Building a collection advices for newbies in Forex Trading

tommy0921

Trader
Jan 3, 2011
29
1
17
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 instruction 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. 32 rules traders should follow (I want to put them in here, so people can choose what they want to see without spending too much time to find, this is our forum link, not go outside)

5. Don't break your entry and exit rules.*You made them for bad trades, just like the one you're stuck in right now.

6. Don't try to get even.*This isn't a game of catch-up. Every action you make has to stand on its own merits. Take your losses with detachment and make your next trade with absolute discipline.

7. 5 Ways To Identify Fake Forex Broker Reviews (see below)

8. There are so many questions before starting Forex. How do I choose a broker? Should I use a demo account? What do I need to know before making my first trade? (see below)

9. Types of Trading Strategies (see below)

10. Why do Forex Traders Lose Money

11. 32 Rules Traders should follow

12. Different Types of Brokers (see below)

13. 20 Ways To Stop Losing Money
 
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tommy0921

Trader
Jan 3, 2011
29
1
17
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.
 
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tommy0921

Trader
Jan 3, 2011
29
1
17
Before you can get started with forex trading, there are so many questions to answer. How do I choose a broker? Should I use a demo account? What do I need to know before making my first trade?
Let’s answer these questions one at a time, in order of importance.
1.*Choose a broker
Making a decision on which broker to use is personal for each trader. Some brokers offer certain options that some traders will thrive on, while other traders will hate the broker for those same options. It is important to review and compare the options of each broker closely and choose the one that makes you feel most comfortable.

2.*Open a Demo Account
Once you have made your decision on which broker you like the best, it is time to open a demo account. Most brokers will offer at least a 30 day trial of their trading platform giving you a chance to trade on the platform using play money. Using a demo account is a good opportunity to make sure that you feel comfortable using the broker’s trading tools. You would not want to trade real money without being fully comfortable with the trading platform. A demo account will not only help you get a grip on how to use the broker’s trading platform, but also trading the market in real time.
• Learn to take risk seriously
• Practice sound money management

3.*Learn About Leverage
Forex trading is typically carried out using leverage, or trading on margin. Margin is a useful tool, but it can be very dangerous if it isn’t used correctly. Forex brokers typically offer anywhere from 50:1 leverage up to 400:1 leverage. The higher the number, the less money required to put on a large trade. The use of leverage is something that needs to be taken with a lot of care.

4.*Practice Reading Charts
Before you start making trades you should get familiar with charts and how they work. It is a good idea to get familiar with the different time frames and the different types of charts. The shorter time frames will give you an idea of how the market is moving minute to minute. The longer time frames can show you how the market moves over longer periods and will show the larger trends. Most charting software will offer charts as lines, candlesticks, or bars. Take plenty of time to try out different looks and time frames to find the style that you are comfortable with.
• Learn about candlesticks
• Learn to understand support and resistance

5.*Making the first live trade
The first trade is a nervous and exciting experience. The demo account prepares you for the technical aspects of trading, but when real money is on the line, emotions will come into play. It is important that you keep a level head and do your best to trade with the same methods that you practiced on the demo account. It may prove to be difficult, but if you master your emotions and use sound money management, anything is possible after this step. If your first trade loses money, do not give up, just piece together where you think you went wrong, and try again.

Forex trading is a constant learning experience. Trading mistakes can be expensive. If you learn from those mistakes and do your best to avoid them in the future, you can become a very successful forex trader
 

tommy0921

Trader
Jan 3, 2011
29
1
17
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.

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. Notice me if I'm wrong.
 

tommy0921

Trader
Jan 3, 2011
29
1
17
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.
 

tommy0921

Trader
Jan 3, 2011
29
1
17
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.

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.

(To be continue..., this information is belong to other people. I collected, please this discuss if you have opinions)
As I said
Hi all,
I follow instruction,create a demo at fxdialogue b/c it is said that this is the best way to...I really appreciate your advices, and experiences.
I still dont have much experiences, please discuss...
 
