Just a couple of comments. Not meaning to lecture you, but the thing about stops is important.
You only are charged a commission for orders (stop orders included) that execute, not for orders that you place or move. It is very, very good advice to always place a stop order below your long entry (or above your short) to limit your possible loss. Where to place them is a subject of a lot of discussion of this forum, but you really need to have them.
(Did you know that, with the leverage of futures, you can end up losing more than 100%? -- If the broker doesn't close out your position first, and yes, they will come after you for it.)
Don't rely on your judgment to know when to get out once you have a loss. Judgment goes wrong quickly when you're losing.
As far as moving a stop, you could argue that it's OK to move it to follow the trade (up when long, for instance -- although many say just leave it alone), but it's suicide to move it down when long to avoid taking a loss. Be happy to take losses due to stops - it means you were wrong and were smart to get out.
This is true even if the market turns around immediately after taking out your stop and goes where you thought it would, which absolutely will happen at times.
You have to survive if you're to succeed, and it's a long-term game.
This is an excellent move. Congratulations!
If you dip in and out of the active forums and threads and sample the many points of view, which often conflict, you will start to get a good idea of what you want to look at further.
The following user says Thank You to bobwest for this post:
thank you for your feedback, not only do I not mind being lectured, I would rather that, then make huge mistakes in life !! And yeah, I found out about stop limit and the prices last night. It is the reason my 11+ contract was allowed to go so far south... It was confusing to me because I am using ThinkOrSwim papertrading, and when I make stops it says like fee = 12.99 or whatever the cost, I am completely all ears to any comments no matter how harsh, I'm 'sure I'll look back on this a few weeks from now and call myself a fool loL.
Ok, I've been thinking about it and thinking about it and I am going to make a live account on monday or tuesday. I probably won't use it very much only 2 or 3 trades per week if that. My goal is to attempt to double a $500 account. I know it is probably will not succeed, but I think I need to know what real trading feels like on a real account. I'm only going to trade ONE market, a micro fx. My only question is where?
I contacted support at TDA and the person I was chatting with said I could trade forex with only $500. He couldn't answer any questions about NinjaTrader so I had to call the trade desk on phone. I had 2 people there tell me I could trade FX, and also 2 different people told me I could NOT trade FX without $2500. One of these people said that the day trader rule only applies to margined accounts, and if you are trading cash, you can make as many trades as you like. I will send them an email and ask, I have been learning the ToS platform (so tired of learning a new platform every other day) and I believe it will be fine. My original goal was to use NinjaTrader, but my girlfriend does not like that program, she acts like I'm playing a cheap video game. I've tried explaining to her how powerful it is, but she does not know anything I'm sure she just hears the cheezy sound effects and judges, lol? For some reason she really likes the look of ThinkOrSwim, I guess even though I'm doing the same thing, but worse, because it is harder for me to navigate the platform and takes forever, it "looks" like I'm more productive, or more professional I don't know. I've been just "sitting at the computer" for a few weeks now, and it has been hard for me to get her to understand that I'm absorbing all this information and I'm not just "sitting at the computer" it's that I'M STUDYING/LEARNING.
So anyways, if ToS will let me trade FX micro with only $500, then I will do that, despite the high commissions, otherwise... I will lease NinjaTrader for 3 months and try to find somewhere else.
I dislike researching new brokers, especially the cheaper ones, I can't tell what is spam review or real review, and what is people upset giving bad review because they lost all their money or legit problems with shady bucketshops. I assume if they are compatible with NT, then must be somewhat ok, I just hope they give me graph data and I don't have to pay extra for it. I'm not sure how this all works, it seems I most likely have to make at least "x" amount of trades per month to make the software/charts free, or pay some obscene price per month if I don't.
My second grandiose idea was to go with ToS anyways, and just trade options or stocks even though I don't even really know much about options, it seems very very similar.
