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Does Anyone Trade on The Forex?

Discussion in 'General Chat' started by ThoughtPunk, Dec 20, 2008.

  1. Masterful

    Masterful Well-Known Member

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    #21
    Alexa_s, thank you for some interesting posts. I've been deliberating entering into Forex for some time. Only one thing's stopped me: I am very busy with my online business, and I don't want to split my attention between my business and Forex. With that said, I have a quick question . . .

    I anticipate that it'll take a long time and a lot of work to get passed the newbie phase and actually start making a bit of money. How long did it take you, personally, to start seeing a bit of profit? And was it as difficult as it looks?
    SEMrush
     
    Masterful, Dec 22, 2008 IP
    SEMrush
  2. ThoughtPunk

    ThoughtPunk Active Member

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    #22
    Yes Alexa_s provided some great information as did everyone else. I decided in going to open an account today. I'm going to experiment with a macro account for now.


    I saw some companies that offer a minimum of $50 but I forgot the web addresses.

    Can anyone recommend?
     
    ThoughtPunk, Dec 22, 2008 IP
  3. alexa_s

    alexa_s Peon

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    #23
    Sorry, but my answers here are really not helpful or applicable to anyone else, because my father's been a professional forex trader for decades, so I had a greatly accelerated learning-curve because of my family background and already knowing some stuff about "what works and what doesn't" and I had an expert teacher standing over me while I was learning. I think most people go through a phase (sometimes a long phase!) of wanting to find shortcuts and thinking that there's a "simple winning formula out there" and especially believing in "magic indicators" (the reality with "indicators" is that they're all formulated from historical - even if short-term historical - price-movements and they don't actually predict anything), and the sooner they get through that stage, the better.

    The hugely time-saving thing for me was that I had someone to recommend (and even supply!) all the Joe Ross books to me without my needing to read 20 other things first, so I got very lucky and managed to start off in the right direction right from square one, as it were.

    The bottom line, I think, is that it's all about patience and discipline and these are things that come more easily to some people than to others.

    One more little tip is that when you're wrong about something, the faster you acknowledge it, the better (and the cheaper). Nobody wins 100% of their trades. You win some and lose some. If they're the same size (such as a 25-pip profit-target and a 25-pip stop-loss) then clearly you need to win more than 50% (and preferably more than 65% of them) to make profits steadily. If your trades have a bigger target than stop-loss (such as for example a 30-pip or 35-pip profit-target and a 20-pip stop-loss) then clearly you can get away with fewer than 50% winning trades and still make a living provided your money-management is good enough to budget for adverse swings and expect them and survive them. Joe Ross teaches a technique of entering a trade all in one go and closing a proportion of it to cover dealing-costs and prevent losses as quickly as possible, moving the stop-loss to break-even on the rest as quickly as possible, and then letting the last bit run for about as long as the price moves in your direction, trailing the stop-loss with your position so that at no point can you lose back too much of what you've made if the thing switches direction on you, as at some point it must. I use the same principle but I'm doing spread-betting dealing, not trading in "lots" of currency, so I have a bit more flexibility. (Spread-betting is not available for legal reasons to US residents, though). People often say "let profits run and cut losses short" and this is generally good advice, especially if you can split your position to cover yourself with say half of the position, and then "take a chance" on the other half knowing that the worst that can happen is that you'll break even and at least cover your dealing-costs. This can work well, and you can catch the occasional lucky swing in the right direction this way, without being exposed to the risk of a an unlucky swing the same size in the wrong direction. This helps to put the odds in your favour, anyway. ;)

