Starting out - what would you do differently?

[Nephin]

Starting Out - What would you do differently??

To all the experienced traders out there:

Simple question:
if you were starting out again at the very beginning of your trading path (like many of us are here!) what basic things would you do differently/what strategy would you follow with the benefit of hindsight.

Thanks in advance for enlightening us newbies.

Neph

 

[BBB]

Timely question!

I trade mainly US instruments and therefore have USD accounts. I've taken a big drawdown over the last years due to the declining dollar. Some kind soul pointed out earlier today that I should have hedged the USD account in the FX markets. This may sound a bit advanced for a newbie, but consider currency fluctuations if you do hold an account overseas.

Also, when I started trading online, I reckon I wasted a lot of time trying to implement the rubbish you read in books. They are ok for ideas, and everyone has to start somewhere, but I honestly believe you are better off understanding a price chart and the characteristics of trending markets - how price behaves in the early stages of a trend and consolidation. What happens when price approaches a previous consolidation. Local highs and lows, reversal bars etc. What do you see happening? Have confidence in your findings. All this stuff about triangles, head and shoulder patterns, Fibonacci numbers etc - throw it out. Its useless. Thats why most traders fail - they are all doing the same tiered old stuff because they cant be bothered to learn for them selves.

 

[BBB]

Do you really expect to find an edge in the market that will make you money for the price of a few books? If only it were that simple.

 

[ChartMan]

Thats why most traders fail - they are all doing the same tiered old stuff because they cant be bothered to learn for them selves.

That is just so true. However,

All this stuff about triangles, head and shoulder patterns, Fibonacci numbers etc - throw it out. Its useless

This is generally true, but there are one or two notable exceptions. I can only speak with reference to the Dow. For general stocktrading, you're probably 100% right.

 

[neil]

True

Do you really expect to find an edge in the market that will make you money for the price of a few books? If only it were that simple.

So very true. I spent a long time reading and putting money on the line.

Eventually you come full circle, books gather dust and you sit in front of a screen with just price action and volume as your prime tools.

You copy no one's style of trading yet gather bits of info. from various places and emerge with your own "edge."

Yet the major part overlooked by many is that the biggest obstacle to trading success faces them in the mirror.

Anyway - well said BBB.

 

[bonsai]

Nephin
Keep it simple , very simple.
Don't trade Options.

Most indicators are just mathematical 'games' played on a series
of numbers (Price). No reason why they should work and as often as not they don't.
So, if you do use them only use one. And learn it, inside and out.
Then and only then may it be of value.

CM
I use Fibs regularly and they work for me.
The 'trick' is knowing when to apply them.

The proviso is , of course, that I dont trade U.S.


Triangles and Head and Shoulders etc I think seem useless.
They lack tradeable definition but look very pretty after the event.

 

[options]

What would I do differently if starting out today?

Absolutely nothing.

The experience gained that can only be 'bought' the hard way has laid a very firm foundation that is built on brick by brick.

You start off as an apprentice and you have to learn your trade in a career that has more highs and lows then a constant roller coaster. Getting on and off that coaster at the right time is the key to trading.

It will make no difference if you teach yourself, have a tutor, or are part of a class of 100 people.
The screw ups you make will serve to be your best teacher. If you listen to the lesson and don't repeat the screw up too often.

Probably the only change I would make would be to start off with more money so I didn't have to work at the same time. But sadly that is a catch 22 situation for the majority of people as they have to work to pay bills etc. One solution is to work outside of the market hours you want to trade.

 

[BBB]

Chartman - yea, I understand. What I ment to say is they dont work for ME! The number of times I traded a breakout of a 'triangle' only to see it turn into a 'rectangle' when I started using charts....

Fib numbers - well, the problem is, there are so many of them (23.6,38.0, 50, 61.8, 100, 161.8 etc) there is a 50-50 chance that some respective low or high will retrospectively occur within a point of one of them.

Options - excellent point. We learn most from our mistakes.

 

[adrianallen99]

I would have saved my money to start with and paper traded for longer. That way I would have had more money to trade when I was convinced I had a chance of succeeding.

Of course there is no substitute for trading with real money and with an amount that will affect you when you lose it. That is the only way to find out how you will react emotionally when trading.

On paper I can make huge gains from relatively small amount, yet in reality it isnt that simply.

Also in hindsight I would have stuck strictly to my rules - My notable big losses have come from when I risked to much or boe my rules.

