How to be a trader for a company?

Price *g*

You also said you haven't yet met any "pure" technical trader. If by that you mean people that ignore any and all news and fundamental details 100%, then I know at least 2-3 consistently profitable traders that work solely off price and could care less what the next "red news item" will do.
They see a setup, use a fixed risk % per trade and have a set exit criteria.

If you mean technical as in solely "indicator" based as in all the funny squiggly line thingies and stuff calculated out of price instead of the chart in itself, then there's prolly less folks around, but Vegas has proven with his tunnel methods that again solely using the 4h tunnel is insanely profitable with the most basic of entry and exit rules and MM.


I'd say exact discipline, patience and diligence. The hard work is 99% on yourself in my own experience. It's not a lot of work to look at a chart once every day or every 4 hours, but it IS an insanely difficult task to control your whims and emotions. The story you told illustrates this well I believe

I hope this doesn't sound confrontational, it isn't.
I just wanted to add my personal experience in this game so far.
But, as jacko loves to say, I could be wrong.

I really love your anecdotes, please keep posting as much as you can/like/find the time to


Take care,

SeekingLight

I'm sorry, but erm...a doctor and researcher are not normal.

They are upper middle class with a high-end education.
You are already above more than half the population in educational background and income situation.

Coming from a working class background it comes across a bit...don't know the word for it, but I'll just say "wrong" for a lack of a better word, to say: "woe is me, I'm not as 'in' as my multi-million dollar connections" when the one year salary of one of your parents most likely outstrips 2-5 years worth of others. Not that I know what they make, but to the best of my knowledge it's white collar work and payed for accordingly.

Not that that makes their work any less important, their work ethic any less diligent, their efforts and input less hard and commendable, but trying to put it in the "us poor working class slobs" corner with a doctor and researcher just doesn't work as well as someone with say a construction worker and nurse, or baker or shop employee, sales clerk, Mc Donalds worker, etc, etc, etc...


Also:

Sure, but could they make 4 the next if they wanted? Can they come and go as they please? Is the only thing they risk their own fate?
No, no and no.

Trading is a very unique situation. This has also been elaborated on already by jacko as well I believe(why forex is/can be the best business in the world)...hm, I reference him a lot

No problem matey, opinions are just that and I respect yours. If you know 2 or 3 and there is 28,000 members here is that a success ratio of 0.0001%? Not being confrontational just pointing out the relative success ratios between forums such as these and environments where the focus is not solely on technicals.

Where I got my slip in the technicals was actually after starting my role as trader from risk management. Obviously as risk manager I got a good idea of what not to do in terms of money management. I developed this nice good system properly tested it very simple idea and started trading it. Sitting and watching for the signal and then having the discipline to stay with a fairly rigid set of rules was not that easy. The funny thing was that I would make no money but if I used the data after about 3 months and ran it through my system it showed me trades I never even picked up during watching the market live. The actual trades look different when looking back and actually experiencing the trade happening. Also in testing you would see a level you entered while when you are live the spread might be larger or the market could have moved so fast that you only got an entry 10-15 pips away from your signal and then its hard to still take the trade because LOOK at the slippage. Rather wait for the next one. The next one is a loss but thats OK I'll take the next one but the next one the entry has moved away already but last time it moved it was good for another 50 pips so take it even if it is 15 pips further than the ideal entry, then it becomes a loss and you start wondering why this nicely tested system is failing live...

At the time I started trading live I had a lazy friend who also thought this is the way to make a living - the market is always there so sleep when you want trade when you want etc etc etc. So he resigned as IT programmer and started with his own account. He had this idea that the correlations should hold between eur and jpy so he got some DDE feeds to excel that showed the rate where the cross should be and also the rate where the cross is quoted by the broker. If the broker is off by more than 10 pips he would take the trade in that direction - he worked on hourly closes and initially he doubled his account using huge margin within 3 months. What he didn't realise was that the broker only lagged a little bit and the trend was up so he was actually buying into the uptrend and therefore being successful - NOT because he was exploiting an edge. When the trend changed to down he was blissfully still buying up and started to lose. He lost almost everything. Then the fun and games started testing this that and the other because there MUST be some hidden formula or something that just needs discovering.

