A blind man who wants to see
Posted: Sun Aug 02, 2009 1:41 am
First of all I'd like to thank TRO, the mighty one and the many others that actually take the time out to help those of us on the 95-98% side that get drained by the banks.
[The Purpose of this post is to ask some questions to experienced traders if you don't want to read my back story BS skip to the questions section ]
Since this is my first post here I thought I'd start things off with a bit of background:
I like so many others am a walking cliché, I'm a very smart guy that has always succeeded in the very mechanical world of academics and theory (where 2+2 IS ALWAYS 4). I've always been interested in the world of investments and trading so I decided to take what little spare money I had and have a go at FOREX (the market with the most "bang for your buck").
I read everything I could get my hands on using babypips as my primary "go to" source on all things FOREX. I traded a demo account for 2 weeks and did fairly well so I figured why continue wasting my time with fake money and opened a MBT account (choosing MB as my broker seems, up to that point, to be the only thing I did right).
First two trades raised my account by 20% (I must be the Micheal Jordan of FOREX right? ). So then in typical cliché fashion I over leverage and get hammered ending my first day by losing a third of my account.
After that disastrous day I went back to babypips and the "never lose again" thread caught my eye for the second time (the first time I thought, because of the title, that it was a BS post trying to sell me something). This time however I decided to read it since I couldn't possibly do any worse.
That thread and all the babypips/anti-TRO drama surrounding it lead me here where I've spent the last 2 weeks doing nothing but reading.
QUESTION I
I've noticed the following common themes in the advice many of the experienced traders give and believe (hopefully not erroneously) that success boils down to a mastery of the following:
*I'm a minimalist at heart and therefore try to boil everything down to a sentence or a word to capture the essence of something, hence the oversimplified descriptions.
A. Price action (and what to do with it)- Trending up, trending down or going sideways. Trends either move with the trend, retrace or reverse. Sideways movement indicates uncertainty but focusing in on this type of price action can give clues as to which way it wants to break. All of this is, of course, relative since a change in perspective can change the picture.
B. There is no Spoon- The world of FOREX as with all things speculative is a world of probability. 2+2 might equal 4 or 3 or 2 or 10, the point isn't to find the absolute answer but rather the most probable answer. All you can ever hope to do is stack the odds in your favor.
C. Support and Resistance- This along with almost everything else is an illusion but since so many see this illusion and believe, it becomes a self fulfilling prophecy (applies to Fibo and psycho lines as well).
D. Money Management is Key- Tweaking Risk/Reward and leverage is key. Poor money management can turn the best system into a losing one.
E. Plan the Execution- Know when to get in, when to get out, when NOT to get in and when NOT to get out.
So the question is do you agree or disagree that A-E are what success in FOREX boils down to? Would you add or subtract anything?
QUESTION II
Would you consider my identification of major support and resistance on this chart to be accurate? Would you change something? If so why?
*I chose the EURUSD 4H chart up to the close on Fri 7/31/09. TRO hints, well more than hints, that being able to see involves only the chart so I've stripped it bare in order to try and train myself.
*I know there are more possible S/R lines but I wanted to keep it simple until I grasp the concept.
*Red lines are stronger than the blue one
[The Purpose of this post is to ask some questions to experienced traders if you don't want to read my back story BS skip to the questions section ]
Since this is my first post here I thought I'd start things off with a bit of background:
I like so many others am a walking cliché, I'm a very smart guy that has always succeeded in the very mechanical world of academics and theory (where 2+2 IS ALWAYS 4). I've always been interested in the world of investments and trading so I decided to take what little spare money I had and have a go at FOREX (the market with the most "bang for your buck").
I read everything I could get my hands on using babypips as my primary "go to" source on all things FOREX. I traded a demo account for 2 weeks and did fairly well so I figured why continue wasting my time with fake money and opened a MBT account (choosing MB as my broker seems, up to that point, to be the only thing I did right).
First two trades raised my account by 20% (I must be the Micheal Jordan of FOREX right? ). So then in typical cliché fashion I over leverage and get hammered ending my first day by losing a third of my account.
After that disastrous day I went back to babypips and the "never lose again" thread caught my eye for the second time (the first time I thought, because of the title, that it was a BS post trying to sell me something). This time however I decided to read it since I couldn't possibly do any worse.
That thread and all the babypips/anti-TRO drama surrounding it lead me here where I've spent the last 2 weeks doing nothing but reading.
QUESTION I
I've noticed the following common themes in the advice many of the experienced traders give and believe (hopefully not erroneously) that success boils down to a mastery of the following:
*I'm a minimalist at heart and therefore try to boil everything down to a sentence or a word to capture the essence of something, hence the oversimplified descriptions.
A. Price action (and what to do with it)- Trending up, trending down or going sideways. Trends either move with the trend, retrace or reverse. Sideways movement indicates uncertainty but focusing in on this type of price action can give clues as to which way it wants to break. All of this is, of course, relative since a change in perspective can change the picture.
B. There is no Spoon- The world of FOREX as with all things speculative is a world of probability. 2+2 might equal 4 or 3 or 2 or 10, the point isn't to find the absolute answer but rather the most probable answer. All you can ever hope to do is stack the odds in your favor.
C. Support and Resistance- This along with almost everything else is an illusion but since so many see this illusion and believe, it becomes a self fulfilling prophecy (applies to Fibo and psycho lines as well).
D. Money Management is Key- Tweaking Risk/Reward and leverage is key. Poor money management can turn the best system into a losing one.
E. Plan the Execution- Know when to get in, when to get out, when NOT to get in and when NOT to get out.
So the question is do you agree or disagree that A-E are what success in FOREX boils down to? Would you add or subtract anything?
QUESTION II
Would you consider my identification of major support and resistance on this chart to be accurate? Would you change something? If so why?
*I chose the EURUSD 4H chart up to the close on Fri 7/31/09. TRO hints, well more than hints, that being able to see involves only the chart so I've stripped it bare in order to try and train myself.
*I know there are more possible S/R lines but I wanted to keep it simple until I grasp the concept.
*Red lines are stronger than the blue one