HELP - Information Overload

Hi Guys,

Where do I start? I've been actively reading about forex for about a year now. I've been following threads such Jacko'sx house of pain and pleasure, James16... etc etc

Basically i've pretty much read about every system, concept under the sun.

Unfortunately, all this information is becoming contradictory and I just need a little bit of guidance. I sit staring at the charts not knowing when/where to pull the trigger. After a year of researching I have barely any demo trades under my belt :/

What I do look at right now is Support and Resistance from previous high/lows, and candlestick patterns.

I would like to trade EUR/USD / EUR/JPY on the 1HR + timeframe.

Could anybody give me a little inspiration / direction?


PS: I'm not looking for a get-rich-quick scheme, just hard work and perhaps in a few years, a career change.

Thank you,

- Chase

Hey Chase

Everyone knows the feeling of information overload. Glad to see you clear a lot of the junk out and sticking to price as James and Jacko do.

Have you read the first post of James16 in his thread. It has a very good outline of how to start to get your feet wet and see if your on the right check. Check it out

Best of luck!

Mike

Hi Chasem,


1. First of all here's some inspiration. Take a look at this post by Diallist about the 5 steps to becoming a trader. http://www.forexfactory.com/showthread.php?t=3156

2. Stop reading and start doing. You said you only had a few demo trades so far, and this is why all the info you're taking in is getting confusing. Now is the time to concentrate more on demo trading and less on "theory." This will help clear up the contradictions and clutter, and help you to figure out which concepts and techniques work for YOU.

Look, you're absolutely right; a lot of the concepts and "conventional wisdom" ARE contradictory. But there's a good reason; people are different. Some are cut out to be trend followers, others are more comfortable probing for bottoms and tops. Some are cut out to be more discretionary in their trading while others are more suited to rigorous rules and programmed EAs. Some like long term trading with daily and weekly bars, while others thrive in the <M1 scalping arena.

So do some demo trading, even if it feels kind of awkward and random for you right now. Try different things, and keep a record of what your trying, why you took each trade, and how it worked out. Do this on demo because unless you're lucky you'll probably lose frequently. Stick to one thing at a time, but not for too long. So on Monday maybe you'll try looking for bounces off of support and resistance. On Tuesday maybe you'll also look for breakthroughs of these levels. On Wednesday maybe you'll try something completely different like working with MAs or RSI divergence or something. Next week maybe you'll be working on not getting stopped out so much, or letting trades run to their full potential. This is a good period to keep a starter journal. You're not trying to make a killing in the market during this stage, you're just tyring to see what works best for YOU.

3. Build your first system. Once you've done some demo trading and have a better idea of which concepts and methods YOU like out of all that huge contradictory soup, you can start thinking about creating a system. You said you had trouble figuring out when to pull the trigger. This is what a system does for you. It defines the following:

a. Entry signals
b. Stop loss placement
c. Exit rules (for both loss and profit)
d. Money and risk management rules

This doesn't have to be a big huge project. It's something you can put together in a couple of hours. Make it simple; base it on just one or two key concepts that you found worked well for you in the demo phase. Also... don't expect this first system to be a winner!! It just may suck so don't get your hopes up. But this stage will give you good experience in approaching your trading systematically instead of haphazardly. Don't worry if your first few systems end up in the trash can after a while. You'll get better.

For a very in-depth look at how to build great systems, take a look at this post by the great beady-eyed one (Merlin).

http://www.forexfactory.com/showthre...ghlight=system


4. Keep learning I know that up in step #1 I said to stop reading, but I didn't mean forever! After you've gotten some demo experience, reached a better understanding of what works for YOU, and created a few systems, you won't feel so overloaded and confused anymore when it comes to all the info out there. At this point, instead of being overloaded by information, you'll become a connoisseur of information. You'll be able to read through a bunch of different strategies and articles and filter out those things are useless to you (but which may work for other types of traders).

I read new strategies and ideas on FF every day, but most of the time I can figure out in the first few paragraphs whether or not to keep reading. That's because I know what works and what doesn't work FOR ME. And this is what you have to work on to get rid of your confusion.

Hope this helps!

Cap

First, take advantage of your demo account capability. IMHO there's no substitute for doing and learning.

In general, I think you can make most systems work for you with enough dedication and practice. But you've got to find one that works for you. I know traders that trade the 1 minute chart and try to scalp 5 pips at a time. They are glued to the screen all day with their finger on the trigger and love it. I know other traders that only execute 1 trade a day at most and wait for the market to move in their favor.