I am not ashamed to mention that I was part of this all the way. It was a great learning experience and we developed some amazing theories that proved itself for a period of time and then failed. I decided to rather go the long term route and he continued on his route. He eventually had to first borrow money to fund his "research" then when the borrowers wanted their money back he had to start working again. To this day he is still working on getting the "hidden formula". I have had a look at some of his theories and if he used his research at a University he would probably be given a PhD! He doesn't want to do that because then someone else will use his "secret". I am trying to explain to him that for it to be a "secret" he must make money from it. The reply? If maybe I could stake him some so he can test it...There buddy go and test on the DEMO account..."NO! the demo does not use the same rates as live trading I need real cash to trade"...and so on and so forth. It is an addiction not the trading itself but the unstopping search for the hidden layer in the market.

I guess it all boils down to what you believe about the market...is it purely random or is there some hidden structure? If you believe there is some hidden structure you will probably spend the rest of your life trying to find it. With success? You decide. It seems according to SeekingLight your chance of finding it using technicals trendlines etc....is about the same as winning the lottery consistently.

I wanna address this *g*
I really like the discussion

First point you made - "If you know 2 or 3 and there is 28,000 members here is that a success ratio of 0.0001%?"

Simple, as we both established and you said yourself:
"Sitting and watching for the signal and then having the discipline to stay with a fairly rigid set of rules was not that easy."

There. That takes care of about 80%+ of people here, unable and unwilling to STRICTLY adhere to the rules of the systems given here consistently and without fail.
This means that, as I posted previously, the hardest part isn't finding a working system, a perspective on market workings or identifying exploitable patterns.
The hardest part is DOING IT. (or in a lot of cases: being able to WAIT for it)
Sometimes I think of analogies like un-neutered Eunuchs in a Harem. Or hungry children told to watch over a delicious pie for a day without eating it in order to get two as a reward if they do and a beating if they disobey. End of the day? Red bums await.

Another reason for the divergence 'scuse the pun between Forum Folks and "other" places is simply the educational level(what they're told to expect, what's realistic, what's safe, what's normal, etc pp).
People see the hyped up FX percentages, the way you can swiftly earn and lose a weeks pay in 2 hours thanks to leverage and it all goes casino. That this means however many thousands of losers vs a handful of winners is no surprise at all to me, but says little in regards to the market being a random walk vs a predicatable entity itself

I personally believe there are tradeable, ever reoccuring price patterns, movement and behavior, else I wouldn't be putting real money on the line due to it.

So this is where I'd have to strongly argue the last part. If the huge percentage of people failing is not due to the TA, but due to their shortcomings as a TRADER, then you can't blame the system/market.

As I've stated, I know for sure that even with a simplified, semi-mechanical approach to price setups there's profitability(given consistent MM as well).

I AM searching for the "hidden structure" as a hobby and interest, too, I think.
But I am trading a system that already exists and makes money
This is already there and has been for a long time and structures my market as it is.

The chances for people achieving this / realizing and translating this into trading isn't low because of the lack of structure in the market, it is because of the lack of structure in their trading approach. (It's a phase we all have to survive as an initiation I think...those that make it and/or have the nerves, insight, will and money to do so further add to the % skew)

My firm belief

As I said, if I didn't have that conviction I wouldn't spend another minute on this.

As a card carrying member, I had to say good job and gives me hope to just keep on working as I did not get this. You da man.

Trader888, this thread is Fantastic, if I ever get down I just read this and it really does get me hyped.

Excellent post Trader888 !!!
I read your opinions and I share most of the comments you have made but it seems that according to you, the only way to make money trading is trading with a lot of money:

1. Fundamentals are the key or at least the only real reason in a random market for prices to move. They interrelate and interact making the prices move in the long term. THE REST is noise…I do agree.
2. Given the purely random nature of markets, you’re doom to fail if you trade based only on TA and indicators....I do agree.

The problem, at least from my point of view, is that small traders don’t have the luxury of the capital.

If you have capital, you can get in or out based on the long timeframes, afford a drawdown (it just noise…), and position winners so profits can be important (maybe not relative to your account but at least in absolute numbers). But if you don’t have enough capital, it becomes almost impossible to afford a 100 pips “noise” against you even if you are right in the long term analysis. And if you trade very small positions the risk and time required to make a profit maybe are not worth the “investment”.

