So I spent the weekend studying forex and getting approved at my brokerage but I'm kinda surprised how little educational material there is. It looks like the only strategy I could find is just collecting interest on currency pairs that have different interest rates. I was also a little shocked they give 50:1 leverage and they disclosed the majority of accounts lose money. So where do I go to learn how to not lose money and make bank? I'm aware everyone says deal with risk and don't fall into a doom loop where you adjust your strategy every time you lose money. I do have a paper trading account to practice with.
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Maturin_nj 1w ago
Give it a go and see what happens. I traded futures for years. Here are the keys that everynewbie overlooks.
Learn how to properly position sizebased onyour total equity. If this is an unfamiliar concept google it.
No lose should exceed 3% of total capital.
Trading is all about money management.
You said you have unique patern recognition abilities. There are people in trading like this known as savantss. What's the worst thing that can happen. You lose some money. Good luck!!!!
whytehorse2021 1w ago
Thanks! I'm learning MT5 but forex.com isn't allowing any new demo accounts due to server overload... sigh. Pattern recognition only helps with longer term trends like bear/bull, monetary policy, witching hour, Do you prefer commission or spreads? I think my strategy will be to sit on a currency pair with lopsided interest rates and collect the difference overnight. We'll see how that goes in paper trading...
Maturin_nj 1w ago
I guess commissions bec I liked to buy the bid sell the offer in futures. If your strategy works then it's good. You do you and don't worry about what anyone else is doing. There's no reason you can't succeed.
Lone_Ranger 1 1w ago
Are you sure that what you are doing is the course of action that is going to lead to progress?
Think about it - trading forex is a 'zero sum game'. If you make a gain, someone else has to make a loss.
Now think about the other parties to this game - the professional dealing rooms of Goldman Sachs etc. The resources they have - quantum computers, Nobel prize winning academics etc etc. The legions of pure maths Oxford graduates.
It's like you are an amateur boxer, and you stepping into the ring with Mike Tyson in his prime.
SwarmShawarma 1w ago
PS I don't do forex as number of factors to consider is even larger then with single company and it is too much to process.
As you say it is important to remember that it is 0 sum game.
I would not compare OP to boxer in a ring, rather number hostess, that can make some side money.
OP's investments are not showing on any big boxer radar. He is only able to ride a wave.
Yet OP is part of larger group of wave riders that large investors will try to fleece with influences. On top of that they have analytics predicting how individual players [at large] will be behaving factoring in: time of day, time of year, weather, national holidays, price of oil, food, etc and the big one NEWS.
Good strategy to think about would be to plan not to be part of the sheep run.
At the very beginning I have fallen for what today I consider fakest of the fake news. On some shady website [but it was featured in official investor news updates], for the speculative stock.
Trading requires nerves of steel and some plan to avoid emotional decisions. For that reason first advice is to invest only spare money.
@whytehorse2021
Lone_Ranger 1 1w ago
there is no such thing as spare money. All money is money. Money is entirely fungible.
It sounds like you reciting the lines that people that sell trading courses sell you. 'Only invest what you can afford to lose'.
Afford to lose?
You say that you are aware that it is a zero sum game, but you do not seem to realise what a zero sum game is. It means that if you are to win something, somebody else needs to lose an equal and corresponding amount.
And when you are playing forex, you are playing against the biggest best players in the world - the dealing rooms of the largest investment banks and hedge funds in the world. What makes you think you can take money from them?
newuseracccausewtf 3d ago
Sure, there are the professional boxers, but OP will also go against other amateurs. That's when he will get his money. When the professionals show up, OP needs to know to "get off the ring". You're right about the zero-sum, but you missed the fact that there are retail traders losing money to other retail traders.
whytehorse2021 1w ago
Actually forex is more about countries rather than investors. When Japan needs dollars they pay whatever the forex market charges. This is how you can make money without a zero sum game. There's always someone pouring money into one currency or another. Always some gov't printing new money.
SwarmShawarma 1w ago
'Only invest what you can afford to lose' is a slogan like other slogans. Taken literally we better don't use any slogans, AWALT included.
OIWYCATL - Depends how you frame it.
If stock crashes you lost the money, but then you really didn't if company didn't go under or you didn't sell.
If you need cash reminder in 1 year, before stock went up, then you lost them permanently.
If you can wait X years, they you didn't loose them. This is what 'Only invest what you can afford to lose' means for me.
I don't think any person invest with purpose to loose it.
You have perfect example of Bitcoin. People waited years to recoup losses. Those that didn't put into it resources they needed, did. Others didn't.
addressed it, I don't, too much to process
Lone_Ranger 1 1w ago
You're now telling me that if you didn't sell, you didn't actually lose the money.
