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JPhillips

In Need of Direction.

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Recently I began to educate myself on becoming a trader. I have been reading everything I can get my hands on from the web. I have no prior stock knowledge prior to what I have taught myself. I have been teaching myself since Nov/11. The more I learn the more I realize I don't know. I know I will not become a expert in a couple months time period but it seems as if though that I educate myself on only leads to more questions. My goal is to become a successful trader but the only problem is currently my cash flow is extremely limited and my knowledge of this business seems to be even more limited. So I send out a request to all traders who know how it feels to want to succeed at trading. Any information,advice,tips and suggestions will be received with the utmost respect and appreciation.:crap:

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I think one of the reasons this business is so fascinating is that you are always learning and trying to answer questions so I wouldn't despair over this.

 

Just from my personal experience, I think new traders tend to set themselves up to lose by investing all their time and energy ( and money! ) in looking for the strategy that is a %100 winner. Forget it, it doesn't exist, the future can never be known.

 

For me, I turned the corner when I took a disciplined approach to a high-probability strategy.

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new traders tend to set themselves up to lose by investing all their time and energy ( and money! ) in looking for the strategy that is a %100 winner. Forget it, it doesn't exist, the future can never be known.

 

.

 

What a great statement, can't say it better.

If you rush to success without a direction that's a way to hell. What direction should you pick..? That's a tough question. Most important point here is this: as long as you trade demo you are safe. Don't think about live trading until you double you demo acc.

 

There is an article that could help you find direction, but I think I can't post links here. PM me if you are interested.

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Speaking as one who has floundered around in the pool of 'no direction' for some time, my advice would be to start to organise.

 

Start defining 'stuff' like 'I want to be a trader'. Trade what? and when? get a plan of attack together. Traders spend their time coming up with plans of attack.

 

The 'how?' comes later and is really a product of getting organised. There are a million and one 'hows' out there but you only need one. Technical/fundamental it needs to be one that you know inside out, applied to a market you know inside and out.

 

Do not get side tracked from concentrating on one market at the start. Your skill levels are in the basement and it's a long way up.

 

Study and apply your market ideas one at a time and keep notes.

 

At the beginning we're on a search, and we're really in the woods looking for treasure.

This is probably one of the most strange and interesting treasure hunts your ever likely to go on.

 

Stick post-it notes on trees so you know where you've been........ ;)

 

all the best.

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My goal is to become a successful trader but the only problem is currently my cash flow is extremely limited and my knowledge of this business seems to be even more limited. Any information,advice,tips and suggestions will be received with the utmost respect and appreciation.

 

The first image that comes to mind of an independent trader is the one who stares at his 6 monitors around the clock with blinking cells all over. Obviously you tend to believe that being a day trader is the only way to live off the financial market. If I can give you one advice: This is a myth, therefore please stay away from day trading. It is the only way for marketers to portray some excitement in this job, so don't get the wrong expectation. Find a time frame that exploits trends in the broader perspective of several days to weeks. It is good to observe the market closely in the beginning of your trading career, but that does not necessarily require you to go in and out every minute. When watching price action, mind the following concept:

 

The market is a battleground for two opposing parties consisting of bulls and bears, who each fight for control. Bullish participants want the price to rise because only then they will make money, but they will forfeit money if the price falls. Bearish participants, on the other hand, have the exact opposite interest. The price action we are witnessing every day is a consequence of this dynamic fight which gets especially intense at certain zones called "support" and "resistance". If a trend is going higher according to the Dow Theory of higher highs and higher lows, you have bulls in a more advantageous position than bears. Nevertheless, bears counter against this influence at every opportunity of resistance and yield back, then regroup higher from where a fresh attack is more sensible and push the bulls back down to support. They in turn will regroup in larger numbers with the ambition to push prices back to resistance again, and beyond. This explains the frequent setbacks and ranges in an uptrend, but are not a reason to short altogether. The actual shift takes place when support is broken and bulls have lost the fight for control. According to my understanding, these are the best trade entries for short.

