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Total Newb Question

Discussion in 'Beginners Bootcamp' started by DannyG24, Dec 10, 2008.

  1. DannyG24

    DannyG24 Recruit

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    I am totally new when it comes to stocks, forex trading and everything. However I have simple basic bare bone question.

    I'am looking at Crude Oil on the forex market, I mean the price jumps are so frequent and so often. I mean this morning its selling for $43.93 a unit and then it becomes $44.52 within a hour.

    So my question is if this is the case, cant a person just be say buying 200 or 300 units and just buying them and selling them when the profit hits 59 cents like above? Is it that easy to make money on forex market or am I missing somthing?

    I mean at 59 cent profit a sale x 200 isnt that like $118 in a hour?

    Thanks, any help and advice would really be appreciated.
     
  2. Pharaoh

    Pharaoh Colonel

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    Some people do make money that way. Of course, what happened to the people who bought oil just before the HUGE price drop? I hope whatever trade platform they used had stoplosses.
     
  3. DannyG24

    DannyG24 Recruit

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    Thanks for the response.

    Basically my next question is, say I would want to try my hand on this. Obviously I would have to make a big order to make any kind of decent profit on a say 59 cent profit a order.

    So I would have to basically pay the price for crude oil which is currently $45.32 * number amount I want?

    So if I want 100, I would have to invest about $4532 into a forex broker account?
     
  4. Agent86

    Agent86 Sergeant

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    Don't roll the dice

    I can't stress this enough, don't just roll the dice

    Market is very volatile and more then likely you will lose all your money unless you know exactly what your doing.

    Unless of course you like gambling and being entertained. But if you want to invest and make money you need a strategy, either technical or fundamental trading or combination of both. And test it with funny money in a demo account first. I know you are probably anxious to trade because there is a lot of money to be made, but also a lot of money to lose do'nt forget that part.
    I highly recommend reading thru the forexpeacearmy and babypips sites etc.
    1. You need a strategy
    2. Make rules for your strategy and stick with them
    3. learn about equity management rules and see if this is something you need to help manage your risk
    4. decide which time frames your life style will allow you trades
    5. Set some times to trade and only trade at those times
    6. Don't risk more then you can afford to loose
    7. Decide if you want to be a technical trader, or fundamental trader or both ?

    I know this sounds like a pain in the neck and not very positive, but it's actually just helpful notes that most traders I think would agree with as they have traveled the road of hard knox to learn such things.
    I don't want you to be discouraged with this advice but just a few notes to keep things stable for you.
    I hope this helps save you from loses.
    I know you will enjoy trading in anycase.
    Happy trading
     
  5. DannyG24

    DannyG24 Recruit

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    Thanks for the advice. I have been doing a demo account for the past week and I don't plan on jumping the gun yet on investing real money. I mean I have so much more to learn first.

    But honestly, from what I have been doing with the demo is I have just been trading the crude oil in the morning. I have been just sitting on my stock trader for 1 hour every morning and looking at the prices. As soon as I see a jump from the price I bought it at by say 40 cents, which has happened every day I have checked, I sell the 200 units I bought. So in the demo, I am making a profit of like $50 to $70 in just that morning.

    Now I know you can just as easily lose it too, but my question comes to, is this demo account an actual showing of what I could be doing with real money? I mean honestly, every morning I have been buying the oil, by waiting patiently the price has risen to a 40 to 50 cent profit from my purchase price.

    Again I really appreciate the links, I am going to read up on those when I get the time this afternoon.
     
  6. Cyclon

    Cyclon Company Representative

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    Position sizing is everything.

    You are assuming no margin and no leverage and also that a decent profit WILL be made.

    The approach you are using will undoubtedly have you 'experimenting' with leverage (and margin shortly thereafter)
    8- ) so let me shorten the learning curve for you just a bit.

    Position sizing is the key to lasting through the two main obstacles you will face on your journey:

    FEAR and GREED

    and as correctly done you have found greed first, so congrats, you instinctively nailed the 1st milemarker.

    By not allowing the market to hurt you in any significant way you control BOTH fear and greed. The way you do it is with position sizing.

    To help you learn the effects which position sizing will have on your account use these tools. They are from the forex project.



    Position size calculator:
    Forex Position Size Calculator

    Risk Calculator:
    Forex Risk Calculator

    The goal is to trade at levels which will keep you in the game. Standard advice hovers around the 3% of equity mark. So when you use the tools you will be able to see real dollar impact so you can assess your risk tolerance level.

    Those should be messed around with and after you have seen how they would logically advise a position size then take 2 trades in a demo at the same point and direction.

    On one, follow the common sense position size answer you derive and the other a lot size which is 'greedier' and leave them open using stops at what would be a normal level, lets just say 40 pips for the test.

    You'll see the impact on your account and what the concept is pretty quickly. I'll see you around!

    Cheers,
    Cyclon
     
  7. DannyG24

    DannyG24 Recruit

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    Well would I have to trade with margin and leverage? What if I want to just use my own money and not go over what my capital in my account is? I don't want to ""borrow" money from the broker.
     
  8. Christian Howard

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    a big question

    Hi everyone. I’ve been all the time trading just with pairs. I don’t have idea how to get in Crude Oil on the forex market. Thanks Dannyg24 for opening this thread. Could you help me figuring out this subject? Nice to know there is more than pairs trading here! Chrish1
     
  9. popbop

    popbop Recruit

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    I believe you want the commodities markets

    Forex is currencies. You can trade oil on the commodities markets.

    nymex.com

    Find a commodities brokerage, open and account and start trading.
     
  10. DannyG24

    DannyG24 Recruit

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    I opened what is called a Forex demo account with a broker and it has commodities on there like crude oil. I have been trading it on there for the past week.

    The broker is avafx. Am I missing something?
     

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