Igat's blog

[Igat]

Diary Of a new Trader

The object of my blogs are not obviously a tipster service I am to much of a novice to give any kind of advice. It really here to help me and hopefully other new traders through the very step learning curve of learning to hopefully be a profitable trader.

Now the disclaimer is out of the way I find myself in one of those many frustrating beginner points - losses. The sequence started Friday with an overall 11 pip loss and today as I stand a further 15 pip loss in one trade. Having learned on Friday that I should always check my setup before trading, the lesson I didn't learn Friday was as a beginner the first hour of trading is extremely volatile. It can mean substantial gains can be made but also the equivalent losses are also there to be lost. My indicators rely heavily on trend and get appear to get very upset with swift movement within very active markets. After a second day I think the FTSE's volatility means that I as a beginner really should not be trading markets that volatile. So where should I be looking well logic says a three legged horse or Spurs winning the league, they seem to be better bets than I am right now. But not being one to quit so easily I have started looking for markets that during these volatile times seem to follow my style and setup. Hmm everyone seems to harp on about Forex maybe that's the market that has "stabilisers on my bike". Well as I am writing this I have 3 pairs on my screen covering the markets between USD, GBP, and EURO. After an initial check on them volatility is still there however not nearly so much as the FTSE right now. My indicators seem to work on a more consistent rate. Onward and upward to trading my account to consistent profit, or at the very least keeping my account from crashing before I finish this blog. Well I think I will paper trade these today no point in losing my shirt until confidence is returned. (BTW dont worry my trading account is only £200 I am not stupid enough to load a load of money into it and burn it out before at least learning to break even)

 

[Igat]

Diary Of a new Trader Day 2

Well I am now a forex trader in the loosest possible sense. After refining my system for forex slightly and back testing it yesterday I set up this morning to watch Euro/USD and GBP/USD from 8:00 GMT for 45 minutes. As I am watching both charts with nothing really happening and no sign of any signal developing I volunteer to take my daughter to school. Upon arriving home from the school run I make a brew and check my charts to discover my system had tipped a sell on GBP/USD at 8:55 and the corresponding run lead to what would of been a 90 pip profit. Ah well I take solace in the fact that my system spotted the trend at the very least. So on I go nothing happening a couple of possibilities but nothing special until approximately 11:55 I see a pattern developing with a possible breakout buy on GBP/USD. After watching this develop for 5 minutes my indicators are signaling a strong buy. Every signal was practically buzzing and adrenaline pumping I open a trade window with my index finger just about to hit the mouse button with the cursor hovering over buy something tells me "lets see how this develops for just one more minute". Thirty "one minute's" later I resign myself to the fact that my indecisiveness and lack of belief has cost me an 80 pip's win. Fortunately for the dog I am not the type of man to inflict harm onto defenceless creatures and as I had recently discovered I would of probably thought about it for 30 minutes, analysing if I should or shouldn't kick and end up missing anyway, if of course I had been decisive enough to of tried. It suddenly struck me, I am hardly worried about the loss of my trading account balance I started it with less money than I blew on last weekends trip to St Anne's. So if its not fear of losing money I have put it down to fear of my system being wrong. This was proven less than two hours later when I traded EUR/USD on a news lead spike for a 30 pip profit. Well fortunately for me my wife was on hand to help remove this emotional block I have. With a simple statement - Your system identified two very profitable trading positions and you didn't trade them one couldn't be help one could. Take heart in the fact they you would be running at 2 run winning streak now if your system fails 3 further times on a run you would be still in profit go trade. Obviously some unprintable stuff also but basically a kick up the, well you know where. Seems a fair assessment to me.

 

[Igat]

Diary Of a new Trader Day 3

The saying if at first you don’t succeed try and try again really does not tell the whole story. What it should be is If at first you don’t succeed learn from your mistake adjust your strategy and of course this should be measured against people who are successful at what you want and then try again. However this is a bit of a mouthful and doesn’t have the same ring to it. The original version and the more commonly used version if taken to its strictest meaning can cause misery and carnage. I think Field Marshall Hague used this strategy during the First World War, which led to the British army being known as “Lions lead by Donkeys” but I digress, although I will return to another 1st world war analogy later. Looking at the more accurate statement on how we should “not give up” a baby when learning to walk uses the method and that is why we can all walk (obviously baring those with physical problems).

