How to be a trader for a company?

Hi Trader888 !

Until today I have followed this thread with a lot of interest
When I started trading Forex I made a painful but exciting journey
to various destinations which are called :

1. Countless Forums and Subforums
2. Account Blow Downs due to disastrous money management
3. Technical Analysis from A to Z
4. Various Gurus with Holy Grail phantasies expressed in
e-books with zero Information for the bucks...

So now I see much clearer and I'm on the way to continuos profits
which nicely compound

What did I do ?

1. I've deleted all templates and indicators from my MT4 subfolders
2. I trade with a naked candlestick chart
3. I only use trendlines as described in Tom Demark's book
4. I stick to the order flow which represents clearly in the
charts every day (It's really sooooooo predictible )
5. I use a strict money management
( I only risk max. 2% of my account on one trade !!!! )
6. My stop loss is 50 pips for GBP/USD, 80 Pips for GBP/JPY
and 30 Pips for the not so volatile currency pairs.

For the long term trades I agree 1000% with your extraordinary
analysis regarding the fundamentals !!!

I know that you couldn't explain all the details of how this business
works behind the curtain but I bow my hat for the little look you
give us here at FF

Regarding the extraordinary gains of all the major companies in the U.S.
like Solomon Bros, Merril Lynch, Goldman etc. there was a discussion
in the newspapers how they had reached such a tremendous result
regarding the FX-Profits.
There was a talk, that the big boys now the direction of the trade
and therefore they can make secure bets with extraordinary sums.

I'm interested to read your opinion regarding all this stuff

Best wishes to you and your family

Bernhard

===================================
Hi Bernhard,
What do you mean by 4) ? How do you know what the order flow is?
Thanks a lot! Scardi

One thing I specifically remember is having a mantra I repeated to myself before each meal each day...

I am a professional trader. My job is to take risk. I am able to honour my stoplosses because I am a professional trader. It is my job to trade consistently. If I manage my losses I will be profitable because I am a professional trader. I pride myself in my ability to let my profits run until the market tells me to cut. I feel good about being able to not let my emotions rule my actions. I am a professional trader and will make $1,000,000 by year end. I will achieve this by following my stops and profits to conclusion and not allow my emotions to overrule my actions. I am a professional trader and therefore flexible in thinking and will not allow my current position in the market to overshadow new information being accumulated. I am allowed to make mistakes as it is part of being a professional trader, I forgive myself easily for making mistakes and move on to the next opportunity. Letting losses run is not in my own best interest. Cutting profits short is not in my own best interest. What I have read here is the truth and I believe in my own ability as professional trader to always act in my own best interest.

After repeating this it comes true. I have basically reprogrammed my subconscious to start believing things different from what I was instinctively taught since birth.

Someone asked me for an example of how I would make a trade...I have in an earlier post highlighted thinking around EURGBP, OIL, ZAR and ALLSHARE index in South Africa. These trades still hold and are still open, I have reduced exposure in ZAR increased in EURGBP and closed in OIL -Holding slightly less still in ALLSHARE.

Currency Specifics: As I explained I went short 6758 on eurgbp then closed some around 6780 (for a loss) entered them short again at 6789-91 and then added more on 6748 and some more on 6738 I am thinking of adding another here at 6718 and then if I hit 6700 I will close half of everything put my stop at 6758 and start adding to the position again at 6685 and 6675 and take them back at 6630'ish. depending off course on what I feel like when these levels are hit. Note - I added at 6738 not on the first time it went through but on the pullback last week thursday/friday.

The positioning was : enter 5 at 6758 close 3 for loss at 82 add 3 again at 89 and 90 then add another 3 at 48 another 3 at 38 and I will probably add 4 at 6718. I will close 8 at the figure and then I will have a proper trend starting without risk of losing much anymore. These contracts is just standard lots I think the position is now at about $240 a pip...Not mind blowing I know, but remember I am doing this as a sideline.