In my opinion, this is the reason why some “small” traders (not all of course) start the vicious circle of looking at indicators. You have to get better timing in your entries to avoid large drawdown, optimize exists, better system to make the most out of the trade, etc,etc,etc.

Your comments represent the “utopia” for the small traders dream. Plenty of capital and experience, long timeframes, less stress and monitor time, large profits, manageable losses, offering private tutoring to newbie’s and become an instant success as soon as you start posting in a forum like this.

You seem to have a vast experience as a trader and I appreciate that you share your views in this post but don’t you think that what your comments entail is you NEED capital (your, bank or investors, etc,) and a decent education or background in economics in order to trade successfully??? … That will leave 90% of small traders out of the game for one or the other reason.

For me, Capital or Capital that’s the question?

jjrvat

You are correct you either need capital or you need time to build a small account into a large account, either way, it boils down to having capital.

Starting with a small account already kills you as you are under immense stress and pressure to make money to pay the bills etc.

You work out: I've got $100K so if I divide that into months I can survive for 24 months without getting an income from my trading and I can open a $25,000 account! Whohooo! I'm a trader.

By month 8 you will know that your capital is not enough or you will be careful not to lose money and so you live like a hobo. Not exactly the glamorious life of a trader.

In my personal opinion and many people might differ: I don't believe trading should be the all-in price of your life. I believe you should have a day job while you get comfortable with your real personality within the market. Once you are comfortable with who you are (when trading) then maybe you can start to think about a half day job and then later do this "trading thing" full-time. Unfortunately (fortunately for some! hehe) this will mean a less active trading life and no intraday getting excited about a 10 pips move. There actually is no glamour in being a trader not as depicted by some movies. Yes, the movies showed us what it could be like but thats just not true, theres maybe 2 or 3 such fast paced days in a year. It's like if you watch hour upon hour upon hour of porn and then go shopping for shoes and can't understand why the clerk at the shoe store is not taking off your pants to fit your "shoes". Real life and movie life is not the same. To be a trader is a boring JOB! For the small guy it should be a hobby developing into real-life income over time only after you really know yourself and know how you react in the market - else failure is almost certain.

Hope this helped.

One obvious solution for undercapitalized traders is to find a broker that provides mini lots. Trading 50 cent lots rather than one dollar lots doubles your capital. Obviously we are talking about a 'hobby trader'.

I thought I am going to join this discussion... After two years of active trading I stiil consider nyself as a newbie.

Money management will give you the edge and the key to success. It is the key to long term survival. I have tried "day trading" or the hunt "for 10 pips a day". Well it doesn't work or at least no that way and not for me. Discipline, right mind and key psychlogy, method and money managemnt are all important factors. Without considerable capital you can't have successfull money management and without discipline you cannot sit through trends and without believe in yourself you won't trust yourself and the market will punish you.

I am at a point where more or less I am successfull.. I have cleared ALL the technical from my screen and trading based on the price mid and long term. Indicators implies laziness.. Try to understand the most important inidcator the PRICE. I believe someone needs 3-5 years and a lot of determinism... I still have a day job and family... But hopefully within 2-3 years I will have the skills to trade. And yes I agree. Trding is boring if you want thrill and excitement go to a casion...

bullrock

[edited]
oh yes and you will need PATIENCE and NERVES to trade with the trend and accept fluctuations... 60% of my trades are loosers...

I guess is sad but true. No capital no trading for a living...

jjrvat

Soros once said, "if you are having fun investing, you are probably losing money, good investing is boring".

Trader888,
The Turtles claim that they are strictly technicals trader and they seem to be doing well. I'm not sure how they do it.

However, in my opinion, certain long-term technical trading tools are just a mirror of the fundamentals.

For example, if the trendline is up since 2 years ago .. most likely we can see good news since 2 years ago.
There's a trend in economics, fashion, business almost anything, so it's good to assume that the good news will keep coming and the trendline will stay bullish for sometime ....

