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Need help! Newbie questions...

  • #1
  • First Post: Nov 4, 2006 2:41pm Nov 4, 2006 2:41pm
Hello everbody!,

I am new to the Forex and am very excited.
I have always loved making money grow since I was 5 Years old.
Anyway, My first 4 days last week I made 12% of my total investment which I am very happy about.
BUT, I did something that I really did not want to do and I am sure everyone here has also, so maybe you can help me. I am stuck now at a
-112 pips LONG on the GBP/USD. I feel That the GBP/USD may continue to go down next week.
My questions are:

1.) If I wait this out could my negative pips come back up within a month?

2.) How do I determine how much each negative pip is taking away from my margin?

3.) Should I hedge the exact amount of lots so that I do not margin out? Could this idea work against me?

Thank you for any help!
  • #2
  • Nov 4, 2006 3:47pm Nov 4, 2006 3:47pm
Quoting Chri$tina
Hello everbody!,

I am new to the Forex and am very excited.
I have always loved making money grow since I was 5 Years old.
Anyway, My first 4 days last week I made 12% of my total investment which I am very happy about.
BUT, I did something that I really did not want to do and I am sure everyone here has also, so maybe you can help me. I am stuck now at a
-112 pips LONG on the GBP/USD. I feel That the GBP/USD may continue to go down next week.
My questions are:

1.) If I wait this out could my negative pips come back up within a month?

2.) How do I determine how much each negative pip is taking away from my margin?

3.) Should I hedge the exact amount of lots so that I do not margin out? Could this idea work against me?

Thank you for any help!
Hi Chri$tina,

Welcome to the world of Forex. My suggestion to you is stop live trading if you are doing so and then start to learn more about this market.

You need to know several rules and techniques to deal with Forex including understanding Technical Analysis and Fundamental Analysis techniques, Forex specific jargon and calculations, Money Management methods, Psychology of trade, etc. Without these you'll be a loser in long term (even in short term).

The answers to your questions:

1) No body can predict the future so nobody can tell you for sure what will happen next. If it's the beginning of a trend it might take hundreds of pips and several days or even weeks to retrace and even if it does it might not get back to its original price.

2) If you trade standard lots (i.e. $100,000) and your account currency is USD. Every pip costs you $10 per lot. It means that if you trade 5 lots and lose 100 pips then you'll lose $5000. For mini lots (i.e. $10,000 lots) every pip per lot will cost you $1.

3) This is only useful if you know where the bottom of trend is. Hedging is a dangerous business that cn be used by experts only.

Good luck,
Al
  • #3
  • Nov 4, 2006 3:53pm Nov 4, 2006 3:53pm
If the reason for entering the trade is no longer valid, then the best course of action is to exit the trade. Do not hope and pray that your negative position will swing your way, or you're going to be looking at a textbook margin call. Admit you were wrong, exit the position at a loss, and don't make the same mistake again.
  • #4
  • Nov 4, 2006 4:00pm Nov 4, 2006 4:00pm
my opinion is tha never let your margin drown use your stops if you can afford lose 20pips put stops on 20 pips take your losses and try again now if you let it drown you gonna end up wiping your account in no time. i dont know the method your using or the plan you having but it seems to me that you got in love with the pair and you where hoping it will comme back ,but some times dont work that way. if its a real account i really dont know what to tell you cause it may come back and get your money back or you will run out of margin and you will lose it all.
what ever you decied next time you know that some times you have to accept your losses and move on to your next trade.
i know i didnt realy help you in your current position but i hope that you will remeber what i said the next time you will trade.
good luck.
  • #5
  • Nov 4, 2006 4:25pm Nov 4, 2006 4:25pm
Quoting twinchell
If the reason for entering the trade is no longer valid, then the best course of action is to exit the trade. Do not hope and pray that your negative position will swing your way, or you're going to be looking at a textbook margin call. Admit you were wrong, exit the position at a loss, and don't make the same mistake again.
Thanks for this advice. I won't make this mistake again! If what you mean by "textbook margin call" is that i will lose my positions by letting my margin drop to 0, I will not let this happen either. That is foolishness and I have watched this happen to other people. I do not want to close out this position if I can hold out for a better time.
  • #6
  • Nov 4, 2006 4:32pm Nov 4, 2006 4:32pm
Quoting JK$$$
my opinion is tha never let your margin drown use your stops if you can afford lose 20pips put stops on 20 pips take your losses and try again now if you let it drown you gonna end up wiping your account in no time. i dont know the method your using or the plan you having but it seems to me that you got in love with the pair and you where hoping it will comme back ,but some times dont work that way. if its a real account i really dont know what to tell you cause it may come back and get your money back or you will run out of margin and you will lose it all.
what ever you decied next time you know that some times you have to accept your losses and move on to your next trade.
i know i didnt realy help you in your current position but i hope that you will remeber what i said the next time you will trade.
good luck.
Thanks for the reminders!!! I plan on using stops scrupulously. I am determined to not wipe my account.
  • #7
  • Nov 4, 2006 4:56pm Nov 4, 2006 4:56pm
Thank you for your time and advice.