So the basic idea is to be fairly active in the beginning until your view starts to work out. When it has then put yourself in a profitable situation -take the pressure off- and see how far the trend can continue adding along the way and taking them back at certain points but always biased towards your view.

Some of these trades take a long time to develop and some just dies -thats when you need to know your view is wrong and close/change gear. I would rather be proven wrong on my view than on my trading.

Also just a quick note on brokers. If we had a particular strong view on the market and we decided to pool our limits and start a serious campaign which might last for months and will involve huge positions we always had the courtesy to phone the brokers and ask them for prices over the phone so they can see us coming and organise their dealing desks in such a manner to accommodate their positions with ours. In turn they protected us on stops and profits and we got better execution...It is always a two way street and I think thats why internet brokers become villians in the eyes of some traders. It is just not possible for these internet brokers to quickly get rid of positions coming en-force over the internet and I think that is the reason why they put some traders on manual execution as they are trying to limit their own losses.

Trader888, Thank you for that mantra. Definitely helps to keep a positive attitude. Your wisdom is greatly appreciated.

Uh, oh, PHANTASTICOOOOOOOOOO ... The SAME, SAME.. I have deleted ALL the indicators... and playing long-term, the trend with strict money management... Since then I have turned my account after blowing a large and a small account... But I went further... I think all the support resistance and price patterns are a hype. I have adapted a methodology purely on price , the most oimportant inidcator...

So you are saying this is an illusion?
Same behavior is on 4h, Daily, Weekly, Monthly..

Nope, they are not... Maybe you are right... Maybe I am just confused...
But everything else stands...

uh, i'm using it... simple and profitable...

Good for you...

Hi Trader888

This is an EXCELLENT post !!!!!!!!!

EVERY trader should repeat this mantra EVERY day.

.

The power of doing something as simple as this is really incredible. If you don't already have a 'mission statement' (to borrow a business term) that you focus and fixate on a daily basis, one that is burned into your subconcious and that you can repeat verbatum from memory, then you should put it at the top of your TO DO list and make it so!

I incorporate such a mantra into my morning meditation. Taking 10 or 15 mintes every day to relax and quiet your mind can help you generate an incredibly positive mindset. Including your goals and objectives as part of this process gets the message through to your subconscious mind and you soon find all your actions and thoughts aligning with your desired outcome.

I can recommend Richard McCall's 'Way of the Warrior-Trader' as an excellent book on how to harness the power of meditiation and train your subscious to bring success to your trading endevors.

I'm currently reading this book...great book, should be a "MUST" read for all newcomers to Forex.

Very true. It does help a lot.

avoid having fixed stop losses. Market is dynamic, not fixed. So adjust accordingly to volatility and your 2% risk

Guys,

You may of noticed I've edited out a number of large quotes, as per best practice (see faq). This is a really good thread and it just takes up unnecessary space if people are quoting large blocks of text with no referral to it specifically. Just cut down your quoting to the beginning and end lines so people can refer back if they wish. Apologies to those posts I may of cut back too much.

Don't worry I won't make a habit of this - just for the better threads. Let's all save screen space (and server load)...

I actually did not get the short at 6718 but got it at 6714 and now closed just over half the posi at 6698 - some good pips made there stops at 6758 and 6738 so for a long term position I should now be OK will add to it again should i reach down to 80'sh and 70'sh...Oil was closed at $80 (as anticipated) and I am looking to go long again on the way to $100 as my view of an uptrend in oil is not changed.

Obviously I wont have time to consistently update my positions here but I am sure you get the idea of how I add and remove lots. Ultimately staying with my long term view. In that other methodology - called Technical Analysis- you would probably regard this EURGBP trade as selling along the touches of the top trendline in the longterm triangle that is now trying to break to the downside...specially mentioned for seekinglights' benefit hehehe. Now if you are a religious follower of TA (and also a moon worshipper) you will be waiting for the re-test of this support to see if it turns to resistance and go short on it...

