How to be a trader for a company?

I can tell stories... I have a family, a mortgage to pay and other bills and a day-time job... But because it was very close to my thoughts and (I am an IT/finance professional) decided to start my journey in the FX world... and risk.. It is a painfull journey but I am not giving up and I cna sense that I am "nearly there". Adapted my strategy to dailies so it doesn't take away to much time from my other duties including family...

Best wishes.

PS. I have also managed to blow up my first account...

Sorry for my english. It is my native one.

Excellent post and very true

I hope my TA rantings earlier didn't come across too snooty or brash, I tend to get caught up in my own thought processes while writing and how the tone could be perceived by others sometimes escapes my puny mind in all the flurry ;P

As you've said, the most important thing I think is for people to realize that there are only certain ways trading can work at all, and even less ways for it to work specifically for THEM. And yes, finding that can be a bit painful and time consuming, but it's all about what you want and why you want it.

Well, you've already mentioned the baggage etc, no need for me to repeat everything you've said

MONEY MANAGEMENT... size, position, dynamic position adjustment, instrument selection, risk control, etc, etc, etc...

Very nice thread and discussion. I’d rate it right after j16 chart and jacko threads on the public side of FF (nothing beats PF though …) Thanks Trader888 for lots of good info.
S.L., since you mentioned me ….. Yes, I do trade TL touches, but I’m still waiting for my first 1Mill cheque. It’s hard to say why they work for me most of the time, but I can confess, that I’m very picky about my trades. Before I trade a touch, I look at a long term trend, interest rate differentials, longer term emas and fibs.
If price is near TL but there is no confluence I might just risk 1/5 of my initial position and wait to see what PA brings and then scale in. If price is near TL but there is also PP there and long term ema with 61fib, etc …, I will most likely risk half my intended position and wait for PA setup to add more.
I guess this is why TLs touches work for me more than they do not..
Lots of pips to you guys..
R

p.s. just an example of my last two 'near touch' trades in fiber

.. and another one

Hi all,

Sorry for this silly question, but as we cannot really know where the market goes intra day, is anyone tried "blind trading" ?? i mean no chart..just prices, you open the platform, DON'T read anything ( very important), choose a pair and go...long , or short..whatever!
My thought are you must be around 50% win, like a head and tail, no ?
With a proper risk management, is it 100% sure going to burn all ?

Just opened a demo account to try this

Was just to add little fun in this extraordinary thread . Thax to all very cool people here, it's a pleasure to read .

All,

What are your opinions on resources to learn the fundamentals of forex trading?

Trader 31

Trader31,

Maybe these will be a good start then google things you are interested in...

http://www.forexrealm.com/fundamenta...-analysis.html

http://www.investopedia.com/articles.../05/041305.asp

Hope this helps


I think that most people do not get born/brought up with the correct mindset to be good parents. I think one of the biggest obstacles for me was to accept a loss. To realise that a loss is not a personal reflection on my ability in the market or my intellegence. This ties in directly to taking profits too soon.

By the time we are 2 years old we have heard thousands of commands starting with "NO, don't do that" followed probably by a slap...What does this teach us? It teaches us that we will get hurt if we do something wrong. What happens if you make a loss? You did something wrong! You internalize the loss into a hurtfull feeling that is already in your subconscious since birth. You do not like losses because it is wrong and you associate them with pain almost since birth you have been indoctrinated into believing that you should not make mistakes. To be a successful trader you have to accept your mistakes and not punish yourself over them. It is OK to be wrong! This is something very difficult to accept.

We are also asked from a very young age..."Do you think money grows on trees?" So we are taught that money is a scarce thing and should be held closely to your chest to protect it. This subconscious behaviour cause many traders to cut profits short. You'r up a few pips and you take the profit...I mean since birth you were taught not to waste money and to take whatever money you can get. Now all of a sudden you have to be able to allow money made to "get lost" again in order to make more. Again we have been indoctrinated against this positive trading personality since birth so its not at all easy to get rid of this negative behaviour we have lived it all our lives...

So you are already grown-up you cannot unlearn all these things you can alter them and it does take a lot of practice to unlearn something that is embedded in the subconscious mind.

