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Mysticforex

What One Thing Would You Pass On?

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If I could pass a message back to myself 7 years ago it would be to not go live until I had thoroughly tested a simple system. When I think back it amazes me that I thought I would be able to make money without a properly thought out and tested system of somekind, whether completely mechanical or with some discretion involved. There are many tools available to new traders to enable them to learn how to trade such as trading simulators (my top recommendation) and demo accounts but how many actually have sat and traded a half thought out system on a simulator to get an idea of how it trades in real time?

 

That would be the one thing that I would pass on to new traders, get yourself some system ideas (search for trading strategies on a search engine and go through the simple ideas you can find there) and then test the daylights out of anything and everything. If you can't make money trading it on a simulator then you probably won't make money trading it on demo and therefore you probably won't make money trading it live. So why bother? If you haven't even bothered to do the above and you are trading by the seat of your pants you will most likely lose money anyway, and quickly!

 

To all experienced traders, what one thing would you pass on to a trader just starting out?

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100% agree....test it (I too have wasted money but more importantly time)

and adding to the same theme - dont be a perfectionist and try and get the tops and bottoms (it can be done...sure sure) but as a new trader - just look to get a profitable piece of something first, get on the trends, go with them, dont worry about trying to pick every turn and collect every pip.....first just get a slice of the pie.

 

eg; if the EURUSD has fallen 100 ticks and you captured 25 then thats better than it falling 100 and you loosing while trying to capture 50 ticks.

 

This will ideally stop you doing marginal trades - those are the ones whereby you sell at support trying to get a few extra ticks, after the instrument has already fallen. Look at where the odds are something will happen - if I think this is going to fall from here (plan) then am I better of waiting to enter on a rally away from support, wait for a second time to push through support, or are the odds high that it will bust through support the first time. (execution). If you miss a trade its not the end of the world. (circumstances dependent)

Edited by SIUYA

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Sure I would of used a simulator back in the day too, however they do not teach you one of the hardest aspects of trading: controlling emotion. Nor are they very accurate in terms of volume or fills.

 

Personally, I would of avoided listening to the many bellwether analysts and done more of my own due diligence/modeling.

 

At the end of the day, learning the hard way is usually the most effective. I would of cared less about my alpha tracking error and focused more on higher growth plays as opposed to momo bounces.

 

Technical analysis is most certainly not the only thing to focus on as you will be correct about the same amount of times as someone only using fundamental analysis will. (Slightly over 51%). This is the number one thing that pisses me off about internet trading forums, is that 90% of the focus is on charting, yet it will yield nearly the exact same outcome as someone who can properly utilize fundamentals.

 

Also, I would also look into, passive and active management and decide which best suites your needs. It is a lot cheaper to make ~6% with a vangaurd ETF than it is to potentially lose everything and not beat the market after taxes/transaction costs.

 

Contrary to the above posts, I would NOT recommend Forex to someone new to trading, learn to scalp before you kill.

Edited by Elitny

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If I could pass a message back to myself 7 years ago it would be to not go live until I had thoroughly tested a simple system. When I think back it amazes me that I thought I would be able to make money without a properly thought out and tested system of somekind, whether completely mechanical or with some discretion involved. There are many tools available to new traders to enable them to learn how to trade such as trading simulators (my top recommendation) and demo accounts but how many actually have sat and traded a half thought out system on a simulator to get an idea of how it trades in real time?

 

That would be the one thing that I would pass on to new traders, get yourself some system ideas (search for trading strategies on a search engine and go through the simple ideas you can find there) and then test the daylights out of anything and everything. If you can't make money trading it on a simulator then you probably won't make money trading it on demo and therefore you probably won't make money trading it live. So why bother? If you haven't even bothered to do the above and you are trading by the seat of your pants you will most likely lose money anyway, and quickly!

 

To all experienced traders, what one thing would you pass on to a trader just starting out?

 

 

Hello, Dear traders!

 

One thing that I did totally pass on was - I did forget that loosing is part of the trading. Really - I was looking to win every trade! lol...

 

Only after some time when I grasp the idea that loosing is part of trading I was able to see the whole wood behind one tree.

 

 

So - do not forget - loosing is part of it!

 

Good luck!