I guess everybody who has read this thread have now hopefully realised that this is not a get rich quick business its just a job in which some are better than others.

One little bit of advice I can probably also give is regarding starting capital. Many people want to start with 50k and some even with 500k and a many lot with 5k or less. Those with little capital can start, no problem, those with a lot of capital - I suggest starting with only %10 or maybe even 5% of your intended capital in a mini live account- forget about demo. Just to get a feel for how you react when your money is on the line and a feel for how the broker treats you. If you can't handle this small account in terms of emotions then I suggest sorting out your emotions before putting major money on the line. If you come into the market with emotions you will lose all your money...I CAN GUARANTEE YOU THIS. I have seen and advised this before and some of the best outcomes I have seen is traders starting off with $5,000 and then after 6 months they pop in another $40,000 and after 6 more months another $50,000. They started testing their emotions on a small amount and slowly built their confidence. Then of course there was this cowboy who thought I was trying to keep him back and he popped in something like $115,000 and started trading. Needless to say his cows didn't calf and at about $90,000 he withdrew $85,000 and listened to his inner voice.

I remember a mate of mine resigned from our bank and opened his own account with a broker - at that time they had these monthly king of the forex competitions and you are automatically entered if your capital is above a certain level. Now this guy was very jittery and couldn't accept losing, he always started shaking and talking fast and eratically over the phone as soon as he entered the market. I could tell whether he was in a position just by listening to his voice - it was fairly simple - when he didn't have a position he sounded like he was lying next to a swimming pool falling asleep and when he did have a position it sounded like he was humping the phone...I later mentioned this to him and suggested he take smaller positions until he can manage his edgyness...His answer was astonishing: "I tried that but I don't get the same buzz, I need large positions to keep me on my toes" he said. He once won the third place for this competition and about six months later quit completely as it was too much work for him. He did make some money but due to his personality he couldn't keep up with it, it was killing him. Now the russian guy I mentioned before was just the opposite...when he wasn't in a position or his position wasn't big enough he was walking fast, talking fast jumping up shouting at the smallest market movement but as soon as he entered positions he became calm and collected completely restfull.

Now if you think about yourself and your trading and the next five years of your trading life, if you get jittery on every trade you make you will burn out quickly. Remember this trade is just the first one of the next thousand you will have to make so if your heart starts pumping on this one you will never get to number 1000.

That's why I suggest starting on a small account just to see how you emotionally react by trade number 20 of a losing streak. Don't think its impossible it will happen sooner or later. Rather it happen on a $5000 account than a $50,000 account. The market will be there forever, your capital won't be if you don't know your emotions in adverse circumstances.

This is especially written for all the PM's I received with people having $50K and some even $500K to "play" the markets as some of them put it. I can't help you all at the moment and probably won't be able to help any but please start small and build confidence before plunging in with too much capital. People have and people will commit suicide over something as stupid as forex trading so don't let it be you!

I really hope you take this post and make it your own.

I have this huge problem with trends. I always seem to be getting in too late. June..EURUSD...Went south. USDJPY...July Went South. I trust the trend too much and I don't put a s/l and now I'm fighting my way back up again. Gotta learn to cut losses. Gotta learn to cut losses.

Some interesting fundamental VIEWS...This is the kind of articles I like reading to gain insight into the markets. It either confirms what I think given the HARD fundamentals like CPI etc or it will dispute my view, it might even give me insight into something I haven't thought of before. Like on the bottom article in the ZAR...I just thought that given the FACT that the reserve bank of SA is involved in keeping the ZAR "weak"er then at some point they may step out of the way and cause the ZAR to reach down to 6.50. But of course if they keep buying $$$'s until this current $$$ weakness on other currencies is over we will never see 6.50 and the ZAR will trade back up to 7.50. So given this I am "afraid" that the reserve bank might step out of the way so for now I am reducing my posi a bit more with the view of adding to it should we trade higher. The lower we go the better entry it would be for a re-test of 7 but also the higher the risk of it dropping in sympathy to the other currencies...so given this uncertainty I am reducing posi and will add to it at 6.50 as an initial position if at that time there is probability of no further rate hikes. If the probability of further rate hikes are on the cards I will stay out...as it might mean the end of interest rate tightening cycle for south africa and thus a re-test towards 6 so I will watch the news in this country carefully going forward.

hope this shed some more light...

