Start up questions (I guess are useful for any beginner)

[Rens]

Hello all,

My name is Rens and I'm totally new to trading of any kind. There are a few things I know and way more things I feel I need to know (as I think any beginner should).

About this thread:
Before beginning my post I want to warn that this is going to be a long one. However I'd like to ask all of these questions in ONE thread. Questions that any beginner may find handy to start reading without having to come up with all these themselves. If new questions come to mind I intend to edit this post so it will stay updated, as, I hope, will the answers. I'll try to nicely layout all the parts of my post, so there's optimal clarity to all reading this.

What I already know or think I know:

• There are an awful lot of scams/shady practices in the (forex)trading realm
• One should read up and ask questions before beginning to trade of any kind
• One should find people, tools and education that can be trusted, FPA can definitely help here
• Trade with money you can afford to lose
• I repeatedly see the Forex Military School recommended as a basis in Forex trading. Find it here
• I think I have some questions summed up here that will benefit any beginner in trading

Questions I think will benefit any beginner (myself included):

1. Can I make a serious difference in income with an inlay of up to $5000?
   
2. Is there any real possibility to make money in forex trading or should I consider another form of trading. In that regard, what are the benefits/downsides of forex trading compared to other forms of trading? I.e. what kind of trading would you advice and why that one (forex, commodity, daytrade etc.)?
   
3. Reviews: There are a lot of sorts of reviews. As in forex trading software, education, trading systems etc. What should I take as a basis? Take forex software as a basis, or forex trading system, or forex education or something else? I see all these sorts of reviews.
   In other words, which one is the most important starting point and which things should I look out for and add on later?
   
4. How reliable are the reviews (as in (not) manipulated by the owner of the course/software)?
   
5. How important are the "Expert advisor" and "Performance tested" icons in the review section of FPA? Tested by whom and Expert advisor according to whom? Is it trackable, what those performance tests found out about the software, what were the results?
   
6. I see some forum members, who are quite active and engaged, like Pharao for instance. What would your recommendation be, regarding trading software and trading systems?
   
7. I saw a section called Education from Huskins. Who is Huskins and why should/shouldn't I trust him/her?
   
8. One of the best rated forex software programs was Magic Stick from 4xCircle.com. Does anyone know what happened and whether Haru Miyagi (the founder) is having some other project starting up? Are there comparably good programs?
   
9. Are there any common pitfalls that beginners should look out for? Some general advice. Is there a convenient resource one can go to, that exposes these pitfalls?

Thanks a lot in advance for answering. My request to people who react is: Try to line up the answers with the questions, so things are kept clear.


To all of you I wish the best,


Rens

 

[Pharaoh]

Definitely read FMS (Forex Military School). It even covers some information about alternatives to forex trading.

$5000 initial investment would be good, but won't be enough to quit your day job. Yes, it is possible to double it in a month, but that style of trading is much more likely to wipe out your entire account. Safely trading it won't be enough to live on, but could be enough to provide some extra cash while also slowly growing the account.

AsstMod may yell at me for getting into commercial discussions here, so I'll be brief on questions 7 and 8. Huskins was delivering the FPA's Daily Signals and sold some products. From what I could tell, a few worked ok for awhile, but later ones didn't get the same enthusiastic reception as earlier ones. Eventually, he stepped down and I've heard almost nothing about him since then.
Regarding Haru, I've seen other extremely well rated products fall off the map. Maybe he did so well that he retired. Maybe he had health issues and quit. Maybe he's working on something new. If he pops up again, I'm sure it won't be long until any new product or site is in the reviews. If you do find out about such a thing before it shows up in the reviews, start a thread in the Has anyone heard of? folder in the Commerce Zone.

FPA PTs pull the data directly from the broker, starting with the initial deposit. There's no way to hide the total drawdown and no way to pick a deep drawdown as a convenient time to start a test. There's also no way to hide whether or not a product has SL's set.

AsstMod and his people go to a great deal of effort to screen out fake reviews. Read enough pages and you'll see warnings about fake reviews in many places. Keep digging and you'll see what happens if company employees get caught pretending to be company clients.