 

[BBB]

wise words AA99

 

[wheezergeezer]

I just want to say to all you seasoned traders, thanks for your
honesty and taking time out to post here , you comments do make a difference to us new guys who are bombarded with all kinds of ****e, I personally trade by feel / intuition and of course research and by keeping my ear to the ground, the best teacher is the painful mistakes that everyone makes,if you learn from them, other wise your doomed to repeate them again and again, a lot of these can be avoided or reduced by reading about other peoples mistakes, especially seasoned traders, guys who have been in the trenches and survived to live another day,
So thank you one and all, for you contribution to our trading education, good luck, god bless............. jk

 

[kevinmcm]

Re: Starting Out - What would you do differently??

To all the experienced traders out there:

if you were starting out again at the very beginning of your trading path (like many of us are here!) what basic things would you do differently/what strategy would you follow with the benefit of hindsight.

Neph

Never be afraid to cut a loss. Protecting your trading pot is essential. Sometimes it happens that you simply get it wrong. Not many people have the discipline to do that. Unfortunatley its a hard lesson to learn for a beginner.

To quote Livermore - A loss never bothers me after I take it. I forget it overnight. But being wrong - not taking a loss - that is what does damage to the pocketbook and to the soul.

Its one of the best maxims to live by if you want to stay in this game.

Kevin.

 

[bottomdollar]

I think it's gotta be "Dont overcomplicate things!"
I went through a stage of learning about trading using technical analysis, cycle analysis, fundamental analysis, some astro stuff.. man, i got so confused as I kept on having so many contradicting signals!

 

[Nephin]

Thanks for all the helpful insights - this site and its members have certainly helped me since I found it.

I think that I've learnt that there are some key elements to ongoing and successful trading.........

1. Keep it simple. Use a few key indicators you are familiar with and understand. Eg Price, Volume, MACD.
(I was recently on a US Technical Analysis site and there were over 200 indicators listed!!......way too much for anyone I think)

2. Protect trading capital ie Money management. When starting out to trade the impulse is to trade for the sake of trading. The buzz of it all is infectious and difficult to control.
Keep control (use stops always), and forget about winning/losing money. Instead think about trading well, and I believe the profits will follow.

3. Do not look for the “Magic Trading System”. You have to develop your own. This will only happen with the passage of time and by experience.

4. As the Japanese say - Kaizen.
Continuous and ongoing learning is essential to success in every intellectual endeavour - especially in the world of trading.

Again thanks to the experienced members for there help
Good trading all

Neph

 

[rglenn]

Nephin

You have got some very good advise from other members and your list looks good.

What I have found regarding stops are to set them where it hurts the least.

i.e in the past I have been setting my stops to get the most profit but when things goes against me it hurt quite a bit.

I feel more comfortable now losing say £100 at a time than say losing £500. Which I can make back quite easily in the next trade.

All the very best in your future trading

 

[timsk]

Nephin,
I don't really qualify to comment as I'm not an "experienced" trader - only having been in the game for 18 months or so. However, for what it's worth, I've recently started doing something that I wish I'd done from day 1, as it's already proving to be beneficial. Namely: I religiously print the chart of the instrument I've traded and write notes as to my reasons for entering and exiting the trade where I did. Most traders develop a trading system and the act of writing down your reasons for the trade enables you to see how closely - or otherwise - you adhere to your system. More importantly, I then write down any lessons the trade has taught me (and learnt from - hopefully) which will help to reduce losses on future losing trades and increase the profits on future winning ones. It's a sort of written trade post mortem and, for me, it's proving a very worthwhile habit to get into.
Tim.

 

[BBB]

Tim. Well done. I agree with you 100%. Not many people have the discipline to do this - what a shame.

 

[Buk]

this is by far the most "interesting" thread I've visited so far...I have literally just started, and was confused/concerned with all the variances of technical information req'd to set up trades. I realise you have to have guidance & supporting trading tools, but by far the most important strategy I've learned already from this thread is : know yourself.....I particularly like Timsk's extremely good advice regarding 'trade history' & keeping records etc....thank you timsk, and thank you everybody for your honesty.....it is invaluable advice to new traders, and me personally.......kind regards!!

 

[jamus]

I would definately have used smaller stakes (margin) instead of going for the home run after the first initial trades went my way. I think its best to start with losses initially than the other way round. That teaches you to be humble and to respect the Market, and to do more research.

 

[EK1]

I am starting out ............... and I am trading 1p trades on Finspreads.

Have done paper trading but it doesn't compare to real cash in a psychological sense - even at 1p per trade.

Trading the daily Dow from 5.30 until close.

I can only learn through the experience.

Still my BIGGEST problem is how to interpret the Dow . My strategy so far has been to look at the trend and try to understand where its going, with very little thought. Don't get me wrong, I do scan the the finance sites for snippets but I can't seem to get it.

Any advice??

Thanks