Is it possible to start trading FOREX with $1000?

[Soultrader]

Just to point out... don't get too caught up in finding the best tools of the trade. You don't need a super charting software to trade profitably in the markets. Give me a simple bar chart, a plain market profile chart, and some market internals and I am good to go.

Learn price action. This will never fail you. Good luck

[ezduzzit]

Deb...

I have read the various responses to you here of late and I have a few observations.

First, what is the driving force behind your desire to trade Forex versus perhaps the e-mini futures markets? ForexMadeEasy (no matter how it is spelled) is an absolute oxymoron. Let me preface my remarks as clearly nothing more than my own opinion, but I think Forex is one of the hardest markets to trade successfully that you will ever come across. It is almost entirely dominated by professionals working for huge multinational banks, institutions and hedge-funds and it is an absolute man (and woman) eating jungle for the inexperienced trader. It is also highly subject to an absolute horde of fundamental report releases that drive it to and fro as well besides being a true 24 hour market (unlike the e-mini futures which are on Globex 24 hours but only thinly traded outside of the pit hours.) Forex is, in my humble opinion, a market that can quickly decimate your account if you continually attempt to day-trade it. Even the best independent traders have since learned it is far more advisable to swing-trade the Forex market if they wish to survive long term.

That having been said, let's move on to more of the nitty gritty, shall we? Beginning traders, for want of any better way to get started, usually start out as what we call "pattern" traders. That means they scan their charts each day for what we call "high probability set-ups" that reportedly put the odds in your favor by taking a trade only when those particular patterns appear on your screen. If that is where you have started let me advise you to focus on just one or two patterns for the time being. Regardless of all the nice little rectangles, triangles, pennants and wedges they love to refer to, once you take a look inside those cute little lines, you will spot mostly only two real price patterns, either M's or W's. The M's are supposed to indicate a topping out of the market and potential reversal whereas the W's are supposed to represent just the opposite (a bottoming and potential reversal.)

Now please recognize that some traders who have either failed at either recognizing or trading those patterns will warn you off patterns altogether and perhaps even say they are total poppycock and hazardous to your trading future. Please take that advice with a bit of caution. Remember, anything that tons of other traders follow almost religiously, including patterns, fibonacci support and resistance, floor pivots or whatever have you, has value as it leaves clues as to market direction and action. Just realize that the big traders often play those positions opposite to the way the small retail traders do. For instance, the big boys are busy accumulating contracts in many of the down moves while the retail traders are selling out to them cheaper and cheaper as the market moves down, then lo and behold they stop buying and the selling dries up. What happens then? Well the buying starts in the opposite direction and of course the big boys then sell and thus distribute the contracts they accumulated back into the market for some nice tidy profits as prices rise.

There are however at least another two sides to that equation (beyond patterns) and they are support and resistance (sometimes loosely associated with the term "value") and momentum/volume in the market that is either supporting or resisting the action at hand.

As Soultrader and others in this thread and elsewhere have intimated, you would be well advised to learn about price action. Unfortunately, telling that to a newbie is tantamount to telling them they would succeed in trading if only they would just learn how. What is price action after all and how the heck does one learn it and make use of it? Ahh... there's the rub.

There are perhaps untold ways of approaching the markets, but almost all of them boil down in the end (if you wish to be very successful at it) to learning about value, about extremes beyond value and also about support and resistance that you might encounter between the two. If no one has told you before today, the big institutions and professional big money players mold and move the markets, whereas the retail traders like you and I generally provide the money that goes to fill their bank accounts. That is why the smarter traders here will tell you first to learn how to stop losing money before you focus on making money.

All this is a long winded way to tell you that you must study and learn who moves the markets and how they do it. After much testing of magic indicators strategies and much frustration you are likely to eventually come to the same conclusion, either learn all you can about market value and support and resistance or get yourself out of the markets before your account is vaporized. You might do well to think of your trading screen (price chart) like a battlefield. There is a battle fought there every day between the bull army and the bear army. Your job is to learn about the artillery and troop concentrations (lines of either support or resistance) and make an assessment based upon what you see happening in front of you - the price action - in conjunction with those support and resistance lines and what is likely to happen as the battle between the bull army and bear army rages on closer and closer toward one of those points on your screen.