Having a little girl and knowing what I struggled with in the market I decided to try and bring her up differently. So I (and my wife) outlawed the word NO and replaced it with an alternative. For instance the little one would pull the cats tail and instead of saying: "NO, dont pull the cats tail" we say: "Come pull my arm, leave the cat's tail". The result of this is both positive and invokes a question by the child: "Why must I not pull the cat's tail?" So more communication and she then realise that something is not necessarily wrong and punishable - there is a reason behind commands. The reason might be that the cat can hurt her...If you just say NO and slap them there is tears and no communication and they run to their room. They don't start to understand and learn to think with reasoning if you enforce negatively. There is one huge jump in mental ability needed for a child to first think (intellegintly as opposed to instinctively) about the consequences of an action before taking the action. Thats why we slap them...next time they will remember the slap and not pull the cats tail but this is instinctive and not intellegant action. If a dog with a tail walks in they will remember the slap about the cat but this is a dog so maybe it's OK to pull the dogs tail? The other child who were properly communicated to will also see the dog and the tail but this child will THINK if I pull this tail it might also hurt me like the cat so I should maybe not pull this tail...A trader should be the same most newbies just get slapped left right and center...they never really understand what they are doing wrong. Thats why TA is so difficult - sometimes you get slapped sometimes not but the slapping is not consistent so that we can learn a pattern of what to avoid.

The second thing we have installed is a "money is valueless" idea. We have small change lying around everywhere and it is treated by our little one as toys...If we go to the shop she quickly runs to collect some money for an icecream. She doesn't know how much is needed but she does know that she needs something to pay for the icecream. Initially she hoarded all the small change we have and hide it from us...now that she understands that it is always available she have no more protectionist actions towards it. It is just a means to an end. Traders need to also let go of this feeling of protectionism when making a few pips before they will be able to take the big ones. It is not just longer term traders that struggle with this - even scalpers tend to take 1 pip and leave another 10 pips on the table. The next step we are taking is to learn our little one that she must actually work for money but we are going to try and do it in such a way so that she can realise that although work is needed to make money it is not a punishment to work and that she should always try to get paid for the things that she likes to do and not get paid for things she hates to do. I think that is a serious problem many people have - we do a job we hate and get paid for it but it is not enjoyable to do work like that. If we are taught from birth that we should get paid for something we like to do then hopefully one day when we are grown-up we will get a job or study/work/take steps towards getting a job that we really like and not just because "it pays the bills"

Hope this helped.

Except for the side stab you took at TA, leaving out that one thing, I love it. Love love love.

You're an extremely sympathetic person now

Also? If you were a girl I'd want to marry you, since the VERY same things and convictions you have just explained about raising children I have been holding as my own firm belief ever since I was a teenager
It is of the UTMOST importance that people, children and grownups alike, are made to understand WHY there are certain workings, barriers and permissables, do's and don'ts, must and must not's in the world. And that there is always CHOICE and RESPONSIBILITY (let me just mention Sartre's essay on "existencialism is a humanism" here which is very understandable even to the layman).

This thread needs to be stickied and is a must read. Well, TA bashing aside
Hehehe

Trader888,
Thanks for such a great thread and your last few posts ahve just blown my mind. I will have to reconstruct my mindset again.

SL,
Thanks to you for your wonderful posts which seem to bring out even more quality posts from Trader888.

What a combination, it is rather like combining James16 with Jacko in the same thread - but even more eloquent

Ian

Thanks for the compliments Ian

It's really Trader888 that has to be thanked for taking the time and sharing and writing his personal insights and experiences. He certainly has a lot more life experience and time behind him than me

Hehehe SeekingLight I will probably always give a jab if I can, but for greater clarity the Jab could also be written as: A fundamental trader seeing a number come out trading in the direction the market should move on the news and then seeing it promptly go the "wrong" way...

Thanks for the replies, I am just trying to save people time and maybe give them a better idea of what trading is really about - whether using Technical Analysis or Fundamentals, doesn't matter its not get rich quick, its hard work just like any other j.o.b.

OK it's weekend for me we have got a big family thing this weekend - first time in 5 years everyone will be together so looking forward to that. If I get a moment of freedom I'll probably give some ideas on how to change destructive behaviour into positive behaviour. It worked for me so maybe some people will find some value in my suggestions as in my previous post I really only highlighted personality problems and not given any guidance in sloving them.

