Sharing my experience for new traders

[dash1]

Hello every one.

I thought as a member of this fantastic community, I will share some of my experience as a trader so that new traders don't end up making the same mistakes that I have made over the years.

Firstly, I am not a professional trader however, I have been doing this on and off for a few years now. I am sure there are other members in this community that have a lot more experience and can contribute to this thread. Like I have indicated previously this thread hopefully will help new beginners in making profits.

 

Okay, if you are reading this then I will assume that you have an IG account. This is one of the most important aspects of trading in my opinion. Having a good broker with an excellent trading platform. I have used many platforms previously and am happy to say that IG has met all my expectations and more. I need to point out that I am not an employee of IG. The fact of the matter is they offer a fantastic platform built for mobile and web. So naturally, the first point that I would make to a new trader is to find a reputable broker.

 

Secondly, in keeping with the theme of brokers, ensure that they have a demo account option. Lucky for us, IG wins on that front as well.

 

Now that you have your account opened, and funded, you are ready to trade? Not yet... This is one of the biggest mistakes that I made when first starting out. I was so eager to trade, that I ended up losing a good portion of my initial investment. If I could turn back the hands of time, I would of spent more time reading, reading, and more reading. There is so much of free information available on the Internet and YouTube that you have no excuse to learn what in fact CFDS are and, how they work. I wish someone had told me that before I thought I knew everything.

 

I am going to call this post one. If this is something you guys think I should continue updating then I will in instalments. Looking forward to your comments and opinions on this thread.

[Trevbeats]

Hi Dash 1,

 

A great read my friend and some good advice you have here. You on the money by having a trusting broker as its hard enough to trade let alone. I got into this new adventure of trading and was hooked about a year ago. Its a strange funny out come but ended well with some persistence in my part. "Big mistake I got into binary option"!!! with a dodgy broker in cyprus I will not name them, but lets just say they want you to lose your cash!

Anyway long story short I got all my investment back and manage to get my trading volume up and beat the silly bonus rules to make a withdrawal and a quick exit from them!

So all good now.

So this got me thinking I have always wanting to try and play with the markets. So done some heavy research of who to use as a broker. Then I found IG and very impressed in the company and the platforms they offer. It was all about trust for me and I think I have found this. Now its time to learn to trade without distraction. My word so much to learn and the best way was to use the demo account which I have been using now for about 9 weeks...There is times where my trades have done very well I'm wishing it was real money and eager like you say to just go for it...? ...haha but I am taking my time to read read and learn the platforms etc before it all becomes real for me! 

Up to date so far: I am day trader, price action, news events trading and now getting into indicators and charts studying, candle sticks, support & resistance. These tools has help me in many ways. Be great if you can share some good advice for a new trader like my self to make it real.

 

All the best Trev.

 

 

[dash1]

Hi and thanks for the fantastic feedback. Strangely enough I also got caught up with the binary options trading companies and it did not end well for me. Well I am glad I have made that mistake and now that is over.

 

So let's get started with post 2.

So, now that we got our account funded and we have played with the demo, we can make our first trade. One of the rules that I try and stick by is try not to risk more then 5% of my capital on any trade. If you are trading with a small account like many of us new traders do then this is not very easy as we want to see the big money come poring in. Having a risk management Strategy is vital in this game. Just as you can make big profits you can loose big as well.

 

The next course of action that I should have undertaken was to find a trading group. This forum is a good example of that. Depending on which country you are from there are many good groups locally that can offer advice and opinions on a lot of the local stocks and shares is that you may want to trade. I have found that sometimes these groups have proven to be in valuable.

 

The next aspect of my trading is keeping an eye on economic calendars. We are rather fortunate on this one as, IG has a mobile app called IGTV. From what I can see, it is updated daily with all the economic news and company earnings for the week and the day. This resaws is free and you should make use of it.

 

I will update this further in post3

[Trevbeats]

Ah thank you dash1 for your reply.

 

I am still on the learning curve of forex trading and getting used to the platform, about 9 weeks now.

I did look at the PRT charts,,,,,**** it was a bit scary so not quit ready for that as yet. So my next question if you can advise me?

Is it ok to trade on there classic platform? Some limited features on the normal charts like the drawing and lines and lack odf colours etc.

Do I need to get on the PRT before I put real money in or is the classic account ok to trade on?  PRT looks great but so much more options and more to study it's a bit mind blowing at this stage.     

 

[Yes Binary option] I can't believe I use to trade on expiry times! that's way to stressful, at least you can pull out of a trade when you wish.

 

I am still working on my demo account [21k up to date] good so far, however I am trading with no emotion so I guess this is why I am taking more risks and keeping positions open until I am in the profit.

