A beginner wants to make it

Discussion in 'Professional Trading' started by d0n, Jan 6, 2012.

  1. Nothing you said made any sense. They are probably pulling your leg or taking the other side.

    Waow...Hedge funds beware....

    No undercapitalized trader makes money consistently. Commissions will kill your account. IB won't sign you for this amount. You will have to pay at least $7 each side for stocks and subject to pattern trader rules. After 214 trades you will have to earn 100% just to recover commissions. Impossible task.

    http://bit.ly/AiPVlw

    My suggestion: raise close to 50K and in the meantime do some simulated trading and backtests. Even go to Vegas to attend a trading conference or two.
     
    #11     Jan 7, 2012
  2. Hi there newbie:)

    If you follow these instructions, you will forego the 10000 hour rule.

    1. Forget stocks or futures, you are undercapitalized. Trade FX.
    2. When you do trade FX, trade with Oanda so you can control your risk.
    3. After you open your Oanda account, fund it with money you would blow over a weekend partying.
    4. Find out where you are relative to the Tokyo-London FX sessions, and get a job that will allow you to trade these sessions on adequate sleep.
    5. Get a decent data analysis platform. I recommend Amibroker.
    6. Analyze the behavior of your instrument and find a way to exploit that.
    7. After you find that, find out where to stop and or reverse if you are wrong. I recommend ACD here.
    8. Send me a Christmas card after you are rich.
     
    #12     Jan 7, 2012
  3. If he is undercapitalized for stocks and futures then he is orders of magnitude undercapitalized for FX. The fact that FX pool operators offer low margins or high leverage to attract small accounts does not mean these accounts are well-capitalized for this market especially when they are trading against their own broker or ECN or MM.

    He is probably going to last no more than 3 months in the FX market. That is optimistic. Most do not last more than one week.

    You are so mean sending this guy to his ruin.:)
     
    #13     Jan 7, 2012
  4. mark_mm

    mark_mm

    About capital,

    With 5-10k you could day trade index futures. One contract tick on ES is worth $12.50 so a 2 point stop is $100 bucks plus commission. Which is 1% of the 10k account and 2% of the 5k account, per trade.

    Obviously you would already have success in simulated trading for a number of months, and this will allow you to have a string of losses without blowing up.

    Mark
     
    #14     Jan 7, 2012
  5. Lack of study here, grasshopper. With Oanda he can trade with an account size of one dollar.

    One buck.

    Did I say he could trade with one dollar?
     
    #15     Jan 7, 2012
  6. Actually you recommended to a guy who admits is a beginner to the most difficult zero-sum game, FX.
     
    #16     Jan 7, 2012

  7. All of these games are zero sum, bruh. He needs to be in a place where he can control his risk and not have to refund his account.

    FX is the place.

    Oanda is the broker.
     
    #17     Jan 7, 2012
  8. NoDoji

    NoDoji

    The Oanda idea is a good one. You can, as RCG pointed out, risk the equivalent of a Friday happy hour while testing various strategies and getting some valuable screen time.

    I'm leery of indicator-based trading because I studied several of them and backtested several of them and despite the backtesting demonstrating millionaire status within a year, reality never came close (this was automated backtesting).

    I was thrilled with the stochastics idea when I discovered it and I had a string of profits for weeks/months, up 40% in three months. I felt invincible (ego) and I held more positions as swing trades, inverting my risk:reward ratio badly when a trade ran against me too far, expecting that there was no way the indicator could be wrong.

    I gave back much of my profit and spent a long time starting over, learning price action trading, the advantage of which is you always have a hard line in the sand beyond which the position is closed or reversed (strong risk management) and because you're riding on the coattails of the institutional traders/investors who move price, the expectancy is positive (statistical edge) due to the inertia created by these market participants looking accumulate or distribute large positions.

    I now frequently buy new highs and sell new lows even if price is extremely overextended and these are rarely losing trades.

    The market is always right. You're new, so here are a few lessons you can have for free instead of blowing your account over them:

    If the news is bad and price is going up, either buy or do nothing; if news is good and price is going down, either sell or do nothing.

    The trend is your friend. Learn to recognize a trend and how to trade one. If a stock's P/E ratio is ridiculously high and only idiots are buying this POS and only dumbasses are falling for this fake rally and this is nothing but a massive short squeeze, either buy or do nothing. Some of us remember how stupid we thought people were for buying NFLX above $60/share, but it never looked back at $60 and spent the next year and a half rising to top $300 and trade at ridiculous P/E levels despite major headwinds. However, once that parabolic uptrend line finally broke and became resistance, it was the short play of a decade.

    If price is totally overextended up or down and the stochastics are fully overbought/oversold and Keltners are in the 7th house and Bollinger aligns with Mars, it's not necessarily the dawning of Age of Acquiring Wealth by positioning yourself against this move. Learn to recognize the patterns that signal a pullback or trend reversal and only trade counter to the move when price triggers this pullback or reversal. Until you learn to do this, either buy the overbought and sell the oversold or do nothing.

    Losing trades are a cost of doing business. A successful business doesn't expect to only produce income without ever paying for rent, utilities, employees, inventory, etc. A successful trader doesn't expect to only produce profitable trades.

    If you're a trader who has, so far, only produced profitable trades, you're cutting winners short in order to snare a profit on every trade, and/or you're moving stops to break even in order to prevent any trade from becoming a loser, and/or you're holding losers (and maybe averaging down along the way) until price comes back to at least break even or a small profit. These tactics can work for a long time, convincing you that you've outsmarted the market. In fact, the longer the string of success, the more danger you're in of taking a large or even catastrophic loss.

    Mom has spoken :cool:
     
    #18     Jan 7, 2012
  9. tobbe

    tobbe

    :eek: :p :D lmao
     
    #19     Jan 7, 2012

  10. You have too many things on your mind. Clear it all out and start with one simple idea. Forward test it for months. I don't even recommend using profits targets initially. Learn the art of stop placement while you use time based exits. Example:

    Buy XYZ at $20.00 when you get your entry signal, and just hold it for one day and exit on closing price. This will give an idea of whther you are placing yourself on the right side of the market. Once you convince yourself of this, then you can fine tune your profit targets in many different ways.
     
    #20     Jan 7, 2012