Help for Newbies (Discussion Thread)

Peter, let me be the first to thank you for putting so much of your valuable time and effort in teaching noobs like me about forex. Theres allot of information here all in one thread and one place, and I have to re-read it at least 2 to 3 more times to digest it all. I think Jacko's thread also deserves a mention in here, if anyone wants to read about it, its in the Journals subforums.

I'll be visiting this thread for more of your feedback, as I am just learning to trade on 4h charts and with the trend.
Any tips on T/p?

There is a lot more to come, time is a problem with a project like this if I'm going to do it properly.

TP is hard, and I'll deal with this later, but try this old thread of mine for a start. I don't have hard & fast TP rules, I suck it & see as the trade develops. If I look back over trades, I'm wondering why I took profit at all at some points. Hindsight & fear, really good partners in FX trading

Hey Peter,

I just wanted to thank you for opening this thread because I am greatly benefitting from your insights and you encourage me to study more and more.

Chris

Peter:

I just wanted to thank you as you have started this thread in a great way. I am playing with FX for a while and your journey reminds me many moments of my FX experience. Pl keep writing and we will be watching you.

Thanks,

FX_California

Help for Newbies. What can you learn on Forex Factory? I'm creating this thread to give Forex newbies an insight into how they can either start making their accounts grow steadily, or, hopefully, recover from earlier disasters in their first forays into live trading. This thread is based on my 18 months’ experience, and tells how my journey has been. Others' experiences will have been different. All the thoughts outlined here are the culmination of information absorbed from this Forum, from people for whom I have developed a great respect.

As I will keep the main thread closed while I finish each new post, please post your comments here.

Thank you

Thanks Peter for this thread,
Can you please shead some light on trailing stops mentioned in jim's thread. thanks once again.

Trailing stops can be quite an individual thing. I'm not sure there is a one-size-fits-all method.
I rarely put a TS on a pair until I feel it's very close to exhaustion, and then vary it as I go along.
Typically, I'll use 75pips on GBPUSD during a reasonable trend, maybe 50 on something less volatile such AUDUSD. You'll have to get a feel for what you are comfortable with. I know that's not what you wanted to know, but, unfortunately, in FX time spent getting to know the rhythm of the markets is one of the hardest things.
Don't forget I trade daily charts so have got used to seeing large movements for, and against, my trades so I'm much more relaxed about giving up a few pips for the sake of letting trades develop.
This is why I say about demoing with a b roker that lets you trade nano-lots (0.01) so you can see how your trading mentality fits in with this.

We all have kept TSs too close when we start, simply because we hate giving pips away. As soon as you lose this fear/greed factor you'll find trading becomes easier.

Hi Peter.Thanks for helping the new people, such as myself.

In post 12 you state that you stopped useing market orders, would you please explain why. Thanks in advance.

Hi Four Kids
For me it was a simple case of fear. It seemed that every time I entered the market I lost more money than I gained. The reasons for this are obvious now, but I had to find another way to trade that kept me out of losing trades, or reduced the number of bad trades that I made.

Looking back, I now know how little I understood about (a) the market and (b) trading itself. Let me break this down into the main points:

1. The market for any currency pair is in a perpetual state of motion. At any given time it's doing one of three things; trending up - trending down - caught in a range (some call this sideways movement). This depends, to a great extent on the time-frame you use. On a daily chart, there can still be 100 pips movement while a pair is 'ranging', therefore, if you trade short-term charts you're always dealing with trends-within-trends.
2. Whatever your time-frame it's difficult, as a newbie, to know whether a trend is over, or just retracing for a while. Typically I would see price moving up, worry that I was going to miss out, place a Market Order and then panic if price started retracing a few pips, and close either for a loss, or for a few pips profit. Generally speaking, I would then have to decide whether to go back in again if price returned to its original direction, or stay out. Every trade paid the penalty of the spread cost. If we accept the fact that fundamentals drive the market, I understand now that the big boys aren't, as a rule, sitting there watching your typical MA cross-over system trying to squeeze 5 - 10 pips out of every movement of a currency. They are looking for bigger things that affect their ability to hedge commercial transactions, for example. I know there are professional traders who are looking to make vast sums of money from relatively small movements in the market, but, for the likes of you and I, we can't create a worthwhile % of profit per trade, taking 5 - 10 pip movements, without using dangerously high levels of True Leverage in our trades.
3. As I moved to longer time-frames, and decided to only trade with the long-term trend, I found I could see the bigger picture much more easily. If the trend was up, but price was retracing, I could look and see if there were possible Support areas where price might stall during the retracement, I would then consider placing a Buy Limit order in that area, or, alternatively, if I was unsure of the amount of retracement, where I could place a Buy Stop above any Resistance points should price return to its upward trend. If I had placed a Buy Stop, and price didn't resume the original trend, no trade takes place (ie I'm not Long in a falling market). If I'd placed a Buy Limit, and price kept falling, my stop loss would take me out of a losing trade, and I would wait until price stalled and then reconsider my next course of action. As I generally use Buy or Sell Stops more than Limit orders, as a means of entering trades, I'm kept out of a higher % of losing trades. It does mean, of course, that I don't win pips during those retracements, but I've learnt to ignore lost pips, and that's all part of the improvement in the mental side of my trading. If I'm going to be a trend trader, and I'm going to focus on daily charts, as a minimum, I can't go around thinking I could have picked up 100 pips on the 4 hour chart if only I'd played that retracement all the way down.
4. We all worry that we're not going to claim every pip from every trade we enter. That's another thing I've cast aside. If I can make 70 -80% of a particular trend's movement, I think I've done very well. In time I hope to have the skills to extract a little more, but for now I'm content with what I'm doing.

