Best way to start is to keep it simple. Pick an instrument based on your cost factors like margin, point value, time of day you can trade, type of movement. This requires some research or ask other trader you know what they trade and why to get an idea. Then open a chart, put a standard pivot market, and maybe 1 moving average. Watch it for about 15min to start, then longer as time goes by. Try to get to 1 hour of just watching and observing. All the while take notes. Note how it moves over a period of time. Look for identifiable patterns at time of day and location. As you are doing this think about what kind of returns you want, and how much you want to trade. Do you want to trade 1 or 2x a day, or do you want to trade more often? Do you mind working? You are researching because trading is as easy or as hard as you make it. There are thousands of methods, strategies, indicators, and ideas out there for a reason. Everyone is different. The only thing we all have in common is that we have devised or found a method that works for us (or not). That is your most difficult work in trading. Also, most of us have gone full circle. So, unless you are from Mars, chances are you will take the same path and return right back where you started and hopefully the wiser. So, keep it simple and trust what you see and create your own style out of what you learn and conclude. It is ok to look at other approaches since you can get some good ideas. But never believe one is better over another. The one for you is the one that you can work successfully.
Not everyone is cut out for this business. So you need to have some kind of milestone measurement so you know when to let this go. Part of this decision has to do with the depth of your pockets, and the type of person you are. There is no shame in accepting that you cannot continue to do this if you are not able to make it profitable in a reasonable time. Just don't think that someone else can make you a profitable either. The only thing you will learn from others is what makes them profitable and the potential that it may (or may not) work for you. No one in under any obligation to provide you anything for free. Those that charge for sharing their knowledge have no more value in so far as the method goes except to demonstrate that it worked for them. So, you must learn to use their method their way (tough to do) before you can expect similar results. Those that do not charge may or may not have a successful method and are the same as those that do charge. VERIFY that the method has worked. VERIFY that the trades are there. VERIFY the track record of trades taken. VERIFY the performance execution of the traders methods as performed by the trader who is giving or selling you that method. This will save you a lot of time and frustration.
Then decide if it is something that makes sense to you, and if you think you can learn it, and if you can make it work for you. Expect to spend the first few years in this mode. Make some trading friends and bounce ideas off each other until something clicks or sticks. Sooner or later you will have to take the plunge. About the only thing a mentor is good for is that they have traveled this road before you. The best one's won't teach you anything new or anything you cannot eventually learn on your own. The key is in how many times they have traveled the same path you are on and how do they know what they know. Watch them trade, pick their brains.
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Well, that's nice. Hope those good traders don't retire or you may be back to where you started. Beware the perils of Shadow Trading!
Shadow trading is what most new traders do too soon when they attempt to learn a trading system and method. This is a big mistake. Besides making you dependent, your ability to successfully shadow another trader depends on a lot of factors that must already be present in your trading. Things like discipline, patience, and keen price observation. Also, you must know beforehand whose chart you will be looking at. If you have the same tool set the decision is easy ...your charts. If you do not, then you will need to be looking at the lead traders charts. Unfortunately, the lag can cost you and the voice lag can cost you even more.
Most importantly there is an important issue at conflict when you shadow trade; your ability to trust. There is just no way to completely trust the lead trader if you have not spent some quality time observing their trading, recording their trading, verifying their trading, and learning to listen to their trading or at least visually understand their trading. The lead trader for their part has to really be more concerned with their own trading than with how you are able to successfully follow. This has to be, otherwise their trading will suffer from the added pressure of wondering if you are able to follow successfully. So, it is your job - the shadow trader - to make sure you can follow if you choose to use this approach to learning.
I have heard a lot of traders tell me they do not care about learning, they just want some good trades and they use their own charts to verify or match up to take the trade. This always makes me laugh. There are some really creative ways that we hurt ourselves as traders, and this is one of the most creative. How can you possibly match 2 different trading systems on one chart and expect to make any sense out of it in real time with cash on the line. Also, don't forget about that other item of understanding and trust. How can you understand why a trade was placed, why the risk and target if you do not understand the system being used. This brings us back again to the trust factor. Add in the natural hesitation from doubt, due to lack of understanding and you have the perfect recipe for disaster.
So what happens is that many traders start traveling from room to room looking for that perfect place where they can shadow trade successfully. It is another holy grail search.
If you want to be able to trade independently one day, and you want to make some money while you learn, then I suggest you take these as two separate paths. They can happen concurrently. Use a signal service like world cup, or some other professional regulated and verified signal service to get the trades or have the broker put you in a house program. Then once that is in place, go find yourself a good trader education place or a mentor or even on your own, and start to learn. Get a trading buddy, learn together. Watching someone trade is one thing. You can learn a lot and you have all the time in the world to record, verify and understand what is happening. But if you start to shadow trade before you have come to a good understanding of what you are seeing and what you need to do, then you will lose your account. I see shadow trading as something a trader does looking for a shortcut route. There are no short cuts in this business.
