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  • #1
  • First Post: Sep 5, 2008 5:15pm Sep 5, 2008 5:15pm
hi i am a noob who has delighted his broker/trading platform/whatever you want to call it by managing to seemingly blow £500ish on spreadbetting cable.
i was introduced to mt4 by a friend and decided that i wanted a slice of the action and wanted to quit the rat race spend more time with the family etc better standard of living blahblahblah.
"Buy on the blue arrow sell on the red" Simple

£500 later having tanked out 3 times now i have come to the conclusion that i know jack!!
there is a pattern and it is loss, loss, loss, small win, loss, loss, loss, small win etc general trend is loosing money.

several questions to all the experienced traders/gods
1)Does a 20pip take profit and 60pip stop mean a 3:1 ratio in my favor? logic states it is 3 times more likely to move in my favor! yet i still sink like the titanic
2)what is a suitable s.loss 30? 60? 100 pips? i am happy to take 20-30 pips a trade per day at £1 per pip
3)why is it that each time i put a bet on the market jumps 20 odd points in the wrong direction?
4)is £300 enough to start spreadbetting again?

your thoughts and comments please

yes i have done babypips school.
  • #2
  • Sep 5, 2008 5:35pm Sep 5, 2008 5:35pm
Quoting behram
hi i am a noob who has delighted his broker/trading platform/whatever you want to call it by managing to seemingly blow £500ish on spreadbetting cable.
i was introduced to mt4 by a friend and decided that i wanted a slice of the action and wanted to quit the rat race spend more time with the family etc better standard of living blahblahblah.
"Buy on the blue arrow sell on the red" Simple

£500 later having tanked out 3 times now i have come to the conclusion that i know jack!!
there is a pattern and it is loss, loss, loss, small win, loss, loss, loss, small win etc general trend is loosing money.

several questions to all the experienced traders/gods
1)Does a 20pip take profit and 60pip stop mean a 3:1 ratio in my favor? logic states it is 3 times more likely to move in my favor! yet i still sink like the titanic
2)what is a suitable s.loss 30? 60? 100 pips? i am happy to take 20-30 pips a trade per day at £1 per pip
3)why is it that each time i put a bet on the market jumps 20 odd points in the wrong direction?
4)is £300 enough to start spreadbetting again?

your thoughts and comments please

yes i have done babypips school.

Nope. Just the other way around! Now your risk is 3, win 1. In the long run you will loose 3, win 1. I recommend you to study trading way more before making any more trades with real money. Start at babypis.com. I have now been learning about one year after i lost the initial "starting money" ..good thing it was under 1000 dollars

Ideally you dont want to choose "a constant number" for your stop loss. And if you do, make sure the take profit is at least the double of your chosen stop loss. Try to first think realistic SL and TP, and THEN adjust your lot size acording to the range of your chosen stop loss. This is how you can manage the overall risk per trade

Btw, i think best way to "learn" is not by using demo account. Better to use real mone but make sure you use very small ammount (micro account). This way its still real money but you get the psychologic side of the trading too. Demo accounts are only good for learning the platform so you dont press the wrong buttons with real money
  • #3
  • Sep 5, 2008 5:48pm Sep 5, 2008 5:48pm
with spreadbetting there is no lot size. its pure gambling in that when the market moves in my direction the house pays me a [pip x stake] and vice verca.
as to the sloss i was under the impression that the stop was meant to be bigger then the profit in order to avoid being caught out by fluctuations.
  • #4
  • Sep 5, 2008 5:51pm Sep 5, 2008 5:51pm
or am i missing something basic here?
  • #5
  • Sep 5, 2008 5:55pm Sep 5, 2008 5:55pm
Quoting behram
or am i missing something basic here?
I was talking about normal trading. And yes, you are missing lot of basics if you want to have more risk(losses) than winnings
  • #6
  • Sep 5, 2008 5:56pm Sep 5, 2008 5:56pm
Quoting behram

£500 later having tanked out 3 times now i have come to the conclusion that i know jack!!
Yes you do. Stop trading!

Quoting behram

several questions to all the experienced traders/gods
1)Does a 20pip take profit and 60pip stop mean a 3:1 ratio in my favor? logic states it is 3 times more likely to move in my favor! yet i still sink like the titanic
You are takling about the risk reward ratio. In esence you are risking 60 pips to make 20. This means that for every loosing trade you would need 3 winning trades to just break even and unless you have a system with a high number of winning trades (75%+{which does not seem to be the case})you will loose money quick. The above statement also shows that you lack a even basic understanding of Money Management.Stop Trading!

Quoting behram

2)what is a suitable s.loss 30? 60? 100 pips? i am happy to take 20-30 pips a trade per day at £1 per pip
A suitable stop loss is one that will get hit from time to time but it will still allow your system to stay in positive teritory after a large number of trades. In another words it depends on the nature of the system that you are using.There are a lot of different variables that need to be considered when determining what an apropriate sl for a given system is. Without knowing those variables no one can even atempt to answer the above question. This also shows that you do not know (have) your system.Stop Trading!

