Your guide to success [Beginners start here]***************************
Getting started as a Padawan
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Learn about investing
When you start you should be interested.
There are many ways to learn about investing:
Books/videos/the internet/Losing money trading for the first time.
My first trades (both speculative and not) were Forex, but I really got started "full time" (still had a job at first but spent a good 12 hours a day in this) in Q4 2017 with the crypto bubble. I looked at charts by myself, I also watched hundreds of hours of videos on crypto, technical analysis, price action, markets, I read articles on the internet, I looked at alot of tradingview ideas (where I started to notice herd patterns just like in real life). Being able to filter out the garbage is on you, and you have to check by yourself every thing you learn.
If you can't bother reading or hearing about monetary policies, the economy, charts, risk to reward, probabilities, now is a good time to quit.
Pick markets you like more
The "retail" markets are usually: Indices, stocks (especially us), forex, crypto, hard commodities.
It's ok to go back and forth, and even when you pick say 1 or 2 main markets to look at, you can still take a peak from time to time at other ones, but careful, you only have 1 brain, and you might just end up losing money.
My own experience: Forex (usd, eur, gbp, jpy, mxn, sek, aud, cad, nzd, chf), Commodities (Gold, Oil, NatGas, Copper).
I sometimes look at other markets there might be something interesting and I might get something out: Bitcoin, Ethereum, Silver, Grains.
I am a consistent loser in stocks and indices yikes. Not like slightly below breakeven. No, like 100% losing rate. Hey I got the holy grail.
I dislike USDJPY, I love EURJPY, not sure about some trashpairs such as EURNZD. I like all USD pairs except USDJPY. In the crosses I like AUDCAD EURSEK GBPAUD GBPCAD GBPJPY EURJPY. Some interest in USDCNH sometimes. I look at USDZAR and USDTRY but never touch them.
With time you get your favorites, your best and worse performers.
Learn about that market specifics
You may be shocked but different markets work differently. First of all different hours (fx = 24 hours a day 5 days a week, oil is open 23 hours a day, most cme agri have 2 trading sessions with 3 per-market, stocks trade 8 hours a day with a pre and post market, crypto is 247...).
And then unlike what some people that have never made money say, sorry but they just behave differently. When you learn to trade penny stocks you can't be an all around jack of all trades that will be able to trade dirt in Kyrgyzstan.
As I said I like (certain) forex pairs & commodities, and do best with those, one reason is because they trend on the timeframes I'm best at and prefer. FX trends for days, Stocks trend for months, and so on. The patterns are different, the trends are different, the valuation is different etc. Bitcoin had 3 bull markets, and they all lasted 1-2 years, going straight up, why would anyway look at a 4 hour chart? There is only 1 way to trade Bitcoin in those situation and this is buy and hold. You might have wanted to buy pullbacks and hold for each wave within the bull market in 2017, but that's still several months of holding. First 2 corrections were ok, maybe some multi day or week buy/sell there, the current one is absolutely disgusting except from a straight down in 2018 and straight up in 2019.
Pick a timeframe
I swear every one wants to either be:
- A (lazy) passive investor that will get rich doing nothing, because people told them this is what works and always will (cough cough)
- A (gambler) day trader that will get rich quick making 2% every day (hahaha), because this is how brokers make the most money the fastest
90/90/90 => 90% of traders lose 90% of their money in 90 days. This might be a little exagerated but that's the idea.
Brokers know they'll all be gone in a few months so they push to day trade so these losses are as much as possible made via commission, rather than a few big bagholding losers that evaporate into the market in a few weeks.
And as I said, different markets really work on different timeframes. FX (& Gold & Oil & so on) I think the best timeframes are H1 H4 D1, Bitcoin that would be the daily and weekly (during trends), stocks weekly and monthly I suppose (and daily during crashes).
Keep in mind the lower the timeframe, the bigger the spread. If you want to day trade FX well I hope you enjoy having your reward to risk divided by 2. Other than the Dow Jones and Dax indices (and cryptos especially as MM on Bitmex) everything is really expensive to speculate on on very low timeframes.
An exception: Ending markets. Gold in July 2020 when it went parabolic, Oil when it went negative, that sort of things. But why would you want to close a mighty winner at 5 pm and go watch tv when you should be staying in as long as the price is skyrocketing? A few more hours = a few more R.
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Getting ready to make money
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Have fun spending hours on statistics (backtesting)
You heard people tell you what works and what does not. The stuff I hear... It's up to you to check if that 🎪 oversold RSI strategy works, and by looking at charts and taking notes, you will find out that it overwhelmingly does not.
Forget about your dreams of building the perfect mecanical holy grail. You need to know what you are interested in at first (reversals, pullbacks, powerful breaks, buying highs & lows in sideways choppy markets and losing money...) and then look at that, have to start somewhere.
If you try looking at everything then see you in the mental ward in 2 months.
Just find what works, what does not. At least you should have a vague idea of where to enter, odds, etc.
You can't just jump in blindly in anything because CNBC, because "cheap" and then as soon as it goes against you go "wow I have no idea what to expect and what to do" 😆. So typical.