 

Once a trend is in place, it will not easily stop. Think about Newton's law of motion: a body wants to retain its current velocity until enough external force has acted on it to reverse. Imagine a freight train which, once at full speed, will need to bring up a lot of force and time to halt, let alone reverse its direction. Numerous wagons are attached to the locomotive which also need to be halted first, before the train has a chance to change its direction. Inertia does not allow anything else. The same applies to a market which involves so many participants who need to gradually change their bias and position first. The common worry among newbie traders of a trade going against them any time is unjustified. Reversing constantly and setting tight stops leads to an accumulation of losses which by all means could be avoided if the focus was more on the forest than the trees.

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The 'how?' comes later and is really a product of getting organised. Study and apply your market ideas one at a time and keep notes.

 

I can fully support RealDemo's advice. Make physical printouts of charts and study them vigorously until you seem to understand the underlying market forces. You might want to use the 1H or 4H time frames to really see clear trends in the market, as the daily chart may hide promising entry opportunities with the best risk to reward ratio. Go with the trend, not against it. Enter at the starting point of a trend whenever possible, not in the middle or toward the end. This gives you the relaxed state of mind you need to manage your position properly. If you enter toward the end of a trend, you are forced to fast adjustments. Before you enter a trade, know when to exit. This complies well with Sun Tzu's "The Art of War". The battle is already won or lost before it has even begun. The entry decides upon success, so choose wise entries. Don't trade out of gut feeling.

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I second the below advice. I started to trade a year back and tried too many strategies and markets at the same time.

It cluttered my mind and also cost me in losses (though not significant).

Then I understood its not about the particular strategy or market. Most proven strategies will work if you really understand the risk and money management.

 

After this i picked one strategy and started to organize the data and interpret it. Backtesting the ideas helped a lot once I started looking at it again and again.

 

Currently I am using the Ichimoku indicator and Ninjatrader for my charts.

I study the charts everyday for 30 minutes and make notes on the trades based on the indicator entry criteria.

 

You can use a simple indicator like moving average cross to start with.

Main idea is to be able to look at the chart and at a glance understand support/resistance for the time period (5MIN,15MIN) you are trading on.

 

Every time you look at the chart you need to note down the parameters you need to enter a trade. You might have 1 or 10, but once you see the chart you need to make the note and then decide the entry.

 

I am also learning the above process for last few months and it is tough but you start getting the clarity as you spend more time in a structured manner.

 

P.S. Also you get more information in less time.

 

Hope this helps.....

 

 

 

Speaking as one who has floundered around in the pool of 'no direction' for some time, my advice would be to start to organise.

 

Start defining 'stuff' like 'I want to be a trader'. Trade what? and when? get a plan of attack together. Traders spend their time coming up with plans of attack.

 

The 'how?' comes later and is really a product of getting organised. There are a million and one 'hows' out there but you only need one. Technical/fundamental it needs to be one that you know inside out, applied to a market you know inside and out.

 

Do not get side tracked from concentrating on one market at the start. Your skill levels are in the basement and it's a long way up.

 

Study and apply your market ideas one at a time and keep notes.

 

At the beginning we're on a search, and we're really in the woods looking for treasure.

This is probably one of the most strange and interesting treasure hunts your ever likely to go on.

 

Stick post-it notes on trees so you know where you've been........ ;)

 

all the best.

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What a great statement, can't say it better.

If you rush to success without a direction that's a way to hell. What direction should you pick..? That's a tough question. Most important point here is this: as long as you trade demo you are safe. Don't think about live trading until you double you demo acc.

 

There is an article that could help you find direction, but I think I can't post links here. PM me if you are interested.

 

 

I am interested in the article. Could you please send it?

Thanks

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Enter at the starting point of a trend whenever possible, not in the middle or toward the end.

 

If you're really a trend follower, shouldn't you know that this goes against the very nature of following the trend? You can't enter at the starting point of a trend if you're a trend follower, because it hasn't started yet. Trend followers are not trend starters. In fact, when a bull trend begins (and cannot be identified as a bull trend yet), trend followers will typically still be short.

 

Before you enter a trade, know when to exit.

 

This also goes against trend following. Long term trend traders almost always give back at least 20% of profits because they don't know when the trend will end.

