Making Money Trading

I want to show you how to make money trading the markets. Naturally, it is not the only way to make money it is merely one way of doing so.

If you follow what I will teach you, try the methodology out on demo first before committing real money in a live account, gain confidence and understanding in the setups and you are patient and disciplined, you will make good money with this method.

The method I am going to show you is based on price action. It uses the price, fibonacci levels, three moving averages, the concepts of support and resistance and trend lines. From time to time it uses an indicator. It is not complicated to follow but it will take you time and effort to learn how to trade it for consistent profit.

We will take things very slowly because I want to make sure that everyone fully understands the concepts as we go along. Having said that, I expect those reading this to have at least a basic knowledge of the elements I have listed above. If you do not, go away and read up on them. You will find a huge amount of free information on them.

The method I will show you is not a system with a rigid set of entry and exit rules. It is not going to tell you that when X happens, do Y. It is a method of trading based on high probability setups.

It can be applied on any timeframe but I use it to make money on the hourly and daily timeframe because this is what I am comfortable with. Therefore these are the only timeframes we will work with here.

I work full time but I have access to my broker at work so I can check the charts every hour for setups. If you are not in a position to do this, then you will need to concentrate on the daily timeframe. Both timeframes work very well.

I want to concentrate on one market. The methods work across every market but I think it will confuse people if many traders are asking questions of different setups in different markets. Also, many traders don't have access to some markets or the margin requirements to trade them are too high. As a result I am going to post a poll and over the process of a few weeks we will eliminate which market we are going to trade going forward.

While the market is being decided, are there any questions?

Just select one yourself. I'm sure we'll all be interested even if it's not an instrument we personally trade.

trader_dante,

Thanks for starting this thread - it has the potential to be very useful for the less experienced. The trading philosophy (and methodology) appears very similar to the conclusion I am coming to for my own use - nice & simple but not doggedly rigid.

re the poll: why no shares eg FTSE350 or NAsdaq - or are they includede in "Indices"?

0007

How about the FTSE, as it's fairly ubiquitous?

Would be interested to hear your method, and learn a few things...

0007 said:

trader_dante,

Thanks for starting this thread - it has the potential to be very useful for the less experienced. The trading philosophy (and methodology) appears very similar to the conclusion I am coming to for my own use - nice & simple but not doggedly rigid.

re the poll: why no shares eg FTSE350 or NAsdaq - or are they includede in "Indices"?

0007

Click to expand...

Hello 0007 - good question!

The reason I didn't choose shares is because of the size of the market. There is small cap, mid cap, large cap shares aswell as those traded on international exchanges. Although I will teach a methodology that will work on any market I also believe that part of being profitable is knowing your market well. With shares the market is simply too large to get to grips with. If a new trader is not aware of the difference in the way the price moves between a blue chip stock listed in the FTSE 100 and a penny share quoted on AIM they may be in for a nasty surprise.

TheBramble said:

Just select one yourself. I'm sure we'll all be interested even if it's not an instrument we personally trade.

Click to expand...

My initial thought was to choose Crude Oil but looking at the poll so far I can see seven people have voted and no one has chosen commodities. I know that many of you will just be interested in the methodology and may then look to take it and apply it to the market you are comfortable trading. However, I think it would help if something was chosen that the majority of people were interested in.

One more thing I would say is that I am not going to reveal some holy grail of trading that is going to blow everyone away. Most of the experienced traders here will probably see themselves reading about support and resistance levels etc and wonder: "is this it?". I will tell you now that there is not likely to be anything here that anyone trading over a year or two will not have heard of or even tried out before. However, the real skill is in how these are all put together. It will start simple and we will add to it as everyone is ready. But I promise you that if you trade in the way I will show you, you will make money consistently in the markets.

if you can show how to make a mere quarter of your "2,154% in 14 weeks" you have my undivided attention.

Being very much a rookie here I am looking forward to hearing more on this! One question re your returns, are this based largely on one market or a good mixture?

Hi trader_dante

Wow, thats nice to see your new thread.

I have been interested in forex trading. Looking forward for your post

Cheers
Fxbee

trader_dante said:

One more thing I would say is that I am not going to reveal some holy grail of trading that is going to blow everyone away. Most of the experienced traders here will probably see themselves reading about support and resistance levels etc and wonder: "is this it?". I will tell you now that there is not likely to be anything here that anyone trading over a year or two will not have heard of or even tried out before. However, the real skill is in how these are all put together. It will start simple and we will add to it as everyone is ready. But I promise you that if you trade in the way I will show you, you will make money consistently in the markets.

Click to expand...

Amen to that Reverend!

trader_dante said:

I want to show you how to make money trading the markets. Naturally, it is not the only way to make money it is merely one way of doing so.

Click to expand...

This should be an interesting thread. Good to see you're raised from the ashes with a winning strat. Looking forward to seeing how this develops.

Magic Moo said:

Being very much a rookie here I am looking forward to hearing more on this! One question re your returns, are this based largely on one market or a good mixture?

