Avoid this Rookie mistake | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Another FX Rookie here 12 replies

Rookie Starting Up 54 replies

Rookie Lessons Learned 5 replies

What is the best time to trade Forex for a rookie? 10 replies

Rookie in many areas. Help. 2 replies

Attachments: Avoid this Rookie mistake
Exit Attachments

Avoid this Rookie mistake

  • #1
  • First Post: Dec 11, 2011 10:00am Dec 11, 2011 10:00am
I sometimes get messages from desperate new traders who say they just lost some huge sum of money on the market, and that they need help.

Please avoid this mistake: DO NOT TRADE LARGE SUMS OF YOUR OWN MONEY.

If you losing $5,000 would hurt, then you need to deposit only $500.

Likewise, if losing $500 would hurt you, then you need to deposit only $50.00!

The goal in trading is to get to a point where you are trading the money you have won on the market. The quicker you can get to this point, the better your trading decisions will be. Only deposit, and therefore trade off of, what you would spend on a Saturday night out or a weekend vacation. I know many of you are desperate to better your lives financially, but no matter how good your strategy is, resist the temptation to risk large sums of your own hard earned money.
Binary Options Trader
  • #2
  • Edited 6:05pm Dec 11, 2011 4:08pm | Edited 6:05pm
Quoting Yoda_Glenn
The goal in trading is to get to a point where you are trading the money you have won on the market.

That really is one of the holy grails of trading! Hasn't happened for me yet but I'm hopeful it will.
  • #3
  • Dec 11, 2011 4:57pm Dec 11, 2011 4:57pm
I know of quite a few who have put 100K+ in as thats what your supposed to do didn't have a clue and lost it all pretty quickly.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #4
  • Dec 11, 2011 5:59pm Dec 11, 2011 5:59pm
I was guilty of putting too much money in the market to, at one time. As tempting as it might be to put all of your savings in the market, and trade/live off of them, don't do it. One will find that trading decisions that are based off of money won from the market are completely different than decisions that are based off of hard earned money. You need to make the smallest deposit possible to become the best trader possible.
Binary Options Trader
  • #5
  • Dec 11, 2011 6:10pm Dec 11, 2011 6:10pm
I've been adding $100 per time, throw away pin money kinda, if I lose it, I go back to demo solve the issue, add $100 back in and repeat.

Sometimes the $100 last a few days, other times it last upto a year the once and everything in between.

It stops you losing more than you can afford.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #6
  • Dec 13, 2011 12:10pm Dec 13, 2011 12:10pm
Nice to a thread like this finally arriving on forex factory.. I also trade only $100 a time. Well I have two accounts one with a larger sum in it where upon thorough analysis I take a trade and let it run thats what investing is all about doing the homework and being fully certain you will recieve a sizeable return. When things get boring I have my $100 account to trade the M5 and M15 using a system I threw together which works great but if it goes against me for whatever reason I can take a 10% loss and only lose $10. 10% is a big figure to lose if you have $100k account!
  • #7
  • Dec 13, 2011 4:12pm Dec 13, 2011 4:12pm
It's bewildering people would open an account for 100k without fully understanding what trading is about. Thats a bit like opening a business without know anything about the business.

I lost £1700 on £2000 acount in just a few weeks about 8 months ago. It was painful as hell, but at the same it wasn't big enough to deter me from trading, and since then I have learnt so much. That account is still alive at £800.

Another thing though I have found is that if the account is too small and losses doesn't mean much then it can become like trading demos.

I totally agree with the initial post that you should never ever trade with money you can't afford to lose. You need to prepare mentally before opening an account that you may never see that money again.
  • #8
  • Dec 13, 2011 5:49pm Dec 13, 2011 5:49pm
I have come across quite a few threads where newbies post trading blip stories where their accounts were wiped out in a matter of minutes.
Rule 1: Always start of with a demo account, irrespective of how much experience or knowledge you may have [on fx markets]
Rule 2: Always start small
Rule 3: Do not assume anything..
Rule 4: Stay well informed