Trading System is for items that are not based on external software. For example, if I were to sell something based on indicators built into MT4, so only had to give you specific IF x THEN ENTER IF y THEN EXIT, that would be a Trading System. If I included a custom indicator with it, that moves it to Software. If I write a more general "How to Trade Forex the Pharaoh Way" product to teach you how to trade, that falls under education. Naturally, there are always going to be items that push themselves into the gray zone.

I recommend holding off on paying for ANY products or services until you've finished FMS. After that, I've written articles on selecting brokers and trading products to meet your needs. Why your needs? Simple. Let's say you decide you love scalping. I don't scalp, so any broker or software recommendation I make probably wouldn't apply to you. You can find my articles here:

https://www.forexpeacearmy.com/forex-forum/forex-basics-boot-camp/

 

[Rens]

First of all, thanks a lot for the answers provided, Pharaoh!

For anyone's clarity:
- I use blue to indicate the answers as I perceived them.
- I use red to pose new (deeper) questions as they arise.
- I use green to clarify terms that newbies may have difficulty understanding

So let's see what we can take away here so far according to Pharaoh:

1. Can I make a serious difference in income with an inlay of up to $5000?
You could earn a substantial amount with high risk trading (not recommended). If you don't you could grow your account and take some extra cash.
Extra question: What would be reasonable to expect after reading up thoroughly, asking the right questions, practicing half a year on a dummy account and then following a solid system based on the information gathered here? Would $50 be reasonable to expect a month or more, like $250 or am I too optimistic here?

2. Is there any real possibility to make money in forex trading or should I consider another form of trading. In that regard, what are the benefits/downsides of forex trading compared to other forms of trading? I.e. what kind of trading would you advice and why that one (forex, commodity, daytrade etc.)?
Other forms of trading, besides forex are mentioned in the Forex Military School basic education program, found here.
Anyone want to chime in with their own experience trading in different fields?

3. Reviews: There are a lot of sorts of reviews. As in forex trading software, education, trading systems etc. What should I take as a basis? Take forex software as a basis, or forex trading system, or forex education or something else? I see all these sorts of reviews.
In other words, which one is the most important starting point and which things should I look out for and add on later?
A trading system differs from trading software in that:
Trading Systems provide standard, built in indicators (IF x THEN ENTER, IF y THEN EXIT) and with Trading Software you can include your own custom indicator.
A more general product, written to trade a certain way or follow a certain strategy, that's Trading Education. There are always products that fall into a grey zone.
Pharaoh's recommendation: Hold off on paying for any products/services until you finished FMS and after that, the articles written by Pharaoh on selecting brokers and trading products based on your needs. You find those here.

4. How reliable are the reviews (as in (not) manipulated by the owner of the course/software)?
AsstMod and his people go to a great deal of effort to screen out fake reviews. Read enough pages and you'll see warnings about fake reviews in many places. Keep digging and you'll see what happens if company employees get caught pretending to be company clients. In other words reviews here are thoroughly monitored (good to know).

5. How important are the "Expert advisor" and "Performance tested" icons in the review section of FPA? Tested by whom and Expert advisor according to whom? Is it trackable, what those performance tests found out about the software, what were the results?
FPA PTs (Performance Tests) pull the data directly from the broker, starting with the initial deposit. There's no way to hide the total drawdown (Drawdown is a series of losing trades, causing your capital to be (significantly) reduced. The calculation of a drawdown is usually done by taking a relative peak in trading funds minus a setback in trading funds. The number found is set into a percentage of the trader's account) and no way to pick a deep drawdown as a convenient time to start a test (What do you mean with this last part of the sentence, Pharaoh?). There's also no way to hide whether or not a product has SL's (Stop Loss) set.
Can I conclude from this that: When the "Expert advisor" and "Performance tested" stamp are given by FPA, the product/person receiving them is tested thoroughly by FPA professionals and results are in the end positive?

6. I see some forum members, who are quite active and engaged, like Pharao for instance. What would your recommendation be, regarding trading software and trading systems?
Read FMS basic education and Pharaoh's articles on selecting brokers and trading products based on your needs. You find those here.
Anyone else some recommendations?