The $100-a-barrel oil that Goldman Sachs Group said would prevail by 2009 may be only a few months away.
Jeffrey Currie, a London-based commodity analyst at the world's biggest securities firm, says $95 crude is likely this year unless OPEC unexpectedly increases production, and declining inventories are raising the chances for $100 oil. Jeff Rubin at CIBC World Markets predicts $100 a barrel as soon as next year.
"We're only a headline of significance away from $100 oil," said John Kilduff, an analyst in the New York office of futures broker Man Financial. "The unrelenting pressure of increased demand has left the market a coiled spring." New disruptions of Nigerian or Iraqi supplies, or any military strike against Iran, might trigger the rise, Kilduff said in an interview last week.
Higher prices will increase revenue for energy producers from Exxon Mobil to PetroChina, while eroding profit at airlines including EasyJet Plc. The US and other oil-importing nations risk accelerating inflation, while higher energy costs threaten to restrain growth.


AND A VERY INTERESTING ARTICLE ON THE ZAR...


There's something remarkable about the rand. It still hasn't firmed unduly even as other currencies are doing handstands.
We should perhaps simply count our blessings?
Other commodity producers and emerging markets are being taken to the caning shed daily as their currencies can't resist upward pressure from rising commodity prices, incoming capital and their own internal arrangements favouring trade surpluses.
But (so far), not the rand.
When ignoring 2002-2005, during which many commodity and emerging currencies appreciated from undervalued levels, it leaves the experience since early 2006.
By early 2006 the Rand was at 6:$, and according to conventional wisdom overvalued by some 10%-20%.
But unlike the lockstep progression of the rand firming along with other freefloating commodity and emerging currencies, as seen during 2002-2005, there was a clean parting of the ways these past 18 months.
The Aussie appreciated some 18% during this period. The New Zealand Kiwi had a slightly more volatile experience. When ignoring its 2006's hiccup, ending the year where it had started, it has since then appreciated some 30% so far in 2007.
Whereas the Kiwi was late, the Canadian Looney had broken ranks even earlier, since early 2005 appreciating by 19% against the dollar.
Anyway, whether these currencies started their breakaway from the rand in early 2005, early 2006 or early 2007 is a moot point, really. All three were subjected to either commodity price surges (Canada and Australia especially) or were the target of love struck Japanese housewives dabbling in carry-trade investing, favouring Kiwi and Aussie, especially in 2007.
Throughout this period the Chinese renminbi appreciated according to a tight schedule set by Chinese authorities. Currency appreciation also happened elsewhere in Asia and Latin America.
The commodity, capital flow and sometimes own investment abstinence (in the case of Korea and other victims of the 1998 Asian contagion, still carrying its scars) kept firming commodity and emerging currencies beyond 2005.
Except the rand. We were lumped together with Turkey and publicly designated a bad risk. But is that the whole story or not even a part of the real story?
Between May and November 2006, the rand weakened by 30%, touching 8:$, before sanity returned, allowing the rand to claw itself back to 7:$, where it has lingered since, accompanied by minor volatility bounded by 6.80-7.40:$.
But we are effectively still 15% weaker than early last year, and much closer to fair value, as compared to our main commodity competitors, whose overvaluations have increased over the past 18 months by between 10% and 30%.
That's quite a relative performance gap in our favour, to the tune of 25% to 45%. Who should we 'blame' or rather thank deeply?
Still, let's acknowledge that the rand's 15% weakening last year did contribute to boosting our inflation surge.
It amplified oil and food price shocks, and probably created more protection for domestic producers, who for many reasons were becoming inclined to pass on more of their cost pressures.
The rand should take part of the blame for our 2,5% interest rate tightening these past twelve months.
That's not something too many indebted South African households will feel too happy about, and that import prices are now generally higher.
But this must be weighed up against the general welfare, in which we cannot ignore our producers, the employers of our labour.
Here we find consensus that while a firm rand assists in keeping inflation down, an overvalued rand cuts too much into our exports, giving undue advantage to imports. It boosts the trade gap and invites longer term financial instability, which could prevent as good a growth performance as otherwise might be achievable (difference between 4% and 6%?).
This relative rand weakness, compared to the currency strength of many of our competitors and compatriots, cannot be blamed on us being less lucky.
Our export prices have also risen, and our capital inflow remained enormous, comfortably funding the trade deficit, despite us being regularly rubbished in financial commentary as a bad risk.
If it wasn't for the Reserve Bank's steady dollar accumulation, today standing at nearly $29bn, up $7bn since early 2006, the rand would also have been sky high, marooned alongside the others in deeply overvalued territory.
Many of our producers would be suffering, our growth becoming more lopsided, favouring domestic over foreign consumption, incurring longer term risk of financial volatility.
So unlike the frequent criticism levelled at the Reserve Bank prior to 2006, about doing too little to prevent rand overvaluation, such criticism doesn't apply in 2007, even if it took a domestic boom, 7% of GDP current account deficit, increased South African investing abroad and steady foreign reserve accumulation to get a more balanced rand value, even as other currencies are taken to the overvaluation woodshed for regular caning.
Until, that is, bank takeover rumours started to swirl last week, taking us near 6.80:$. Could 6:$ remain inconceivable, or is the global maelstrom sucking us in once again, overcoming all our elaborate currency defences?