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If you're really a trend follower, shouldn't you know that this goes against the very nature of following the trend? You can't enter at the starting point of a trend if you're a trend follower, because it hasn't started yet. Trend followers are not trend starters. In fact, when a bull trend begins (and cannot be identified as a bull trend yet), trend followers will typically still be short.

 

This also goes against trend following. Long term trend traders almost always give back at least 20% of profits because they don't know when the trend will end.

 

Point taken. I will stand by my stance because what you understood from my post is not what I have meant. Instead of starting a trend (regardless of the fact that a single trader is unable to initiate a trend; he would be engaging in picking tops or bottoms at the very least), I was insinuating to enter a position at the beginning stage of a new trend. You can detect reversals as soon as we shift from a pattern of higher low and higher high (uptrend) to a break of the aforementioned higher low to a pattern of lower high and lower low (downtrend). Take any chart in the 1H or 4H time frame, for example, and you surely spot the patterns I am talking about. We will never be able to know for sure how long a trend will last, but that is not the agenda either. The agenda is to trade in a way as to give us the best risk to reward ratio.

 

This leads me to your second critique. By knowing when to exit, I was referring to using a stop loss, or another method of limiting your risk. You enter a position after you have elaborated on the potential outcomes; most of all the maximum tolerated loss. Trend followers do give back profits which is a striking characteristic with this approach. What is of significant difference to other approaches is that they know their potential risk in advance and how much potential profit they are going to give away should the trend reverse against their position (trailing stop).

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:offtopic:

Thank you JoshDance

Readers, be careful of crowds that do not differentiate btwn real trend following and fake trend following...

 

:bakontopic:

OP, If you have to ask...

(OP, this may seem like a flippant, insincere reply. It's not... it is not necessary, although most still do, for a beginner to join the large loser crowd as part of your initiation!)

 

Also, peeps, if you have to sim...

(Again - although most do, it is NOT a necessity for a beginner to join the large loser crowd as part of your initiation!)

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The optimum individual path to trading mastery is rarely through the typical, consensus, “educational” model… yet almost 100% noobs come in fully ‘conditioned’ to that concept… and, initially at least, are eager to follow that path ...

 

... when that fails, ...and it usually does fail quickly, ...

 

... the educational 'system' of the trading world has no more real interest in inducting you into the top than does the current educational 'system' of the larger society...

 

...

 

charles hugh smith-The New American Divide

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JPhillips,

What has really helped me:

1. The Opening Range

2. Using candles

3. Use a stop loss

4. Don't chase the market, usually a huge move means you need to go the other way.

5. Determine the trend and trade with the trend.

6. Learn to identify a choppy market and stay out.

7. Trade something less choppy like Soybeans. If trading futures, start with the Russell, YM or NQ. Identify best times to trade, learn when to be patient and when to act fast.

8. Demo trade but treat it as seriously as if it was real money.

9. Use a system that you like, say Moving Average crossovers, etc. the simpler the better. 10. Don't clutter your screen with more than two indicators.

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The best option for you will be to quit right now and don’t even dream about day trading, even if some kind of a miracle will happen and you will turn into an “expert trader” you still will lose your money, being undercapitalized is one of the biggest reason why traders lose in the stock market

 

My suggestion to you is to go for a nice vacation some place that you will remember and enjoy the memories for the rest of your life

 

If you really have the urge to depart from your money sent a check to me, believe you me at the end you will feel much better than giving it to Goldman sucks at least I will not torture you....

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Understand different forces that affect stock price. Sometimes, the prices for many stocks move in group. One company's events affect the other. The macro-economic factors like country's debt, unemployment drive prices down. The final price is the combined results of all these factors, which make price moves nearly random. The trick is to filter out noise from signal and identify patterns from which you can profit.

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If I may offer some thoughts...these apply specifically to my journey..

 

This is a complex business and unfortunately there is an overwhealming amount of educational material out there and redundent technical approaches...

 

What's worse many want to go the route of Vendors/Guru's to advance their understanding and learning curve.. while this is a logical path it is also littered with broken dreams and false hope... There is no plug and play or turn-key Holy Grail. One cannot slap some indicators on a screen and trade mechanically using the common off the shelf tools... While some here may be doing it successfully I submit it was not plug & play..and their choice of tools evolved to match their psyche..