7. I saw a section called Education from Huskins. Who is Huskins and why should/shouldn't I trust him/her?
See paragraph 2 of Pharaoh's answer.

8. One of the best rated forex software programs was Magic Stick from 4xCircle.com. Does anyone know what happened and whether Haru Miyagi (the founder) is having some other project starting up? Are there comparably good programs?
See paragraph 2 of Pharaoh's answer.

9. Are there any common pitfalls that beginners should look out for? Some general advice. Is there a convenient resource one can go to, that exposes these pitfalls?
Reading up on this in FMS and in Pharaoh's articles.
I'm open to other suggestions here.


Thanks for providing the answers, Pharaoh. Maybe you can shed some light on the question that arose from your answers? And please do correct me if conclusions/interpretations/definitions are wrong in my attempt to arrange the answers neatly, so other may also benefit from my journey to answers.

This leaves me one more question for now:
Pharaoh talked about "Scalping". This formed a new question in my mind.
For how long can/should you hold on to your investments? Let's say you buy EUR/USD at whatever point. Chances are great you didn't accidentally pick the absolute highest point in the graph for let's say a month. So you can actually wait until it turns a profit and sell. Then you'd never have to sell with a loss... I probably know my reasoning falls short somewhere here, but can someone explain where and why? Or is this good reasoning?

Thanks a lot for all the clarification given and to be received!

 

[AsstModerator]

PTs stand for Performance Tests.

You should see the emails I get from companies after I or one of my review mods catches them leaving fake reviews. Usually, it starts with a denial. Then I show them evidence and they claim clients were visiting the company's offices. You would think that someone who was inside the offices looking at the operation would mention this, but somehow they never do. Then it turns to demands to immediately remove the fake reviews and promises about how it will never happen again.

 

[Rens]

Hello AsstModerator,

Thank you for clarifying the diligence with which you do the job of filtering fake reviews. Really good to read this!

Could you answer and expand on question 5 a bit for me, while you're at this threat?

5. Can I conclude from this that: When the "Expert advisor" and "Performance tested" stamp are given by FPA, the product/person receiving them is tested thoroughly by FPA professionals and results are in the end positive? And, are there details of these tests available?

Thanks again for taking guidance in this chaotic world of forex and the parties associated with it, seriously .

 

[Pharaoh]

I'm back.

1. I'm hesitant to say how much can be earned. A skilled trader can make 30% or more some years while trading very carefully. Overall, I think most successful traders (defined by 5 years or more profitability in a row) probably make less than this. Even a skilled trader will have to adapt. As market conditions change, that trading method might end in a modest loss next year even if it brought in 40% a year for 5 years in a row. (I'll get back to why this is a modest loss in #9).

2. I have traded stocks in the past. Made some money, lost some money. Hopefully, some others can chime in.

3, 4. Looks like these are answered.

5. I think I can answer this one. Companies volunteer for PT ( I think some come forward by themselves, but have heard of invitations being sent too). They have to submit investor access to a live trading account. Scam-rated brokers don't qualify. I believe a few other highly suspicious brokers are also excluded. What you see displayed is pulled directly from the broker using the investor password. Short of something going wrong in data collection or with the broker actively cheating, what you see is the same thing you would see if you could login to the account yourself.

Many companies won't hand out investor passwords to everyone who asks. Many traders would just put a trade copier onto the MT4 platform and then get the same trades without paying for the EA, signals, or managed service. By using the PT program, the company can show off their results without having to worry about the investor password being shared and abused.

Some tricks used on other mT4 sharing sites won't work at the FPA. The only items covered are the name on the account, the account number, and open/pending trades (to prevent copying). The total floating profit/loss of open trades is always displayed. Since the test shows all the way back to the initial deposit, the account owner has no way to only show part of the history. There's also no way to filter by comments on the trades, which can be misused on some MT4 sharing services to cherry pick the best 2 or 3 sub-systems if someone runs multiple methods on an account. Since SL can't be set to private (like on some MT4 sharing sites), you can quickly see if hard stops are used or not. No matter how profitable a system might be, I want to see hard stops to protect the money in case the trading platform gets disconnected.

