Has this been an unusual six months?

Hi all,

I have been demo trading for a little over 6 months using the same method, and have had decent returns. I know people here say demo is not like live trading, but I was just wondering if there was anything unusual about the markets right now (very trendy perhaps)?

The reason I ask is because I have seen that "95% of all traders fail" over and over in this forum. It doesn't seem too difficult as long as you are willing to dump your initial capital in the trash. Today I was in the red on 6/6 trades (some 100+ pips) and ended up positive on 4 of them, 1 is still negative and 1 is up 62 pips at the moment.

I'm going to demo through the rest of college (2 years) before I trade for real.

Thanks

edit: 2 min after I write, the negative one just turned green ...

Last 6 months were the same as the previous 6 before them. Markets go up, markets go down.

All markets have periods of consolidation followed by trends followed by consolidation. But currencies historically are good trend markets overall.

As for demo trading, trades in the red have a habit of turning green because there is no risk to holding out till they do. But nothing is better at learning to control risk than trading live. And controling risk is THE number one aspect to learn how to trade successfully.

Demo trading is good for learning the actual trade functionability of the platform you are using and the market you are watching and analyzing, but not much else.

Real money on the line is the best teacher.

You are well on your way to joining the 95%. I wish you the best.

I disagree, it can take a year to learn to trade profitably, your account will be long gone by then. Open a demo on the same money you would like to trade live (i.e. what you can save in a few years), treat it like real money. If you can't be profitable in demo then live trading will not help.

I guess you're a discretionary trader. Demo tests your method, real your stamina. In real, push your buttons with these:

Experience trading emotions, or at least fear it'll go against and hope it'll go well for you, as deeply as you can and as the only reason for a trade, and then recover.
Try for a while to get dd during your trade under five pips.
Get really, really upset at losing twelve cents. Why? Because you were wrong.
Make a trading mistake, change your trading method accordingly, and see how fast you adapt to the new way.
Get ten requotes in a row, crash your platform and try and reach your broker right after you enter a trade forgetting the stop, and miss a trade you'd planned for because the computer fried.
Make 100% in one trade, then lose 99% of it, and return to your usual, without missing a beat.
Trade when a major negative life event happens to you (death, divorce,), and make a profit.
Trade a hunch you have, without any reason you can pin down except 'it feels right', and profit.
Ask for a trading tip from someone you respect, trade against it whether or not it feels right, and tell them what you did.
Explain how you trade to someone, someone who has a vested interest. Think you can take their answer? Then trade again.

I tried 'em all.
A thread for your progress: http://www.forexfactory.com/showthread.php?t=3156

Trading is all about opinions. We each have our own.

But if somebody runs out of money before they learn - it means they didn't have enough money to begin with and should have stuck to their day job.

Cruel world, I know. But the market doesn't have a conscience.

Although I agree if your strategy doesn't work in demo it doesn't have a prayer in live mode, but on the other hand if it does work in demo that doesn't mean you are ready to place an order for Bugatti Veyron either.

Haha, thanks for the encouragement dude. But care to explain? None of the 6 trades hit their SL (which was = to T/P) ...

A. You probably wouldn't have 6 open positions with a real account. The majors are correlated to a degree, as are the JPY pairs.

B. There is no way in hell you'd let all 6 pairs go negative, especially 100+ pips. If you did, you'll blow out your account in no time at all. It only takes ONE time for your 6 positions to all be on the wrong side of a multi-hundred pip move and your account is destroyed. I don't care if you pull out of a big drawdown like you just did a hundred times, that one time is going to put you out of the game.

That's what he means. What you are doing has been done thousands of times before. It's nothing new, nothing special and neither are you. The sooner you realize this and start doing the work needed, the sooner you can make some progress. But I guess there is a certain path that we all follow.

I'm just guessing but Phil's comment probably had something to do with your "being willing to dump your initial capital in the trash." As long as you're willing, that's precisely where it will go. Maybe not today, but very, very soon.

As far as your question, "Are the markets very trendy lately?" A quick look at your charts should answer that if you've been demoing for six months.

Like someone said, use the demo to learn the platform, get a feel for how info is displayed, how orders are processed, etc. BTW, what broker are you demo-ing on, and what trading platform? If your are comfortable with the way things work, find some disposable cash, yes disposable, cause you probably wont see it again. This will now be part of your tuition in the FX market schooling. Now find a broker that will let you trade with .01 mini lots, (a penny a pip on */USD pairs) or smaller if you can find. Put in $200 or so, then have at it. Nothing like having some skin in the game to teach about emotional trading. BTW, Emotions don't belong in trading, but they find their way in. Try not to lose the $200, it will be hard. but it is the only way to learn.

