Warning - As the title says, this text maybe not accurate at any
level because of the lack of experience of the author. It's just a
history that describes the path of the autor in discoveries of this new
word (for the author) of markets, the trade actions and some personal
tougths. The natural language of the autor don't is the english
language, and that may reflect some errors along the text. Thanks in
advance for compreension of this facts.
At the end of 2011, after many years of some adversities, i get some
estability, some free money at the end of month result of hard work and
some discipline about expenses. Puting this money in banks is at least
secure (in some extent) but the real profit taken is too low, and
sometimes below inflaction, what means the loss of value. With this in
mind i begin the path to find some alternatives. I began to analyse
stock markets but the time window for trades don't is compatible with my
work. There are other alternatives, like CFD's, Futures, Options, but
seems that i need more knowledge about markets, comodities and all, and
to begin with is needed more funds as i have available at the moment.
In this path i find currency exchange, a market characterized by high
volume of transactions, some volatility, 24 hours time window all the
week (except weekends), and with some importance, don't is needed a
large fund to begin (taking in account i don't pretend to use too much
leverage - i understand now the risk/profit ratio). In other way, the
rules, and the pathway is in my opinion, simpler. With this factors and
others, my choice fallen in currency exchange to begin, and maybe in
future try other markets for investiment diversity.
The first thing that came to my mind, is to learn the fundamentals of
currency exchange, referred for simplicity as Forex (Foreign Currency
Exchange). For this, the internet is your ally, and you can find books,
foruns, traders experience and systems at the distance of a click. But i
advise to not believe all you find in internet, there are many things
that don't are true, and if, it's too good to be true, that means with
high probabilty that is false. Just use your common sense to avail, and
in this world, everyone wants to make money, but at least someone as to
loose it. Just try to learn everyting possible about what you wanto to
do, as a key aspect to try to be successfull. Well, at least is what i'm
trying to do.
Find a correct currency exchange broker, is other hard task... There are
a huge amount of them... You need to know how they work in the market
(for simplicity there are two main groups): DD brokers and ECN brokers.
DD means Dealing Desk Brokers - Brokers that join all trades, make a
equilibrium in this trades with their own trades and then put all in
market (means they trade against you) and some do things like Stop Loss
Hunting, and usually don't allow scalping (trades with litle live time
for litle profit usually) and higher spreads. ECN brokers - brokers that
give direct access to the market to the traders and have the advantage
of low spreads, scalping allowed but in other side they charge
comissions. I have tried some until i find Dukascopy. All of them have
Demo accounts for you to learn and understand how market works without
learn loosing real money. In Dukascopy the best way to learn is to join
their monthly «Trade Contest» where you can learn you pathway to success
or not and see how other contestants trade. As a cherry in top of cake,
you can win some money to fund a real money account if you are a awsome
naturaly trader or at least have some luck.
As result, i joined in this contest in the month of January. Dukascopy
platform is easy and powerfull. I read all i can about charts (maybe my
next article), win/loss ratios, leverage, indicators, etc. As i don't
know too much about markets, and the influence of news, taking long (in
time) trades seems to me a litle risky, i have chosen scalping method,
where i enter a trade, follow and end it in litle time. If the trade
runs in profit i let it run but i find to lose many profitable trades
because of greed hoping more profit. In other way, in trades that run
against me, its hard to find the timing to exit the trade and the hope a
reversal in price took me to bigger losses. The month ended in loss, but
i expected that... the lack of experience and knowledge is a great
factor for that, but i tried not to lose to much. My final drawdown (the
loss of money for the initial fund in account was 20%) but i learn some
key aspects i believe that are important.
With one month of trading in Forex, came to me this key aspects that
enumerate here after (there is certainly much more):
Market don't is your enemy, don't fight it, you lose. Just try to
Make a plan, and stick to it (discipline is the hard part).
Be prepared for loss. The market reacts unexpectedly.
Follow the market news but remember that it may already previosly
Before enter anytrade, see the market sentiment (analise diferent
timeframes and pairs).
Trend is your best friend, don't trade against him in the beggining.
Learn about them (i'm still on that).
Learn to find suport and resistance lines (i'm still on that).
Always use Stop Loss
Take care of rounded prices
Don't trade in revenge after a bad trade (i have done some)
Well, i joined the February contest, lets see if i have learned
something... I think my next steps are (not necessarilly in order):
Find the best timeframe and pair to trade
I conclude hopping good trades for you all (and in this case, good