Forex_trading

I am a beginner forex trader and having already lost a small fortune, and then some, within this week, I decided to stop and reflect before I blow out again. If any of you would be so kind, I need some answers and/or validations.

As far as forex trading is concerned, I am still a novice and I concluded that I lost all that money due to my own incapability, but in the wake of some recent events( following US jobs data), I think that may not be all there is to it. Volatility is really really high during such time and that is understandable, but I saw this presentation the other day by an ex banker in UCL, london of uk regarding trading in investment banks, the lifestyle that came with it, etc etc and one of the things that was really important, but it slipped my mind was, that "short term trading is totally dominated by quants", Anything from within a day, or even within a week is totally out of our reach of us retail traders.

1.Is Short term trading is so fucked by quants and leverage for us retail investers? that we dont even stand a chance? Now I'm not trying to hate on quants, I am just saying that it s a very big disadvantage for us 2. Having already lost so much, has anyone actually recovered? 90% of forex readers lose money but are there any retail speculators in that remaining 10%? 3.Are there any successful short term (non totally quant) traders? Because my confidence is totally fucked right now, Is there any hope at all? Or all you need is luck, because I dont seem to have it

Here's the link:

104 Comments
 

Every product is different so a blanket statement like "short term trading is totally dominated by quants" doesn't say a whole lot. Also, luck is only part of it. You said yourself you're a novice; at least now you aren't disillusioned by making 300% returns in the first week from beginner's luck and thinking you're the shit and have a perfect strategy. You've learned early. Everyone loses money, it happens. Another big thing, don't let your emotions influence trades--sometimes you have to learn to cut your losses.

 

Thank you, but my aim was not to make crazy returns, Though I do believe that is possible, because if 60-90% of people lose money in forex and someone's loss is someone else's profit, those who do make money should make a lot. My aim was 30% return on equity in a month. Is that too much? Actually returns on forex is really a grey area for me, I have no idea about it, so if you could throw in a ballpark figure, that would be great.

Let me live so when I die the reaper cries..
 
"abhiminhas"

Thank you, but my aim was not to make crazy returns, Though I do believe that is possible, because if 60-90% of people lose money in forex and someone's loss is someone else's profit, those who do make money should make a lot.
My aim was 30% return on equity in a month. Is that too much?
Actually returns on forex is really a grey area for me, I have no idea about it, so if you could throw in a ballpark figure, that would be great.

30% on anything in a month is a fuck ton. I couldn't tell you what returns you should be aiming for though. FX might be a little harder since that is one product in particular that will likely be the first to go to full automation (in my opinion).

 

So you thought you could just waltz in and start making a 30% return? How do you mange to lose 92%, why would you let a trade go that far in the red? It sounds like you really didn't do any research before you started. Start by Reading investopdiea articles, it looks like you need to learn the basics.

 

Watch your leverage too. Its important to size your positions appropriately, especially with FX. Be attentive to what variables will affect the underlying currency pairs.

You mentioned the jobs report so I am assuming you were trading the dollar. Be aware of any reports coming out while you have a position so you aren't caught off guard either.

One last thing I'd say is that for very short term trading, the odds are against you, including the spreads you have to pay for commission. The market moving +- 25 bps is probably noise, but if the trend is that one currency has devalued for months (or years) against the other, theres a decent chance that trend will continue if the central bank's monetary policy remains the same.

Think big picture, watch your leverage (risk), and know whats happening in the economies of the currencies.

My 2 cents, hope some of it was helpful.

 

Well at least you're honest with yourself, that's a solid first start.

To address the rest of your post though: stop trying to "trade" and focus more on attempting to catch large trends in whatever product it is that you are focusing on. I'm not saying no one can be successful in the shortest term market activity but the problem with short term activity is it plays so much more on your emotions and thought process. You may see opportunity xyz to go long EUR/USD at say 1.1010 and an hour later it has dipped down to 1.0980, you're losing your mind, and you exit. The next day it's at 1.1090 and you were right all along.