Sure, these are general tips but newbies would do well to review it again and again.
  • #9
  • Dec 25, 2011 10:48am Dec 25, 2011 10:48am
Quoting Forexnuts
I have come across quite a few threads where newbies post trading blip stories where their accounts were wiped out in a matter of minutes.
Rule 1: Always start of with a demo account, irrespective of how much experience or knowledge you may have [on fx markets]
Rule 2: Always start small
Rule 3: Do not assume anything..
Rule 4: Stay well informed

Sure, these are general tips but newbies would do well to review it again and again.
yeah, agreed, demo account is really important, have to use imagination power thinking that demo account= real money, trading it seriously for a period of time.
  • #10
  • Dec 25, 2011 6:31pm Dec 25, 2011 6:31pm
I never had a problem thinking of a demo as real, because my goal was always to see if I could figure out how to read the chart. I would have been just as happy with a blinking light that said "You win" or "You lose" based on whether I could accurately fill in the pattern that was developing at the hard right edge.

I've read a lot of posts in which people talk about stress and emotion derailing their trading. I don't have that. I think it's because from the very beginning I was filling in patterns rather than trying to capture pips.
  • #11
  • Dec 26, 2011 2:59am Dec 26, 2011 2:59am
Quoting Jerri
I never had a problem thinking of a demo as real, because my goal was always to see if I could figure out how to read the chart. I would have been just as happy with a blinking light that said "You win" or "You lose" based on whether I could accurately fill in the pattern that was developing at the hard right edge.

I've read a lot of posts in which people talk about stress and emotion derailing their trading. I don't have that. I think it's because from the very beginning I was filling in patterns rather than trying to capture pips.
I have come into some resistance from people about this as well, stating that I must have a live account right away in order to have the right feeling and atmosphere to trade. That makes little sense to me, since I wasn't just given a pair of boots and a rifle when I enlisted, but was sent through training and did demo exercises, having a full knowledge of what I was going to have to do when it came down to the "real thing".

I'm in your position - just learning how to read the chart! I don't have money to throw away, and trading is quickly turning out to be something I didn't know it was when I first thought of trying it out. It's really something quite in-depth and complicated; or at least it seems this way to me.
  • #12
  • Dec 26, 2011 3:37am Dec 26, 2011 3:37am
Quoting forexpoor
yeah, agreed, demo account is really important, have to use imagination power thinking that demo account= real money, trading it seriously for a period of time.
I respectfully disagree that one should demo for a period of time (my assumption of you saying period of time is more than 1 week). Demo doesn't teach you how to control emotions. It is like playing video Call of Duty where after losing your life, you can still play.

My suggestion is for someone to demo a maximum of 1 week then open and fund an account with $100 or $1000 maximum. Study and analyze how you will react after your lossing and winning trades. If you loss your initial deposit in a very short period of time, stop trading for a month and go back to th drawing board and see where you can improve. Then fund again with a maximum of $1000.

The cycle should repeat until you gain control of your emotions. Once you're there, the money will follow.
Fear prevent possibilities, and so does Greed
  • #13
  • Dec 26, 2011 5:38am Dec 26, 2011 5:38am
Quoting xtrader101
Demo doesn't teach you how to control emotions. It is like playing video Call of Duty where after losing your life, you can still play.
I demoed for about 10 months, as I recall. (It was a long time ago.) But back then there were no books or websites about Forex, and I had never traded anything. It took me awhile just to figure out what a pip was. Because of my unusual situation, I never went through that emotional thing that seems to be the nemesis of new, and sometimes experienced, traders.

I can tell you with absolute honesty that nothing could possibly happen in any trade -- no matter how much I have on the table -- that would cause me to feel anything stronger than mild surprise and curiosity. Maybe a little excited because I saw something new and it might be something I could exploit in the future. But I can also say that I would feel exactly the same if I were trading a demo.

I don't think it cut my learning curve much to not have the emotional issues, because it takes a long time to get the data into your brain. It just takes a lot of clock hours watching the charts and there seems to be no way around that. I know many people trade via indicators, but I never did, so don't know if indicators can shorten the process or not.

