News & Trading Question

G'day everyone,

Some of you may already know me as the guy who is still looking for a system to suit him...Ahem! Im working on that, anyway i have 2 questions that i would like to clear up:

1) When a trader says that they want to add to their position, does this mean that they open a new trade. For e.g is i was trading 0.10 lots and had a TP somewhere along and brought my stop to B/E. Lets say i decide im sure the trend is going my way and i want to add to my position. Do i open another 0.10 lot? Or is there another way to do this?

---------

My other question is regarding the news...

2) If there is some high importance news that is going to be coming up on a pair. Is this news capable of effecting the market hours before the news come up by sort of changing its trend or changing the markets pattern?

Ive usually seen this happen just a few minutes before the news comes up but is that possible?


Thanks everyone for the help...Im learning a lot each day

Cheers
S

BUMP!

Anyone..?

Yap I've been on your previous thread, still looking for a system Lol but same as me.

Since we are just a newbie I just want to share my idea about adding to your position. Your explanation I think is very correct that when you add to your position you simply add an additional lot like doing the martingale system.

there is multiple ways to do this there is no right way the way I do it is with an "anchor" the "anchor" is a heavier position like if I have a 10k trading account I normally will trade 1:1 leverage so my first position is 10k if price moves 50 pips and im in a trend i wait for the best possible chance to enter or the next retracement and will buy the next dip at .4:1 leverage or 4k bucks the reason i do it this way has to do with the weight of the position 10k @ 10price [email protected] = 14k@ 10.14 now price would have to drop 36 pips to hit a breakeven point if your adding to your position. If you just add .1 lots every 50 pips itll be 25 pips from breakeven. Its also important to buy the dip instead of averaging up into a trade... this will cause lots of breakeven trades because the weight of price will be pulled up as you add to the position and when price in trend makes the normal retrace will cause you to break even. so the best way to look at it is if you add to fast to much to quickly youll end up breaking even on the trade.

another way is by stripping parts from the bottom and adding to the top. aka Acc trading.
and another way is increasing aggressively on the dips almost creating a upside down pyramid..

price is always being moved by future news whether its anticipation of a news event guessing what number will come out or by past news as well if news came out that was a let down or a major change price maybe continued to be effected by it.

Thanks guys...Appreciate the help...

NFC - that was a bit confusing regarding the balancing act lol..Anyway's ill keep reading more about the subject.

Thanks once again
S

lol sorry what i mean is add slowly to the dips and dont add to fast or when the price retraces you be negative.

K alright got you this time...Thanks

1) "adding to the position" is simply taking a trade in the same direction of the previous trade -- be it short or long. There are various methodologies of how this is done, some people wait for price to retrace a bit before taking the next position - this follows a popular ideology of "buy on weakness, sell on strength". Others are may add to their position based on time or price movement. There is no "right" way to add to a position, completely depends on what suits you.

much like other things in life -- practice is the key. pick some ideas and try them out (pref a demo acct or a very small one, so the tuition to learn trading is kept small).

a guideline i find helped me out a lot when i was starting out was these three principals. a think a famous trader wrote this in some book - sorry, can't quite remember which one.

________________________________________________________________
1) preserve capital
- FIRST AND FOREMOST -- protect what you have. Don't think you can learn to make money trading if you can't learn to keep it. There are plenty of talented individuals who have good systems and make profits--often great profits doubling or tripling their accts in weeks, however they soon bust out and start again from scratch.
Design your system so that it protects capital first.

- personally i found it helpful to split my trades in 3 positions. Lets say my system gives me a short signal -- i then take 0.3lots short. I take off 1/3 or 0.1 lots at 1/1 r/r (so if my stoploss is 10ticks, i take off 0.1lot off at 10ticks profit after spread) ... then i shift the remaining 0.2 lots to breakeven s/l. This allows you to reduce your risk quickly, you may get stopped out and see it run in your favor after -- which can be severely frustrating. But there will be times where your remaining two positions can really run far in your favor, and since you reduced your risk--its easier to hold the position, and even if you do get stopped out -- you make some money, which is much better than losing money
i must stress - this is just one method, there are many that work equally well -- the principal is the same -- PROTECT CAPITAL.

2) consistent returns
the next key is consistency -- this is the only way i know of how to survive in this business. at the end of the day what makes trading lucrative is LEVERAGE and the power of COMPOUNDING. The only way you can feel comfortable in leveraging up your positions is to be more consistent.

E.g. Imagine you take 1 trade a week and net yourself a small 40pips, which is not much movement for an entire week. Starting with an acct of $5000, and risking 2% of capital per trade or $100 at a measly 1/1 Risk/Reward. So your lot sizing is 0.25 lots x 40 pips = $100. Thats a 40 tick stoploss or 40 tick take profit. And every week you adjust your leverage to match your acct, the following week you can risk 2% or 5100 = $102 or taking positions of 0.255 lots. In 1 year your acct would be at $13000+ in 2 years it would be $37000+. 7 times your money in 2 years is not too shabby-- and that is with 1/1 risk reward 2% risk. This is just an example of compounding and leverage power. Many traders on this forum can make 40 ticks a week...take 5 trades a week of 40 ticks...win 3, lose 2 ...you're still up 40 ticks. But the reason why many bust out, cause they leverage up without establishing protecting capital and consistency as their foundation.

3) exponential returns

this will come in time...but only if you get the first two right.

________________________________________________________________

2) how news affects trading is debatable --- some hardcore technical analyst say everything is priced in to the market. --- others say news drives the market. At the end of the day what ever you believe....you want to make money, and to do that week after week or year after year you have to protect capital. some traders refuse to trade around news times (liquidity sometimes drops, spreads go wide, spikes...etc)


- this is all just my opinion and 2cents...take whatever you may find useful...all the best in your trading.