So the short answer to your question is TIME. I have time to think about my trades; where to enter and where to exit. I have a plan, and, whilst I'm not fully-rounded as a trader, I know that the skills I need to finish my development will only enhance what I do now.

Thanks for your comments, and feel free to ask more questions.

Well said Peter.

Find the Timeframe that suits you best & you will find your Trading more intune with yourself.

You Choose...

Or this may be more your style...

Where did you get that picture of my Uncle George?
He's only 35 years old but trades the 5min charts.

Look how it's aged him

BTW

The old dilemma

Heya Peter, I just wanted to say that it's awesome to see what you have gone and done for the public side and beginners especially.

This should become required reading for anyone starting out, but as we all know, most will still go on just busting accounts and reading the cable thread instead, taking random casino gamble trades day in and out.
Part of the ritual I guess.

I for one know the amount of time and effort it takes to put up a comprehensive tutorial with structure and layout and I can't applaud you enough for it.
See, there IS a good reason I mentioned you alongside the other "big names" that one time =)

The turtle always wins the race - Zeno says hello ;0
(http://www.mathacademy.com/pr/prime/...tort/index.asp)


Take care,

SeekingLight

Wondering why I cant see the start of the thread where you posted all the information? Peter did you delete it?

Re the turtle thingy, that's how I feel (me being Achilles) when I look at your trading approach (you being the turtle).

If so its just that when Merlin moved your kind comments from the main thread it's based on time stamps. So your response was created before I set up this discussion thread, so you became the thread author. My 1st post in ths thread got moved to #5

Hi Peter,

Thank you for the interesting threads you have written. I too am based on the UK, and am following pretty much the same path you have trodden, although I am much further back along the way. I have just reached the stage of recognising that there is something in my psychological makeup that is triggered on the shorter time frames, which prevents me from trading these time frames profitably. Even though I can see that others do trade them profitably. I have traded equities on an end of day basis for a small profit for a number of years, and thought that trading forex intraday would be similar. But it is not. So, in a bid to get away from the magic of the dancing numbers, I am looking at putting together a way of trading forex in the same way I trade equities.

As an end of day equity trader, once the numbers come out at 6 pm, there is plenty of time for me to review the London market in the evening. I can decide on the course of action for the next day, set my orders and forget about it until the following day. That kind of approach is what I want to achieve in currency trading. But as forex is a 24 hour market, how and when do you decide to put your orders in? And do you take any decisions based on the 4 hour chart, or are you strictly using only daily charts?

Thanks for your kind comments, and I apologise for taking some time to reply. I wanted to make sure I gave it some proper thought.

I am finding, as I mature as a 'trader', that I need to re-evaluate everything that I'm doing as I go along. Where I am now is a completely different place to where I started, and will be different to where I end up. So this reply is based on what I do now, and, as you have already discovered, may need to be moulded to suit your own style of trading.

Essentially I base my trading on the Daily chart. I only trade the trend as shown on that time-frame, but I do go looking for entry points using the 4hr/1hr charts. So far this has proved reasonably good, but the trends have been fairly steady, recently, so the trades have been, to a certain extent, risk free. If this response doesn't fully answer your question, please feel free to come back to me.

Brilliant stuff,I am in the habit refering to your posts as a regular tonic in order keep my attention in the right places.What I find amazing is that I seem to have to learn everything the hard way i.e experience the very things you talk about before I really understand what you are talking about! Keep up the good work and thanks for your insight.

It took a little time to post the last few as I wanted to be sure I had my sums right. Now I'm away from the numbers stuff (never my strong point) I should be updating faster.