Focus on one or two pairs max, drafting and completing your own research, and attempting to catch longer and larger trends. Best of luck to you, it's not an easy task.

 

i agree with you, that happened to me. i ended up closing my position. when i was really down. a day later, everything was back to normal eurusd is the only pair i am focusing on and it is extremely volatile. i have lost my mind in the past few days.

my question is, how do you explain these movements?

Let me live so when I die the reaper cries..
 

That's the nature of the FX markets. I won't say that all movements are due to a particular thing but EUR/USD especially has a tendency to make some rather sharp moves on data or news that may not be directly related meaning that even if you're keeping a spotless macroeconomic framework and outlook on your product, you may still be caught be surprise from time to time.

It's a information game; you want to make sure you're getting all of the relevant and useful information at all times quickly and efficiently, otherwise you're just playing a game in the dark.

Why are you in the market? Are you a college student trying to learn the business to have something to talk about during recruiting/interviews? Individual looking for income/cash flow? Individual looking for long term growth?

 

Forex isn't my thing, but if you felt so compelled to exit a position due to a very short-term loss, your position was probably too large for you to afford. Don't put more money in a single position than you can afford to take a big loss on. That goes for any strategy.

"Strength does not come from physical capacity. It comes from an indomitable will."
 

I like short term trading . I had not much amount as capital to use in long term trading .With small amount it is easy to gain small profits in short term trading . I do trading to get some pips in a trade .

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OK, I'll bite. I'm not trying to kick you while you're down, please don't take it that way, but it looks like you haven't learned where you fucked up.

Walk me through price absorption at a given price, how do you choose trade location or how you manage risk? How do you determine position sizing? How long did you practice your plan and executions in a simulated environment before taking the plunge with your own cash? If you did why aren't you executing the same? What process do you use for feedback on your performance?

Trading even in your personal accounts is a business that needs to be built on a solid foundation or you will fail. So far the equivalent to your story is me buying a pair of Jordan's and calling myself a baller.

Try again after you've graduated and are gainfully employed, unless you have a 4.0, an offer locked up and more cash to burn your priorities are out of line.

 

Also, it sounds like you didn't use stop losses? Take this with a grain of salt as you're seeing me ask someone on here for advice, but the site I used to learn about trading basically said that you should never manually close your position for a loss. You need to plan out each trade so that you know what's being risked and what might be gained. You have to understand technicals and patterns and other stuff though before you can get an accurate stop loss. Otherwise you're just jumping into the market hoping it goes one way with a backup plan that if it doesn't you have the stop loss to save money. If you understand the other stuff though, the market should only go against you when you've either misread it due to your own error, or there has been an actual shift in market sentiment. Finally, the consensus on that site, babypips.com, was that you needed to do a demo account and trade profitably on it for about 2-3 months before you started live trading.

 

All that can be said is that sometimes it happens, all you can do is learn from it. Try again this time with a rule about cutting your losses after a certain percentage fall.

 

Haven't read through the comments but here are my thoughts:

1) Tone down your leverage, and make sure you have an account size where you're getting stopped out at 1-2% where you can still move on without pulling your hair. The fact is, if you're using a very small account, you have to take wayyyyy more risk.

2) If you're trading the volatility, and scalping pips then tone out all the music and just stick to price action (i.e look up "Trading Supply & Demand by Keyser Soze).

3) That video you linked has nothing to do with retail trading, Anton talks about the consolidation in the institutional trading industry which is dying off due to quants & algorithms/

4) Understand that Forex is a negative sum game, the broker will always make money off the bid-ask which is constantly trading depending on liquidity.

5) Do NOT trade exotic pairs, stick to GBP/USD, EUR/USD, GBP/EUR. Please do not trade JPY also, you will hate yourself ;)

6) Also get some kind of news feed, and keep an eye out for events. The last thing you want to wake up to is being down 100-300 pips on a negative report.