    Most of the serious trading-books say that you should never expose more than 2% of your capital to risk in any one trade. I have a high success-rate with trades and therefore risk 3% on them. This means that if I have say £5,000 in my account, I can expose £150 of it to risk on any one trade. So if I'm doing a trade with a 30-point stop-loss, I can afford to invest £5 per pip (or the equivalent of £5 per pip) including dealing-costs, on that trade. Many people think that with £5,000 in trading capital, trading at £5 per pip of price movement is "too conservative", and they're among the 85% of people who lose money. Their technique of entering trades might be brilliant, but one day they'll wipe out their account when they have a bad run (which can happen to anyone). So you do need a bit of money to start. As a rule of thumb, I would certainly not want to invest more than 1/1000th of my account per pip when trading, and when I started it was a lot less than that. All of this paragraph was just a long-winded way of saying "Beware of over-staking because it will bite you on the @$$ one day!" :eek:
     
    alexa_s, Dec 22, 2008 IP
  4. alexa_s

    alexa_s Peon

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    #24
    Don't use high leverage until you have lots and lots of experience. There are places that will let you trade on huge margin, with about 200/1 leverage, but nobody has ever survived that way of trading without blowing their whole account!! :eek::mad:

    The one thing you must avoid if trading in "lots" of currency rather than by spread-betting is a "margin call"!!
     
    alexa_s, Dec 22, 2008 IP
  5. Masterful

    Masterful Well-Known Member

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    #25

    Thank you for that comprehensive answer! :) I think I'll check out this Joe Ross guy's works when I get some spare time.

    Thanks, Alexa!
     
    Masterful, Dec 22, 2008 IP
  6. pachecus

    pachecus Well-Known Member

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    #26
    I am starting today with a new forex account and this is the Detailed Statement untill now :)

    8383374 2008.12.22 23:14 sell 0.10 gbpchf 1.6231 1.6401 1.6171 2008.12.22 23:27 1.6220 0.00 0.00 0.00 10.07
    8384088 2008.12.23 00:06 sell 0.10 eurgbp 0.9411 0.9562 0.9366 2008.12.23 00:10 0.9405 0.00 0.00 0.00 8.90
    8384402 2008.12.23 00:28 buy 0.10 gbpchf 1.6202 1.6034 1.6244 2008.12.23 01:02 1.6213 0.00 0.00 0.00 10.05
    8384507 2008.12.23 00:29 buy 0.10 eurchf 1.5236 1.5072 1.5291 2008.12.23 01:01 1.5242 0.00 0.00 0.00 5.49
    8384874 2008.12.23 01:01 sell 0.10 eurchf 1.5251 1.5410 1.5191 2008.12.23 01:17 1.5245 0.00 0.00 0.00 5.49
     
    pachecus, Dec 22, 2008 IP
  7. alexa_s

    alexa_s Peon

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    #27
    I'm not sure if this will interest anyone, but I'll try to show you one of my very simple forex trades with a little chart to illustrate the whole thing, and talk you through the chart.

    [​IMG]

    This is a 30-minute bar-chart of USD/JPY (the US dollar against the Japanese Yen - it's not one of my favourites to trade, actually, but it's a nice convenient example of a really simple 1-2-3 formation of the exact type I've been going on about, that I learned from the Joe Ross books.)

    I've marked the 1, 2 and 3 points on the chart in blue.

    The green bar following the bar with the 3-point marked under it signals that we've had a 1-2-3 formation (and in live trading you'd identify them when this bar closes), so there's a high chance that the previous downward trend (off the left side of the chart, not shown here, but it had been a proper downtrend) is now being reversed and we're looking for a long trade, buying the USD. I've drawn a horizontal line at 102.65, the 2-point, and my plan is to enter a trade when the price gets above 102.65, so I put in a buy order at 102.65 or 102.67 or whatever (102.65 is a Ross "traders' trick entry", I'm being cheeky here, the safe entry would be 102.67). Two bars later (an hour later) the price hits 102.65 and my buy order is filled.

    Now my first target is 102.80, which is 15 pips profit (horizontal line drawn) and my second target is 102.95, which is 30 pips profit (another horizontal line drawn). My plan is to close half my position at 102.80 and make sure the other half doesn't lose me more than the 15 pips I've already taken, moving my stop-loss to break-even there and locking in some profit, say.