Go look at PTs and also check the box to see stopped tests. You'll see tests in loss (active and inactive). You'll see accounts completely wiped out. A Performance Test is a piece of information which shows how well a product has done since it started. More often than not, a Performance Test is a warning.

6. There's other free stuff out there. Unless you read very fast, FMS should keep you busy for awhile.

7, 8. Looks like these are answered.

9. If I had to name the number 1 pitfall, it would be poor risk management. Yes, there are many broker which will steal your money. There are many companies which will charge you lots of money for stuff that doesn't work. Still, even if you have the most honest broker in the world and buy or build a trading system that works extremely well, it's incredibly easy for anyone who doesn't understand risk management to wipe themselves out within days of funding an account. Sive covers it in FMS, but I think this article I wrote sums it up nicely:

https://www.forexpeacearmy.com/fore...2272-how-manage-risk-while-forex-trading.html

As referenced back in question 1. A truly skilled trader will have an iron-clad risk management plan. So, even if the markets start behaving in wildly different ways and profits don't come, losses will be tightly controlled.

 

[Ty_jowe]

You can earn money even if you are beginner. But if you want to earn huge money that means that you need to be ready to invest huge money as well.

 

[nahiyar]

Huge money investment is not a secure way of start forex. As a beginner they should start with some investment so that they know their skills .Jump in forex with high amount may be not a good experience . They can be dis heart with loss .

 

[Rens]

I'm back.

1. I'm hesitant to say how much can be earned. A skilled trader can make 30% or more some years while trading very carefully. Overall, I think most successful traders (defined by 5 years or more profitability in a row) probably make less than this. Even a skilled trader will have to adapt. As market conditions change, that trading method might end in a modest loss next year even if it brought in 40% a year for 5 years in a row. (I'll get back to why this is a modest loss in #9).

2. I have traded stocks in the past. Made some money, lost some money. Hopefully, some others can chime in.

3, 4. Looks like these are answered.

5. I think I can answer this one. Companies volunteer for PT ( I think some come forward by themselves, but have heard of invitations being sent too). They have to submit investor access to a live trading account. Scam-rated brokers don't qualify. I believe a few other highly suspicious brokers are also excluded. What you see displayed is pulled directly from the broker using the investor password. Short of something going wrong in data collection or with the broker actively cheating, what you see is the same thing you would see if you could login to the account yourself.

Many companies won't hand out investor passwords to everyone who asks. Many traders would just put a trade copier onto the MT4 platform and then get the same trades without paying for the EA, signals, or managed service. By using the PT program, the company can show off their results without having to worry about the investor password being shared and abused.

Some tricks used on other mT4 sharing sites won't work at the FPA. The only items covered are the name on the account, the account number, and open/pending trades (to prevent copying). The total floating profit/loss of open trades is always displayed. Since the test shows all the way back to the initial deposit, the account owner has no way to only show part of the history. There's also no way to filter by comments on the trades, which can be misused on some MT4 sharing services to cherry pick the best 2 or 3 sub-systems if someone runs multiple methods on an account. Since SL can't be set to private (like on some MT4 sharing sites), you can quickly see if hard stops are used or not. No matter how profitable a system might be, I want to see hard stops to protect the money in case the trading platform gets disconnected.

Go look at PTs and also check the box to see stopped tests. You'll see tests in loss (active and inactive). You'll see accounts completely wiped out. A Performance Test is a piece of information which shows how well a product has done since it started. More often than not, a Performance Test is a warning.

6. There's other free stuff out there. Unless you read very fast, FMS should keep you busy for awhile.

7, 8. Looks like these are answered.

