Word of advise to Newbies:

[JoeTrader]

Don't think you can rush into this without first knowing the risks involved. Don't plan on how much money you are going to make. Instead plan on how you are going to minimize the amount of money you are going to lose especially during the learning process. If you can't hle losing keep your money.

The key is to minimize the risks. Take it very slow at first. Plan your trade Trade your plan. Know the premises! Always know WHY you are entering your trades. Never predict. Always have your stop-loss in mind before the trade.


Anyone else what to ad some advise to the Newbies ?? we have all once been there I'm sure you can add something you learned down that rocky trail



Good Luck.
JoeTrader

[currencia]

Virtually every tool I now of on a chart is a predictive tool; just some are worse than others. perhaps "never predict" is interpeted wrong here by me. I can underst the statement "Look at what the market is actually doing not just what you predict it to do".

[fairwind]

I am not a pro at this trading business but I believe I can make a worthwhile comment on this topic. I have been studying FX for 7 months tech analysis for 4 yrs in equity's.

There are parallels but FX analysis is different in that it is more volatile I believe.

Anyway I want to say that predicting the market price movements is not what analysis is about. My understing is that we are predicting the "best probability" we can of market movements. The market has a good or high probability of going the way we expect depending on how good our analysis was.

It is of course not always true is it? Thats why we have a stop loss strategy. "We take several small losses so that we may take a few large profits". I am not too sure who said that the Aussie trading guru Darryl Guppy spring to mind.

[currencia]

U SAY: "predicting the market price movements is not what analysis is about" BUT U say "we are predicting the best probability of market movements" ! What kind of circular talk is this?

Market movements already printed on the chart are facts. Market movements not already printed on the chart are probabilities that soon will become fact. It is all technicians job to analyze the existing facts to determine probability of what the next facts are going to be trade it according to the most likely probability in the safest fashion possible.

Many traders simply give up or never start on the very long journey of analyzing facts to predict act upon what they beleive comes next. They simply chase the next market move with a breakout strategy under the idea that it is either gonna go up down or sideways. If the market immediately moves against the entry they get out. If the market immediately moves with the entry they get out. most do this with a risk/reward of 1/1 or less. Needless to say the journey lasts about 6 months.

Day trading is a game of speculation it is speculating on how the market moves next. Predicting future market movements is precisely what tech analysis is all about. Developing trade strategies to obtain a net positive result these calculations of probabilities is a big part of the game.

[magnus]

So currencia I gather you are against just following the trends is this correct?

[currencia]

I look at trend lines I am "not against" them. It is but one tool in a tool belt. I dont just follow trends that's correct. Most traders cannot find a usable trendline till after it's too late to use it. After all which trend line? There are lots of em everywhere!

The easiest thing for someone to teach you or tell you is to follow the trend until it bends. So it makes a good cheap story for those who teach for a big fee. In fact trend line trading has most often very very unacceptale risk/rewards in stop placement unless the retraces are 786's; that means a very shallow trendline that fortells of reversal soon. Most trendline trades have a stop that far exceeds the taught target. the more vertical the t line the worse the ratio.

If trading was so simple as a trendline why do 95% of traders fail in 6 months? (everyone teaches it almost everyone claims they use it to a great degree)

[Paul Koszarny]

quote:My understing is that we are predicting the "best probability" we can of market movements. The market has a good or high probability of going the way we expect depending on how good our analysis was-unquote


I don't underst why you use 'probabilities' where each decision you make is based on facts parameters picture that never repeat themselves as an exact replica of the past experiences. I mean you deal with a situation when you've got a sample consisting of one element only. It reminds me of media statements 'the probability of rate cut by 25points is 70%'. Has anyone given Duisenberg one or two more tries in exactly the same economic conditions?

How can you predict probabilities?

[Cable]

Going back to JoeTrader's advice that's about the essence of trading. Have a plan. There are only three steps to trading. First step is decide how to make the entry decision. Base this on whatever seems sensible to you. You'll find all kinds of methods for entering trades on this forum. Someone even suggested that you could flip a coin. Heads I go long; Tails I go short. Whatever methodology you use to determine your entry point the rest is just risk management. Second step is to decide what needs to happpen to prove you wrong. This manifests itself via by the price action not behaving according to what you thought it would do. There are two things that can happen in this step. You of course have set a stop loss above the last swing high swing low last bars high/low or have chaosen your arbitrary number of pips that you're prepared to lose. Good now what happens is that suddenly the price races away contrary to your position hits your stop. Alternatively the price lingers around goes your way turns around goes against you comes back to evens ad nauseum (sound familiar). Here you MUST be objective - let's face it the price is not behaving as you thought it would. Close the trade - or be prepared to suffer a lingering loss or perhaps a lingering profit if you get lucky (but then that's gambling not trading). Bottom line is that Mr. market is not doing what you want. I've found that one tends to lose objectivity when stuck in one of these types of trade more often than not they turn around give you a larger loss than you could have taken.
The third scenario is that the price goes in the direction that you thought it would. Again there are two things to do. Presumably you have set your profit target the price races in the direction of your trade bang! You're out with a nice profit. Secondly you can "manage" the trade by moving up the stop loss profit target adding to the position at intervals. You would do this if you get into one of those strong trending days that's when the pips roll in.

Bottom line - you're using your tech analysis psychic emissions solar storm theory fractals ju-ju beads or whatever to determine the best point of entry for your trade - the point at which you feel most comfortable stumping up your money putting it on the line. After that you need to manage the trade. This entails managing the risk your emotions. This are the most difficult components of the integrated art.

The last thing to remember is that if you get kicked out of your trade don't jump back in - most likely you'll just add to your losses as this would be an unplanned impulsive act (Plan the trade & Trade the plan). The best thing to do is take a break for an hour or two.

Another thing that I've found is that very often we can beat ourselves up for winning as well as losing. This happens when you've taken maybe 35 pips then see the price over the next few hours continue to a level that would have given you 120 pips. So now you're thinking "why didn't you stay in the trade for the other 95 pips why oh why ?" In this case you should learn that with the proper trade management you could have gotten another big slice but then resolve to manage better rejoice for your winning trade - otherwise you'll never be happy.

Well this appears to ramble somewhat but as it's advice for "newbies" ( I am a newbie of two months now) I hope it can be of value.

Could we hear some of our more experienced traders with their advice on trade management /or psychology of the art ??

Good trading to all