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  • #16
    Ok, so im new to the whole stock market/forex trading deal. I was shown this post by my wing man and he explained enthusiastically about how much money you, Rodehard, were able to make with little as $300 dollars investment (the post where your daughter was able to turn $300 into thousands). Right now Im currently a 21yr old, unemployed college junior with about $300 to my name. So im looking for anything to help out my finacial position

    So i started to do a little research of my own. I bought two books already, Forex made Easy and Currency Trading for Dummies, and have read into both of them a little bit. I have also already opened a trial account on Forex.com. Which i spent a little bit of time on there with the EUR/USD and made a $29 profit of a $200,000 position(Im still a little overwhelmed by the amount of information on there). I think I've been able to come up with a pretty basic understanding of how this works with the few hours I spent on it this morning (about an hour and a half reading plus a little under two hours with the trial account). But i have a few questions that i would like to clarify before I invest any of my own money into this. (and i do realize it takes months, if not years to get a good understanding and feeling for how the market works)

    1. Leverage - I see the leverage ratios on Forex.com are 50:1, 100:1, and 200:1. Keeping it simple, i will invest $25 at 100:1, that means i control a position size of $2500, say for example in EUR/USD, which is what i invested in this morning (around the time period of 9:50am to 11:45am). That being said, with leverage, if i invest $25 at 100:1, do I make the profit off of the $2500 position if the exchange rate increases or does the profit reflect back to the $25 initial investment? Ill use what happened this morning. I bought in when the exchange of the EUR/USD was 1.39775. I watch until it increased to 1.40430, so that would be a move of +65.5pips. I tried to close out, but i think i made a mistake by switching the position from buy to sell. If this is the case, can you explain how to get out of or "close out" of the deal? Also, on the flip side, If I made a wrong move and the exchange starts to drop, will i lose a possible $2500 off of a $25 investment if there is no stop loss in place since i control a $2500 position?

    2 Stop Loss - I get the basic idea that this function is to stop you from losing money just by the name. But my question is, Do you place the stop loss at a percentage of your initial investment($25), or place the stop loss at a certain percentage of the position size($2500)? Also, if the exchange rate is dropping drastically, will the stop loss still pull me out at the given value, or will i not be pulled out until the rate stabilizes to pull me out no matter the amount lost?

    Thank you for your time, Valinn
    Last edited by Valinn; 06-12-2009, 10:14 PM.

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    • #17
      Leverage: Since you opened with $300 the only position you can use is the mini positions, 200:1 where each pip is worth $1.00. It takes around $70.00 margin to control one mini EURO/USD. Since I use a max of 30 to 40 %of my account balance to trade the mini I divide the margin by .3 and then divide my account balance by that number. So the margin is $70.00 and I want to use 30% of my account $70/.3 = $233.00 I want to have for each position. With $300. I would never take more than 1 position. This limits the amount I can loose. Since I would be trading the mini EURO/USD each pip is $1.00.
      If the market rallies 65 pips, I will make $65.00. Since I had $300.00 in the account, my return on investment is 22%. For what it is worth the trailing stop (see below) produced a $220.00 profit on the last 1.3977 move before the stop loss triggered. There were 5 such moves last week. I caught 3 between Sunday night and Tuesday night. Once you get the hang of this you can set it up to text you when a trade you have planned is ready to take off.
      [B]
      Do you place the stop loss at a percentage of your initial investment…[/B]..
      I use a 2 bar low trailing stop. That means if I am short EURO/USD s, i.e. betting the dollar will rally, (the quote you see on FOREX. Com goes down) I will place a stop loss at the highest high of the last 2 bars. So if the last two bars are 1.4100, and 1.4011 and I short at 1.4090, I will get stopped out it the quote goes over 1.4011. If I am long the EURO/USD I will place the stop at the lowest low of the last 2 bars. I use candle stick bars as they are easier to read. I also limit the loss I am willing to take to 40% of my position and never use more than 30 to 40% of my account. In effect this means I the most I can ever loose is 12% of what I have invested. Since when I am right I pick up 100 to 200 pips, it takes 8 times being wrong to loose the profit from 1 right trade. Since I step off for a few bars after 3 wrong in a row, I never have a loosing month, or week.

      Also there is a tab on the left side of the screen called Forex Insider, keep an eye on the news. There have been many times when I was long (or short) and raking in the money when an article would pop up in Forex insider saying that there was going to be a reversal around 1.xxxx. In these cases ‘liquidate the trade as soon as it hits 1.xxxx. At the top of the screen there is a tab for research which will open an web page with the strength and resistance quotes, momentum indicators, and notes. That is also very helpful. NEVER bet against the trend.

      [B]
      If this is the case, can you explain how to get out of or "close out" of the deal? [/B]In the upper left hand corner of the quote screen there is a tab for open positions. Click that and you will see all your open positions. Double click the position you want to close out. A pop will open. In that window there is a link that says “liquidate position” click it and then click yes in the next window. Also as soon as you place the trade, you can place a “trailing stop” in the same way. Lear to think of them as one inseparable thing you NEVER place a trade without placing a stop loss at the moment you get filled.

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      • #18
        Would you recommend using a decision support system such as forex automoney to give the "right" buy/sell signals and invest $99/month into their membership or rather recommend studying forex trading and then trading based on own calculations and understanding? I'd like to get into forex trading, have a master's degree in finance & investments giving me a baseline understanding of trading, but I also work 60 hours a week as management consultant. I wonder if I have enough time to make forex trading profitable for myself.

        Thanks for your advice!

        Satisfaction

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        • #19
          Once you learn limits and stop losses, it reduces the amount of time you need to dedicate to it.