Very good point on the low account to new traders, as this will be me when I put in real money in.

So now my trades will be much less on the pip, between 0.50 to £7...this I hope will make it real for me and getting prepared for RM.

Yes I live in the south east Kent. Trading groups sounds great that would be a great help, where can I get started on this? Economic news I do use to serve my trades. However when its positive it turns out negative and that can be miss leading and frustrating..

 

I get the morning call from IG to my email as I like the FTSE 100. but IG don't always get the prediction right. A crystal ball is what we need,,,haha.

 

Thanks for your time buddy.

 

TreV... 

[dash1]

You can find a local trading group by just using Google. Also maybe start a thread and find out who lives in your area?

 

I think prt is fantastic but you can also use the normal charts as well.

[Rene]

Hi, I thought I'd share my experience as a trader in BIOTECH stocks on the US exchanges. I have been trading with both cash (shares) and leverage/margin (CFD) since 2012 on/off as this is my hobby and I trade because I enjoy it. I do day, long and some short term trading. I would say I am not a technical trader, but I do use indicators such as charts, fundamentals, investor sentiment and of course some DD (due diligence) to guide me in trades. I am not very advanced (some would say smart) as I do not do spreads and rarely trade with stops. I will try and explain why later.

 

So before I start let me share some thoughts with you, some seen through the eyes of a day trader:

1. Decide what you are trading for. Is it capital gain or (additional) income? This is important as it should determine the type of trader you will be.
2. Try to focus on one market i.e. I only trade in the BIOTECH segment, but not saying I will not do a quick trade in another market. But try and focus because when you get out there it is a big world and there is money to be made in every corner, according to the market makers, fellow investors and so on. You can get defocused quiet easily, and you cannot keep up with the flow and amount of information. After all you are trying to make an informed decision on whether to enter a position or not.
3. Are you a positive (bull / long) or negative (bear / short) trader, or maybe both? For long trading either or will work fine, for day trading you probably should look into doing both because of the market mechanics (up and down). Obviously don’t alternate and be a bull one day and a bear the next, but follow the market trend – here is where charts come in handy.
4. Whether you day or long trade set up a goal. How much do I want to make per day, per week or per month. Keep in mind that even if you “only” set your goal to $100 per day it is still $100x22days=$2200 per month! And it is easy to make the $100 by doing day trading i.e. you buy 1000 shares and therefore only need a $0.1 up or down, not taking fees, taxes and so on into account. But keep in mind, the longer in the future your goal is, the higher a stock need to go up, or down for that matter. Most importantly, do not be greedy. Exit at your goal. When you become greedy you lose money. Easier said than done I know. We are humans and want to make as much as possible. No one wants to exit too early and then see a stock take off – that will leave you with a lot of regret, but so will a late exit and a big drop!
5. Many have said it before, but it is important. Never invest more than you are willing to lose in a particular trade. So again set a goal for what you will accept in loss. You will get emotional; especially when a stock goes the wrong direction, but never double up or down to avoid loss. Or for that matter take a reverse position, it can get very messy. Many times you cannot salvage an investment gone bad, but will only end up with a bigger loss. Cut it loose and take the loss. Yes I did not mention stop loss. I will explain later.
6. Trading is emotional, especially because you are trading with your own money. So if you do a demo account first you will see you will do better than when you start trade with your own money. It is difficult to pull the trigger when it is your own money. Try and overcome that barrier. I did it by keeping track on all my trades until I became comfortable with trading (pulling the trigger). I wrote down the entry and exit point and P/L. I actually still write down my entry target price, but on a post it.
7. Plan your trade/day. Pick out your targets and do research on them, settle on an entry price and most importantly do not chase the stock if it starts to move unexpectedly! That is when you become a bag holder. Timing is difficult in the market and sometimes you miss the boat. Learn to let it go and move on to the next stock, same as you need to learn to leave money on the table. Maybe plan on catching it on the reversal if you missed the boat the first time around :smileywink: But remember there is a reason for why it moved, so be careful.
8. Never fall in love with a stock! Again it is all about emotions, and there are more retail investors than ever, and most of them are emotional and in love with their stocks. So they trade irrationally and can cause big swings in the market which some market makers take advantage of i.e. bear or bull raids.

 

Let me try and explain some of the points I made earlier, and cover it mostly from a day trading perspective.

 

So what are you trading for? Answering that will help you figure out whether you should day trade or not. I also guess you should look into how much time you can and are willing to spend each day. Day trading is almost a full time job, between research, planning and trading. However, if you day trade it is most likely because if you are looking into using trading as a way of supporting yourself or to gain additional income every month.