    Just under 4 hours (8 bars) later, the price touches the line at 102.80 and I close half my trade (sell 1 lot, if you bought 2 lots, or sell 1 minilot if you bought 2 minilots, or whatever). And after another hour and a bit (2 - 3 bars more) it breaks 102.95 and I've sold and I'm out. I've made 15 pips profit with the first half of my trade and 30 pips profit with the second half.

    You can do this on a 15-minute chart, and you'll get a lot more trading in that way, but your success-rate won't be so high. And in the long run, it's actually better to do this on a 30-minute chart and do fewer trades which are safer. And the long run is all that matters, in this game.

    Note that I haven't shown the stop-loss on this picture, and have simplified it a little bit. But I hope it sort of makes sense?

    As you can see, this trade took about five and a half hours to do. What I'll do is start the day by looking through all the currency charts to see if any 1-2-3- formations have just about formed or might be just about to form. And have the discipline not to trade if there aren't any. This one must have been a day when my preferred ones, Euro and Cable, had nothing suitable, so I tried the Yen instead. (JPY is a slightly dangerous currency, not my favourite, because the Central Bank of Japan is very interventionistic and occasionally they mess about with their damn currency during the day and catch you out, Euro and Cable and almost anything else is safer!).

    You'll notice that I use simple bar-charts with no poxy moving averages or rubbish on them, not candlestick charts covered with unnecessary information and "indicators" and stuff!

    PS the times shown on this chart are CET not GMT (they're GMT + 1 hour, in other words, and that's just because the charting package I was using comes from Central Europe, not from London).
     
    alexa_s, Dec 22, 2008 IP
  8. uyma

    uyma Active Member

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    #28
    I was interested in investing in FOREX last year (a month ago). Investing in FOREX you can get much more money than investing in stocks. But like everything else it takes more risk.
     
    uyma, Dec 23, 2008 IP
  9. alexa_s

    alexa_s Peon

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    #29
    Here's one more, showing a Ross-hook following a 1-2-3 formation (for me, this is a double-sized trade, one entry for the 1-2-3 and another for the Ross-hook - so I'm effectively doing two separate trades at the same time here, with 3% of my account risked on each. To me, this is the strongest trading signal there is, for my system). This one is a 30-minute Euro chart, which I much prefer to trade:-

    [​IMG]

    I've marked the points of the 1-2-3 top, which predicates a short entry at the level of the middle horizontal line drawn, which is the 2-point, hoping the previous upward trend is about to reverse. The initial stop-loss is at the level of the 3-point (top horizontal line). An hour later, it has become clear that the bar following the entry-bar constitutes a Ross-hook, so another order is entered at the level of the Ross-hook or just below (bottom line). About an hour after this, I moved the stop-loss to break-even to ensure no loss and waited for the price to drop.

    As you can see, on this occasion, it dropped right off the bottom of the chart. Because this is the Euro rather than the Yen as shown in the example above, I don't just set a simple target and "take profits" but allow the trend to play out, if it does, trailing my stop-loss down with the position, so that when it reverses I can lose back only a smallish proportion of the profits. "Cut losses short and let profits run". With the Euro and Cable, anyway, I'm more nervous about the Yen!

    This double trade was altogether +£1,010 for me, even with my little account trading at £5 per pip, so it can be done if you wait for exactly the chart patterns you want to trade rather than just trading every day "for the sake of it": this is really the key.

    It's easy to look at a chart like that and think "Well, you just got lucky because the price collapsed when you had a short position open" but the reality is that the more you study and practice identifying these 1-2-3 formations and Ross-hooks, and the more disciplined you are about trading them, the "luckier" you get. About 75% of these positions should be profitable, and the losing 25% should be pretty small if you're careful with your stop-losses.
     
    alexa_s, Dec 23, 2008 IP
  10. RightMan

    RightMan Notable Member

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    #30
    I am a stocks trader and do intend to venture out in the forex trading as well...

    But, yet busy learning the basics of the same...

