Thread: Building a collection advices for newbies in Forex Trading

Hi all,
I've just started to learn to invest in Forex field for 2 weeks. This is a good way to earn money if we well understand about trading, tools, and strategies in Forex. As a newbie, I follow people instructions and create a demo at fxdialogue because it is said that the best way to learn Forex is open a demo account. I agree. A demo account helps me understand Forex better. Alike any other newbies, I still have not much experiences. Therefore, I create this thread to put advices and experiences in. Obviously sometime advices cannot be correct for 100 situation, but it helps us gain experiences. I really appreciate your advices, and experiences. Post them in, so we can make this thread become collection advices for beginners.

I start first, and if there is something wrong, please notice

1. As I said above: "Never start Trading without FIRST using a*DEMO Account"*.A Demo Account allows you to become familiar with trading procedures, such as placing Market, Stop and Limit orders without any risk. All dollar losses or gains in a Demo Account are imaginary but the

2. Start with basic trading knowledge. There are some people invest without knowing what they are doing. It's the worst thing human have ever made. We don’t need to have MA degree, 'cause even MA will lose sometimes, but we've better knew deeply about what we will do.

3. No one cares about your money as you do. Take 100% responsibility and never wait for brokers to take your responsibility. Brokers do not always show a potato as it really is. You have to know what they tell you are true or not.

4. Don't forget your discipline.*Anyone can learn the basics of the trading game. Sadly, most of us will fail because of a lack of self-control, not a lack of knowledge.

5. Don't chase the crowd.*Tune out the groupthink and dance to the beat of your own drummer. Get out of the chat rooms and off the stock boards. This is serious business.

6. 5 Ways To Identify Fake Forex Broker Reviews

7. The most important of all success principles
If you do what other successful do, you will eventually get the same results that they do. And if you don't, you won't! (For your information, see below)

8. Types of Trading Strategies

9. Why do Forex Traders Lose Money

10. Demo vs Live account (Please help)

11. 32 rules traders should follow

12. Different Types of Brokers (see below)

5 Ways To Identify Fake Forex Broker Reviews
I found this good article..and maybe it will benefit all of us... (this post not belong to me, I don't know whether put source here is correct or not. If correct, notice me, I will modify my post)

Many traders or future traders shop for a broker to work with and find endless reviews on the web, and not all are genuine. Here are 5 ways ways to separate the good from the bad.

There are lots of sites that specialize in forex broker reviews and lots of talk about brokers in various forums. While a lot of information is comes from real experience of people that have used a brokers’ services, some may have a hidden agenda of promoting the broker. Promoting a broker is OK, as long as it’s done in a transparent way. Let’s see the 5 ways to identify fake reviews:

1. Look at the site: if this officially a forex news site / education site, but the first thing that you see is a big list of forex broker reviews, then you can take the reviews with a grain of salt – the site’s sole purpose is to make money on affiliates and not necessarily have up to date news. So are the reviews genuine?

2. Check the link: If you see something like landingID=3 or affiliate=fxsite at the end of the link that leads from the review page to the broker’s site – this is definitely an affiliate link – the reviewer gets paid for referring clients to the broker. Getting paid for referrals is legitimate, but hiding the fact that the reviewer is paid for the service isn’t proper. For site owners, the solution is to write a disclosure about the affiliation. This way, the readers can judge for themselves if this genuine or not, having the knowledge about the affiliation deal.

3. Option to comment: If the site has an option to add your own comment on the review, actually your own mini-review on the broker, that’s a good sign of openness. But this may be tricky as well. Try commenting and see if your comment really appears on the site, or if it’s held for moderation forever. Sometimes comments are automatically posted, but are later deleted when they aren’t convenient. Such sites’ openness, but it’s fake.

4. Check the forum member: if a forum member posts a reply with a recommendation about a forex broker, even without an affiliate link, he could be associated with the broker. If he’s officially representing the broker, that’s like a full disclosure – you can judge him for yourself. But if he’s not? Well, check out what else he wrote on the forum. If he’s a regular participant, it could be genuine, but if his main agenda is promoting the same broker, don’t take his word. I must say the Forex Factory is doing a good job at getting such promoters out of the forums.

5. Search the web for negative commentary: A common check if to search for the name of the broker with the word “sucks” – this will easily bring you to negative reviews, and you can see how bad they are. Getting results for this search doesn’t mean the broker is necessarily bad, but this is how you’ll get some negative words as well.

Nice information you got there. Thanks for sharing it..