 

My answer is just basic and simple. Investing gradually and safely could be the key, don't be eager enough to try different strategies to earn more, instead earn it slow and in a speculative way.

 

https://www.babypips.com/learn/forex To learn all the basics, terminology, and most commonly known strats. It's hard to estimate how long it will take to "get it down". It's a forever learning process. I would say though the best way to learn is by actually trading yourself. You'll find paper trading =/= real trading, especially in terms of psychology. Obviously, making a profit would be ideal, but I would focus on just learning and not so much trying to crush it.

For what it's worth, I tried trading FX on my own during school, did well at first, but ultimately ended up as a loser. Still was a great story though during future trading interviews and showed my initiative.

"Luck is what happens when preparation meets opportunity"
 

If you don't have something like 10-20k to trade on, don't trade on a margin greater than 50:1. You won't be able to survive swings of even 10-20 bps. Study up on your macro econ, and always watch the economic calendar. Bloomberg has one, I'd tailor your positions around the calendar as they're the biggest trading opportunities imo. Try trading on low margins at first, and once you're doing decently you can start upping the ante. Make sure you know basic chart reading as well, it helps a lot when trying to indentify potential trading ideas/opportunities.

 

Jesus... This isn't CC. The majority here know dipshit about UG admission except what we did. There are better ways to stand out and getting tail feels better in HS than a .45% gain in your EURUSD position.

CNBC sucks "This financial crisis is worse than a divorce. I've lost all my money, but the wife is still here." - Client after getting blown up
 

Anything you do outside of school is considered an EC. I'm a sophomore too and have been learning to trade forex too as that's the only thing I could really trade after school. Wharton looks for business/finance EC's so this would definitely help you there. In my opinion, running your own business, getting a 2200+, finishing top 10% in your class, and having outstanding rec's are more important than trading. If you're interested in running an online business, PM me. I have one and currently make about $100 a day.

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It's ALWAYS a good day to trade support/resistance. I don't know about intraday, but doing this on a daily chart is rarely a bad idea. Supply & demand don't care what day it is on the calendar. This is particularly true for Forex. It's kind of silly to call yourself a forex trader and then worry about local holidays - kinda misses the global perspective and impact of FX, dontchaknow.

 

My S&T guide focuses quite a bit on options (although nothing specific to FX, it should do the trick for what you need). If you want a discount I have 3 unused from my last offer so just PM me.

Other than that, theres a book called FX Options and SMile Risk. You should be able to find a free PDF copy online if you look hard enough. Its fairly in depth maths wise from what ive seen of it but does do a good job of focusing specifically on FX.

Theres also tons of free resources online. Try googling for PDFs or Powerpoints and you are bound to come up with some inhouse research articles or university materials.

 

Dynamic Hedging by Taleb is pretty good, and you can find it online. Otherwise, I am a FX Options trader so ask away.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

Take it. It's golden, a lot of banks are expanding their FX operations right now, and the derivative space is really the last frontier of the wild wild west where regulation hasn't fully penetrated and gunslingers can still make shit happen.

I am permanently behind on PMs, it's not personal.
 

If you had a margin call they would.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

Forex analysis is a kind of homework done by forex traders to get idea and assume opportunities about changes in forex market. In a forex market, traders buy and sell on several currency pairs.

Forex Traders want to utilize forex market moves and need to decide if to purchase or offer a money pair at any given time. Some forex examination is led physically, by a broker. Some forex investigation is directed by means of PCs that have been programed to dissect recorded information and signs from forex markets.

 

Check out Commodities and Commodity Derivatives.

[quote]The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.[/quote]
 
ChedonaHey,

I was wondering if anyone had any good reading sources or book suggestions for someone starting out full time in a foreign exchange and commodities trading role?

I am also interested in eventually trading derivatives and futures, so it would be greatly appreciated if someone could point me in the right direction for some good literature on this?

Any other suggestions for things I should do / read up on / educate myself on before I start full time in July?

