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Help for Newbies (Discussion Thread)

  • #121
  • Nov 24, 2008 1:32am Nov 24, 2008 1:32am
Quoting Xenjin
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?
Helping one another is the key thing is life i guess. worst thing of mankind is being selfish. =)

Anyway, i am new in this community =) but i do see everyone sharing their knowledge..i would say, kudos..i love this place.
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  • #122
  • Nov 24, 2008 6:30pm Nov 24, 2008 6:30pm
Quoting PeterFM
I'm always doing this - reading a post and missing the point.

My Stop is always based on 1% of the account equity. I decide, based on S/R where my stop is likely to be safe. I then switch from the Line chart to the Bar chart and see the highest high or lowest low beyond that point. I add in a bit for the spread and then arrive at the number of pips stop I need. Divide that into my 1% and that tells me how many lots I'm trading this time.

Normally, I'll stand back and take my hit if the trade goes wrong but I have closed early if my gut instinct...
Wow what an excellent risk management strategy. It's really great to hear an advanced trader saying about not getting emotional, hopefully with some discipline and practice I don't get emotional and listen to my gut instinct. I don't usually listen to it, probably I don't trust in my moves yet. Thank for such helpful information.
  • #123
  • Nov 25, 2008 3:05am Nov 25, 2008 3:05am
Quoting Hdsn
Wow what an excellent risk management strategy. It's really great to hear an advanced trader saying about not getting emotional, hopefully with some discipline and practice I don't get emotional and listen to my gut instinct. I don't usually listen to it, probably I don't trust in my moves yet. Thank for such helpful information.
Hello, I am new on this, but I know what you say, I have the same, in these days all I think is that it can reverse at any time and start to go up... I don't know, sometimes it is clear what I have to do, and many other times I don't know what to do, it is like the chart is telling me nothing..., have to improve chart reading and gut reading too je
  • #124
  • Nov 25, 2008 4:39am Nov 25, 2008 4:39am
I'm doing this with one good eye at the moment, so the spelling may be crap...

Having confidence in your trades is key here. I know it's hard when starting out not to take every loss as a personal attack on you as a trader. But there are certain basic ideas you need to take on-board.

Although I'm advocating Support and Resistance as a vital part of your trading plan, it's important to remember that what are obvious levels of S/R to you are also obvious levels to everyone else. This means of course that when you place a protective stop below a Support llne (assuming you're trading long) you are in effect placing a Sell order into the marketplace.

Should there be a large number of these orders around the same area as your stop then they can get picked up my other traders looking to Buy at a better price. This is why you see so many complaints on here about 'stop-hunting'. It is a fact of life in trading and has to be born in mind whenever you place your trades.

The only way round this is to cut out the greed and greed factors in your trading, I'll explain:

Most new traders are trying to grab EVERY single pip they can in any potential trade they see. This means that they will make at least two simple errors: (1) because they are over-leveraged they will place their stops too close to their entries simply as a means of minimising the damage if the trade turns against them; (2) because they haven't carefully assessed the point at which the trade really would have turned against them they close out potentially good trades out of fear of another loss.

Using the simple tactic of holding back for better confirmation that the anticipated move is developing in the direction you anticipated you'll have a clearer idea of where stronger levels of S/R are developing around your potential setup.

If you have a clear target in mind for the move (ie the next major/minor Resistance level in an uptrend) then you can sit back and target 80% of that move with a much stronger feeling of faith in your trade. Your stops will have been set in a more analytical way and your position size will be more accurate. Managing the trade while it is motion is another skill you will develop as you develop your ability to read S/R levels. If you go into every trade expecting to get a fixed R:R ratio out of it you will be sadly disappointed over time.

There's nothing wrong with having a target in your mind as you look for a trade setup, but there are times when the market simply doesn't want to get there, not in the short-term anyway. So you'll have to decide whether to move to Break Even and sit it out, or take all or Partial Profit and be happy with what you've got.