 

I have written elsewhere that we cannot mimic someone elses trading plan and hope to be successful. When you read the forum you will see quite a few "systems/tools" that some traders claim to use successfully. Some do, some don't. What is true is that most cannot replicate it.

 

You can get ideas from the forums and until you understand how a tool works it won't work for you... In addition indicators, at least in my experience, do not tell me when to initiate a trade only where I am in a cycle or swing based on my timeframe and then I step in front of the trade..indicators lag so one must recognize or read the market and it helps if the indicators you do use coorborate what you think is going to happen but since they lag they will only support you after the fact...

 

Just my opinion...it is also dependent on your timeframe and the volatility of the market...

 

Just so you know..there is no Holy Grail or secret sauce.. we all have been to the mountain and will never stop trying to improve... that is the nature of it...

 

As someone posted get organized...create a business plan - this is a business. How will you acquire information? How will you measure your progress.. What are the basic elements you need to assemble.. how will you prioritize them.

 

If you were building a business from the ground up how would you do it...

 

This business is like manufacturing...Losses, Comm, Overhead, etc are cost of production. You must know your cost and what your yield should be..To obtain that you need a process that throws off a yield.. You must know how to achieve that yield.

 

Contrary to what many new traders think, complexity is the enemy..your mind, if you are a descretionary trader needs the minimal input necessary to make a decision.. Trading is a multi-tasking endeavor..you need to minimize the inputs to minimize decision-making conflicts.

 

I do not have the answer but I started with Classical Bar Charts.. at first they looked like an EKG but now it is second nature... I built my trading from the ground up..Ibelieve that was the basement.. So figure out what you need.. if you don't know then the forums will guide you since all of us started at roughly the same place..

 

Good Luck - this is the best business in the world,and the toughest..

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If I may offer some thoughts...these apply specifically to my journey..

 

This is a complex business and unfortunately there is an overwhealming amount of educational material out there and redundent technical approaches...

 

What's worse many want to go the route of Vendors/Guru's to advance their understanding and learning curve.. while this is a logical path it is also littered with broken dreams and false hope... There is no plug and play or turn-key Holy Grail. One cannot slap some indicators on a screen and trade mechanically using the common off the shelf tools... While some here may be doing it successfully I submit it was not plug & play..and their choice of tools evolved to match their psyche..

 

I have written elsewhere that we cannot mimic someone elses trading plan and hope to be successful. When you read the forum you will see quite a few "systems/tools" that some traders claim to use successfully. Some do, some don't. What is true is that most cannot replicate it.

 

You can get ideas from the forums and until you understand how a tool works it won't work for you... In addition indicators, at least in my experience, do not tell me when to initiate a trade only where I am in a cycle or swing based on my timeframe and then I step in front of the trade..indicators lag so one must recognize or read the market and it helps if the indicators you do use coorborate what you think is going to happen but since they lag they will only support you after the fact...

 

Just my opinion...it is also dependent on your timeframe and the volatility of the market...

 

Just so you know..there is no Holy Grail or secret sauce.. we all have been to the mountain and will never stop trying to improve... that is the nature of it...

 

As someone posted get organized...create a business plan - this is a business. How will you acquire information? How will you measure your progress.. What are the basic elements you need to assemble.. how will you prioritize them.

 

If you were building a business from the ground up how would you do it...

 

This business is like manufacturing...Losses, Comm, Overhead, etc are cost of production. You must know your cost and what your yield should be..To obtain that you need a process that throws off a yield.. You must know how to achieve that yield.

 

Contrary to what many new traders think, complexity is the enemy..your mind, if you are a descretionary trader needs the minimal input necessary to make a decision.. Trading is a multi-tasking endeavor..you need to minimize the inputs to minimize decision-making conflicts.

 

I do not have the answer but I started with Classical Bar Charts.. at first they looked like an EKG but now it is second nature... I built my trading from the ground up..Ibelieve that was the basement.. So figure out what you need.. if you don't know then the forums will guide you since all of us started at roughly the same place..