          Comment


          • #20
            Originally posted by Satisfaction View Post
            Would you recommend using a decision support system such as forex automoney I wonder if I have enough time to make forex trading profitable for myself. Satisfaction
            [B]Would you recommend using a decision support system such as forex automoney[/B]

            I never use anyone Else's cues for getting into or out of a trade. There are many reasons for this, but the most important is I am giving someone else control over my money. Your money would be better spent reading about FOREX trading, and learning to me a master it then building your own system.

            [B]I wonder if I have enough time to make forex trading profitable for myself. [/B]

            I started trading when I was a full time student and single day i.e., 170 hours a week. The cool thing is in a short time I had enough money that I could graduate and not have to work.

            One thing you want to focus on is the outcome... would you rather work really hard for a couple years then retire or work really hard and retire in 50 years. My brother asked me what the most important thing I ever got for my money was. I told him 25 years. I got to retire 25 years earlier than anyone I know or have met.
            Last edited by Rodehard; 06-15-2009, 07:36 PM.

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            • #21
              So ive been doing this Forex trading for a few days now and i finally got a hang of how it works. The thing im struggling with is that i always seem to be on the wrong side of the move. This morning at around 10:30 i got on, i placed an order for the AUD/USD to sell at 0.79997. I read the Forex insider and it said that the AUD/USD had a techincal potential to reach .74000. So it dropped to .78003. But then at around 10:35 am, it turned up and raised the whole way to .80280. Luckily my Stop Loss was in place so i didnt lose that much.

              My question is, Does the time of day have an impact on wether you should buy or sell when traffic is going to be higher?

              Also, how long do you keep at typical order open before you liquidate it?

              Comment


              • #22
                Have you noticed a direct correllation to a rise or fall in the US Stock exchanges and the FOREX Dollar exchange? I am incredibly accurate in knowing when the DOW will be up or down or flat, so if it responds equally or tranversely, I can make some serious money.

                Comment


                • #23
                  Originally posted by Sincerelee View Post
                  Have you noticed a direct correllation to a rise or fall in the US Stock exchanges and the FOREX Dollar exchange? I am incredibly accurate in knowing when the DOW will be up or down or flat, so if it responds equally or tranversely, I can make some serious money.
                  Sometimes there is a correlation. When the Dow rallies, they say the risk is on and the USD drops in value. April and May there was a 93% accurate correlation between oil and the Euro/USD. So far June has been -37% accurate.

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                  • #24
                    Originally posted by Valinn View Post
                    My question is, Does the time of day have an impact on whether you should buy or sell when traffic is going to be higher?
                    Also, how long do you keep at typical order open before you liquidate it?
                    I keep a trade open until I am stopped out. Since I use a trailing stop all I have to do is set it and then go sarge. When I come home I have either made a lot of money or lost a little.

                    The first hour after markets open tends to see bigger moves, but other than that there is not a time a day that does better than another. I have been looking into Trade days of the week, and month. The S&P has days of the week that tend to rally more often than others, and days of the month that tend to rally more than most. Conversely it has days of the week and month that tend to sell more often than chance.

                    Don't use FOREX Insider by itself, combine it with support and resistance lines, trend, etc. Think of it like poker. If you are holding 1 ace, its not the time to go all in. If you have 4 aces then maybe.

                    This morning on the Euro/USD the Resistance was at 1.3920, FOREX inside mentioned a lot of options set to close above 1.3940, the hourly trend, 4 hour trend nd daily trend were all down, the Dow and S&P were up (Night markets), and the Euro had rallied to 1.3920 and fallen back several times overnight with each drop being lower than the one before it, but the rallies never breaking 1.392 and %r was topped out, So when it hit 1.392 this morning I shorted it.

                    Comment


                    • #25
                      Hey Rodehard !

                      I am also 17 years old, and want to start with FOREX. You seem to be pretty clued up so can you please give me a list of books/ or some kind of training that will teach me the essentials?

                      I have very little economical knowledge so I probably need to start from scratch.

                      Thanks!

                      Comment


                      • #26
                        Originally posted by MoonDog View Post
                        I have very little economical knowledge so I probably need to start from scratch.
                        Start by conditioning your mind for Wealth. There is something called Cognitive Dissonance and if you don't master it, you'll never master trading. Start with Anthony Robbins, then Rich Dad Poor Dad by Robert Kiyosaki, then go to amazon.com and read reviews of FOREX books. Find one that seems good to you, read it, master it, repeat. When you master that book, buy another repeat. In time you will be able to build your own system and make money constantly.

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                        • #27
                          I'm 18, living abroad in a country that has one of the worst economies at the moment and I'm unemployed with very little money.

                          I found [url]http://www.dailypips.com[/url] a great site for learning about FOREX.

                          I hope to use the little money I have trade in FOREX and hopefully make enough to help me get through college.

                          If anyone has any advice or tips, I would love to hear it.

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                          • #28
                            My advice is to NEVER invest more than you can afford to lose. If you invest money you need toworry about, you make stupid mistakes. This is because panic will cloud your judgement.

                            For example, say you have $1000 to invest. You do so, knowing that if you lost that money, you would not be able to eat for a month. Then, through market changes, your investment is worth $950. Then it hits $900. You begin to panic, pull your money, invest it somewhere else, and see your old investment went to be worth $1200 after a market correction, but because you bailed, you missed out. You do this a few times, and you will walk away with nothing.

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                            • #29
                              Sincerelee is right. Old School theology says never trade with money you can't afford to loose. There is also an opposite school of thought that says if you have money you cannot afford to loose you will be much more cautios in your trading. I am the latter. If I am on a role I tend to be a bit more "risk on" but if I am hitting drawdown I tend to tighten up my trading.

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                              • #30
                                Yes, when you become confident in your ability to invest and know you will come out ahead, then you don't have the worry that causes panic.

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