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My returns are made from a mixture of markets. I trade almost everything that moves with the exception of shares.

A word of warning though: don't pay too much attention to returns.

Percentage return is very easy to inflate. A friend of mine set up an account with a spreadbet broker that was offering a bonus of £150 free to those who opened accounts with them. He has never placed a trade before in his life and so we decided that I would trade it for him. This was just under five months ago and as of today the account is just shy of £2,350. This equates to a percentage return of 1,345%. It sounds very impressive but it masks a simple truth. The account had minimum margin requirements. For example, minimum trading in the Dax has to be at £3 a point. Therefore with a stop loss of say just 50 points, you are risking 100% of your account on the first trade. And in my opinion, although a system or methodology can give you a significant edge over time, the outcome of any one trade is 50/50 - along with your chance of getting wiped out in this example!

Remember, all you need to do is start with a small amount of money enough times and you can tout an incredible performance ratio. If you start a new account with just $100 each time and trade a full lot ($10 a tick) with a stop of just 10 ticks and go for a home run you will wipe out many times. But of course, if just once you make a 200 pip run (which is fairly likely on something like GBP/JPY) - you can, of course, very legitimately and truthfully say that your return on a new account is 2,000%. Once you then have your $2,100 you can start to trade a little safer but still boast what looks like an incredible return. I am sure many unscrupulous system sellers do this.

The principle is the same with my personal account but not the methodology. I started with a very small amount of money. I had actually wiped my account out at the time and couldn't bear to put much more money in so I started this new way of trading with what I had in my account which was just £63. I have built this up into £1,435 as of today. Since the broker I use lets me trade at small size though, I did not take excessive risk which could have wiped me out from the start.

So, as you can see these are small returns in terms of actual money made despite the fact that the percentage increase is phenomenal!

I have recently reviewed all the trades I have done in my account since starting to use this methodology. From this review I can see that my win/loss ratio is just under 80%.

Losses will be cut very quickly and winners will be left to run until it looks like the move is running out of steam. Naturally, some retracement will be necessary before this is realised. Nonetheless, some of the trades I will show you have incredible risk:reward ratios.

The latest trades I took were in the Bund (German Treasury market) and in Crude Oil. The last setup my methodology generated in the Bund returned a reward of 12 times the risk on the hourly timeframe. (180 ticks reward for a 15 tick risk). In Crude Oil, the method generated a reward of 5 times the risk (362 ticks for a 67 tick risk) This is without adding positions which was also possible.

Testing out the validity of any methodology on demo is very important. After all, how many businesses can you "try" first without losing any money?

Having said that, I am a firm believer in going live with a very small amount of money rather than working with demo. This is simply because I have heard many traders complain that although they could make money consistently on demo it all fell apart when the account went live. Your behaviour will often change when you start to trade with real money and I think it is important to be in the right mindset from the start.

One way that the "demo affect" shows itself is that positions can become much harder to hold when you are live, the money actually means something and you are fearful of giving too much of it back to the market.

So my advice is take some small risk capital - money that you can afford to lose and put it into an account. If you are spreadbetting this is easily done. You could demo this strategy for as little as £10 with certain brokers that will let you trade in pennies. Don't worry about the reputation of the broker. We are not scalping the market with this methodology and we are not trading news. We are placing orders either based on hourly or daily bars. I have used almost every broker out there - including the ones that all get a bad rep on here - and never had a problem with them relating to this kind of trading.

There are also direct market accounts that will let you trade at any size you want. I know Oanda allow this on Forex.

The other alternative is to get an account that offers you a free bonus. Then you have real money from the start but no risk in your starting capital. I had £150 from TD Waterhouse SB and £100 from Barclays SB. I had this without needing to put any money in or make a trade first but they may have changed the rules now. It is worth having a look round to see.

At any rate, get yourself an account and make sure you have access to decent charting.

Great thread trader_dante, looking forward to reading it over the next few weeks.

So not many people wanting to learn to trade commodites. I am amazed as this is where many fortunes will be made over the next decade. Commods have gone main stream and the liquidity is exploding.

Good trading,

yeah, I voted bonds but on 2nd thoughts favour crude oil much more

Hi Trader_dante,

"There are also direct market accounts that will let you trade at any size you want" could you point any name for that..... (iam not sure, sorry if it is not allowed to say the name)

Cheers
Fxbee

TWI said:

So not many people wanting to learn to trade commodites. I am amazed as this is where many fortunes will be made over the next decade. Commods have gone main stream and the liquidity is exploding.

Good trading,

Click to expand...

I agree. But you will be able to take this method and use it on the market of your choice.

forexbee said:

Hi Trader_dante,

"There are also direct market accounts that will let you trade at any size you want" could you point any name for that..... (iam not sure, sorry if it is not allowed to say the name)

Cheers
Fxbee

Click to expand...

Hi Fxbee, I believe Oanda (direct access forex broker) allow you to trade at any size you want. You can certainly trade in increments of a penny. They also offer a demo account. I am not affiliated with them in any way.