But certainly, if people become hysterical and blow up their accounts, or do incredibly stupid things like averaging down, it's going to take them even longer. We don't learn well when we're frightened or upset. I think people should work through these issues with a demo, unless they can't emotionally engage with a demo at all, in which case, I'd say they've got a REALLY rough road ahead because they really are totally focused on the money.
  • #14
  • Dec 26, 2011 10:53am Dec 26, 2011 10:53am
When I say demo for a maximum of 1 week, the premise is that the person already knew the basics of trading such as what a pip is, draw a trendline, how to use indicators, how the forex markets works in general.

If a person is totally brand new to trading then by all means study the basics until he/she is comfortable. I do not think more than a month would take for an average person who is really willing to learn to have a good foundation of the basics.

I am basing my comments based on my personal experience. I used to trade stocks for 3 years and when I jump to forex I already have a good foundation on technical analysis and it took me 5 days to demo trade.
Fear prevent possibilities, and so does Greed
  • #15
  • Dec 27, 2011 9:03am Dec 27, 2011 9:03am
Quoting xtrader101
When I say demo for a maximum of 1 week, the premise is that the person already knew the basics of trading such as what a pip is, draw a trendline, how to use indicators, how the forex markets works in general.

If a person is totally brand new to trading then by all means study the basics until he/she is comfortable. I do not think more than a month would take for an average person who is really willing to learn to have a good foundation of the basics.

I am basing my comments based on my personal experience. I used to trade stocks for 3 years...
At first, I thought you were blowing a load of smoke, but now that you clarified a bit more of what you meant, I agree with you. It doesn't make a ton of sense to spend a lot of time in a demo account, but I would think that a person is able to self-diagnose if they are ready or not... or perhaps that could just be my particular outlook of myself. (Whether or not I would know I'm ready.)
  • #16
  • Dec 29, 2011 9:20am Dec 29, 2011 9:20am
Maybe people have to know what they expect from a demo/live account.

Demo Account is perfect to find out how things work - but for a new trader it is also positive to have a (small!) live account where he can make actual use of the current trusted system.

I'll say so, because it is much more giving back - even when just gaining the first cents it is more like getting a lolly from your mum, when you've done something well.

If you want to try something new, want to modify your system -> that's what the demo is for, because it's no drawdawn on your real money. That's a good way to learn, as a check if you've investigated right or so.

Surely - you have to know what you are doing and that the market can slightly change in general which you have to look out and compensate.

Personally I don't want to play half a year on a demo account, as soon i think i got something I will play it live - with smallest possible invests for sure, but even it's only 1 ct per week - it IS success and that's very good for the traders soul ;-)

You see, back in school, when you were working hard to learn something - you truly wanted to be proofed, u clearly want to have a goal - it is not, that I learn today and get a Lolly from mum 2 years in the future :-)
  • #17
  • Dec 29, 2011 11:53am Dec 29, 2011 11:53am
I am 18 months on demo and its the best thing I could have done

I treat every pip as if it was my own cash

I was up 5% for the summer after 14 months of being just under BE, got big-headed / emotional in Ocotber and lost 14% in a week

Hard lesson to swallow but thats what demo is for

Plan is to see if I can continue to be profitable the first half of 2012 and then open a small live account in June
  • #18
  • Jan 3, 2012 3:26am Jan 3, 2012 3:26am
true indeed, good to always start small at beginning, till fully understand the method to be used.
  • #19
  • Jan 3, 2012 1:15pm Jan 3, 2012 1:15pm
Most traders tend to think that by just putting a couple hundred in their account they can somehow make millions in a few months. So I don't think what you did was a rookie mistake. If you have studied and practiced the Forex for years and are pretty confident, then go ahead, start with 10,000 USD or (whatever currency you use)! You need a lot of money to make good profits!
  • #20
  • Jan 6, 2012 10:07am Jan 6, 2012 10:07am
It's totally different when you trade with live account from demo account.

you can use demo account to test the broker, familiar with the system.

you need to learn the real trading through live account.

start small is right. it's a learning curve to grow your account.

sure, when you are confident with your skills and control, you can run with more money to enjoy a considerable possible good profit.
0 traders viewing now