I used the second version last night. I reasoned my problem wasn’t my system (or so I thought), but confidence so onto the Internet I go researching. I returned to babypips.com and review the lessons I had previously read. The last time I read the lessons there was one I consigned to the “witchcraft” category as being too far-fetched and ridiculous. The lesson was on support and resistance, yes I accepted the principle of it but being able to set lines based on yesterdays high, low and close seemed well like sticking your finger in the air. This time I read it with the same rebel teenager attitude of “whatever” as I did the last time. After reading a few posts on this website supporting the theory and thought what the heck. I opened a spreadsheet and after 2 minutes of formula and data input I had Tuesdays support and resistance lines from Mondays trading on the Euro/USD. Upon opening my charts and plotting these lines I nearly fell out of my chair. What magic sorcery is this that had appeared on my screen? How on earth does that work? Had I happened upon the secret to eternal life? Well of course I haven’t but that’s how it felt. I now at this point realised that my plan didn’t work because it appears the movers and shakers follow this one. The lines represent the points to which bulls and bears fight it out. Each side has a fall back trench like they did in WW1 and just like in WW1 without them there would have been carnage and confusion without them. (Although some may argue there was enough carnage in WW1 with trenches) Without knowing where these lines stood I was effectively walking through no-mans land with no map and looking lost and probably killed very quickly.

So onto the days trading well now I am ready with my £1 pip trading plan and ready to take no prisoners. Not twenty minutes after setting my S/R lines I see it happen a rush to the bears trench I jump in with the crowd at this point my adrenalin is pumping as we charge, then without warning a few of us bulls turn into bears all of a sudden and we start retreating 10 pips back toward our own trench roughly to the point I joined a fear that we may lose this battle engulfs me however luckily that move quickly loses momentum as a few more bulls join in. We reach the bear’s trench and as it happens we overshoot 5-6 pips we all start talking do we go for the next trench or consolidate here. It turns out by general consensus we consolidate at this trench and I retreat from battle pocketing my battle reward of 30 pips. (Please be aware I don’t just jump in every charge I measure what’s happening prior).

Battle weary and buzzing from this new style of trading I decide to watch battle from the sidelines and got a little perturbed when the Generals announced cuts to the bears pay at midday and renewed by this news the bulls charged at the now demoralised bears and the ensuing bloodbath was not pretty but I dare say those who survived were heavily rewarded.

Anyway enough of the analogies for now and signing of for the day a much more confident newbie trader with his first medal in his pocket and much wiser for the experience. Ah I couldn’t resist.

 

[Igat]

Diary Of a new Trader Day 4

Often when studying a new subject especially one as deep and full of acronyms and jargon as trading. The shear volume of information is daunting to say the least. I had the same problem with chemistry at school it made absolutely no sense to me until we studied organic chemistry then as if by magic it all suddenly made sense. Over the last 24 hours I had my organic chemistry moment in trading. Along with my newly discovered s/r levels I tried out the 1-2-3 and trend breaks. I have had my most successful day trading thus far, after 12 hour's with a watchful eye on my screen I was pumped. I believe I have reached the first target that I set myself which was set myself up with a workable, profitable system that I had full confidence in, and made sense to me. Time for stage 2, which is on the balance of things much more difficult maintain this system and become consistently profitable with it.

However I do know that there is more trading than systems and no newbie is guaranteed success no mater how great the system because there are times when I believe an experienced trader know through instinct that even though the setup looks good they wait. There is more to this than charts and fundamentals there is something else there is the human factor. There was one setup today for instance that looked very good it certainly looked like some previous winners but something deep down told me it wasn't, It was a trade that if I blindly followed my system would of lost me my stop loss of 13 pips. It was the only time in the day I did it and before and after it I traded the system no problem at all. I don't think there is any particular flaw with my system I accept there are no 100% sure fire systems but something I had seen before in my very modest trading history locked in my subconscious prevented me trading that one. Its that where I believe the experienced trader has an edge. They know instinctively risk reward on every trade and that's what has really made my day more than the pip gain, I am no longer a newbie I am now a rookie.