The next step in your development is to NEVER look at the pips/money you would have made if you'd stayed in a trade longer. It is the most negative trait you can develop. Forget it and move on; the next trade could be THE one!
  • #125
  • Nov 25, 2008 8:03pm Nov 25, 2008 8:03pm
I really appreciate your reply Peter. What a good way of helping newbies. The thing is I haven't applied S/R in my strategy, though I am having an insight with your post. Holding back for confirmation seems to be a good tactic, as you can rearrange the S/R. I used to be the kind of trader trying to grab any potential pip regardless any consideration, now I know where to put my S/L on a safely place and I am kind of handling fear when having to leave a trade. ...KUDOS.
  • #126
  • Nov 25, 2008 9:44pm Nov 25, 2008 9:44pm
As I see setting up S/L with support lines is the method to be “relax” in trades. That means for me they are a proved strategy which give you de confidence to teach it as you do. Not a 100% is reached but certainly more the good ones than bad ones.
  • #127
  • Nov 26, 2008 8:17pm Nov 26, 2008 8:17pm
One of the main problems I had when i started out was error # 1 quoting Peter, over-leveraged and placing my stop close to the entry, fearing an unexpected trend turning against my trade. I guess trading on D1 and longer has given considerable experience to me. Fear has decreased and confidence on my risk management strategy has been getting stronger.
  • #128
  • Nov 26, 2008 8:31pm Nov 26, 2008 8:31pm
hey buddy! i would like to know if you don't mind what kind of trades are you used to open trading over a D1 Time Frame. I'm starting to develop my method, trying to do it as accurate as i can possibly can. Thank you man!
  • #129
  • Nov 27, 2008 7:54am Nov 27, 2008 7:54am
Quoting fxbreather
hey buddy! i would like to know if you don't mind what kind of trades are you used to open trading over a D1 Time Frame. I'm starting to develop my method, trying to do it as accurate as i can possibly can. Thank you man!
I'm not quite sure what you're asking me but if it's what type of indicators I use I have to say - none!

All I do is mark key S/R areas on my chart and look for Price Action around those points on the Daily, 4-hr (and sometimes) the 1-hr charts.

Stops are located below/above the lower/higher S/R areas and I trail using either Daily or 4-hr S/R areas as the trade develops. Take Profit will generally be at the next obvious S/R area that price is heading towards.

It's almost too simple to describe, so I have no 'magic' system that I can offer you. I've had 2+ years of gradually clearing my screen of all the crap and now feel the most confident in my trading that I have ever felt.

I still get it wrong, but that's normally because I haven't really looked at the chart and taken everything into account. Quick, unplanned trades lead to quick, unplanned losses.
  • #130
  • Nov 27, 2008 11:07am Nov 27, 2008 11:07am
Quoting PeterFM
It's almost too simple to describe, so I have no 'magic' system that I can offer you. I've had 2+ years of gradually clearing my screen of all the crap and now feel the most confident in my trading that I have ever felt.
Sounds like I need to spend more time on the J16 Chart thread!


Hope your feeling fine Peter!
  • #131
  • Nov 27, 2008 1:31pm Nov 27, 2008 1:31pm
Quoting FXSurfer
Sounds like I need to spend more time on the J16 Chart thread!


Hope your feeling fine Peter!
The eye is gradually clearing up, it just seems to be taking longer this time around. I've got the screen zoomed in as far as I can so I can read what I'm writing.

As far as studying J16 stuff goes it will be time well spent. You still need to know when to pull the trigger as not all PA patterns are equal. And you need vast amounts of patience while you wait for the good setups (still my biggest problem) but life does get easier, I promise.
  • #132
  • Nov 27, 2008 2:42pm Nov 27, 2008 2:42pm
Hi,
I m a newbie and I trade mostly 5m and 1m chart on demo. I do feel that it risky, but so far I've had some success.
I have been learning from a guy that was doing it for years and he built a house only from his FX income. He was also a futures trader before.

I encountered several other articles on the Internet on just using a chart ie Price Action, and I was very interested in reading it, and then I came upon yr post. I must admit that the first time it wasn't what I expected and I just moved on. Now I ve read the whole thing