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What I'd pass on to traders just starting out:

 

  • Learn price action. Fancy indicators and robotic trading techniques are no substitute for knowing price action. Try taking all your indicators off the chart, maybe leave a moving average and volume. Chart some trades, figure out how to enter and what exit targets to use. Learn how to identify trends and chop and waves. Learn price patterns. Trade this way in a simulator for a month. You'll be surprised. I can now look at a crude oil chart with only price and volume and see right away whether price is trending or about to reverse, and where I should place my orders. Books by John Hill are useful for this learning.
  • Draw by hand your trades on a chart for at least 5 days or 50 trades before going to the simulator. That way you know better what to look for in real time.
  • Use the simulator. Don't go live until you can demonstrate a winning record for 3 weeks, like 13 out of 15 winning days if you're day trading. This is hard work. Your live performance will be worse than your simulated performance, due to the emotions attached to having real money at risk. If you can't do well in simulation, you will fail when going live.
  • Everyone knows that under-capitalization is dangerous, but so is over-capitalization, because an inexperienced trader can just as easily lose a large account as a small one. For me a good rule of thumb is the starting account should be 7-10X the margin requirement for 1 contract for whatever you're trading.
  • Money management isn't just to determine order size. There's another kind of money management for setting limits on when to quit for the day. How much can you lose before you quit for the day? How much must you win and by what time, to allow you to continue? For example I have a rule "If my 1-contract losses exceed $300, or if I'm profitable but haven't exceeded $200 in profit by lunch time, STOP, my day is done. If I have exceeded $200 I continue as long as I'm above $200."
  • If possible, find a mentor who is successful at what you're trying to do, not someone who makes a living teaching others, but someone who trades for a living.
  • Discipline. Be consistent in applying your rules. It is so tempting to make changes and exceptions, to try un-tested ideas as you go along. Resist doing that. If you get a new idea, test it thoroughly.

That's from the top of my head. I'm sure others will come up with other useful nuggets of advice.

 

About learning to code: Not necessary. I'm an experienced programmer, and I find that to be a useful and helpful skill, but it isn't mandatory. A couple experienced and highly successful traders I know (one has been trading for a living 35 years) couldn't write code if their lives depended on it. They know price action, and use two or three basic indicators to add some clarity.

 

-A

Edited by amatulic

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The one thing I would pass on:

 

All my losses until I became a profitable trader (as a bonus, emotional pain is also included in the package).

 

If the person getting them is motivated enough, he or she could use them to learn from them and to adapt until they have found a trading style suitable for his or her personality.

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I agree with almost all of the previous posts...

 

One thing to add: Simplicity, Simplicity, Simplicity. Find the minimal inputs to allow you to align with the market...

 

It takes courage not to lean on redundent price based lagging indicators.. yet that is what most tend to do at some time in their development... Do not be fooled by the exotic software packages loaded with indicators and impressive charts... they are really a Pandora's Box...you could open it and get lost in all the noise... and waste time energy and brain cells...

 

Price behavior, pattern recognition, volume.. also possibly basic bar charting..none of the complex patterns just the basics and you will have a foundation...

 

Everyone wants to know how to enter a trade. That is the easiest part...risk management and exit are where the financial rubber meets the road.

 

Find just ONE repetitive pattern/setup, test it, develop confidence in it, and prove to yourself you can execute it on a consistent basis... Have a rule based exit strategy that you have tested and execute on a consistent basis.. Do this on Sim and see where your numbers/probabilities are... Statistically valid? Go make $, and learn another setup you don't need many..

 

If it doesn't work in SIM? Back to the drawing board... KISS... I think we become profitable when we can find the "simple" tools that align closly with our personalities - that is where the search can take time... IMHO.

 

"Nothing To It But To Do It"

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The second thing I would pass on:

 

Patience ! Rome was not built in a day. Or, Everything comes to those that wait.

 

I fully agree.

 

"Patience" is different than "price action" as method of trading and can be more effective. Recently one of the signals service based on "price action" gave these results:

+60p; -60p; -60p; +30p;

 

Don't know the future series, but above short series one ended negative.

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Rome was not built in a day.
... because that was a government enterprise :rofl:

 

I would pass on ... that the higher TF rules all.

 

Had I known that 8 years ago, and learned to view at least 4 different TF using

this principle, then ... who knows how much smoother my ride might have been!

 

A Ferrari is a good, smooth ride, btw :cool:

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What would I pass on?

 

There are many things to consider, but several of the most important that I would consider are the strength of my offensive line, distance to first down, the hands and ability of my receivers, and the time left on the clock. If the conditions were right, then I would certainly try to pass on 1st and or 2nd down. In most cases, though, I would not pass if we had 1-4 yards for a first down and we were on 3rd down.

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