 

As stated earlier I chose BIOTECH for my trading. I think they give you a good coverage of all the types of trade you can do such as day, swing, mid and long trading. Also they are more fun because they have a lot more catalysts that can drive them both up or down, and are not necessarily bound to the quarterly earnings reports such as a Google or Apple stock is. However, the catalysts do make them more volatile, but in some way I find that they are more predictable. An added bonus is the upside the stocks have. Take for an example a stock like DCTH that gained +1000% over the past 14 days. Keeping focus on one or at least a narrow set of the market will definitely help you get to know the stocks, the market, the investor sentiment and behaviors; and this is important if you decide to day trade. Also it might help you land one of the big movers. I will explain.

 

While the market is overflowing with emotional retail investors with irrational trading behaviors, you are trading in a market that is primarily driven by robots, algorithms and time. But let us begin with the retail investors in the BIOTECH segment. The reasons I stated above about the BIOTECH segment is also one of the reasons for why you find, I guess, majority of the retail investors here. A chance to make a quick buck and stocks trading at prices where most people can afford to be in them in cash, and at the same time get a good chunk of shares.

 

The problem, if you will, with the retail investors is they trade with their emotions. This is, however, understandable as they are trading with their own money and an ambition to retire overnight. As I said earlier when you get to know the segment you are trading in, and the investors you can use their sentiment as an indicator for trend on a specific stock. Most do not care about the fundamentals, but are chasing the $, so when someone spread good vibes around a certain stock you will see people and money flow into the stock. The same goes when the vibe turns negative, money will flow out. DCTH is probably a very good example of this. Monday (19/6-2017) the sentiment turned positive, money was flowing into the stock. Come Tuesday sentiment was raising on ANY (tech stock) and DXTR and today (Thursday) they exploded – with no catalyst behind, only investor sentiment. It normally takes about 3 to 4 days for a stock to reach its peak, and after that it sells off again and the scalpers are off to look for their next target. Good or bad, it can sometimes be positive for a stock as it can settle higher than where it started. But whether it will be able to maintain the level is another thing. You should always do DD before entering such a stock so you understand if there is anything that can drive it higher after the selloff – if you plan to be long in it.

 

The irrational trading part is seen during the rise and fall of the stock. Shorts have stop loss sitting to close or panic and selloff, causing the stock to rally higher. During sell off you see the ones that were chasing the stock panic and sell off to avoid becoming bag holders, causing the share to plunge and take out a couple of long stop losses out on the way down. This is why I do not trade with stops, as it can cause a premature exit and the stop would either way need to be so low or high that it makes no difference – thanks to the emotional retail traders. Also, this is why it is important that you have your exit strategy in place and stick to it. Don’t get emotional and try for that extra cent! It could turn a great run into an ugly bag, or you exit at a lower than planned profit and a lot of regret. If you decide to follow one of the many forums for retail investors, then check your emotions before entering. It can be hard not to get carried away when people throw big numbers out on a stock you are in.  

 

I use charts, but only as an indicator for direction. This tie back to the comment on robots, algorithms and time I made earlier. I normally use a 24 hour and 3 months chart displaying Bollinger bands and MACD. This is a personal preference, so right or wrong (remember non-technical trader here), I advise you figure out what indicators suit your trading pattern and you are comfortable using. For me it gives me an indication on the direction to invest in, long or short.  Trading is computerized so it is done by robots that adhere to algorithms. This is why I use the Bollinger band as a stock that trades rationally will stay within the band. If and when it falls out of the band, the robots will try and correct it back. It should also give you an idea on what to expect on the price range when it is corrected back into the band. I use the MACD to get a sense on when the direction will change. When the MACD cross you will see the trading direction change and Bollinger band might need to adjust up or down depending on the momentum, positive or negative.

 

This post is getting a little long and I got side tracked on the day trading part. So let me close with this. If you want to day trade (without too much risk) look for a stock with these characteristics:

• The higher your daily target, the higher the price per share should be. It gives you a higher possibility for a bigger swing.
• The stock should not be too fast trading, but also not so slow that it might be faster to watch paint dry. Slow means more time to react and also make it more predictable.
• The daily traded volume should probably be in the 1 million (or over) shares traded per day. You need to be able to buy in and also get out.

