Patience and Trading

[markelshark]

This was a comment thread taken from the main site at http://piphut.com/2009/12/forex-signals ... he-attack/ . It is important enough that I wanted to make it have its own forum post so people will continue to see it.

James
December 16th, 2009 at 9:16 am

A friend asked me to have a look at this website a few weeks ago and tell him what I thought. I don’t know Mark’s background but he certainly knows his stuff and his trade suggestions are excellent. Really struggling to understand why so many aren’t listening to him though. Every day there are comments about trades entered that are simply reckless gambles. Sure they may work and it’s your money your rules but why enter a short on fiber at 525 or 540? The logic is sound to look for pa on a pullback to 600 but anything below is just a punt. I started that way and spent a year blowing my first account. By the time I knew what to do, or what not to do, I’d run out of money.

This is undoubtedly the toughest business there is. I know I’ve earnt a living from it for a few years and seen many blow their life’s savings during that time. The skill in this isn’t the trading it’s the waiting until everything lines up and you have the greatest chance of success. Jesse Livermore said it best: “It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight?”

Mark’s doing the hard work in suggesting the best place to enter and the direction to trade. The easy (or maybe hard) part is waiting until price gets there and does something. Some days it won’t. The reason those of us that make our living in this business do so well is because we can “sit on our hands” while others gamble their accounts away.

From what I’ve seen this is a great place to learn but read all of what Mark writes. The “Trading Idea” says exactly what to do with this pair today. If it doesn’t happen it doesn’t happen but there will be thousands more trades in your lives if you don’t blow your account so why worry about a day when you don’t trade?

Good luck to you all!

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HENDRIK
December 16th, 2009 at 10:13 am

Hi James
Thanks for your views… it’s so true! My entry of 540 got me a 20 pip scalp. It’s not that we do not follow Mark’s trading ideas, but if I see an oppotunity to make a quick buck I’ll take.
Are you still a fulltimer?
o
James
December 16th, 2009 at 12:34 pm

Apologies Hendrik, I’d assumed everyone following this site traded 1hr+. I’m not a scalper, did try the low tfs a couple of times but failed miserably. I do this full time.

Levels starting to get more interesting but news in an hour so more sitting on hands. Market’s thin and volatile heading up to XMAS so really only interested in very “safe” trades. Don’t plan to hand over my hard earned £s to the brokers on a whim!
+
Alvin
December 16th, 2009 at 1:06 pm

Good observations James. Those that make it in this biz fly straight, low key, smart. Cowboys don’t make it!

Good trading to all!
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Ed
December 16th, 2009 at 10:29 am

Xlnt post James!
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joe
December 16th, 2009 at 10:54 am

Very well said James
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Markus
December 16th, 2009 at 11:08 am

so true, waiting is everything. Still struggling with it sometimes, but i think im getting there.
I still think theres room for trial and error. Just following blindly would teach no one nothing.
“money management the piphut way” good stuff.
o
Ed
December 16th, 2009 at 11:57 am

I agree Markus. “Money Management” is key. Even though I made some bad trade decisions yesterday I was only down 2% ( my risk ) of my account value. Proper money management will always give you another day to trade.
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Lisa
December 16th, 2009 at 11:18 am

James,

I am glad to hear you say this because sometimes I was thinking that I was really missing out when I saw some of the others trading. Like Mark said, it’s better to wait and not enter a trade than you enter one that makes you nervous.

Thanks again for your comments.

Good Morning Piphutters!!!!
o
juan_s
December 16th, 2009 at 1:03 pm

I agree with you Lisa. That is exactly how I feel when other guys open trades without a valid reason from my point of view.

[markelshark]

Great post James! Yes, my analysis is the easy part – waiting is the hard part, hands down.

I say it over and over but you can’t be afraid to miss out in forex – this is a tough business and is by no means “get rich quick” as some would have you believe. If anything the way some people enter it is a “get poor quick” scheme.

There will always be another trade in these markets. Even if you miss out on a great opp, there will be another great opp. And to your point about trades just because a trade was profitable does not mean it was a good trade, and just because a trade is a loser doesn’t mean it was a bad trade. What matters to me is if I traded the same way every day would I be net-profitable in the long-term, regardless of whether my short-term trade wins or loses.

