Newbie Starting Out

Hey guys,

Im just starting out and this is my first post on this forum after reading it for the past few days. I think this is such a great information resource on forex and im really happy I found it. Ive come up with a quick plan for my future in forex based on what ive been reading here:

 

1. Now - 6 months : Study as much as possible about the subject.
2. 6 - 9 months : Develop investment and management strategies.
3. 9 - x months: Start trading on a demo accounts until I find a good platform and profits are made.
4. Start trading on a micro/mini account and work my way up.

If anyone has any ideas or anything else they feel would be a good newbie plan, please post.

Thanks guys

Arcane Investor

Welcome Arcane Investor.

By way of suggestion, I would do number 3 concurrently with number 1 and 2. The sooner you start practicing trades, becoming familiar with trading environments, indicators, price charts, etc., the better. Most people start off trading thinking that they will be successful by gaining the right knowledge. That's a fallacy, and the reason most traders fail. Success is gained by disciplined implementation of that knowledge (e.g. a set of trading and management rules). So, the best way to learn discipline is not to study the market, but to become a market participant. Learning is important because it allows you to be an effective participant in the market - I don't want to underemphasize the importance of learning the principles of technical and fundamental trading. However, do this by finding a system and practicing it on a demo account until you can trade it in your sleep with NO deviations from the rules. Then, go live.

Of course, you'll probably hear a dozen or so different opinions. Good luck with whatever path you choose!

Regards,

stockwet

PS: The criteria for success on the demo platform isn't whether or not profits are made. That could happen in a week, but, doesn't necessarily qualify you for live trading. The real criteria is whether or not you can trade a set of rules consistently, without getting caught up in other, emotional trades. Do that, and you'll have great success.

Thanks for the good advice Stockwet.

Unfortunately I am unable to demo as I am still one of those people using (don't laugh) dial up. I have just moved to Italy for 6 months so I am still considering if its worth getting broadband for this time as most packages come with a years subscription. Hence the 6 months study period.

Hi Arcane, and welcome to the Factory!

Stockwet gave you some good advice, about application of knowledge being more important than the accumulation of knowledge. Good stuff.

I'm going to recommend you do the following concurrently:

READ-READ-READ!!! Start by reading all the stickies in the Beginner's Forum, then read the following books:

Market Wizards
Reminiscenses of a Stock Operator
Trade Your Way to Financial Freedom
High Probability Trading
Trading in the Zone

While you are reading, open an account that lets you trade micro lots ($1000) or smaller. I use a micro account at FX Solutions (www.fxsol.com) and am very happy with them. Another good one is Oanda (www.oanda.com). The advantage with Oanda is that you can trade very small positions, much smaller than a micro lot. When opening your account, choose the highest leverage your broker offers. You are NOT going to use this high leverage. The only reason for choosing it is to obtain the lowest margin requirements.

Charts: Many of the traders here at the Factory use the free charting package called MetaTrader4 which can be downloaded from www.metaquotes.com. Very powerrul and flexible charting software!!

System: There are many, many profitable systems to choose from. It has been said that there are more profitable systems than profitable traders. Just use a system that feels comfortable to you, and has a good reputation. The money doesn't come from the system anyway. It comes from properly applying discipline and money management to your system of choice. As to which system to use, look in the Beginners's Forum in the Systems thread and choose one. I recommend the Vegas 4 hour Tunnel method. Read the document for that system, set it up on MetaTrader per the directions, and then go and read the "Lost in the Tunnel" thread in the Journal Factory forum to get started.

With all of the above in place, demo trade for 3 to 6 weeks, just to get familiar with all the components (Your broker's trading platform, your charting software and your system of choice).

I used to be of the opinion that new traders should demo for many months before risking any real money. Unfortunately, demo trading is like kissing your sister - it just isn't the real deal. Only by trading real money, even in tiny amounts, will you trigger the emotional responses you'll need to learn to overcome. With the advent of micro accounts and smaller, it is now possible to safely trade real money with low risk and proper money management. I recommend putting a minimum of $1000 into a micro account. Make certain the money is risk capital. By that I mean if you lose it all it will have zero financial impact on your family or your lifestyle. Start live trading with a SINGLE micro lot (or smaller if you're with Oanda). At 10 cents a pip, even a 100 pip loss will only cost you $10. Be sure to limit yourself to only ONE micro lot, even if your money management rules state that you can trade more. Your objective at the point is to learn to trade. It is not your objective at this point to make money. Learn to trade first, and the money will take care of itself. Another reason for limiting yourself to a single micro lot in the beginning is that if you can't make money trading a single lot, then trading more lots isn't going to help. Once you can make money with a single micro lot, start gradually increasing your size until you reach the maximum allowed by your money management system. Expect this to take about 100 trades. As long as you are making money, you could increase your size by one additional micro lot after every 20 trades, providing the net returns on all 20 trades is a profit and not a loss.

Patience: You need lots of it. Don't trade everthing that moves. WAIT for the best setups. Spend most of your time sitting out of the market.

Above all, believe in your yourself. Believe you have the ability to become a profitable trader.

Expect the process of becoming a profitable trader to take from 2 to 5 years.

Hope this helps.

Dial

Helps me! Thanks, Dial.

I'm also new to this (less than two weeks), but I've found the demo account has really helped me to understand better what I'm reading and learning. Sooo far to go!

By the way, I am also on dail up (will change that soon) and I've had good luck. Sure, there's probably times I close a trade and lose a couple of pips but since it's demo, I don't mind so much. It's about learning right now for me. When I get a real account, I'll upgrade to broadband. So don't let your dial up discourage you.

Squid

You're welcome Squid. I'm glad you found it helpful. If you have any other questions don't hesitate to ask. I'm glad to help.

Dial

Just to add to what has already been offered. All great advice btw.

How about working on your own work schedule.

It is very important to have defined Times that you will be Watching the Market. This will help you decide which Currency Pairs and Chart Timeframes suit you best for Trading.

Will it be for 2 hrs / day or 6. Will it be during the London Session or North Am or...

If you are consistant with this approach, you will become familiar with the "Normal" ranges of the Market during these times. As well as at what times the Market has the potential for a Volitility explosion.

Great advice Bemac! I always forget to include that most important piece. Thanks for mentioning it.

Dial

Awesome advice guys! Its great to hear some advice from people who are experienced in Forex. If I didnt find this forum I probably would have spent my money on some useless system.

Many thanks,

Arcane.