Rusty

A couple things:

First, it is virtually impossible to be in 6 trades and not be trading highly correlated pairs. Ignoring correlation is a silent killer. My guess is that a bunch of them were USD related and it wasn't going your way. I am never in more than 3 trades. I realize that you are demo trading and probably want to take as many trades as possible. That's fine but learn to respect correlation.

Unless you are trading long term (4 hours and above), having stops that exceed 100 pips is questionable. Having multiple simultaneous losses on demo might seem funny to you but when you are trading multiple contracts of real money it won't be so laughable.

"as long as you are willing to dump your initial capital in the trash" That's not a luxury that those of us who trade for a living can enjoy. It tells me that you aren't serious about your demo trading. And, if you can't take your demo seriously then you are just pissing away your time.

Lastly, the fact that you got away with loose stops and "the market came back" only rewards your bad behavior. The market was choppy yesterday but some days it won't be and the market won't revert and you're going to get crushed. What percent of your account would you have lost if all 6 trades went bad? 18%? 24%? Not acceptable!

I don't mean to sound like an ass but I just got the impression that you were boasting a bit and you don't even realize that you got away with bad behavior.

I've yet to meet someone who truly became successful that screwed around on a demo account and then decided to get serious with real money. Yes, someone is going to follow this post with a story of how they did it but remember, this is the internet and they are probably still on microlots.

This is at bottom of a range. Here is how im thinking of playing it.

Thanks everyone for making that clearer.

What I meant by "6 trades" was not 6 pairs; i.e. some were multiple trades of the same pair. Also they were all .1 lot so even if they all hit S/L I would be approximately only down 600 pips (I don't have the exact number I set it to) which is 6% of my capital ($10000)

Sorry, the last thing I wanted to do was boast. I know I'm not good, let alone great; I'm new at this.

This forum is quite helpful.

Yes, it actually is. What most newbies don't realize is that they are saying and doing things that some of us have already done. We've seen dozens, if not hundreds, of people come on these boards and tell us how it is when they know nothing, yet won't admit their ignorance. Often times they get arrogant, and most of the time they disappear as quickly as they appeared.

Many responses to these people are not couched in particularly polite language. Many times it's just plain language and we really don't care about the feelings of the poster. We're not here to make each other feel good. We're not "haters" (an amazingly stupid thing to say, but very common) who are trying to beat people down.

I think many of us who have been at this for years have mixed feelings about the newbies. On one hand, we feel that everyone has to pay their dues. Why should anyone else get a shortcut when we didn't. But the nature of the business really does dictate that for the vast majority, they are going to have to put in a lot of time.

On the other hand, I know for myself, at times I do want to help shave some time and pain off the learning curve for others. I often get messages asking for help. I usually do so. But a surprising number of people I've helped lack grace, common courtesy, and half a brain. That's ok, they're probably not going to make it anyway.

The key to learning is acknowledging one's lack of knowledge and seeing it not as a personal deficit, but simply as a knowledge deficit. It's a very simple precept, but many don't seem to grasp it. I've been in education for a long time and I've seen it over and over again, just as I've seen it on forums.

No one is busting your balls, we're just telling you like it is. You seem to have the right attitude. Keep at it and keep an open mind.

hi - I demo-ed for 10 months before putting up money for a small, small live account. and I blew it. Hadn't a real clue of how markets worked.

But i refunded again, equally miniscule amount as I felt it would be counter productive to demo again, tho I try out new things on demo.
Trading with real money is so different, as it matters if you lose it, people have a natural instinct to want to be right. If you have a winning streak and you up the lot size, sods law then follows a string of losses, or the system you started out with becomes unprofitable or you do something stupid, and bang goes thinkiing this forex is a breeze.

I consider myself a rookie as I am not yet consistently proftiable. (Only as good as how I managed my last losing trade.) I've learned a lot, and continue to learn.

On Oanda you can open a live account with peanuts, and trade 10c a pip

I bow to prior experience, but personally I think the markets have changed since I started out, tho perhaps normalising now.
Initially I entered during the years long bull trend, then came the down trend and things really changed, but that was great once you'd realised the uptrend had ended and adapted. The market had a huge ADR, and was very forgiving in recouping losses, so long as you were short!

The last 4 months has been different again, Is the downtrend over? Has a new uptrend started or is it merely a correction of downtrend? Range, range, breakouts, consolidate, down/up, basically reflecting uncertain economic times. So you have to adapt again.

cheers and good luck