The most important of all success principles
If you do what other successful do, you will eventually get the same results that they do. And if you don't, you won't!
"Nature is neutral. Nature does not favor one person over another. The Bible says, "God makes the rain fall on the just and the unjust." When you do the things that other successful people do, over and over again, you achieve the same results that they do. It's not a matter of luck, or chance, or accident. It is a matter of law" (from Millionaire Dollar Habits book)

Some people say that the most valuable pieces of advice they have ever learned is to focus in on people who have already achieved what you're trying to achieve, and ignore all the rest. It's easier said then done, but it's good advice.
However…
They do not ignore all the rest. They learn from failures of all the rest. Warren Buffett learned from Benjamin Graham. Benjamin Graham failed to realize the potential of stocks in long-run.

Your situation will not 100% the same as successful situation in a particular period. You apply the way they do, you get 80% + experiences from failures of the others. You achieve 100% growth rate.


As I said

Originally Posted by tommy0921

Hi all,
As a newbie, I follow people instructions and create a demo at fxdialogue because ... I create this thread to put advices and experiences in. I really appreciate your advices, and experiences. Post them in, so we can make this thread become collection advices for beginners.

Please discuss

Types of Trading Strategies
Each of the primary trading styles has been briefly introduced below. They have been placed in order according to the time frame that the trader operates in when employing that strategy, from the shortest to the longest time period that the trader typically holds a position.

*Scalping– a very short term strategy used mostly by market makers and speculators to attempt to capture the bid/offer spread.

*Day Trading– a short-term trading strategy in which a trader liquidates all positions before the end of the trading day.

*Range Trading– a short to mid-term strategy based on first identifying and then trading within a range. Involves selling at the top of the range and buying at the low end of the range.

*Swing Trading– basically, buying low and selling high, often using technical analysis to determine swing points where the market is oversold or overbought.

*Trend Trading– the most long-term of the trading strategies, trend trading involves identifying and trading the overall direction of the market, often until a reversal occurs. Trailing stops will often be used to protect profits.

Originally Posted by tommy0921

Hi all,
I follow instructions and create a demo at fxdialogue because...I create this thread to put advices and experiences in. I really appreciate your advices, and experiences. Post them in, so we can make this thread become collection advices for beginners.

Please discuss, and give your ideas. Don’t just see and leave. Notice me if I'm wrong.

Why do Forex Traders Lose Money

It’s commonly known that most forex traders fail. In fact, it’s estimated that 96 percent of forex traders lose money and end up quitting. To help you to be in that elusive 4 percent of winning traders, I have compiled a list of the most common reasons why forex traders lose money.

1. Low start up capital
Most forex traders start out looking for a way to get out of debt, or to make easy money. It is common for forex marketing to encourage you to trade large lot sizes and trade highly leveraged to generate large returns on a small amount of initial capital. You must have some money to make some money. It’s possible for you to generate outstanding returns on limited capital in the short term. However, with only a small amount of capital and outsized risk, you will find yourself being emotional with each swing of the market and jumping in and out and the worst times possible.

Solution:
People that are beginners in forex trading should never trade with only a small amount of capital. This is a difficult problem to get around for someone that wants to start trading on a shoe string. $1000 is a reasonable amount to start off with, if you trade very small. Microlots or smaller. Otherwise you are just setting yourself up for potential disaster.

2. Failure to manage risk
Risk management is key to survival. You can be a very skilled trader and still be wiped out by poor risk management. Your number one job is not to make a profit, but rather to protect what you have. As your capital gets depleted, your ability to make a profit is lost.

Solution:
Use stops, and move them once you have a reasonable profit. Use lot sizes that are reasonable compared to your account capital. Most of all, if a trade no longer makes sense, get out of it.

3. Greed
Some traders feel that they need to squeeze every last pip out of a move. There is money to be made in the forex markets every day. Trying to grab every last pip before a currency pair turns can set you up to lose the profitable trade that you are sitting on.

Solution:
It seems obvious but, don’t be greedy. It’s ok to shoot for a reasonable profit, but are plenty of pips to go around. Currencies move every day, there is no need to get that last pip. The next opportunity is just around the corner.

4. Indecisive Trading
Sometimes you might find yourself suffering from trading remorse. This happens when a trade that you open isn’t immediately profitable, and you start saying to yourself that you picked the wrong direction, and then you close your trade and reverse it, only to see the market go back in the initial direction that you chose.

Solution:
Pick a direction and stick with it. All that switching back and forth will just make you lose little bits of your account at a time.

5. Trying to pick tops or bottoms
Many new traders try to pick turning points in currency pairs. They will place a trade on a pair, and as it keeps going in the wrong direction, they continue to add to their position being sure that it is about to turn around this time. If you trade this way, in the end you end up with much more exposure than you planned, and a terribly negative trade.

Solution:
Trade with the trend. It’s not worth the bragging rights to pick one bottom out of 10 attempts. If you think the trend is going to change and you want to take a trade in the new possible direction, wait for a confirmed trend change.