I first suggest you learn all you can about pivots and support and resistance, especially as it concerns what happens when the price action either bounces off of them or goes through them in either direction. Additionally, you need to always think about three things before each trade, once you understand the structure of the playing field: trend, timing and momentum or volume. Is there a trend or is the market chopping to and fro in a fairly tight range? Please understand that very few people successfully trade chop in a consistently profitable manner, very few. I must add however, that very few people who mostly only play "break-outs" (wherein they try to immediately pounce on the breakthrough of price through some formidable line of resistance or support) fare much better.

The smarter and more consistently profitable traders are often waiting for proven establishment of the next trending movement. Remember that although a market only trends about 15% to 20% of the time, once it begins it often goes on longer than most traders expect. Timing is your next consideration (and please remember you can eventually do all of these things in just a few seconds as your experience takes hold) and you will probably have to look to your assessment of whether the move is breaking out of known and accepted "value" to new heights or new lows and if so.. you assess your third issue which is momentum or volume. Has the action reached an area on the screen where the big players have been lying in wait to pounce? Is price breaking through the daily pivot in a new direction? Has it passed R1 and seems as though people are piling on in a race to the next line of resistance at R2? These are questions that can only be properly assessed once you both understand the structure of the markets as noted above and have spent ample screen time in observance of what normally happens at such junctures so that you have some feel for what happens more often than not in similar situations.

Trading is a profession, much like learning to become a surgeon or an airplane pilot. There is a lot at risk and you don't jump in and put money or lives on the line without knowing what you are doing and having an experienced understanding of how best to protect your patient, your crew or in this case, your capital, at all times.

After plenty of study and lots of screen time you are ready to begin thinking in terms of probabilities. Don't worry about being right more often than being wrong. Focus instead on controlling your losses. Just like in a battle, you only commit your troops when you truly believe that you have an advantage over the enemy. As soon as you notice you are wrong in your assessment, cut your losing positins without mercy. Do not make a habit of waiting for them to eat their way all the back to your stops.You don't need to be in the market all the time, but you must be in the market when your rules or signals/triggers tell you to be there otherwise, just keeping losses small won't be enough, as you won't be in the market when those big moves come along.

Anyway, I have gone on way too long here and I am all tuckered out, so I will wrap this up here and hope that there was at least a tiny morsel of something useful for you here in all this typing.

Happy Trading

[Soultrader]

Amazing ez. Now THAT is a great POST!

New traders beware.. print this out and read it everyday. As a matter of fact tape it on your monitor. This post is going to save you thousands of dollars.

If you don't get it don't trade until you do. I wish I had read this when I was a losing trader.

[feb2865]

	Quote:	1time
	Just graduated from college and looking to start trading the FOREX markets. Ive been looking into brokers and seems like FOREX brokers offer huge leverage. They also guarantee my stops so I can only lose what I put in. Any advice on a sufficient capital for trading?

Ok

Maybe I am going to sound a little contrarian here I sincerely hope not to offend anyone.

First thing I would like to point out is..why did you choose forex for trading? I hope you're not in becuase is the most liquid market in the wolrd with 1.5 trillion dollars a day and a piece of that could be yours. That's completely deceiving and false from the speculation side.

Hey nothing wrong with trade forex I did trade it for many years and altougth I am not as active on that market as I used to be, if EUR/USD Falls into 1.18 - 1.20 area I will probably be a participant. But that's me. The point is, if you're following Forex, I would like you to consider certain aspects concerning about this particular market.

There's three ways you have to play Forex

A) Market Makers

B)ECN's - think there's only two offering this platform

C)Currency futures.


1) Market makers - as the word suggest, they make the market for you - meaning the quote (real price) is something they make for you. I case you don't know, market makes are fed form the "interbanks" which is something similar to the internet. A web of framework interconected systems that routes money flow according to markets demands, volume, participants, etc. Also they perform clearing for bigger clients and of course market makers .

If you're going to trade with market makers here's my suggestions

1) Master the art of mental stops - the minute you have a set of stop-losses in place , sooner of later you're going to get screwed. The reason for that is not necessarily market makers are hunting stops. But that's a big story I will tell you later.