No this cannot happen, as my stop would be calculated to the amount of $$$ I can "afford" to lose on a trade. Once I get a few ticks past breaking even and commissions, I have been manually moving the stop up, but now I suppose I will look into trailing stops, even though I don't trust automation.
I'm going to open a $500 account for me to play around in, and if I trade micro FX I think I could loose no more than $10 per trade. Hopefully I'll win the odd trade, and cover commissions, then I could make 50 or so trades! I think 8 ticks is pretty small but it might be enough ?
I don't understand why everyone is patronizing you. There is no way in hell, that you are ready to start trading. You have neither the capital, the knowledge, nor the experience, to begin a career in trading. It's just that simple. What you should do first, is gain a better understanding of the markets and trading, practice further on sim, and do whatever is necessary to raise sufficient risk capital ( money you can afford to lose). Then you can begin to think about trading.
The following 2 users say Thank You to tigertrader for this post:
I agree with you Tiger! I don't have $100,000 of risk capital. I don't trust the sim, it's why I want a live account, even if I'm only trading the micro fx. Why do I want to trade live at all? Because I believe I have an edge. My edge is that in a certain market, and between a certain time frame, I won't loose (as much) money. I've been studying this market and I know how it behaves (at least for a few hours). I don't know how I can gain experience if I don't ever do anything. And besides, it's only $500. I think that if I can break even in the micro markets considering commission costs would better than a major victory. I know (for reasons unforseen by me) that my first account will most likely get blown. I am prepared for that. I do not think I will come out ahead, I think that commissions will eat up my account faster than I know, but in reality it's only a few hundred dollars, I think that is money well spent to make 50+ live trades! (even if they are tiny ones).
The following user says Thank You to jamiecassar for this post:
Comments like that make me want to study up and learn about stuff, then beat the market even harder!!!!
Someone said something about not being able to predict the market, and I would like to quote it but couldn't find it. I don't think it's possible to predict the market. You can't predict the flop either, but one of the things I have written in my personal hand written journal is:
Know what you're going to do, when the market does what it does.
The following user says Thank You to jamiecassar for this post:
Stops are pre-determined (before entry) based on where you are WRONG about the trade. It has absolutely zero to do with what you can "afford" to lose or any other monetary consideration. The market doesn't care about your monetary consideration. Market just wants to find value, wherever that may lead.
That is not to say that you shouldn't have a maximum stop in mind. You should. Many people use 1% or 2% of their account. But it does NOT mean that is where you place your stop because it's all you can afford. If a proper stop, dictated by price action, goes beyond your maximum stop size (1%, 2%) then guess what - don't place the trade.
As for moving a stop after you get profits, that is a rookie mistake. Anyone that has done any analysis in this area will tell you the same thing. Most likely you would perform better by not moving the stop at all. The trade is either a profit target trade, or a stop loss trade. Once you get more advanced you can look at scaling in and out of your position, although you will find plenty of people that will remind you that all in all out is mathematically superior. Regardless, scaling in or out of a trade works for psychological reasons (although not mathematical ones), and can provide good areas for timing the change of a stop based on a previous entry or exit.
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The following 7 users say Thank You to Big Mike for this post:
When I said "all I can afford" I guess it was bad linguistics on my part. Apologies for the confusion, I meant to say that 8 ticks would be 1-2% of my total capital. I suppose "all I can afford" means every dime!! I wouldn't ever risk more than 1-2% on any one trade. I would rather only risk 1% but that's not possible doing what I'm trying to do. Right now my plan is to just sit and wait for the right opportunity, and when it comes be ready. I plan to wait for (at least) a 20 day low or high, then buy once the breakout (or not) is confirmed.
Thank you for your advice is really is helpful, I think I will not consider trailing stops, just moving the original one to a break even, and perhaps lowering my profit target to 30-40% and not 50%
edit: ok when I wrote this ^ up there, I didn't realize what was being said to me
Last edited by jamiecassar; January 18th, 2014 at 05:48 PM.