It sounds like you don't see that paper losses are losses -that there is only one kind of loss, regardless of whether you cash up or not. Paper losses are not 'theoretical' losses - they are losses. You most certainly have lost money if your stock goes down but you don't sell.
Do you not see how crazy that is? It tells me that you ought not to be investing.
whytehorse2021 1w ago
But it's not zero sum. It's a market. What's fair to one person might not be fair to another person. You're thinking more about futures and options. Even then it can be seen as paying the price to have insurance or borrow shares/currency.
As for hedge funds, they can be a blessing or a curse. They're typically not trading just to trade. I know when to get out of their way and it's always the witching hour when they rebalance portfolios. They're a blessing if you have stocks they want and you set your price above market and yours get snatched. In fact my whole options strategy revolved around the 1-2% fluctuations they cause just through normal activity. They can be a curse when they quickly respond to something and upset the market, like when interest rates went up.
Lone_Ranger 1 1w ago
Are you sure you know what 'zero sum game' means?
whytehorse2021 1w ago
Yes, there are always people buying into the market though so it's not zero sum. If you had a perfect balance of buyers and sellers it would be zero sum and nothing would ever go up. There's also consumption which keeps buyers coming back for more.
Forex trading is considered to be a negative-sum game in most cases. Here's why:
So, while the overall foreign exchange market isn't a perfect zero-sum game, for most individual traders, the transaction costs make it a negative-sum game in the long run.
Lone_Ranger 1 1w ago
I'm not being hostile or rude my good friend, but it does seem that misunderstand zero sum and negative sum games.
You say "there are always people buying into the market" there are also always people exiting the market.
Entrants and exits are NOT what makes a game non zero sum.
The stock market is NOT a zero sum game, because the entites in the stock market do business and make profits (sometimes losses) so all things being equal, the value of stocks will increase regardless of the entrants / exits and buy / sell
Zero sum games are like bit coin or forex. There is no profit without a corresponding loss. when you say
That indicates to me that you are not quite understanding the nature of forex.
The other thing that makes me think you're not quite understanding is this comment (my bold)
A game is never either a negative sum game or not for 'most' traders. That's like saying its Friday for most people in France. A game is either zero or negative sum for everyone or not.
Individuals can either make or lose money, but it cannot be a zero sum game for some participants and not for others.
whytehorse2021 1w ago
If I buy currency X today at $1 and tomorrow it's worth $2 and I sell it, how is that zero sum? Currency X lost value over time. You could argue that the loser is the person who is stuck on currency X because their gov't printed too much money but that doesn't make it necessarily zero sum.
Lone_Ranger 1 6d ago
Currency X gained value over time, not lost.
But that's just it - when you are in the FX game, it's always in futures and options, its never cash balances. So when you 'buy' X at $1 today, what you are buying is a future contract to exchange at the ROE. So if the value of X is $2 tomorrow, the loser is the guy on the other side of that trade.
Can you really not see that?
newuseracccausewtf 3d ago
what if the "loser guy on the other side" is using his future contract as a hedge for a positive stock position? Can you not see those infinite other options as well?
whytehorse2021 5d ago
It's not that I don't see that. I do. It's that you don't see that the other side of the trade may not be a loss. Bob buys X for $0.75 and sells it to me at $1. I sell it to Fred at $2. Does that mean Bob lost $1? Nope.
Lone_Ranger 1 5d ago
You either don't understand this or are not explaining it very well.
Why would Fred buy it from you at 2 when he could buy it from Bob for 1?
newuseracccausewtf 3d ago
Because Fred missed the timing to buy from Bob for 1, but he plans on selling for 3, so buying from me for 2 is still profitable for him. Whytehorse is right, and you saying currencies (forex nor cryptocurrencies) is any different from stocks show us YOU are missing the point and don't really know how markets move. It's no shame, obviously.
Lone_Ranger 1 1d ago
Not going to get into a flame war with you friend.
If you think FOREX is not different to stocks, then there really is not point in discussing this with you.
MrSupreme 1w ago
I learned the basics at babypips.com.Most advice I've heard from profitable traders has been to manage risk.
whytehorse2021 1w ago
Thanks! I checked them out. They have little bit more than TDA so I'll definitely be spending some time there.
Maturin_nj 1w ago
This post got me thinking about a great youtubevideo on trading with some terrific red pill moments. The video is titled "Floored". A documentary on the final days of floor trading on the CBT. I think you guys will like it. Maybe someone can post the video. I don't know how to post here.
SwarmShawarma 1w ago
you have probably tried to post link on the other sub-site, forum side is less strict and you can post links almost right away after setting up acc, like now you definitely can
sombre77 1w ago
I have been trading Forex for years now and I will give you the same info I tell all new traders.