 

For day trading you don’t really need to do a lot of research as you are not really trading the fundamental or technical part of it. Just be aware of upcoming catalysts (read news, read IR pages and so on) that can throw a surprise in there. I know you say, don’t put all your eggs in one basket, but if you find the right basket you really don’t need anything else. Trading is pattern recognition, so find a couple of potential targets and observe them. Learn how they swing every day (up and down), how they trade at the bell (open and close) and find the right time to get in and out. Large caps are normally a good place to be in, and with the leverage on CFDs you can afford to be in. I normally tend to not do any trade for the first half hour, because at that point the market is trying to find the direction. So you will se swings up and down. Let it settle and find its direction before you get in, unless you are banking on a lower or higher entry point.

 

I hope this post will help you avoid doing some of the mistakes I did when I started out and had to find my trading style. Remember trading is risky, especially if you do BIOTECH so be careful! Happy hunting and safe trading! :smileyhappy:

[Patrick]

hi i belive this games should be played by group as there are many aspect we need to  consider. If you are keen we see set up working tean to pull the reswourse together, each take on some areas and putting together to make a final decision ? how about  that .. I can reacg with low.patrick168@gmail.com

[Patrick]

I believe share prices are unpredicable as the big guys move the market and it is a Zero sum games, if winner take all donated by the losser. if all a winner who will be the losser. Thus we have to devise some mean to see what the big guys want to do for the day.. on Techincal can do that ,  thus i believe we need to place more on technical , fast response is the key...EA is the way to go but we have to monitor the market and guide the robot when it is lagging 

[Birdjohn]

Cool thread! Could have done with reading this three years ago.....

The idea of joining a trading group is such a good idea. I find it's quite lonely and don't know anyone.... :-( ......

I use trend lines, fibs and MA quite a bit. Increasingly watching the news as I got caught with my pants done with no guaranteed stop....

Moving the stop and chasing the trade - still trying to train myself into good habits. Also over trading as I don't have a 'formal' strategy....

Anyway, thanks everyone for sharing. Much appreciated.

[Birdjohn]

I'm near Chester btw.... anyone nearby?

[Crownboy]

Write these rules down and stick them to the wall above / beside your PC and keep adding to them as you learn more. It's about being unemotional; ok almost robotic but you can have a feeling just don't break the rules

[Sunshine1]

Hello some great tips thanks what is a good stop loss to have and how do trailing stops work ?

[Sunshine1]

P.s. and how much do stops cost?

[Caseynotes]

Hi   See babypips.com  for good info on stops in the School section (also check the IG education section).

The trailing stop def is from the infopedia section.

Stop orders are just another order so the cost is the spread, guaranteed stop orders carry an extra charge so see the IG page re charges. 

 



[Sunshine1]

Great! Thanks, I'm in a funny situation as I've had a friend helping me but I'm on my own now, so I've been trading a couple of months with good success but don't know how to physically do it, I put a small spread bet on wall st last night, thought I knew how to close it but don't think I do, I know it sounds crazy...

[Caseynotes]

Execution of deals depends on your platform, if in doubt just go back to the old fashion way, get on the telephone to the broker.

[Trevbeats]

I do hope you are more familiar with the entry and exits? It is a must knowing how to use the platform and reading charts before you start real money trading.

Trading is harder enough so without knowing the tools of the job you will lose your cash!.

Please let me how you are doing atm?

 

Another tip: go to all the videos on ig under education and learn and study them.

Go to youtube and study like crazy different strategies. Listen to ig morning call at 7.30 and 10.30 and know the price action and the price market.

 

When you trade without emotion your on the sweet spot.

 

Let me know whats happening buddy.

 

TreV..

[dash1]

IG still offers the old-fashioned telephone call which is really helpful in sticky situations. I will do an update to this thread shortly

[Sunshine1]

Thanks for that, will do that, as I'm not confident.

[dash1]

Understanding fundamental and technical Analysis.

 

In today's post I wanted to share a little bit about why understanding technical and fundamental analysis is so important. As I previously mentioned, I am not an expert and I'm learning day by day however, in order to become a successful trader, you must understand why the market moves in the way it does.

 

 

Depending on which country you reside in, does a strong or weak US dollar affect your market? If so, do you know why? Is the market that you trade in heavily weighted in commodities? These are some of the crucial aspects of fundamental analysis that you need to understand before placing a trade.

 

Let me illustrate with an example. The South African top 40 index is heavily weighted in currency sensitive stocks. The South African market is also heavily weighted in commodities. A week South African rand and high commodity prices often drive this market higher. The same can be said about the FTSE to a certain extent.

 

You need to take some time out and do a little research as to why gold for example, moves the way it does.

 

Once you get a grip of the basics, you can then follow this up with technical analysis through the use of charts. There are plenty free resources available on the Internet with regards to how to interpret different types of charts.

 

Take your time and get an understanding of how candle patterns work. What is a bullish candle? What is a bearish candle? Some of you who are experienced may find this section of the post and little boring however, there are a lot of people who don't know anything about how to interpret charts.