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tommy0921

Trader
Jan 3, 2011
29
1
17
32 RULES EVERY TRADER SHOULD FOLLOW
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…)
 

tommy0921

Trader
Jan 3, 2011
29
1
17
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.
 

tommy0921

Trader
Jan 3, 2011
29
1
17
Different Types of Brokers
- The first step in choosing a broker is finding out what your choices are. You don't just walk into a restaurant, knowing what to order right away, do you? Not unless you're a frequent customer there, of course. More often than not, you check out their menu first to see what they have to offer.
brokers.png
- There are two main types of brokers: Dealing Desks (DD) and No Dealing Desks. Dealing Desk (NDD) brokers are also called Market Makers, while No Dealing Desks can be further subdivided into Straight Through Processing (STP) and Electronic Communication Network + Straight Through Processing (ECN+STP).

What is a Dealing Desk Broker a.k.a. Market Maker?
Forex brokers that operate through Dealing Desk (DD) brokers make money through spreads and by trading against their clients. Also called market makers, Dealing Desk brokers literally create a market and artificial forex exchange rates for their clients. While you may think that there is a conflict of interest, there really isn't. Market makers provide both a sell and buy quote, which implies that they are indifferent to the decision of the trader.
Since market makers control prices, it also follows that there is very little risk for them to set FIXED spreads (you will understand why this is so better later). Also, clients of dealing desk brokers do not see the real interbank market rates. Don't be scared though, the competition among brokers is so stiff that the rates offered by Dealing Desks brokers are close, if not the same, to the interbank rate.
Trading using a Dealing Desk broker basically works this way:
dealing-desk.png
Let's say you place a buy order for EUR/USD for 100,000 units with your Dealing Desk broker. To fill you, your broker will first try to find a matching sell order from its other clients or pass your trades on to its liquidity provider, i.e. a sizable entity that readily buys or sells a financial asset.
By doing this, they minimize risk, as they earn from the spread without taking the opposite side of your trade. However, in the event that there are no matching orders, they will have to take the opposite side of your trade. Take note that different brokers have different risk management policies, so check with your broker regarding this.

What is a No Dealing Desk Broker?
As the name suggests, No Dealing Desk (NDD) brokers do NOT pass their clients' orders through a Dealing Desk. This means that they do not take the other side of their clients' trade as they simply link two parties together.
no-dealing-desk.png
NDDs are like bridge builders: they build a structure over an otherwise impassable or hard-to-pass terrain to connect two areas. NDDs can either charge a very small commission for trading or just put a markup by increasing the spread slightly.
No Dealing Desk brokers can either be STP or STP+ECN.
(to be continued)
 

tommy0921

Trader
Jan 3, 2011
29
1
17
What is an STP broker?
Some brokers claim that they are true ECN brokers, but in reality, they merely have a Straight Through Processing system.
Forex brokers that have an STP system route the orders of their clients directly to their liquidity providers who have access to the interbank market. NDD STP brokers usually have many liquidity providers, with each provider quoting its own bid and ask price.
Let's say your NDD STP broker has three different liquidity providers. In their system, they will see three different pairs of bid and ask quotes.
hgggggggggggggggggBidhhhhiAsk
Liquidity Provider A 1.2998 1.3001
Liquidity Provider B 1.2999 1.3001
Liquidity Provider C 1.3000 1.3002

Their system then sorts these bid and ask quotes from best to worst. In this case, the best price in the bid side is 1.3000 (you want to sell high) and the best price on the ask side is 1.3001 (you want to buy low). The bid/ask is now 1.3000/1.3001.
Will this be the quote that you will see on your platform?
Of course not!
Your broker isn't running a charity! Your broker didn't go through all that trouble of sorting through those quotes for free!
To compensate them for their trouble, your broker adds a small, usually fixed, markup. If their policy is to add a 1-pip mark-up, the quote you will see on your platform would be 1.2999/1.3002. You will see a 3-pip spread. The 1-pip spread turns into a 3-pip spread for you.
So when you decide to buy 100,000 units of EUR/USD at 1.3002, your order is sent through your broker and then routed to either Liquidity Provider A or B.
If your order is acknowledged, Liquidity Provider A or B will have a short position of 100,000 units of EUR/USD 1.3001, and you will have a long position of 100,000 units of EUR/USD at 1.3002. Your broker will earn 1 pip in revenue.
This changing bid/ask quote is also the reason why most STP type brokers have variable spreads. If the spreads of their liquidity providers widen, they have no choice but to widen their spreads too. While some STP brokers do offer fixed spreads, most have*VARIABLE*spreads.