Which oil contract are you watching? Mine got to only $76.38 so far - corresponded to a FE 200 / FE 100 projection here. Still waiting for an eventual 80$ test, but the FE is also a good reversal area(temporary or final one never knows ahead of time, but one looks for PA).

Just wanted to show the weekly EURGBP of the same chart I posted before, perhaps to allow some overview of what prices / where

On my version we are now right at a key s/r area and still on support, testing how well it may or not hold. If it gives then uh oh, if it holds then EURUSD will most likely make up for all the sideways staggering and GBPUSD get hit or at least slowed down in comparison.
I believe it's these sort of things when folks say a pair "outperforms". Obviously the last 2 weeks that was GBPUSD in this case.

The Oil FE I was talking about. 1:1 projection of the 1 => 3 for a simple 1-2-3 projection..

Sorry. Lot of TA gibberish ;P

Just wanted to show which Oil I was watching

81.92$ would be the next step, 85.50$ will have fib targets / fib s/r with a higher likelyhood of reversal. 91.60 could see the end if we even get there. That's by FE estimates, there's also alternatives like fib extensions and possibly intersecting TLs. I personally prefer to not call tops ahead of time, just LIKELY spots to WATCH for potential setups. Trading a number instead of a setup usually ends up being risky and as good as putting your money on a nr at a roulette table.

(a pullback to 67-70$ before getting a new bullish setup would be nice to see here for example, but would I KNOW where that happens? Not ahead of time.)

Calling 100$ is mostly because people crave big numbers. Last year everyone was screaming 1000$ Gold. When was it the loudest? When we hit 700$. Where did we top out? 730$.

Classic funnymental hysteria and media headlines. They need to write hypes so that more people will read them

Gold subsequently shed 190$ down to 542$. So much for that one ;p

Oil 100$ was also called at the same point in time, got to 78$ after clamoring was loudest once we hit around 70$. Fell to 50.85$ dollar afterwards as seen on chart, too.

It's all nice and well that talking heads earn their daily bread, too. I just don't see how screaming out big, fantastic numbers makes anything very tradeable without a chart =)

Sorry, enough fundamental view bashing, but Gold and Oil are just such a superb example after last year, I had to elaborate.