I think its hard to see that clearly sometimes for beginners because they see people making reckless trades and profiting and they think “If I could just do that!” when in fact that reckless trade is not a good long-term strategy.

My 2 cents. Again, great post!

[dannytan]

Nice pointers Brandon. I'm currently going through a patch whereby I trade rashly, entering a trade even though it has passed its entry point hoping that it could go further. I'm also doing bad habits like dragging SL further n further in hope that it would bounce back at some point, and that is killing my account.

Money management is a must, as the saying goes "as long as you know how to lose correctly, you win".

[Brandon]

From the PipHut webpage i promised Mark to post it here. So here it goes!

I was a complete “loser” in the FOREX market when i first started out without any knowledge or what-so-ever with what i am doing. Luckily for me, i had a friend who dabbled with it and made some terrific returns. He gave me the idea of starting with a demo account (like you did with Lisa) first before putting in any real cash.

Now, i think a guide would probably go like this;

1. Start a demo account for a comfortable time range (say 3 months)
2. Decision time: If you feel you’re ready, start of with a small capital (this is where i am now!).
3. Trade in 1 or 2 Mini lots so that Margin Calls can be avoided.
4. As time passes and confidence grows, top up the account gradually (say in 1k)
5. Increase the the amount of Mini lots to see how one copes with the pressure or making huge losses (i assume everyone can cope with huge profits!)
6. You’re on a rather healthy growth.

Patience. I was trading with my eyes glued on the screen every night and i realised that this did not help at all. That is when SL and TP comes in handy. Get a strategy, put it in, let it run. If it works, well done. If it doesn’t then learn from it. No one gets it right all the time.

I personally treaded on the pointers and it did help. I hope it will help others too. Without paying too much “tuition fees”.

Cheers!

[guzzi4geez]

Well I myself is a newbie and I just started trading like 7 months back. I strongly agree with Mark on the issue of a GOOD and a RECKLESS TRADE. Despite applying good money management of 2% of equity per trade one could still blow up his/her account with time. I have made reckless trade in the past which when I made some, I made some nice profit (though I was not using good many management), but lets look at it this way, You trade with 2% of your equity and made some reckless trade, for the first three trade you were succesfull. You then go on in that manner and make the next 5 trades and they all resulted to losses. Now you are only 4% down of your equity and you keep telling yourself as long as you use good money management you will never get broke. You then continue in your reckless trading and keeps making 30%-40% win-loss ratio. Now a 40% win-loss ratio could mean in every 10 trades you loss 6 or in every 20 trades you loss 12 and what about if all losses were in a stretch(possible?). What if i made 15 straight losses, my account is 30% down and my confidence is also down and when my confidence is down I make more reckless trade. So what am I saying, no matter the good money management you apply a reckless trade can not be succesfull on the long run. Imagine the statistics, some will say only 10% of traders are successful others will say 5%, the question is can I be among the 5-10% successfull trader if I take reckless trades?

[4xpipcounter]

If it was really effective, everyone would be jumping at it, because it caters to, "Make lots of pips with no work."
That is as "complete" of an "analysis" as it gets. If you want to make money in trading, do your due diligence and stay away from robots, EA's, and black box method. s

I don't know if I write to the right place, but I'm new in here and I need an advice.
Please look through this link: forexfreebot(dot)com
I need your thoughts about it.. can you help to make a complete analysis of this stuff?

[Craig]

Hey 4xpipcounter,

You nailed it, that is why 95% of traders do not make it. They are looking to get rich with little or no effort on their part. FOREX is a lot of work. You have to study the charts and keep an eye on what news is going to affect the markets. You should also know as much as you can about candlestick formations, but most important, have a plan and stick to it! Yes, some are going to swing for the bleachers and hit a home run, but that is a very rare occurrence, those that do, usually end up giving back everything they made and them some, because the next home run attempt goes against them and they lose, big. Proper money management and have a plan, sometimes the simple plans are the best.

Craig