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10 Truths about Day trading
1 - Trading is a serious business.
2 - The market has no mercy.
3 - For every trade there is a winner and a loser, and there are real people trading.
10 - Trading is not for everyone.
These are especially important for me to remember, as I am just starting out. Thank you for sharing your knowledge
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Ain't this the understatement of the century (though I've edited it a bit out of the context in which it was intended!)
And even when you do know very well and respect the moderator taking the trade if one has "trust issues" s/he can feel more confident taking a losing trade on his or her own than a winning one with the assistance of someone else helping you.
Yes indeed. I have come across several people claiming to have an investment strategy but you have to pay them lots of money for it. You have to be careful otherwise you will lose more that you bargain for.
1 - Indicator vendors who do not trade their own indicators.
2 - System developers who do not trade their own systems.
6 - Trade education rooms where you cannot see the trades either on the chart, dom, or in full clear view.
7 - Trade education rooms where you cannot see a track record of trades taken with accurate time stamps on each trade.
8 - Trade education rooms where the trades are not called in advance enough for you to take advantage of them.
9 - Hard sell trade rooms, email bombardment.
10 - Sales rooms disguised as trade education rooms.
Thanks for the list. Those points above pertain a lot to what I experienced. I think I had experienced this the last year or so. I had been on a "trader's resource" private website and forum where they had a "library" of indicators and articles mostly from other affiliated vendor sites. finally they had a staff member write some articles of their own, but it's all mostly rewritten stuff from free online articles.
The site also had a couple of staff instructors who hosted "live trading" webinars once or twice a month. One instructor who claimed to have made average 40-80 pips a day on the currency futures. He said he only teaches "principles" not systems. Most of those who followed along for many webinars of the instructor, we never could duplicate the success of the said instructor. He'd be all over the place even changing and revising the indicators. And always using trend lines. Then another session looking back on 15min , 4 hr and different time frames to decide whether or not to trade on the 5min or 1min chart.
After a year of watching about 10 of the guys 2-3 hours webinars. , and 10 more past recorded ones, I came to the conclusion that the website company which hired these staff did not require them to divulge their system. What they showed in the webinars was not how they really traded. Why come up with a variation of a system every other webinar. And he promised to create a pre-recorded webinar for better market conditions for his method as the live sessions we attended were not "optimal" for his style of trading. He also had one time offered "one on one" or restricted to 2 or 3 people extra webinars to help "fine tune" , but later on said the people which had a few sessions with him this way didn't find it helped either. Granted , it can be hard to duplicate a mentor's success even live trading. But I found it very hard to believe the instructor was making big pips off of what he just showed us. There would always be something else , something from his vast trading experience we didn't see before. too many details and caveats, and a not a coherent set of rules, just "principles". And I saw no sign he was a price action trader of Al Brook's caliber of whose live sessions I've attended and have seen what he teaches work in action and clearly reproducible. The instructor would , well a bunch of small bars , I usually just want to get out of there. Or that spike at the lower bollinger band. He also said he didn't really use stops, and exits would be discretionary or at best if it looked like it was crossing over the trend line on the "indicator".
So I came to the conclusion, yes, the instructor was a profitable trader by himself. But no, we could not see his actual trades. And he did not share his real working system. Instead he was trying to teach us a constantly invented and revised system of his for the purposes of the site so he could practice his own fiddling of indicators. It's like going to a Karate or Akido class where the instructor keeps pummeling you down to the floor but how are you ever going to learn? The only one practicing the actual moves and trying new things out is the instructor as he continues to trip you and perform locks and twists on you.
He informed us he was using a demo platform which was different from his which was fair. And no, he did not share with us his actual working system. Instead I believe it was a system he was trying to develop by himself for the room attendees. I believe he was just fulfilling his obligations to the site and probably was paid a steady salary for his work there. But he being able to pull 200 to 300+ pips per week? I'm sure there was more to it than what was shown on the webinars. Also the site was heavily affiliated and part of it's parent publisher which sold many many other bogus forex system sites, you know the long vertical ad pages with a system for $97 and 30day money day guarantee , and payment via Clickbank.
And when I tried to quit after one year, the annual fee of $500, clickbank said the vendor changed my cancel request to Tech Support ticket! And it happend twice when I tried again. It finally got resolved when I made my case known on the site and another staff member said she would notify the subscription arm and Clickbank. Then finally clickbank acknowledged the cancellation from the vendor. Now I tend to believe this whole site is also an advertising exposure to the numerous other new systems the site's publisher churns out month after month, including many forex EA's that have come and gone over the last six months.
So to conclude, I learned to only learn from those I think to the best of my knowledge, are trading for a living, and also in live trading rooms, one can only learn from those who are actively trading the session and not "trying things out" on a demo platform.
Last edited by Cloudy; July 14th, 2011 at 04:18 AM.
Do a google on CTA programs or World Cup programs. Verify the statistics and the references with the NFA and CFTC regarding the licensed CTA. That's what I was referrring to in the previous post about using a trading service.