Hello Everyone, I know a lot of people don't have patience for Newbie threads, but those that do, please bare with me because I have some important questions that, after a few months of demo trading, have me confused on what steps to take next: 1) What is a bucketshop? Examples? I've done some research on the different types of brokers, and I understand a little bit, but are sites like Forex.com and Oanda considered bucketshops? Do they hedge by betting against you (make money when you lose)? 2) I'm self-taught in this field and I've been doing research for about a year on the markets in general. I'm a realist and aren't interested in getting rich quick, but rather building wealth over time and getting better at this. I have developed some strategies that I think work...at least according to the demo trade account results... How accurate are these demos, specifically Oanda and Forex.com, to their real platforms and can I expect the same results from Demo to LivE? 3) I don't have a ton of capital to throw down initially...probably about 1K...I plan to trade in very small lots until I get some additional cash to dump in. If I fund my account with 1K, are 10K lots too much? My hope is to build on that 1K slowly so that maybe in a year, I can start trading in 100K lots, and then go from there....decent strategy? And Finally... 4) Judging from these forums, there are a lot of shady brokerages out there...is it just safer to use one that is based in the US and that accepts credit cards (for recourse purposes)? I've demo-ed Oanda and Forex.com...I like Oanda's platform much better...not to mention the spreads are 100 times better than Forex.com, but they aren't based in the states and they don't accept credit cards. Are there any other brokers I should look into? If ANYONE can answer ANY of these questions I would really appreciate it. Thanks.
I've read 37 books and watched 24 videos on trading and have never been a profitable trader. However, in the last couple of weeks I've had winning streaks of 4 consecutive winning trades twice but lost those profits when I decided to be aggressive to make more money faster. Even though it appears I'm a "loser", I'll attempt to answer your questions. 1) A bucketshop in the 1920's or before was a place that took a deposit on a stock you wanted to buy. Since they were leveraged trades, customers often lost so the bucketshop simply pocketed the money from the customer and never did actual trades. If a broker acts as a market maker and trades against you, you have a better chance of getting a fill on a mini lot. Those that are ECNs like Interactive Brokers often trade only in standard lots. 2) You may experience delays in getting filled when prices move very quickly. 3) Since I'm a "loser", I decided to trade one single mini lot at a time until I can trade 2 mini lots at a time without risking more than 3% on a single trade. I mean, if I had $2000 in my account and I have a stop that would cause a $30 loss on two mini lots, that would mean losing $60 on a total of $2000 which is 3%. So, with 5 consecutive losing trades, if you round out the numbers, let's say I might have 15% maximum drawdowns (in that situation I described). Unfortunately, with the tiny amount of money I have in my mini lot Forex account, I'm currently risking more than 3% per trade but I consider this temporary (unless I continue to be a loser, lol). Amazingly, I currently have only a slightly smaller amount in my account right now than I originally deposited. 4) I used Paypal. I would not trust a Forex broker with my credit card number (just my own paranoid opinion). 5) I have an account at GFT Forex. But, if I do end up making lots of money later on, my choices might be: Dukascopy, Interactive Brokers and HotspotFX through Mirus Futures. I can't choose MB Trading or IBFX because they do not handle accounts for residents of Quebec, Canada due to regulatory requirements like having an office in the province or some oddity like that. I know Interactive Brokers and MF Global are compatible with Ninjatrader which allows you to do backtesting for free. However, I did use Dealbook 360 by GFT to do some backtesting. I simply copied the instructions from the pdf guides because I'm not a programmer. I believe the Dealbook 360 platform by GFT is better than the Sterling trading platform I used when I worked at Titletrading (proprietary trading firm which does day trading in US stocks) for 3 months. And yes, I lost my job because my results were not good.
Stick with the basics - support and resistance, chart patterns, price action, money management. Learn everything about them. Do not deviate into indicators, esoterica or fundamentals. Thats how the market works on the short term. Focusing on just obvious support and resistance levels should turn u profitable. Its all about screen time.