 

Good Luck - this is the best business in the world,and the toughest..

 

Nice experience, thanks for sharing!

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Thanks Landser for acknowledging and THESE COMMENTS ARE FOR EVERYONE..just one persons opinion...

 

The forum is full of the same questions.. You will note that many try to automate what they do.There are toolboxes out there that will support that approach.

 

I really cannot comment too much on that approach since it didn't work for me, at least not as a daytrader... but I have seen posts so apparently it is being done.. once again takes a lot of work to get anything to work for you...

 

One of the major issues to this business is for whatever you do to align with your psyche... That is an area you really need to understand... it is probably the "achielles heal" for all of us. If it doesn't fit you won't be able to execute or you will constantly change it. This is an indication of non-alignment and conflict...

 

The thing about this business is there is no one way to do it.. if you go on the web or Youtube you can see an endless parade of approaches and they might work for some but not for others.. I seriously doubt there is one "best" indicator/tool that would be voted most popular..I truly don't know..

 

I have been at this for 30+ years.. I won't bore you with the journey or what I have done over the years to succeed in this business since it is continually morphing as the technology and the markets evolve...

 

One thing I can say is that what works for someone else did not work for me..I've tried it. Seminars, books, courses, software, programming, system design, black box systems, published systems with track records,BTW, most of the stuff didn't work or failed upon execution - even with track records.. much of it is BS. None of it was mine - I couldn't mimic the trade plan but they were all BS..even if they were viable at the time...curve-fitted trash. Unfotunately you have to pay a large tuition to find out...save your $. I initially studied charting at CME - that was the first thing I did.. not saying it should be anyone elses..we used a chart book, straight edge and a pencil back then - no computers...:doh: Reading charts is necessary unless you automate and then it's just math. All the above added value but was NOT the solution - at least not for me, etc. I could go on & on... I'm not saying that I didn't derive value from it but I did not get the answers I thought/hoped I would. I even worked with some well known traders that many would recognize, $7 Figure guys... what we all dream about - not entirely realistic unless you have the capitalization for it...I thought that would be huge. It was good to know it could be done but I couldn't replicate what they did.

 

I worked with indicator developers whose tools are in every trading tool-box today - thought we found the Holy Grail, several times over- NOT. Many still try to use them since they are popular. Just because they are in a software tool box means nothing. Somehow because it is there it must work - right? However, I didn't realize at the time that the psycology was the obstacle - It wasn't mine. I certainly got ideas, but could not replicate what they did. I spent a huge amount of time and resources trying. It is what most of us initially do. What else is there - right? Try replicating Michael Jordan or Tiger Woods. :helloooo:

 

I recommend that you learn about Auction Theory... there are books on it... You need to understand what makes any market move... Why does it go up & down..who are the participants that move the market? Why do people lose money? Who makes it from those who lose? How do you not join the group that lose? Most do...why?

 

This is a facinating business - a multi-dimensional chess game.. I wish I could share more with you but really you should spend time here & read. However, you will always come back to the same place.. This business outside the market & tools is about you.. and you really won't know who you are until you face your own demons.

 

The socialization we get to live in the real world, the values and beliefs that made us successful are actually obstacles to success in the trading buisiness. Our beliefs, things that we were taught as children, etc are actually the things that will cause us to fail..Trading is counter-intuitave..You must be ok with losing money..something we are taught not to do. You must avoid needing to be right, something we all want/need. It goes on & on... I hope this makes some sense. I know when I started out I would hear this but couldn't relate to it... until I recognized it in myself..I thought "not me," "I'm smart enough"...Sure.. It took time even to recognize what they were talking about.. I'm still working on it..

 

Best of Luck on the Journey..this is not any different than becoming an athlete, fighter pilot or surgeon. The difference is much of this must be self-taught and discovered for yourself..not easy but worthwhile.. just don't think that there is an ATM machine waiting out there for you... that you can easily access. There's much more to it than that but it IS achieveable. Just my 2 cts. :2c:

 

Best of Success to ALL who read this thread..it is achieveable but doesn't come for free...

Edited by roztom

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