6. Refusing to be wrong
Some trades just don’t work out. It’s human nature to want to be right, but sometimes we just aren’t. As a trader, sometimes you have to just be wrong and move on, instead of clinging to the idea of being right and ending up with a blown account.

Solution:
It’s a difficult thing to do, but sometimes you just have to admit that you made a mistake. Either you entered the trade for the wrong reasons, or it just didn’t work out the way you planned it. Either way, the best thing to do is just admit the mistake, dump the trade, and move on to the next opportunity.

Originally Posted by tommy0921

Hi all,
As a newbie, I follow people instructions and create a demo at fxdialogue because it is said that this is the best way to...I really appreciate your advices, and experiences.

Currently, I've been playing demo for nearly a month. I know that the road ahead has many impediments. I don't know how long does it take us (normally) to learn Forex by demo? 3 or 4 months?
There is an ideas that demo account does not help us in control emotion. Does it correct?

32 RULES EVERY TRADER SHOULD FOLLOW
1. Never risk more than 2 - 5% of your current (not initial) trading capital.

2. Always use protective stops in each and every trade you execute.

3. Never average a loss as this can lead to disastrous outcomes.

4. Preferably you should always trade in the direction of the daily trend, holding a position against the daily trend should be done with caution.

5. Never enter or exit a trade without a good reason, you should have a well outlined trading plan and cross each signal out as it unfolds.

6. Never get in or out of the market just because you have run out of patience.

7. You should always see the market from a neutral perspective, be willing to sell as you are willing to buy. Don’t force your opinions on the market.

8. Don’t just sell because you feel the price of a commodity is too high or buy because the price of a commodity is too low.

9. Never cancel or move your stop from its initial position, the only exception is when trailing profits being captured.

10. Specialise in one currency pair at first, and when you get really good at it you can expand your portfolio.
(to be continued...)

32 RULES EVERY TRADER SHOULD FOLLOW
11. As a new trader you should stay away from trading at news time because this can be very risky as the market tends to act in unexpected ways at this time.

12. Always look for signals on higher time frame charts as they provide more reliable signals with more room for errors.

13. Make your analysis with a top down approach, after confirming a signal on a higher time frame chart you should look for confirmation on lower time frames.

14. Never place a trade just because of a single indicator/ signal, always look for at least three to four events occurring at the same time to tell a story.
15. Once you loose an opportunity you should stay out and let the trade be. More opportunities will come

16. When holding a position just focus on the charts and price action, don’t pay attention to the equities window as this will only distract you from making logical decisions

17. Face your fears; don’t think about loosing when placing a trade. Simply put the trade on and let the possibilities play out. We “are” speculators after all.

18. Keep a trading journal where you record all your trades, both losses and winners. This serves as reference when analysing your progress.

19. I f a trade turns out to be looser, just forget it at that instant and move on to the next trade, as a trader you should accommodate the fact that losses are part of everyday trading, even professionals have losses and that they are only a bump on the road to success.

20. Don’t be greedy by trying to pick the exact tops and bottoms of a market, let your strategy tell you when and how to close a trade, and always be satisfied with whatever profit you bank from a trade (no profit is too small).

21. When holding/ initiating a position, don’t think about how much money you stand to make/ loose. Just focus on the task at hand and think about making sound decisions free from fear and greed.

22. There is no single trading formula in the FX market, always use dynamic strategies for different market situations, and learn to swiftly abandon a strategy/ close out your trade the moment the market stops doing what you expect it to do.

23. Never let a loss go by without learning from it, if you learn from your losses then it counts as tuition for a lesson learned, but if you let it pass without learning from it. Then it is indeed a loss.

24. Your trading plan must be followed with absolute discipline in order to succeed. The trading plan should be tailored to suit your personality, ability and resources. It should be YOUR plan and unique to your style of trading.

25. Maximize profits not the number of trades.

(to be continued…)

32 RULES EVERY TRADER SHOULD FOLLOW
26. Have a scheduled time specifically for studying the markets before making trading decisions

27. Do not move with the crowd or do what everybody else is doing because the majority (95%) are usually wrong. You should look to buy when the majority are selling and sell when the majority are buying. It’s the basic law of supply and demand “it is an exchange market after all”.

28. Never blame others for your losses, always examine yourself when your trading results are poor. Only by doing so will you be able to improve personally.

29. Never doubt your trading plan, always trust and have faith in it.

30. Price has a memory; if it did something at a certain level possibilities are that it will do it again.

31. When trading the news, don’t pay much attention to the news itself but rather the charts reaction to the news. The answers are always on your charts as the impact of that news event has already been incorporated into the chart long before the news announcement.

32. You are your biggest mentor, you MUST believe in your analysis and your decisions. Only by doing so will you be able to build the necessary confidence you need to succeed in this business.