    I trade using charts and I am looking forward to using the same for forex too...

    Regards,

    RightMan
     
    RightMan, Dec 23, 2008 IP
  11. wilhb81

    wilhb81 Active Member

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    #31
    I used to be an active forex trader 3 years ago, but I dropped it after loss huge on it!
     
    wilhb81, Dec 23, 2008 IP
  12. alweb

    alweb Banned

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    #32
    I have tried a demo account , but i didn't like it
    maybe coz i did't learn enough about Forex .
     
    alweb, Dec 23, 2008 IP
  13. RPM Poker

    RPM Poker Peon

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    #33
    I never found out how to trade. I hear it very big and the payouts are pretty high
     
    RPM Poker, Dec 23, 2008 IP
  14. ferdousx

    ferdousx Peon

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    #34
    I was trying to understand it by googling but found it too hard to understand.
     
    ferdousx, Dec 23, 2008 IP
  15. alexa_s

    alexa_s Peon

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    #35
    Yes, I think it's really difficult to start off this way, because inevitably you don't understand enough to be able to "sort" and can't therefore tell which links are worth looking at and which aren't. An introductory book is a much better bet, really.
     
    alexa_s, Dec 23, 2008 IP
  16. ferdousx

    ferdousx Peon

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    #36
    I think u should be good in mathematics and world economics to do well in it. And also lucky be at the same time.
     
    ferdousx, Dec 23, 2008 IP
  17. alexa_s

    alexa_s Peon

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    #37
    Being good at mathematics is undeniably an enormous help. Specifically, you need to understand statistics and variance and standard deviations a bit, to be able to make your "staking" appropriate to the size of your capital: this is exactly where so many people go wrong and end up overstaking, so that however good their "system"/"method" is, eventually a losing run will wipe them out. I shudder to think how many otherwise good forex traders have blown their whole account because they didn't understand standard deviations of results of trades and just got their risk management wrong. This easily accounts for all the people who basically know how to trade but not how to manage their money, and all end up convincing themselves that they've "just been very unlucky".

    Forex trading forums are absolutely full of people who genuinely believe they've been unlucky when what happened to them was actually entirely statistically predictable.

    If you know that you win an average of "X" amount of money on "A"% of your trades and lose an average of "Y" amount of money on the other "B"% of your trades, but haven't worked out mathematically what your longest losing run can be from those figures, you more or less get what you deserve, I'm afraid.

    Two very good and very helpful books in this regard are "Beyond Technical Analysis" by Chande, and "Trade Your Way To Financial Freedom" by Tharp. I strongly recommend both these books and find the idea of people trying out forex trading without having read either of them (or something equivalent) pretty scary: talk about stacking the odds against yourself.

    I haven't found understanding worldwide economics to be of any value at all, myself, but I'm only a day-trader and I can see that it might be relevant, a little bit, to people planning to hold positions open for days or weeks at a time (I would never do that, myself, because I like to sleep!).

    This always helps! ;)
     
    alexa_s, Dec 24, 2008 IP
  18. ThoughtPunk

    ThoughtPunk Active Member

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    #38
    I found out after losing some cash (nothing huge) that I had more success selling instead of buying. when I saw a nice big Red candle stick appearing I jumped in and sold, once I assumed it was at a low I liquidated then bought.

    These happened very quickly.

    Merry Xmas.
     
    ThoughtPunk, Dec 25, 2008 IP
  19. pspdropship

    pspdropship Peon

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    #39
    great point!
     
    pspdropship, Dec 26, 2008 IP
  20. alexa_s

    alexa_s Peon

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    #40
    Your primary responsibility to yourself as a trader, more important than "making money today", is still to be there tomorrow. You can't wipe out an account without grotesque overstaking. It's always said that 85% of people who "try forex trading" lose money, which makes me wonder what proportion of those people have exposed to risk more than 2%/3% of their capital in individual trades.
     
    alexa_s, Dec 27, 2008 IP