Quoting behram

3)why is it that each time i put a bet on the market jumps 20 odd points in the wrong direction?
The market is not a being. It is not an entity that hates you. It does not wait for you to place a trade than goes hard against it to piss you off. The market does not care about you or your trade. Get your self a solid trading plan that you have confidence in, then it will not matter what the market does. This shows tha psichologicaly you are not ready to trade. Stop Trading!

Quoting behram

4)is £300 enough to start spreadbetting again?
Absolutely not.

I know this is not what you wanted to hear, and for that i am sorry! Please stop trading and wasting your hard earned money. You have a long way to go before you can trade and make money. It takes a lot of hard work and dedication to get there. Do not be in a hurry. Keep your job (or get one) and keep studying and practicing. Do not use signal providers. Stay away from scamers that promise to make you rich over night with their system that could make you millions with very little effrot and yet only cost $ 59.99 (for a limited time that is).

I wish you luck and hope this helps!
Stubbornly persistent
  • #7
  • Sep 5, 2008 6:14pm Sep 5, 2008 6:14pm
hard news but i need it thanks
  • #8
  • Sep 5, 2008 6:56pm Sep 5, 2008 6:56pm
Quoting behram

yes i have done babypips school.
Did you learn anything there?
  • #9
  • Sep 5, 2008 7:58pm Sep 5, 2008 7:58pm
yeh, he learned he's in over his head.
  • #10
  • Sep 5, 2008 8:15pm Sep 5, 2008 8:15pm
Sounds like you have a great system, all you need to do is exactly the opposite of what you are doing now. Think about it - the reward to risk ratio is excellent and by the sounds of it the success rate is very high. Trading requires a paradigm shift in thinking - noobs add to losers to 'average down' when they should be closing them and adding to winners. They buy at resistance when they should be selling, and they sell at support when they should be buying. Noobs take profits early and give more 'breathing space' to stop losses, again exactly the opposite of what they should be doing to maximise their profits and minimise losses. In other words, find a noob who will inevitably lose and fade every trading decision he makes and you'll make a bundle.

You might be disillusioned by this experience but there is a lot to be learned from it.
  • #11
  • Sep 6, 2008 5:37am Sep 6, 2008 5:37am
hi birdt

what you are saying is that im doing this backwards?

steps to a trade:

1) read ff calender
(find out what is happening)
2) look at basic daily trend in mt4
(to find out whether market is going up or down)
3) if up bet up £1/pip, if down Bet £1/pip.
(start small to get big later in life)
4) set s.l. for 60pips trailing and t.p. for 20 pips fixed.
(to avoid being stopped out. £20 is enough to gain per trade
dont want to be greedy.)
5) watch market
(obvious)

the above strategy is done on mt4 using hour chart for the indicator crossover of 5 and 13 linear average.
what am I doing wrong to loose trades? and then tank out?
  • #12
  • Sep 6, 2008 6:39am Sep 6, 2008 6:39am
sign up for a metatrader demo account. Its free and you can practice with no risk while you learn. note LEARN!!!!

max
Gravity goes both ways in forex...
  • #13
  • Edited 9:42am Sep 6, 2008 9:26am | Edited 9:42am
Quoting behram
hi birdt

what you are saying is that im doing this backwards?

steps to a trade:

1) read ff calender
(find out what is happening)
2) look at basic daily trend in mt4
(to find out whether market is going up or down)
3) if up bet up £1/pip, if down Bet £1/pip.
(start small to get big later in life)
4) set s.l. for 60pips trailing and t.p. for 20 pips fixed.
(to avoid being stopped out. £20 is enough to gain per trade
dont want to be greedy.)
5) watch market
(obvious)

?
In Bold, is the thing which is the most fatal, what you are doing "wrong". It is what will make you lose your money in the end.

1) Do not use "automatic" trailing stop, at least blindly.
I think this is a "trap" made for newbies
2) Do not use bigger stop loss than your take profit.
3) Try to put your stop loss some place for a raason.
Example, behind support or resistance levels, then if its hit,
you know the direction is changed...

Try to enter a trade when you can have "small" stop loss and bigger take profit realisticly(example trading breakouts). Adjust your lot size by calcukating how much the loss will be "if" the stop loss is been hit. This way you know the overall risk % of your trade compared your account size. Take profit MUST give more winnings than your losses. If not, then you are playing a loosing game if your winning accuracy is not more, example over 80+% something(i dont have forumula for the %)...

Just think about it. You currently have it just the wrong way, you can lose 60, and win 20 !!!

One losing takes your last 3 wins. What if you have tree losses in a row? Thats very easy and common. You would need to have 9 wins next in row to make up those 3 losses ! That is a losing game!
  • #14
  • Sep 8, 2008 10:56am Sep 8, 2008 10:56am
Quoting behram
hi birdt

what you are saying is that im doing this backwards?

steps to a trade:

1) read ff calender
(find out what is happening)
2) look at basic daily trend in mt4
(to find out whether market is going up or down)
3) if up bet up £1/pip, if down Bet £1/pip.
(start small to get big later in life)
4) set s.l. for 60pips trailing and t.p. for 20 pips fixed.
(to avoid being stopped out. £20 is enough to gain per trade
dont want to be greedy.)
5) watch market
(obvious)

the above strategy is done on mt4 using hour chart for the indicator crossover of 5 and 13 linear average.
what am I doing wrong to loose trades? and then tank out?
Mate, you are woefully under-capitalized to be using those money management rules with only a few hundred quid in your account. Your main objective is to lose as little money as possible in the next year or two so you actually gain some experience and insight in to the markets. One day, you may look back at your post and cringe. If not, it'll be because you are in the trader graveyard having achieved nothing but made your broker richer.