-EVERY TRADE YOU MAKE IS LEVERAGED!!! You can lose all of your money and profits on a single trade if you don't know what you are doing. -EVERY TRADE YOU MAKE IS LEVERAGED!!! The longer you sit on a trade, the more fees you will pay. On a trade that is positive for you it may be worth holding on, it makes a losing trade more painful. -Start practicing on your demo account, treat this account as if it were real money. Trade multiple demo account using different strategies. -Look up stock market scalping strategies for some ideas of what you can try. Most of them are biased on price movement and price patterns. These can work well most of the time, but usually blow up around news announcements (especially big ones). Trading a scalping strategy when news comes out is how people lose their money. Trading through news without a stop loss is how people lose their money. My favorite place for news is forex factory. -Start small. Take trades with the smallest lot size possible. For my account it is 0.01 and I'm leveraged 200:1. For my trading this would be $1 for each pip movement. Yours would be .25 for each pip. -Try to make sure that for each $1 you risk you are aiming for at least $2 in gain. This means that you have to win ~35% of your trades to break even. This is harder to do than you think. At a 1:1 Risk to Reward you have to win about 53% (fees add up). This is not just a coin toss. You have to get the direction correct, but also have to have enough room on the downside of your trade to not get stopped out.
-Risk management. How much of your account balance are you willing to risk on each trade? Proper position sizing along with an appropriate stop loss is the foundation of managing risk.
-Choose a currency pair that have the most activity during the time that you will be able to trade. Look up a forex market clock and choose a time that works for you that has the most overlap of multiple markets. Like EUR/USD during the times of 8:30 to 11:00 EST. -Don't start trading with real money until you are making a regular profit on you demo account. Most people do between 50-75% worse when trading real money than a demo account. Don't plan on doing as well with real money as you do on a demo account. They are close, but they are not the same thing.
I am not a huge fan of prop firms. But for a beginner they can give you some real life experience without too much risk of your own money. If you do find one that provides the largest set of trading tools/indicators for the price. Some of the firms offer full trading courses. There are lots of courses that exist on websites, youtube, facebook groups, udemy and similar. Start with free information and go from there.
Maturin_nj 1w ago
Sombrero. What about the bid asked spreads. They are pretty wide in forex which leads to a slow death to most traders over time. Imagine what you'd be able to do buying the bid and selling the offer. That is the greatest edge in trading. Every time you place a forex trade the house market maker locks in a profit taking the other side of the trade where the retail trader is forced to give up the edge.
sombre77 1w ago
You are correct I should have mentioned the spread, but I found a broker that averages 2 points on the EUR/USD. (My main pair). So as long as I'm not trading at market close/open, I don't even really think about it.
whytehorse2021 1w ago
OK so I have 2 accounts: forex.com and tdameritrade. TDA gives me thinkorswim but they sell their order flow which means I am being front-runned. Forex is direct orders and I can choose spread or commission. What would be best? Normally I try for slower strategies so order flow doesn't matter but I'm pretty sure scalping requires fast execution. If I do scalping I will be using MetaTrader5.
So here's the plan, I will write a buy/sell script which uses the following:
It's important to understand that there's no guaranteed "holy grail" strategy for profitable forex scalping. Market conditions and individual trading styles can influence success. However, here are some popular scalping strategies that can be effective when used with proper risk management:
Price Action Strategies:
Support and Resistance: Identifying areas where the price has historically bounced off (support) or reversed (resistance) can provide entry and exit points for scalps.
Breakouts: Scalping breakouts above resistance or below support can target quick profits if the price continues in the breakout direction. However, be cautious of false breakouts.
Technical Indicator Strategies:
Moving Average Crossovers: Using short-term moving averages like 50-period or 200-period, scalps can be initiated when a faster moving average crosses above/below a slower one, potentially indicating a trend change.
Other Considerations:
Volatility: Scalping thrives in volatile markets with frequent price movements. However, excessive volatility can also lead to increased risk.
Spreads: Look for brokers with tight spreads on the currency pairs you want to scalp, as high spreads can eat into profits.
Once I have a script that does that, I will back test from 2000-2024 to capture both the bear market from the great financial crash as well as the bull from QE. Then I'll run it on paper money for a few days and if it makes money switch to real money.
sombre77 1w ago
I spend at least a month on a live market with a demo account before I will start using real money, I usually spend 3 months. If you feel comfortable with only a few days, you are a braver person than I am. I really understand your desire to use a script, nothing better than being able to automate your trades so you can walk away and ignore it. Most of your strategies you listed have a caution attached to them. Make sure your script works in all market conditions. In may experience script backtesting is...unreliable. Best of luck.