I believe its very important to be aware of the more fundamental chart moves and systems even if you are a scalper ( as I am at the moment ). I will be reading Jim’s Price action thread
You are certainly not going to learn that in those broker training/info packages
  • #133
  • Nov 27, 2008 6:11pm Nov 27, 2008 6:11pm
Having price action as strategy seems to work for some people, the more advanced ones. I still consider myself as a beginner, just few months trading and learning, but I guess a price action analysis can be acquired through experience. For me indicators were really helpful when getting started to analyze a trend, they have shown me the entries. Setting up your S/R will give you a chance to manage your risk and to place your stop on a safely place. And then I guess you go with your price action. As I read on J16 thread, indicators show the past and price action shows the future.
  • #134
  • Nov 27, 2008 6:22pm Nov 27, 2008 6:22pm
Quoting Hdsn
Having price action as strategy seems to work for some people, the more advanced ones. I still consider myself as a beginner, just few months trading and learning, but I guess a price action analysis can be acquired through experience.
Start your price action (PA) studies now. The longer you leave it the harder it will be to shake off your reliance on indicators. For now, blend the PA with whatever your chosen indicators are, but watch how signals can work together. For example, watch for and only take a MA cross-over when you have a Pinbar or Outside Bar.
Quote
For me indicators were really helpful when getting started to analyze a trend, they have shown me the entries. Setting up your S/R will give you a chance to manage your risk and to place your stop on a safely place. And then I guess you go with your price action. As I read on J16 thread, indicators show the past and price action shows the future.
If you combine your indicators, PA and S/R you'll trade less but you will select the better areas to trade around.

I wish someone had really explained the importance of S/R when I started out. I could have saved myself an awful lot of grief, time and money.
  • #135
  • Nov 27, 2008 8:48pm Nov 27, 2008 8:48pm
great advice! it is necessary to get knowledge about how to set those levels. When you are a beginner, you are use to ear about it as something really difficult but the reality is that if you just focus on the basics of the method, you'll be fine...

here it is...http://www.investopedia.com/articles...1.asp?viewed=1
  • #136
  • Nov 27, 2008 9:00pm Nov 27, 2008 9:00pm
Quoting PeterFM
If you combine your indicators, PA and S/R you'll trade less but you will select the better areas to trade around.
I’m seeing in your suggestion something very important. Combine that information, I mean indicators and the entire thing, you reduce your work area but in general you know better what you’re doing instead placing any time any pair a crazy order.
I’m looking after it.
  • #137
  • Nov 28, 2008 2:50am Nov 28, 2008 2:50am
Quoting PeterFM
As far as studying J16 stuff goes it will be time well spent. You still need to know when to pull the trigger as not all PA patterns are equal.
What do you think of the idea of focusing on trading good
quality PB's?
J16 is a bit overwhelming to me, I have to say, so I'm thinking
that starting with a nice high probability pattern like PB's might
be good...or is it all or nothing?

Thanks Peter!
Brent
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  • #138
  • Nov 28, 2008 3:29am Nov 28, 2008 3:29am
Quoting FXSurfer
What do you think of the idea of focusing on trading good
quality PB's?
J16 is a bit overwhelming to me, I have to say, so I'm thinking
that starting with a nice high probability pattern like PB's might
be good...or is it all or nothing?

Thanks Peter!
Brent
A well-formed Pinbar at the right location is as reliable as anything you'll find.

Just learn to be fussy about the look and location and you're on your way!

Your example is spot on. Pinbars still fail, but so does everything else, but they are a high-probabilty trade. If one does fail then you have a strong signal that the trend isn't over, assuming you were looking for a trend-reversal signal.

They are also great trend-continuation signals as well and are my favourite trades. Just need to see some trends developing instead of this ranging crap at the moment. Hopefully, once the holiday season is out of the way and there is a bit of money coming back into the market we can get back to normal trading.

Take some screen time and learn to look for the best ones at S/R. Keep to 4-hr charts as a minimum for now as the longer the time frame the more reliable they become.

Patience you need, young Brent, and may the Force be with you.
  • #139
  • Nov 28, 2008 8:14am Nov 28, 2008 8:14am
candlestick patterns is not price action even if you use bars. a double high lower close is a candlestick pattern its and engulfing pattern price action is exactly that watching where price is going and the only pattern that follows price action to a T is the 123 pattern
  • #140
  • Nov 28, 2008 12:22pm Nov 28, 2008 12:22pm
Quoting PeterFM
Patience you need, young Brent, and may the Force be with you.
Thanks Peter! I haven't been called "young" for some time! LOL!

While we are talking about J16, where is a good starting point?
I just pick up the terminology and acronyms piecemeal on the
J16 charts thread. Like this one that I just learned (from your
reply) after seeing it many times:

Quoting sonicdeejay
PPZ means??

what is ur entry will be..in this case.??

Sonic
Have a great weekend!
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