Sorry, just had to quickly comment on what I find interesting in terms of fundamentals. This came out today on UK spending. Reading this I ask myself what is the significance of the "average worker"...




Finance
Over 2m in UK always in the red
20/07/2007 12:48
http://www.news24.com/Images/Photos/...poundnotes.jpg More than two million Britons are permanently overdrawn, and the average worker goes into the red 27 days after payday, a survey shows.

UK inflation falls to 2.3%
UK embraces Islamic financing
Banks make millions off charges
Africa

I'd like to thank Trader888 for his contributions as I think they show great insight into not just the value of incorporating fundamental analysis into your trading arsenal, but of what it means to be a trader and the effort and dedication needed to get there.

Reading Trader888's comments I repeatedly nod my head in agreement. I've been following a strongly fundamental based approach for nearly two years now and I have produced the consistency and profits that I have long searched for in my trading quest. I can immediately see the wisdom of his comments and hope that if you're an aspiring, hard working trader who just can't seem to find what works for you, that you seriously consider the approach that he advocates. There are many roads to trading success. Far too often forex forums only tread down the technical and systematic paths. Maybe it's time to consider the path least travelled: that of fundamental analysis.

I want to go back and give some additional comments on a post by FrankS:

My first comment here is only to ask some more questions, as only FrankS can really answer the question of whether studying fundamentals is worth it for him or not: If you are consistently successful purely scalping then why are you on the hunt for something different? Since you seem to be keeping an eye on the fundamentals, what are hoping to get out of your time spent reading the reports and views?

Trading is hard. Is trading oil or grains harder than forex? I guess the only ones who can really answer that are people who spend time trading all those different markets. I've only ever stuck to trading forex. Simplicity is a powerful thing when it comes to trading. Narrowing your focus and becoming an expert of what you are focused on gives you a massive advantage over someone who wants to a jack-of-all-trades across multiple markets.

Markets react to fundamentals in ebbs and flows. There is no direct cause and effect. This is probably why most people find using fundamentals to be so difficult. Instead of the exactitudes and precision that technical analysis presents to its afficiandos fundamental analysis only provides opinion and vague conjecture.

It's as if you, the trader, were a heart surgeon listening to the rhythm of a patient's heart (the market). Listening to the rhythm you get feedback on the state of the patient's health. Irregularities and murmers point to potential problems; the speed of the beating, etc all provide clues for you to make a diagnosis.

Getting in sync with the fundamentals, which is an on-going and never-ending process, tunes you into the health of the market and the various economies that make up the currency pairs you are trading.

When you get to a certain level of proficiency with any trading approach, TA or FA, you realise that you could readily apply your chosen approach to any market. Each market has its own individuality and quirks. It takes time to learn those, to familiarise yourself with the unique characteristics that make up any given tradeable market, but once you understand those, it should not be a major challenge to switch your focus.

If the dollar or euro ever goes poff and evaporates (the currency markets are very young in comparison to other markets, such as futures, and who knows how long the fiat currency system will stay in place) then you shouldn't have any fear in being able to apply your trading knowledge to another market.

Looking at a chart is definitely the easiest way to see the historical trend in a currency pair. It shows you what the trend has been. You can certainly infer from the chart that the trend will continue and trade using TA off the chart. A perfectly valid approach, and profitable as has been proven by the Turtles.

As Trader888 has explained in some of his posts, using fundamentals to trade means that you rarely go for exact entry and exit signals. You are not looking for entries and exits with precise entry and exit price levels to the pip. You generally buy and sell given if price is in a certain area or band.

You step back and use the longer term time frames. You extracate yourself from the random noise that exists at the shorter time frames. There are generally no signals produced from doing fundamental analysis that are clear cut. You can't read an economic data report or read a Fed statement and base whether to enter or exit a trade on some mathematical or predefined signal. You have to interpret the information. You compare it to all that has gone before and allow it to weigh one way or another as to your current view of the market. Does it strength or weaker your present outlook? Maybe you dismiss the news or analysis as just noise and ignore it.

This is highly dependent on how much capital you have to begin with and what sort of returns you are realistically looking to achieve.

You cannot escape the reality that professional money managers and traders aim to achieve 30% year return. If you can do that consistently then you will end up pretty wealthy no matter your starting capital. Never forget the power of compounding.