9. If I had to name the number 1 pitfall, it would be poor risk management. Yes, there are many broker which will steal your money. There are many companies which will charge you lots of money for stuff that doesn't work. Still, even if you have the most honest broker in the world and buy or build a trading system that works extremely well, it's incredibly easy for anyone who doesn't understand risk management to wipe themselves out within days of funding an account. Sive covers it in FMS, but I think this article I wrote sums it up nicely:

https://www.forexpeacearmy.com/fore...2272-how-manage-risk-while-forex-trading.html

As referenced back in question 1. A truly skilled trader will have an iron-clad risk management plan. So, even if the markets start behaving in wildly different ways and profits don't come, losses will be tightly controlled.

Thanks a lot for your detailed explanation Pharaoh. The long answer on point 5 has got me lost some times, but I think that's got to do partly with the fact that I'm just starting out.

To sum up point 5 and to see if I got the gist, here's what I got (and please correct me if I'm wrong):
The brokers/companies that provide the software systems, often volunteer for a performance test. On such a test the most important data can be accessed.
The part of using tricks or copying data, I don't really get. I think my lack of insight and experience as a newby is to blame here.
The PTs are not all positive, you should always check up on the PTs to see if it's a warning sign, or whether a system actually performed well.

Questions:
It doesn't get really clear to me what actually happens on a PT. Does the person who does the PT, actually use a live account or can it look at live accounts that are being used by traders?

What are hard stops? It's not in the glossary.

Thanks again!

 

[Pharaoh]

A hard stop is a stop loss entered on the platform. The trader could throw his computer out the window and then kill himself. The hard stop will be executed (possibly with slippage) when price reaches that point. Mental stops are used by traders who claim that they continuously monitor their trades and will close things manually. Evidently, these traders never have bodily functions that require them to step away from the computer and also have perfect internet connections that are never interrupted even for a moment. The truth is that unless you are doing very long term, very low leverage trading, you need a hard stop just in case something does go wrong while you or your connection have been interrupted. If you are worried about your broker trying to manipulate price to take out your stop, change brokers or put an emergency hard stop 25-50 pips past your mental stop.

I've seen some very successful PTs with no SL set end up crashing and burning with no warning. I'd never use an EA, Signals service, or Managed Account service that didn't use hard stops on all trades.

Companies don't provide the software. All the trading in PTs is done on accounts owned or controlled by the companies. I say controlled by because sometimes a managed accounts company will share a client account (with the client's permission) instead of setting up a separate account.

MT4 has what's called an investor password. It allows read-only access to the account. Someone who has the investor password (plus account number and MT4 server info) can see all of the account history from first deposit up to what's happening right now. The information comes directly from the broker and the company is physically incapable of hiding anything. Anything hidden is done on the MT4 sharing site's end.

To sign up for Performance Testing, the company that wants to be tested must provide the account number, MT4 server, and investor password to the FPA.

Where the FPA differs from other MT4 sharing sites is critical.

Some sites let companies pick a specific start date. Imagine a chart that's been going up and down like a roller coaster. Then imagine you are the company. All you do is wait until the balance is heading up, and pick the start date from the most recent low point. The result - viewers see only the most recent upswing and you can make a lot of sales before your roller coaster tops and heads down. FPA PT ALWAYS starts from the initial deposit.

Some sites let companies hide the specific details of closed trades as "private information". This means viewers cannot see if stop losses are set or if any set SL's are at reasonable levels. Viewers cannot see lot sizes, number of trades opened simultaneously, etc. There's no way for a viewer to truly evaluate how risky the trading is without this information. The FPA shows ALL info on all closed trades. To prevent copying of trades by people who don't subscribe to a service the FPA usually covers pending and open trades, but does show the total floating profit/loss of all open trades.

Some site let the company filter trading info to only use data from trades which contains certain comments. This would let a company run 2 EAs on the same account and show the results separately. The problem is that a company could also run 10 different settings on a single EA on an account, develop a history, and then pick the 2 or 3 most successful ones to display as the "official results" of the EA. FPA PT does not allow filtering by comments. ALL trades are used in the calculations.

All PTs are done on live accounts (demos were used initially but were phased out years ago). There are minimum balances based on whether it's an EA or Signals/Managed and if the company has any prior failures of any of its products. If you go to the Commerce Zone tab in the forums, visit the Performance Testing folder. There's a thread about how to volunteer for PTs with all the rules.