Twelve stepping stones for rookies
If you seriously want to become systematically profitable (and without having to spend a cent), imo these steps will give you as good a chance as any:
1. Learn the basics of fx from babypips school.
2. Start by reading this carefully.
3. Read this carefully, and understand the implications. (It's possibly the best essay on pro trading that I've read).
4. Read this carefully, to understand the significant differences that exist between institutional and amateur trading. And if you don't mind some colorful language, watch the video in this link by ex-prop trader Tom Dante, especially the first 9 minutes.
5. Read this carefully, to understand the vagaries of statistical variation. It's all too easy to be fooled by randomness; therefore you need to understand qualitatively why your 'edge' is robust.
6. Read this carefully. Understand that markets are driven by a variety of complex, competing forces, and hence no holy grail exists. And that the smart trader is willing to adapt to changing market conditions, if necessary.
7. Read this, this and this thread, to gain an understanding of microstructure and orderflow: HOW and WHY markets move. Understand that unless an indicator directly measures the forces that move the market, its predictive capability will be little better than 50/50.
8. Understand the limitations of TA. In general, avoid EAs and simple TA-based systems. If it was this easy, everybody would be a millionaire. If an indicator is consistently producing near perfect signals, it's almost certainly repainting. If an EA is producing straight line equity growth, it's almost certainly using unsustainable MM like loss avoidance, recovery, martingale variants.
If an EA that was guaranteed to deliver consistent and safe profit forever existed, ask yourself (1) why banks and instiutions don't save themselves millions in salaries by using it to replace all of their analysts and traders, and (2) why anybody would want to share it freely with their potential competitors, by posting it publicly on a forum.
9. Understand risk management. This article is as good as any. And the implications of the Kelly formula.
10. Work your way through the trading myths. And the tips and caveats here.
11. Trading psychology: Dr Brett Steenbarger's articles are as good as any. Mark Douglas' book Trading in the Zone explains the probabilistic nature of an 'edge'.
Now look at the graphic here. If you've read and absorbed everything so far, you've gotten past the top of 'Mount Stupid'. For most people (including myself) it takes years to reach this point. But if you're willing to do some reading, the above info can potentially get you there in less than a month.
12. After this, if you want a starting point, try LauraT's roadmap (and here); Davit's pivot trading; or traderathome's PVSRA. I've selected these not because their methodology is necessarily exceptionally superior, but because they encourage self-reliance and diligent study. To become expert requires sound knowledge and (potentially) years of screen time and hands-on experience. Don't waste money on systems or education; at the end of the day, it's about mastering a process, and ultimately the only person who can teach you that is YOU. Take nothing for granted, and always test ideas and strategies thoroughly before risking any money.
The above assumes a 'discretionary' approach. If you want to trade mechanically, as a 'quant', then start with threads like those by Copernicus and 60minuteman. But understand that trend following approaches tend to deliver a lot of small losses, while you wait for the big win (assuming you have the nerve needed to keep your position open!) that allows recovery back into overall profit.
Keep in mind that more than 95% lose money and quit. If you're unwilling to put in the necessary time and sweat, then decide whether you'd rather quit now, or needlessly burn both time and money. And understand that nothing is guaranteed; despite your best analysis, markets can move however they please (more here). As Keynes wryly observed "markets can remain irrational longer than the trader can remain solvent".
Disclaimer: As always, it's just my opinion (after 13 years of experimenting with both discretionary and automated approaches, and attending a few institutional workshops), take it or leave it. Feel welcome to disagree -- the fx world is full of conflicting opinions -- but don't expect me to defend my position. I'm not selling education, I have no desire to prove that I'm right, and I don't have the stamina to debate semantics.
As I've said many times before, even though I might have learned some valuable things from knowledgeable traders, I'm a programmer, not a pro trader.
If you seriously want to become systematically profitable (and without having to spend a cent), imo these steps will give you as good a chance as any:
1. Learn the basics of fx from babypips school.
2. Start by reading this carefully.
3. Read this carefully, and understand the implications. (It's possibly the best essay on pro trading that I've read).
4. Read this carefully, to understand the significant differences that exist between institutional and amateur trading. And if you don't mind some colorful language, watch the video in this link by ex-prop trader Tom Dante, especially the first 9 minutes.
5. Read this carefully, to understand the vagaries of statistical variation. It's all too easy to be fooled by randomness; therefore you need to understand qualitatively why your 'edge' is robust.
6. Read this carefully. Understand that markets are driven by a variety of complex, competing forces, and hence no holy grail exists. And that the smart trader is willing to adapt to changing market conditions, if necessary.
7. Read this, this and this thread, to gain an understanding of microstructure and orderflow: HOW and WHY markets move. Understand that unless an indicator directly measures the forces that move the market, its predictive capability will be little better than 50/50.
8. Understand the limitations of TA. In general, avoid EAs and simple TA-based systems. If it was this easy, everybody would be a millionaire. If an indicator is consistently producing near perfect signals, it's almost certainly repainting. If an EA is producing straight line equity growth, it's almost certainly using unsustainable MM like loss avoidance, recovery, martingale variants.
If an EA that was guaranteed to deliver consistent and safe profit forever existed, ask yourself (1) why banks and instiutions don't save themselves millions in salaries by using it to replace all of their analysts and traders, and (2) why anybody would want to share it freely with their potential competitors, by posting it publicly on a forum.
9. Understand risk management. This article is as good as any. And the implications of the Kelly formula.
10. Work your way through the trading myths. And the tips and caveats here.
11. Trading psychology: Dr Brett Steenbarger's articles are as good as any. Mark Douglas' book Trading in the Zone explains the probabilistic nature of an 'edge'.
Now look at the graphic here. If you've read and absorbed everything so far, you've gotten past the top of 'Mount Stupid'. For most people (including myself) it takes years to reach this point. But if you're willing to do some reading, the above info can potentially get you there in less than a month.
12. After this, if you want a starting point, try LauraT's roadmap (and here); Davit's pivot trading; or traderathome's PVSRA. I've selected these not because their methodology is necessarily exceptionally superior, but because they encourage self-reliance and diligent study. To become expert requires sound knowledge and (potentially) years of screen time and hands-on experience. Don't waste money on systems or education; at the end of the day, it's about mastering a process, and ultimately the only person who can teach you that is YOU. Take nothing for granted, and always test ideas and strategies thoroughly before risking any money.
The above assumes a 'discretionary' approach. If you want to trade mechanically, as a 'quant', then start with threads like those by Copernicus and 60minuteman. But understand that trend following approaches tend to deliver a lot of small losses, while you wait for the big win (assuming you have the nerve needed to keep your position open!) that allows recovery back into overall profit.
Keep in mind that more than 95% lose money and quit. If you're unwilling to put in the necessary time and sweat, then decide whether you'd rather quit now, or needlessly burn both time and money. And understand that nothing is guaranteed; despite your best analysis, markets can move however they please (more here). As Keynes wryly observed "markets can remain irrational longer than the trader can remain solvent".
Disclaimer: As always, it's just my opinion (after 13 years of experimenting with both discretionary and automated approaches, and attending a few institutional workshops), take it or leave it. Feel welcome to disagree -- the fx world is full of conflicting opinions -- but don't expect me to defend my position. I'm not selling education, I have no desire to prove that I'm right, and I don't have the stamina to debate semantics.
As I've said many times before, even though I might have learned some valuable things from knowledgeable traders, I'm a programmer, not a pro trader.