If you are only salivating over the prospect of making 20% a month then you are going to take plenty of shortcuts to try and get there. In the end you'll probably be sorely disappointed with what you have achieved.

Don't set yourself up for failure before you've even begun. Set realistic, achievable goals. Start with ones you are comfortable with. For example, you might just set a goal to not loss any money in a given month. After you've been able to do that consistently for three to six months you might alter your goal to be a return of 2 or 3% a month, etc. Start small and slowly build up your targets; it's not a sprint, trading is a marathon.

As to how much time you need to apply yourself, and what your reward is. Think of it as differing the rewards to a later date.

A good analogy is going to university. When you're at uni you spend a lot of time learning new stuff, but you're not making any money from it right away. You need to put in place the foundation, all that information and knowledge, so that you can leverage it in the workplace later.

Trading can be approached in the same way. Look to build a strong foundation, even if you're not making much money while doing it (if any). Once you have that strong foundation and achieve the consistency and confidence needed to be comfortable with your trading approach so that you can follow your plan you will start to see that fruits of your labour.

You don't need to know everything to be able to trade and make money. It's not how much information you're able to gather, but the quality of the small amount you do gather.

Don't look to sign up to every newsletter, bank reports, economic data release, central bank report, pundit analysis that you can find, as you'll just drown in information. You'll see so many conflicting opinions that you'll never be able to make up your own mind.

Filter the amount of information you read and process. This takes time, and you'll often find yourself adding or removing reports and analysis as your preferences are refined. The Illusion of Knowledge is one of the Seven Deadly Sins of trading (as identified by James Montier of Dresdner Kleinwort Wasserstein and discussed on my blog).

Also keep in mind that its not the quality or quantity of the knowledge that matters either, it's what you do with it.

It's definitely worth reading the Bill Lipschutz interview in New Market Wizards to get a better understanding of how useless bank traders can also be. From memory, I think Bill says that one year a bank he dealt with generated $300 million from their forex trading department. Unfortunately, it had generated $600 million from providing trading transactions (being a broker) and had lost $300 million from its trading division. Even against the big boys it's possible to make money.

If you truely believe that the markets are totally efficient then you might as well give up trading. If that meme exists in your mind that you are doomed to failure, as your own subconscious will sabotage you when you least expect it.

As Warren Buffet has commented in the past, if the markets were truely efficient then there would have been no value-based companies for him to buy and profit from. He's one of the great investors of our time, and while true randomness and luck can never be fully purged from the equation, I'm going to say that there's a good chance that the markets are not totally efficient.

The big boys don't act on the information straight away. The opportunity to profit from a move resulting from an economic release or change in the fundamentals does not evaporate immediately.

The road to trading success is different for each of use. Using FA is a hard and long road to travel. It will have its success stories and failures, just like any other approach. It takes time, motivation, persistance and dedication to become a master of any skill; trading is not unique is this at all.

Looking to turn $1000 into a million bucks overnight will only result in you being $1000 poorer. With the correct expectations and drive you can achieve financial independence through trading. It will change you in more ways than you can possibly imagine when you first start out.

If using FA to achieve consistent, profitable trading is possible then I think it is definitely worth it, whether you're a small retail trader or a big bank trader. If you can consistently make money then you enter the elite cadre of traders who will have learned a skill, and the ability to harness it, to provide them with a source of income for the rest of their lives.

If you're a small retail trader it might not be your sole source of income, but it can still provide a nice second stream, and can be useful when you are looking to retire later in life.

With the way social security is here in the States, it is ever more likely that people are going to have to work well past the current retirement age. If that does become necessary, wouldn't you rather be able to trade to earn that extra income rather than working for Wal-Mart?

I guess all I'm trying to say is think long-term.

is it possible then for you to open a thread demonstrating how u would take such an approach?

like showing live examples of long term trend following and pyramiding

I like the very last sentence. I am defiately going to do that, trade for the long term , from now on.

Have you heard about the 2% / 4% rule in trading?
In forex you can adopt this easy, tested & profitable strategy.

You can toss a coin every London start and go for 2% SL and 4% TP. You will make money.

WOW....very good insight...

Demark,

I'm not Trader888 but I do pyramid. Last week I managed to put 4 positions in Fiber.

To me, assuming we have good risk management in place, pyramiding still takes a lot of guts.