TA like trendlines just summarize the entire fundamentals in that timeframe. This idea IMHO only applies if you are using 4HR,Daily,Weekly,Monthly charts. It doesnt work for lower timeframes. Too much noises. My belief is, if the TA does not mirror the fundamentals, it's not a good TA.

So to me, the best TA tool is trendline in Daily charts or higher.

What do you think ?

Moving averages are "lagging" indicators. As such they are the tools of trend followers and they do not predict market behaviour. They just say "in the last 2 weeks ON AVERAGE the prices moved down, up, or nowhere. (Who wants to predict anyway??? I am really bad in predicting things and then comes the surprizes... )

So yes in the LONG term, looooong term moving averages reflect more or less long term sentiment and this way fundamentals.

So if you play 4H, or daily charts but I rather believe is more Daily than 4H the fundamentals are more or less are reflected in the averages... I am LOOONG term player now... Especially that I do not want to be a slave of the screen...

Regards
Bullrock

Trendlines are probably the TA tool I have seen most in my life. They have that weird ability to so accurately show you what has happened but so difficult to trust when it is actually on the hard right edge of the chart.

I will still have to see that a trendline provide a probability higher than 50% of either holding or breaking when price reach it. Some people say a trendline must have 3 touchpoints before it becomes reliable...why? Has it been proven statistically that the fourth time it reaches that trendline it bounces off it with a reliable probability of more than 51%? If so then all of us should be millionaires within a year. With a 1% edge you can make a lot of money. You just find enough "3-touches" and make sure you make more than you lose on each trade. There you go holy grail of long term success. Unfortunately the market surpass your stoploss and then bounce back inside the trendline, in hindsight it looks great in reality it was a loss. In hindsight it looks like that trendline was there from the start, in reality when the market got there at that time the trendline was slightly higher than now because you did not know that it was going to first dip before honouring the trendline you are going to use months from now in the future.

Unfortunately our eyes are trained to see in history only the times that a trendline did work and not the times it failed.

I think seekinglight has shown a chart earlier in this thread with trendlines on it...if you look at the top line coming down then I can't help but wonder why he discarded all the spikes over the line on (I think) the second touch of that trendline...was it perhaps that if he drew the trendline including those points then the dropoff occuring most recently (from about 0.6790) would not have fallen on the trendline? I like to call these lines pschycotic trendlines drawn by a madman...No offence seekinglight. Would you have known that the trendline should have been where you drew it if the market did not bounce there? I think this trendline is a perfect example of hindsight.

I am now going to do something I have not done in any post before...I am going to submit this post and then go and look for the post number with the chart and come and edit this post again. You will notice I have not edited any of my previous posts but this one will be altered just to include the number of the post with the chart...my apologies for the edit!

They do / will / can.

You just have to view them as something other than price representation and use them differently as well

(i.e. not as crossover entry signals or whatever people are made to believe to be supposed to use them for)

Decided not to edit my previous post the chart I am refering to is #122. Page 9 if you use the standard FF page format.

And it is actually the "third" protrusion I have written about...

Thats why only experienced people who've practiced a LOT with TLs will trade touches. Raczekfx for one can do this profitably and has done so for more than a year to the best of my knowledge. Examples of his trades are found in the James16 thread.

I personally never dare trade touches alone(and that infamous "spike through" you refer to is fairly common imho, too), but a touch + proper price action setup = profit in better than 50% of the cases.

I think your distrust of all the technicals comes mostly from not having been "socialized" or introduced to them properly, which is no fault of yours.

I personally have held the same scepticism and still do, hence the need for me to see a setup first. But I use them every day, draw them dozens of times and observe their behavior. (there's that trying to find the hidden workings hobby again *smile*)


They're not meaningless, but they're also not "good enough" to make up a sole source of trading for me. Tom DeMark probably would beg to differ, but that's his call

Guidelines they are, wrappers.

As for the EURGBP channel, yep, that's retrofitted, but I have posted EURCAD channels with trade setups at the boundaries as they occured as well as other charts before all over the place.

Oh that reminds me, I have USDCHF examples, too, that I updated before and after the fact, I can try and find those? And GBPCHF, too, I think..posted all of those in my journal and some in the pair threads but that's all on the private side of the forum.