The problem is you're losing more often than you are winning and you're losing more when you lose than you win when you win. That is the perfect formula for a winning strategy, but in reverse. Ideally a system will win more often than it loses and win more when it wins than when it loses. It is not essential that a strategy fulfill both these criteria though, I've seen strategies with a win rate below 50% win in the long run because of the excellent reward to risk ratio the trader was able to extract from his trades. And I have also seen strategies with very poor RR ratios win in the long run because of the excellent win rate (+90%) they had. Whatever, the combination of these two components will determine your expectancy. Right now, yours is negative so stop trading and don't start again until you are certain that you have a positive expectancy.

Yours is a theoretical mathematical puzzle that you need to prove - does the MA crossover produce a profit in the long run with the money management rules that you employ? That is for you to find out but I suspect that a system as simplistic as that needs some 'context' in terms of support and resistance, as without it you will inevitably be buying into areas of resistance when the MA crossover comes and vice versa selling into support (which is apparently the case judging by your poor recent history). I say get back to the drawing board and figure out what is really going on in the market, as those moving averages won't tell you much at all.
  • #15
  • Sep 8, 2008 4:56pm Sep 8, 2008 4:56pm
fair enough
what do you recommend?
i dont want to stop trading.
  • #16
  • Sep 8, 2008 5:21pm Sep 8, 2008 5:21pm
Difficult to say what you should do as what I find works for me may not work for you. There are many ways to skin this cat, despite what some say there is no 'only' way. You just have to figure out what resonates on your level and stick with it. If a simple MA cross system is what works for you and you're comfortable with it then that is great, stick with it and know the system like the back of your hand.

It is oft quoted that new traders spend 90% of their time refining the entry method and largely neglect the exit method (which IMO deserves at least as much attention as the entry yet how many threads are there in this forum dedicated to them?) and not nearly enough time working on the psychology of trading. Mark Douglas has an excellent book that introduces this aspect of trading (Trading In the Zone - look it up on google with the word 'download') which really impressed upon me the significance of this.

I do recommend reading the No-Brainer thread by BillyRayValentine and the pdf that one of the readers compiled - absolutely essential reading for any trader who wants to get their head around support and resistance.
  • #17
  • Sep 8, 2008 5:29pm Sep 8, 2008 5:29pm
Go to demo until you have worked out a decent method for making money consistently. Everything you've written so far suggests you are in no position to be trading with real money. Try some of the systems described in this forum particularly Jacko's thread and James16's thread.
The market reveals who we really are...
  • #18
  • Sep 9, 2008 5:43am Sep 9, 2008 5:43am
hi birdt, hi ninja,
thanks for the pointers, do you have the links to the posts?
you are doing something right in that i am starting to question my forex beliefs and ideas.
  • #19
  • Sep 9, 2008 5:50am Sep 9, 2008 5:50am
got the ebook ta
  • #20
  • Oct 17, 2008 8:22pm Oct 17, 2008 8:22pm
Hello,
Just a few thoughts from my p.o.v.
I know where you are coming from mate. When i first discovered the wonderful potential that is FX trading, I was ready to jump right in and make my millions. I stumped up some funding for a live account and doubled the money in a week. What I hadn't realised was that it was pure luck. As some of the more seasoned traders here can surmise, I lost the money, and lost it quickly.
Hopes crushed and dreams shattered.
Now for the good news. It is possible to be consistently profitable with FX trading. BUT! before that can happen there are several things that need to be understood. This is not meant to be a comprehensive list, just a few pointers that I have learned:
1) It takes time. From my first live catastrophe it has been more than 1year, and I am just starting to make some headway in terms of profitability.
2) You need to understand your pair. It is all well and good to want to trade all the pairs there are, but it's just not practical, especially as a new/novice trader. Focus on one pair and understand it inside out. What are the economic conditions that affect both sides of the pair?
3) Know your timeframe. I don't know which pair you were looking at, but to me on an hourly chart 20pips is way too small. Find out what the average range is on a candlestick and work out what is a reasonable target/stoploss.
4) Understand support and resistance. Not just what it is, but how price reacts to support and resistance levels.
5) Chart time. There is no substitute for sitting down and watching the candles draw themselves, over and over again. What does a news announcement do to them? What is different about Monday morning, Wednesday lunchtime and Friday afternoon? US time, Europe or Asia?
6) Price goes up and down all the time. How is this significant for you in the pair you like and the timeframe and the duration of the trades you are planning?
Some food for thought. If you REALLY want it, then there is no rush. This has potential to revolutionise your life, but you will need a firm and stable foundations in the basics. Otherwise this market will bite you over and over again until there is nothing left.

My kindest regards for the future.
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