Sorry for vague description, but I don't know all the details.

Thanks again for all the help - much appreciated.

Cheers,

Tim Weithers Practical Guide to FX and the term commodities is so vague that you should just read through the cme website and go from there.

 

www.WonderfulForex.com Software and Strategies, Prosper with Foreign Currency Exchange - Shop our large inventory of items. Find affordable prices, no credit card needed to open a free account, forex software system and high speed internet connection - can help you make good trading decisions to maximize your profits.

 
Addyman Do you think I should pick up options trading or forex? Also what would I be doing as a first year analyst at an investment bank?

Haha at the randomness of that last questions.

  1. As @guyfromct already mentioned, try paper trading FX and Options. Thinkorswim has an excellent platform for papertrading and the mobile capabilities are great. FX is a whole different game (traded for 1.5+ years) and the pairs are extremely difficult to trade when compared to equities. Options are a bit safer and offer endless possibilities on trade setups, but you can get burned easily when you don't know what your doing (time decay, imp vol, etc.). I'd say if you can paper trade these for 3+ months, keep a log like you would do for real trades, figure out what you're best at, cut the crap that sucks your energy/$, then it's ok to slowly start throwing real money around. Remember, your in HS so you have plenty of time to build up experience all throughout college. No reason to rush, though you'll be tempted to.

  2. Search.

 

Forget FX and options---by the time you are hitting the workforce the industry will look and feel completely different. I'd focus in two areas--corporate finance and computer programming. An expertise in either of these two fields will best prepare for a career in investment banking, trading, or anything else you want to do.

People are leaving the trading industry in hurds--don't put all your eggs in that basket.

I know this isn't what you want to hear and others may disagree but this is my opinion.

Also, your 18 so go convince your older brother to buy you a twelver of busch light, grab a buddy, and try and go make out with chicks.

 

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Or maybe the following pros can chime in... @CF123" karismarawat drivedelta

Hope that helps.

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 
  1. No it's not so fucked up
  2. Yes
  3. Speaking in the short term yes they are a lot, speaking in the long term yes they still are some but not so much

To get it straight: You don't need luck you start by making your own luck and starting to make your own luck. Seems to me that you focus to much on the "bad side" of the problem, how did i figure it out? All of your questions are about loses not one of them are about winnings :)

I'm really curious to look at you'r trades and see what went wrong in there

Now i have some questions: I see that you watch Anton's Kreil courses on YouTube Are you impressed by his lifestyle? Do you want to trade just to own a Ferrari and bang 5 chicks a night? If not what made you decide to take this path? How much capital you started with? What leverage do you use? What pairs do you trade? What broker do you use? What background do you have? Do you trade based on news? What do you focus at when you trade?

I'm not trying to troll you, i just want to better understand what's wrong so i can give a hand

 

99% of all trading books/education are pretty much bullshit. With that said, supply/demand is king in any market, though each market has its own idiosyncrasies and move with varying degrees of volatility. Not all stocks move the same, not all times of the day move the same, so you need to focus on consistency.

You'll see dumb asses move from Facebook to Soybeans in the same week, from morning session to after hours. One day they've got a 20tick target and 5tick stop the next it's a 80tick target 20tick stop but they scratch the trade for +3ticks.They are all over the fucking place which means they can never actually figure out what is and is not working. Study whichever market you want to trade and devise a way to profit from it on whatever time frame is available to you. I still think you guys should just learn some classic investing, be patient with your timing and then bust your ass at work to get those raises.

 

Disagree with 99% of trading books being worthless. While books detailing systems that work for 1 and won't for others are pointless, books about the psychology of trading and approach ate very useful.

Agree with the sense of certain traders throwing something at the wall and hoping it sticks. Systems are very important and discipline to stick with them in the moment make or break traders.

Some say to specialize in a market but a great trader can trade any market. Takes a while to get to that level of discipline, intuition and precision.

 

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