 

If there are any experts which I am sure they are, please feel free to start a thread on the basics of candlestick patterns et cetera.

 

That's all for today.

[dash1]

Hello guys. said something in the previous post that got me thinking and, I decided to do another post on it. That is confidence. Trading is all about confidence and, it takes a little bit of time and patients’ before you get there however, you do get there.

 

I am still yet to see a trader who can tell us that he has never lost? I am willing to bet that there are very few of those or none at all. You got to accept the fact that you are not going to get it right all the time. That is the game of trading. When you first start, it can be rather damaging to lose a few trades. It’s not so much about the money that you have lost but, your confidence gets hit hard.

 

If you read one of my previous posts you will read about revenge trading and so on. Confidence takes time and will grow as you become comfortable with your trading plan. Having the right mind set for this game is key. If you think you are going to become a millionaire over night then I think trading is not for you. The aim for me is to rather be consistent daily then get one big trade and loose 5?

 

I set my self little targets. For example, I trade the South African t40. I try for 100 points daily. If I get more then that then, that is a little bonus. It was hard but, there were some days where I never took a trade at all. Trying to keep emotions in check is the hardest in trading and, I still struggle with that.

 

Hope this helps

[1986sn]

I would be keen to join the Whatsapp group. I'm fairly new.

[VINSGD]

hi buddy , i totally agree , so far i in the red but learning , i think best option is to set limit on the lost as i having much higher lost than profit ,  i will get there one fine day

[dasadasadasa]

who reads this grandiose *****

 

[Mrk1977]

question to all from a new trader

 

how do I setup a trailing stop that cuts to ensure you keep some profits..?

 

Ie, I sleep during most UK and US trade for work, live in AUS and would have enjoyed the dip from last night but cut off before the big dip.

 

Is there a simple step by step to set the trailing stop..?

 

 

[Caseynotes]

Hi   The mechanism for an automated trailing stop will depend on your account type and platform.

 

Check out this page from IG's education section for explanation and examples or the help manual for the PRT platform.

 

https://a.c-dn.net/c/content/dam/publicsites/1468921675548/igcom/uk/files/education/CFD/ig_cfd_tradesense_chapter3.pdf

 

 

[Trevbeats]

Hi Dash 1,

 

Sorry for the delay.

 

I am looking more into the trading groups like you said in your last post to me. Except for IGs trading group where can I find these usefull groups? should I seek google to find this info, however as you know one can be led up the wrong path on trades so really need to find a trust worthy one..

 

With this IG group i do find some of the swarks and reports not up to date? but great that IG supply this info.

 

Trev..from south London btw. 

[Metaphor]

Hi Dash I am a begginer...still trading on the demo

 

I am planning to fund my real acc soon....i am just wondering if R100 is not too little for margin requirements.

[dash1]

Hi there and welcome to the forum. R.100 is far too little to start with. A good size account would be 10 K plus. In my opinion.

Mod Edit >> edited out personal contact information

[dash1]

Hi. So it’s time to give this thread an update. We covered a few aspects so far but, there is a bit to go! One of the major factors that see new traders blow out there accounts including myself, is revenge trading. You start the morning and start with a losing trade, you then take another one to try and make up for the first one and, that to, does not work out. You try the third time and again, bang account almost blown out.

 

You think you got one more shot at it and you have now smashed your entire account. We all have been there when we first started. Trust me, do not do this. You will just become stressed out and extremely frustrated. Develop a strategy. Set yourself targets. Say to yourself, I am taking 2 or 3 trades for the day and that is that. If they work then good for you but, if they fall apart then stop and sit on the side lines for a bit. Do not revenge trade. In the long term it just does not work.

 

Well, the worst is when you are on a losing trade and you close out only to find the price rocket just after you leave. The general thing that new traders do is to jump back in only for the price to fall again. Like I said do not revenge trade.

 

Something ells for new traders to apply is a strict stop loss. If the target hits the stop loss then stop. Another serious mistake that new traders make is they keep on moving the stop loss as they have a belief that, “if I hold it a little longer it will bounce” Don’t do that!!!! Stop losses are there for a reason.

 

IG offers a great trailing Stop loss feature use it. You can lock in profits with it. That’s all for to day

 

 

[Maverick73]

I've only started trading in Fx and the excitement of a few initial wins; over excitement, bad trades equate's to downside investments, and I believe in either winning or learning. My learning journey has begun, and seeking more sustainability rather than quick wins, is a challenge that I'm looking forward to. Understanding candlesticks through to learning various statistical tools to help me evolve into a profitable trader.