I recommend you try out different systems in your demo accounts and see which you can make work and which you can't. Which "feel" good to you and which feel awkward. If you don't understand and are not comfortable with a system, it doesn't matter how successful someone else was been.

If I can recommend a book, try "Trading for a Living" by Alexander Elder. The technical side can really be somewhat trivial compared to the mental/emotional side. Learning your emotional tendencies and how to control them will serve you more than any system will.

My 2 cents.

Chasem,

Did you live in L.A. a little while ago?

Anyway, best thing you can do is clear your charts & head and start over from scratch. You have all this information and experience under your belt to use. Start using it! Stop thinking/chatting and start trading. Have you learned all you can about support/resistance and japanese candle sticks? Those 2 things are the biggest weapon in the arsenal of a successful trader. Everything else is white noise - but can be beneficial when used properly. It's always a learning experience so don't give up. Also, I would recommend learning about psychology; trading and otherwise. Awareness of personal reservations will help clear your mind.

Good luck!

It happens to all of us. Best thing to do is to Step Back from the computer and take a week or two off. Just don't think about trading. Take a walk in a park or take up a new hobby. Thats what I do. I prefer the Park. Love to people watch and feed the ducks.

... btw, the only system you need are Pivot Points, Basic Knowldge of Candlestick Patterns (candlestick reversal patterns to be specific), and Trendlines.

Wait for a trend to develop. Apply trendlines to verify the trend. Use Pivots points as a goal to where price will be striving to touch and collect your profits along the way. And remember to limit losses.

Can we get a w00t here please!

Absolutely agree with the stop reading and start doing. It's all good to trawl the forums whilst you are waiting for a set-up, but here's a piece of advice - ignore the Interactive Trading and Trading Systems sub-forums. If your brain has reached saturation point, the lure of a 'new and better' system is always likely to distract you from the primary matter at hand - learning to trade. The only way to do that is to stick with one methodology.

You should have done enough reading that the first thoughts for a trading plan are crystallising in your mind that is somewhat logical and could be profitable (you don't have to re-invent the wheel, there are many giants around here upon whose shoulders you can stand on). You need to get it down on paper, covering every single contingency. How can you learn discipline if you don't have a framework to stick to? It'd be great if you could just rock up to your trading terminal and milk the market with pure discretion, but in my experience you aren't going to be able to do that until you've done the ground-work first.

I know Cap already sung the praises of keeping a journal but I'm going to tweet to that tune a bit more. Your brain, and everyone else's is wired to avoid pain. Losses hurt. Unless you develop a system to deal with the pain then you ain't never going to learn from them - and you know what they say; you learn a lot more from your losers than you do from your winners. Keeping a journal to analyse your trades and decisions will allow you to process the bad decisions and then you can offer yourself constructive criticism to evolve as a trader and tweak your trading plan if need be, or give yourself a pat on the back if you done good.

Good luck.


PS. Also, I think that the system that you use is not so important, what is imperative is that you understand it intricately and believe in it enough to weather the inevitable storms. The most valuable skills you can (and hopefully will) learn as a trader are not 'reading Japanese candlesticks' or 'trading a CCI' etc., it is developing the professional mindset to trade. I'm not even sure that can be taught or read in a book. You might catch a glimpse from reading literature written by those who have it, or speaking to successful traders, but ultimately they make it look effortless and you might question why it is that you can't do it. Behind every successful trader is a long path of blood, sweat and tears which brought them to where they are.

I would say It depends on what you want to be.... If this is a hobby for you then go along the tech analysis root If you wish and see fit.

If your young and find that this is your only Interest and the way you would like to take your life and make a living then go all out:- Learn about how the markets work, what influences them and who plays here. Dont limit yourself to looking at the past, and dont give yourself limits on what is possible because of what others say. Every Possition on a subject that you take should be grounded on what YOUR experience has proven to YOU.

Last but not least, dont hang on anything I say because I can not yet make any kind of money from the market with any proven consistency. Id hate for someone to think that these words were coming from someone who is making a living trading FX.

Ps. I liked the fact that you understand you have years to go (atleast(If ever)) untill you will be able to make some money Trading.

GL, Leon

Hi Everybody!

Thank you so much for your words of wisdom and inspiration!

Absolutely invaluable information already posted here.