I do not agree with you that I should stop live trading. One of the reasons I disagree with you is because I have always learned the most in my life by actually doing something. In jobs for instance, I have worked my way to the top by "getting in the game" so to speak and learning "on the job".
The second is you do not know how much knowledge I have already acquired. The third is if no one can predict the future than no matter how much knowledge you have about "rules and techniques to deal with Forex including understanding Technical Analysis and Fundamental Analysis techniques, Forex specific jargon and calculations, Money Management methods, Psychology of trade, etc", none of this would matter. And last but not least I am playing very small in comparison to most. Any losses now are so small that the value of the knowledge gained far outweighs the loss. Especially since I will not really "get in the live trading game" until I feel I have enough knowledge and I wire in a significantly larger deposit"

I hope I do not upset you by stating my opinion on my own plan for a very disciplined person as myself.

I do have another question for you though:

What defines an "expert" in the Forex in your opinion?

Thanks again!

Christina~
  • #8
  • Nov 4, 2006 5:58pm Nov 4, 2006 5:58pm
An expert is a trader who knows when to take a loss. Analyses if s/he broke any rules- if so fixes the prob, if not, forgets about it and moves on to the next trade. When u can do this you will be an expert.
In trading, there is no bullshit. You either make money or you don't.
  • #9
  • Nov 4, 2006 6:14pm Nov 4, 2006 6:14pm
You say you need help and three people tell you basically to stop what you're doing and exit the position. You would rather have your revenge. It's your account, do what you wish with it. I wish you luck, maybe it will help you.
  • #10
  • Nov 4, 2006 7:16pm Nov 4, 2006 7:16pm
Christina:

Well what do the technicals tell you about the trade? Where is the trend heading on multiple time frames? Do you know how to figure this out?

IMHO, if you don't know how to figure this out and come up with a reasonable forecast based on objective analysis (e.g., not hope), you should exit the trade. Also if the trend indicates that you'll probably keep losing, you should exit the trade.

Finally, if you need help figuring out the negative position of your account currently, you really need to exit the trade and figure out how to know that on your own before trading with money.

Otherwise, hey, thanks for the easy pips.
  • #11
  • Nov 4, 2006 7:27pm Nov 4, 2006 7:27pm
I agree with all that has been said here... you really ought to close out this trade... take your loss...

You will lose many other trades too, and that is oK...

If you are not sure if you should keep the position or not, then more than likely you are wrong and will lose more.

I DO agree that you should keep trading real money but go to a broker such as Oanda that will allow you to trade one penny or five cents at a shot...

Everyone who has answered you here, has already passed down the road you are on... take their advice !!

I am only a short ways furthe down the road than you are... if only I had taken their advice or even knew the advice existed when I lost money in the beginning...
  • #12
  • Nov 4, 2006 10:10pm Nov 4, 2006 10:10pm
Most are telling you the truth. You may Luck out but it is really time to get out now. Re-group and read for a few days.
Do not get sucked in to advanced trading techs. Just play it simmple for a while.
  • #13
  • Nov 4, 2006 10:15pm Nov 4, 2006 10:15pm
Quoting PipRipper
...If you can wait it out, average down, add money, etc...
It is obvious you havn't been trading long. This is probably the worst advice I've seen on this forum thus far; and I'm on here quite a bit.
  • #14
  • Nov 4, 2006 10:22pm Nov 4, 2006 10:22pm
Quoting twinchell
It is obvious you havn't been trading long. This is probably the worst advice I've seen on this forum thus far; and I'm on here quite a bit.
I agree with you. I think I saw someplace on here that the pipripper is short the GBP. The advice given would play right inhto his/her plans.
  • #15
  • Nov 4, 2006 11:01pm Nov 4, 2006 11:01pm
Quoting Chri$tina
Hello everbody!,

I am stuck now at a
-112 pips LONG on the GBP/USD. I feel That the GBP/USD may continue to go down next week.


1.) If I wait this out could my negative pips come back up within a month?



Thank you for any help!
A losing trade is part of trading. If your analysis tells you the GBPUSD is headed south, why on earth would you cling to a losing trade.? Since you deem 112 pips an unacceptable loss , you either have to tighten your stop losses or decrease the size of your positions.
Establish your total amount of risk(dollars) and set your stops. Please know your mistake was NOT being in a losing trade, it was clinging to it. If you never do it again, your lesson is well worth the loss. I have paid for this lesson multiple times.... I hope you are smarter than that.
good luck.
  • #16
  • Nov 5, 2006 12:42am Nov 5, 2006 12:42am
Quoting mrgreen
An expert is a trader who knows when to take a loss. Analyses if s/he broke any rules- if so fixes the prob, if not, forgets about it and moves on to the next trade. When u can do this you will be an expert.
Well, I did recognize and execute this once last week. All of my other 40 or so trades were positive.
Thank for your input!
  • #17
  • Nov 5, 2006 12:54am Nov 5, 2006 12:54am
Quoting twinchell
You say you need help and three people tell you basically to stop what you're doing and exit the position. You would rather have your revenge. It's your account, do what you wish with it. I wish you luck, maybe it will help you.
Take the luck back please. I don't believe in it. I also despise a revengeful attitude. I will listen to all of the advice given here and make a decision based on the knowledge gained.
  • #18
  • Nov 5, 2006 1:14am Nov 5, 2006 1:14am
Hi Christina, and welcome to Forex Factory. This is THE best forex forum to belong to if one is serious about learning forex. We have many very good traders here, some of them professionals, who go out of their way to help new traders. With few exceptions, nearly everyone here are very good people. However, because those good traders truly want to help a beginner succeed (including myself), we oftentimes practice tough love. This consists of telling newbies in strong, certain language what they need to hear. Not what they want to hear. So please remember this when another member of the forum offers their help in strong language. That said, I have this to add:

Quoting Chri$tina
1.) If I wait this out could my negative pips come back up within a month?
That would be a bad move. Close the trade now. Take the loss and accept that it was a bad decision to let it get that far in the red in the first place


Quoting Chri$tina
2.) How do I determine how much each negative pip is taking away from my margin?
If you are trading a proper position size, you shouldn't even have to worry about your margin at all. If you're worried about your margin to the point of wanting to know how much each pip affects it, then your position size is too large for your account.


Quoting Chri$tina
3.) Should I hedge the exact amount of lots so that I do not margin out? Could this idea work against me?
As has been said, hedging is an advanced technique that an admitted beginner such as yourself should not be messing with now. You need to learn the basics first. Get out of the trade and accept your loss and learn from it and move on.


Quoting Chri$tina
I do not agree with you that I should stop live trading. One of the reasons I disagree with you is because I have always learned the most in my life by actually doing something. In jobs for instance, I have worked my way to the top by "getting in the game" so to speak and learning "on the job".
<SIGH> It's your money (soon to be mine) . Do yourself a big favor and demo trade until you can be consistently profitable for a few months. If you must trade live, then do so with a micro account (or smaller) and limit yourself to only one micro lot per trade. If you can't make money with one micro lot, then putting on more lots will only cause you to lose money faster.


Quoting Chri$tina
The second is you do not know how much knowledge I have already acquired.
Yes I do. Not enough. Can you answer these BASIC trading questions?

(1) You have $3450.00 in your trading account. You want to place a trade on EUR/USD with a 70 pip stop, with 2% risk. What is your position size if you have a micro account? What is your position size if you have a mini account?

(2) What is the difference between broker leverage and true leverage?

(3) You have four pairs: EUR/USD, GBP/USD, GBP/JPY & EUR/CHF. Which two pairs have the highest correlation?

(4) You're looking at a chart of AUD/USD. An economic news release causes USD to strengthen while AUD remains unchanged. Which direction on the chart should price go?

(5) You open a short trade on EUR/USD. The spread is 3 pips. Your position size is 10 mini lots. How much money did the broker take out of your pocket the moment you opened the trade?

Quoting Chri$tina
The third is if no one can predict the future than no matter how much knowledge you have about "rules and techniques to deal with Forex including understanding Technical Analysis and Fundamental Analysis techniques, Forex specific jargon and calculations, Money Management methods, Psychology of trade, etc", none of this would matter.
No one can predict where the market will go next. No one. Forex traders always and forever deal in probabilities. The only certainty we have is uncertainty. And yes, all that stuff does matter. It matters very much.

Quoting Chri$tina
And last but not least I am playing very small in comparison to most.
Really? Then how do you explain an outrageously high 12% gain in only four days?

Please remember, I am not being mean. I really truly would like to see you succeed as much as you want to.

Dial
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  • #19
  • Nov 5, 2006 2:02am Nov 5, 2006 2:02am
^^ Great post Dial.

And Christina....

1. I prefer trading LIVE with a small micro account. That way, you'd be serious about what trades to take and what not to. I never really liked demo trading, and even now, I test new strategies with real money and never on demos. Perhaps, you're like me...??

2. Look at the RRR (risk to reward ratio) - You shouldn't be risking more than your potential profit, unless your system is correct most of the time. Calculating RRR is pretty simple. If you can't figure it out, let me know. I'll be happy to help you out.

3. You will have a long streak of losing trades. Everyone does. Prepare for the worst FIRST.

4. Don't let your losses run. Your stop loss should be placed at such a point that once it hits it, you're sure that you were wrong about the trade in the first place. You should figure out 3 things before you get into a trade. The entry price, the stop loss, and the exit price. If you can't figure these out, you shouldn't even get into the trade.

5. Consistency is the key. You could double your money each day, for 5 days, and lose it all in one day!!! I've seen a friend of mine give out a 2000% return in a week, only to lose it all the next.

Good Luck.
  • #20
  • Nov 5, 2006 2:21am Nov 5, 2006 2:21am
Diallist,

As I told you in my pm, give it to me hard. I can take it.
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