2)Lower your gearing - lower your leverage

Forex traders are doomed for that. 100:1 ratio even 400:1 ratio is insane and criminal. Put yourself in a 10:1 ratio and later on maybe 50:1 that's it.

In my opinion high leverage is made up for nothing but to blow your account fast.

3) Make sure is a reputable company.


B) ECN's - they are your"conection" to the interbank - My humble suggestion - don't trust them

C) Currency futures - Instead of pips you're running on contracts. They have intraday margin requirements, from $500.00 up to $1000. You have the advantage of a clean -transparent quote. Again, if you're starting, go with 1-2 contracts.

Do your homework and decide which one best for you. In my opinion, I prefer to have, as a trader, a clean-cut price and the peace of mind nobody is fooling around with my stops.

Capital requirements - you can go as low as $250.00 in a mini account with a market maker. But let's be real - that's just play-money.

I don't know how advance are you on trading. But if you're really starting( I assume you are) do us a favor and play demo for a while. I personally can give you a couple of nice set-ups especially designed for Forex. After a while you're going to take your stake into a much larger amount, only if you're disciplined and have patience. Like some nice traders are stating here, don't blow your money in expensive courses that will only tell you to trade only when the big mac is in tune with the EMA super 8 chicken strip line, you know these kinda stuff .

If your get around this site, we will help you out

To end this long post, Forex is a different yet unique market. You need to be familiar with the London Market, the New York Market, the Asian Market, etc how they correlate and what participants of these markets are looking for, currency correlations, the Friday syndrome, the Sunday evening deligth etc etc etc.

Regards

Raul

[feb2865]

Excellent Post EZ

Your words brings plenty of wisdom much needed nowadays.

I would like to point out as a cross reference with my last post

There's plenty of deceiving advertising outhere about forex.

Traders, please don't let them fool you. Forex is not the way to riches. It's probably the most difficult market to trade. Many newbies fall prey of these wrongful and deceiving advertising, everyday.

It can be traded. But is not what everybody thinks.

Regards

Raul

[torero]

Anyone thinking about trading forex please check this forum before even opening an account.

The Non-Dealing Desk Forum - Savvy Traders Want to Know - Powered by vBulletin

I'm not trying to hype this site but it has serious discussion on forex and brokers. It clears up the industry's shady side of business. And it IS POSSIBLE to get 1 pip spread and to get to real SPOT MARKET. Deciding on a broker paramount!!!! Buyer BEWARE!

[Reaver]

If you're wanting to get a feel for trading real money, you can open an account with Oanda...they let you trade any size you want. I started out with $100, no false hopes or delusions, but I wanted to get a feel for the difference between papertrading and real money. Even if it's a few bucks, it will still make a difference in your approach if it's real money on the line. Good for making the transition.

[pipMonster]

	Quote:	1time
	Just graduated from college and looking to start trading the FOREX markets. Ive been looking into brokers and seems like FOREX brokers offer huge leverage. They also guarantee my stops so I can only lose what I put in. Any advice on a sufficient capital for trading?

You can start trading w/ $1000 IF you reduce your expectations to the size of your account. This means forget about leverage and get up to speed on money management and risk assessment. I would suggest an account with Oanda for the reason that they offer trades to very small size and their execution is excellent, though they do have variable spreads to watch for during 'high profile' data releases. You would want to stick to a total risk per trade of 2-3% of your account.

No matter which broker you go with, you'll encounter some slippage. A few pips at the most is typical.

Have you paper traded your strategy into profits and are you confident in being able to execute it without fail or question? If not, work out your strategy some more in demo land. There's no rush to get into the market. It'll be there when you're ready to trade your hard earned cash.

[Reaver]

Nicely put Pipmonster. I think a small account with NO leverage is good to start. On one hand cranking up leverage could work out nicely, and if your account is only a couple hundred bucks it wouldn't be the end of the world...but it would build horrible habits....so I say no leverage and slowly build up as you see fit, IF you see fit.

[torero]

monster,

I was thinking of trying out Oanda's demo and wanted to know if they are as good as they claim in terms of demo to real account accuracy (no window dressing) and if the execution and spread is as reliable. I currently trade with MBTrading and like them alot, but always looking for a 2nd account as part of my contingency plan. Thanks.