and can flow with it.
Another example, you may find more Googling for it.
https://www.investopedia.com/terms/d...and-bottom.asp
I won't initially add more information to this thread unless I realized I missed something important. You can use this thread to work on these ideas with other persons with the same interests or just ignore it.
For trading patterns, you do not need additional indicators, only your OHLC or candlestick bars. Trading is all about past and future pricing levels and areas and all that information is already printed in your chart. You do not need it does not mean that you may not successfully use them. It is all about how you prefer to trade.
But remember: once you make a decision, stick to your decision until you finish your training period of six months to one year. Try to keep things simple.
Good luck.