What is an ECN Broker?
True ECN brokers, on the other hand, allow the orders of their clients to interact with the orders of other participants in the ECN.
Participants could be banks, retail traders, hedge funds, and even other brokers. In essence, participants trade against each other by offering their best bid and ask prices.
ECNs also allow their clients to see the "Depth of Market." Depth of Market displays where the buy and sell orders of other market participants are. Because of the nature ECN, it is very difficult to slap on a fixed mark-up so ECN brokers usually get compensated through a small*COMMISSION.

As I said
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 contribute your points, don't just see and leave
 

tommy0921

Trader
Jan 3, 2011
29
1
17
20 Ways To Stop Losing Money
This is good for general trading, not specific to FX but rules are just the same.

Here's a reality check as we slam headfirst into the January markets. The vast majority of retail traders lost money in 2007 and will lose money next year, despite ample doses of education, enthusiasm and brilliant ideas. In fact, at least 80% of all at-home speculators will eventually give up and wash out of the financial markets.

How can you buck this enormous tide and make 2008 your most profitable year in the trading game? To state the obvious, the best way to start making money is to stop losing it.

In that regard, here are 20 ways to staunch the bleeding and get back into the winner's circle in the new year. Happy holidays, everyone!

1. Don't trust the opinions of market gurus.*Remember that it's your money at stake, not theirs. Listen to what they say, then step back and do your own homework.

2. Don't believe in a company.*Trading isn't investing, so you need to focus on the price action and forget the balance sheets. Leave the American Dream to Warren Buffett.

3. Don't break your entry and exit rules.*You made them for bad trades, just like the one you're stuck in right now.

4. Don't try to get even.*This isn't a game of catch-up. Every action you make has to stand on its own merits. Take your losses with detachment and make your next trade with absolute discipline.

5. Don't trade over your head.*If your last name isn't Kass or Cramer, stop trading like them. Just concentrate on playing the game well, and stop thinking about making money.

6. Don't seek the Holy Grail.*There is no secret trading formula, other than good position choice and solid risk management. So why are you looking for it?

7. 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.

8. 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.

9. Don't trade the obvious.*Everyone sees the most perfect-looking patterns, which is why they set up the most painful losses. Simply stated, if it looks too good to be true, it probably is.

10. Don't ignore the warning signs.*Big losses rarely come without warning. Don't wait for a lifeboat before you abandon a sinking ship.

11. Don't count your chickens.*That delicious profit isn't yours until you close out the trade. Trail stops, take blind exits and do everything possible to get that money into your pocket.

12. Don't forget the plan.*Remember the reasons you took a trade in the first place, and don't get blinded by greed or fear when the position finally starts to move.

13. Don't have a paycheck mentality.*You don't need to get paid every week or every month, as long as you take advantage of the opportunities as they come. Classic wisdom: traders book 80% of their profits on just 20% of the days the market is open for business.

14. Don't cut corners.*There are very smart folks out there working full time to take advantage of your mistakes. Fight back by examining your results, updating your plan and finding working themes for the next session.

15. Don't ignore your intuition.*Listen to that calm little voice that tells you what to do and what to avoid. That's the voice of the winner trying to get into your thick head.

16. Don't hate losing.*The best traders lose money on most of their positions, so get used to the pain of losing. And there's a side benefit: the losing teaches more about winning than the winning itself.

17. Don't fall into the complexity trap.*Traders who can't see the market are looking for it everywhere except in the price action. In truth, a well-trained eye will find more profits than in a stack of technical indicators.

18. Don't confuse execution with opportunity.*Expensive software won't help you trade like a hedge fund. Pretty colors and flashing lights make you a more nervous trader, not a better one.

19. Don't project your personal life onto your trading.*Trading gives you the perfect opportunity to find out just how messed up your life really is. Get your own house in order before you play the financial markets.

20. Don't think that trading is fun.*The trading game should be boring the vast majority of the time, just like the real-life job you have right now.
 

gnike

Trader
Feb 13, 2011
27
1
12
Hi tommy 0921!

I'm new to trading too. Thanks for all the posts. They're very informative and yes, I've learned something. Hopefully it will help me with my trading.
 

Ary Barroso

Active Trader
Jul 9, 2017
908
71
39
35
Hi tommy 0921!

I'm new to trading too. Thanks for all the posts. They're very informative and yes, I've learned something. Hopefully it will help me with my trading.

That’s the real benefit of using Forex forums; I see there have so many dedicative forum members like the author (thread creator). In addition, I have also improved a lot.