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New to Forex Trading!

Discussion in 'Mess Hall' started by Kathryn 4x, Oct 19, 2009.

  1. Kathryn 4x

    Kathryn 4x Recruit

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    Hello Everyone!
    Gosh, FINALLY I am able to log on to my FPA act! (There were some technical issues... go figure)
    My name is Kathryn, and I'm pretty much new to Forex Trading. A friend of mine introduced me to it a few months ago, and from what I've been reading, forex really works! (*If you know what you are doing). So far right now, I still don't know what I'm doing, but I'm hoping that's going to change.
    I'm really excited to be able to read the threads that are on here, I've heard they are some of the best threads available on the web. Pretty cool!
    I'm excited to meet everyone and read what you have to say!:cute:
     
  2. Stanly

    Stanly Private

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    Welcome.

    Can you please share the information that forex realy works?! It works but only for 5% of all traders(!
     
  3. Chaz McHan

    Chaz McHan Corporal

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    You Can Do It!

    It DOES work for 5% of all starting traders. Most of the other 95% experience some success, too, before they blow up. The journey to becoming one of the 5% successful traders who can make a living at it is not an immediate one. It's not a random one, either. It's not luck. Your chances are already much greater than 5% since you are interacting with experienced traders on this board and doing research. Knowledge is power. You are already off to a good start. Stay humble and teachable. Here are some tips to move you into that golden 5%:

    1. Learn to read charts and do technical analysis. Until you become proficient at this, you should find a couple professional analysts and follow their every update. Compare them to each other for balance. Even after you are proficient, consulting other competent technical analysts remains a good discipline. It is NOT a substitute for becoming proficient yourself, though. I recommend using Japanese Candle Sticks, Bollinger Bands and Moving Averages on your live charts. Furthermore, learn to plot Fibonacci retracement levels and identify trends and pivots. That being said, I recommend avoiding all other indicators until and unless you have a real good reason for using them. Keep your charts simple and easy to follow.

    2. Follow the news. Every day. Live, as the major announcements are made public. Learn how the various kinds of news items affect the price of currencies. Learn how to follow countries' financial policies and how their currencies are manipulated. There are whole books dedicated to explaining how fundamental analysis is done. Read them. Review them. Follow the release of new titles as they become available. A solid background in economics is very helpful here.

    3. In fact, you should make it an indispensable discipline to read all the forex and general trading books, courses and articles you can get your hands on. Least valuable in this category are books on specific trading systems developed and proposed by the authors. Read these kinds of materials with an eye to considering the underlying justifications for the system's elements. Remember always, though, that trading "systems" come and go and all work under some conditions for a while and all fail under other conditions.

    4. Learn about how sentiment affects the markets and how to read psychological indicators. This is very different from the fundamentals, despite how some people lump them together.

    5. Money management is key and should be a separate area of study and discipline. The main points here include learning to not be over- or under-exposed in the market, learning to spread positions among multiple currency pairs and learning to identify the correct profit-taking and stop-loss points. Money management overlaps with the discipline of risk mitigation. It is more than that, though, and also less... so "risk management" should also be treated separately.

    6. Risk management is the subject of many books and even entire courses. Resources on risk theory usually are broad... that is, not forex-specific, but VERY useful to a forex trader nevertheless. I recommend reading up as much as possible on the subject of risk.

    7. Another broad topic is probabilities. Probability theory, statistics and even decision theory will be helpful. Once you dive into the study of probabilities you'll learn to make what is "counter-intuitive," yet true, be more "intuitive." It will help you place values on trade options. Higher probability trades should be more aggressive and less tentative than lower-probability trades, for example. Jump into higher-probability trades and limp into lower probability trades. You'll also learn where to draw the line between a go and a no-go trade based on its probability value. You'll never be perfect at this and will periodically miscalculate a potential trade's probability of winning, but if you make the study of probabilities a concerted discipline, you'll become more and more accurate in your predictions.

    These are the disciplines you'll need to be consistently successful without blowing up your account. For some people, luck goes a long way, but it will never get them into the top 5% of traders for the long haul.

    8. If a new trader is unable or unwilling to put the time and effort into doing it right, then I'd recommend to them that they find a professional to manage their forex investment. There are managers who do a good job, but also many who are hacks. Do your due diligence and make sure they are disciplined and experienced in the areas above.

    9. Avoid reliance on EAs ("expert advisors," i.e. robots/bots/automated trading scripts) and signal services. These might be very effective under certain market conditions, but will be less effective under other market conditions and outright terrible under still other conditions. There are plenty of good people on here and elsewhere offering and advocating these products, but I respectively disagree with them on their usefulness. Like I said, the main reason are that they are NEVER consistently effective. Furthermore, they play on people's desire for the easy way out, the shortcut, the golden goose. There just isn't any way around proper education and developed discipline. Anyone who says otherwise is a lair or a fool. Finally, these systems a fatally lacking because they cannot be comprehensive. They are either strictly technical (usually) or based on technicals plus fundamental predictions. That's it. A lot of what should be considered is ignored. Granted, human emotions are usually a liability in trading, which is what these systems intend to overcome. However, an informed human intuition is indispensable.

    I hope these pointers are helpful. Don't lose hope. Don't be overwhelmed. You CAN do it. You CAN make it to that 5% who make a great living trading forex if you pay your dues.
     
    #3 Chaz McHan, Dec 2, 2010
    Last edited: Dec 2, 2010
  4. Pharaoh

    Pharaoh Colonel

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    I don't say this very often, but I really wish I'd written the post above this one.

    Excellent advice Chaz!
     

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