As I pointed out, the spikes and moves above aren't the trade. The trade setups are the bars. IB = inside bar => you straddle both sides for a breakout. If you get one at s/r like the channel top, you've got a good chance for a descent. Also the weekly bar was a doji which signals potential exhaustion as price could not close higher than at the week's open.

Same goes for pins, DBHLC etc pp. It's just a question of HOW you use these things.

The post / chart in this thread that's meant is here
http://forexfactory.com/showpost.php...&postcount=122

Also: I didn't "discard the spikes. Price "hops" trendlines, resistance becomes support, usually price is overextended when this happens (it just happened on GBPUSD, too) and price falls back inside. As you can see if you look closely the bar highs while price closes below it and the bar lows while above line up exactly. This is what I look for in my TLs.
S/R flipping once passed (support becomes resistance and vice versa) is a basic concept for my TA approach that works over and over and over...

And if one asks: how do I know when it will hold or break? By looking at what price says at that juncture. Pin bar? Likely reversal. Inside bar? Undecided, either side could go. DBHLC? Bearish. And so forth.

Good post. Note I am using them as a confirmation when I would like to enter a trade. Otherwise I trade simple breakouts... Sof far so good. It works at least for me...

We had a BEAUTIFUL example of one on Gold. Was in a bit earlier thanks to small timeframe PA(4h PB entry into a weekly PB) at 649$, already closed that one at 674.5$ and still have one from 666$ going.



To illustrate how these things can work - note how the last three bar highs are all obeyeing the TL, the touches get more frequent which is a sign of buying becoming more frequent and then a clean break. Very rare to see it this beautiful and clean, but Gold can be pretty well behaved sometimes:

a really great thread! thanks all people here who sharing his experiences. especially contributions made by Trader888 are highly appreciated. id like to share my idea, hehe, i think long term trading based on fundmentals is perhaps more suitable for big players with big captial. i happen to know someone who is skilled and experienced in technial trading and has made a big fortune.........

Seekinglight,

I was thinking that for you to be where you are in your trading took you probably just as long as it took me in my trading, you using technicals truely becoming a master of the "dark" art hehe. The point is that it took you just as long to get where you are using TA as it would take someone using funnymentals. So, it is still a time consuming exercise with a lot of work on the practitioners side, and it would take you very long to convince me that you do not have a "gut-feel" when drawing your lines and then taking the live trade on a specific currency. You pass-up on certain trades, right? It just didn't feel right to take it? That's also gut-feel trading in my opinion.

I am sure there are profitable TA traders but they are rare because few have the perseverence to stick to something they initially thought would be a breeze. I think that's the real crux of the matter TA or Fundamentals both work dependant on the practitioner and the baggage he/she brings to the market. Of course also dependant on the way we are brought up as kids but that's a topic for another post...

I really do not wish to get into a debate on what works and what doesn't as both sides obviously have success stories. I am just getting rid of some of my own baggage :-)

By the way, initially I tried to answer all the PM's I could, but it is taking a real long time. The people I did answer will hopefully agree that I have given long and clear answers to their q's and I really tried to do it as properly as possible taking their personal circumstances into account. I believe in reaping what you sow so I am really trying to answer people but time is a constraint and I believe in giving something my full attention or leaving it be until I can give a person the attention they deserve. So please do not feel bad should I not answer PM..

However, many of the emails I have seen are from married people some with children...My advice would be to think twice and maybe a third time before putting your family through something like trading FX. Traders who have come out on the other side (maybe like Seekinglight, Jacko?) will know about the frustrations you will have to face on your journey. Certain people are born to be traders and we read about them in books and forums, others (the majority) will have to change the way they think and perceive life. Not many people will "survive" such a journey. Even once you have "made" it, it doesn't stop, you will have to be ever vigilant in your discipline towards the market as it can be very unforgiving if neglected...

The most important thing I can maybe add is that what works for one person may or will not work for another. WE all have different personalities and behave differently under different stresses. So nobody can really teach you how to trade, that is something you will have to find on your own. Like religion, you have to find it yourself, nobody can force you to believe in something your senses cannot experience. I think seekinglight's previous post makes it clear that different things work for different people.

I hope this helped you on your journey...