Pick a charting provider
Most frustrate me to no end. I hate them with a passion. Is it that hard to let me freely scale and move my chart around? Really? You can put all those idiotic indicators to make sure day traders are as active as possible and lose as much as possible, but you cannot give us a simple measuring tool? Wow, just wow.
TradingView is really good. I don't see what people could want more. Unless they miss a market idk the Kyrgyzstan stock market maybe, then I would say they have everything on the charting side.
Use good news services
Don't be a Scrooge McDuck and dish out that $24,000 for a yearly bloomberg terminal sub. Did you know they have 325,000 subscribers worldwide?
We're obviously all poor and need to use what little money we have for essentials & risk capital. Under $2.5 million of risk capital I would not even consider it.
You might think "oh no, I want to isolate from the news because hype because I want to not be emotional" or whatever.
Now first of all you're crazy if you do because the hype & emotions are the best part and you are missing out on all the fun.
And as we have seen I myself have a watchlist of 25 fx pairs (10 currencies), 4 commodities, plus a dozen or more other tickers I may be interested in.
You want to only trade the price action, ok. You're actually going to carefully check 30 charts every single day? Wow. And not forget to check several dozen stocks indices etc from other markets regularly and be ready for a big move? Well congratulations rain man.
The media & investor hype tells you what is interesting to watch. And I'm sure it helps your opinion and subconscious mind.
In July the dollar crashed as it should, and accelerated in the second part of the month and then I kept looking for shorts and guess what I kept winning and had a monster month. Gold & silver went up back then but I was too busy, and I did join gold in August when it was past ath and there was some hype and the laggards were starting to buy.
Deposit with a regulated decent broker that suits you
You're all ready. Time to deposit on a good broker and promise yourself this time you won't blow your account. This time it'll work out.
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What you'll be doing for the rest of your life
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Look for ideas, "inspiration"
That's when you look at charts and remember or tag or set an alert on the ones that seem interesting to you.
And that's when the news in general can come in handy. "K what is undervalued" "K what is exploding up I want to join - er I mean fight the trend and get decimated".
Price action or no price action, there is more to this business than just drawing lines on a chart and placing an order based on price action. Much more.
Decide on what you want to see
Say you have an interest in Oil, Gold, and the USDollar. It is required you see something to take action. A strong break followed by a small pullback?
A double top accompanied by mainstreet euphoria, signaling a top?
You are a sniper and you do not just rush to a rooftop and shoot at random passerbys hoping to get your target.
This is what the USA did in the Obama era in Yemen with drones. You are not the USA.
Have a plan before setting an order
You shall NOT jump into something without a plan first, you are not Bud Spencer that punches first asks questions later. This is an order.
The number of times I heard people go "Ok so I bought x. Price is going down. What should I do I have no idea? Please fast!".
I heard, not from personal experience but from others, that even "pros" with at least months in a company, have been spotted asking those questions.
You know who you are. Please don't do this. Hahaha I nearly cry when I think of this, is this a casino "Oh well I just went all in let's see what happens yolo".
Trail your stop, at least bare min
You're at 99% of your target, you're actually going to risk everything for that last little percent?
Even if you don't care about missing out on additional gains, I do not get it. Why?
At least move your stop 1/3 towards target when the price goes past 2/3.
Myself I prefer to have something more evolved, where based on experience and backtested data I know approximately how much it should retrace and how much is 1- too much loss of my gains I am not willing to give away, 2- high probability or sideways or reversal.
Log your last operation (in excel)
Note everything you buy & sell in excel (or you can use something else I don't care I am a libertarian do what you want, except jump in with no plan, I am a german dictator for this, you are not allowed to do this).
This will be very useful. Going to share my own "method", I now have an excel with 3 tabs (alot more with all kinds of stuff in, but let's focus on the 3). 1 Tabs is for "Trends" and I have 8 columns: Date, Ticker, Thing, useless, useless, R, Result (Win Lose Breakeven), Comment. So actually it is 6 not 8. I used to have over a dozen tabs but I gave up, they're not that useful and they're a pain to maintain. In "Thing" I write the "strategy" I used, for the tab "trends" I got 4 choices: Pullback, Pump (actually it's pullback in a pump), FOMO, Downtrend/UptrendFeeling (when I just go in without a clean rule because I want to). Pullback and Pump are the main ones.
So ye, pretty simple. And the specific relevant details I want to note, I note them in Comment. Such as "got stopped at the top and then missed 25R" 😃.
Well in that case it might cause some depression so I'm not sure this is the best idea, but you do not want that happening consistently.
Important: Log the ones you did not take because you were a terrified little coward, and ended up going like a rocket in your direction. Thank me later.
Analyse your past trades
You'd better spend time looking at your past trades. I like to screenshot mine, I got a 25 GB HDD allocated to that. I already used up 10 GB but I also have some backtesting ones.
Check your average R, winrate, look at comments (maybe put the most important ones in red).
You can also on top of this use a broker service some provide analysis data, and also MOAR you can use tradingview where you posted ideas (public or pvt) and see what your thoughts were, and more.
If you took some screenshots with your thoughts at the time, go look at this and wonder what was in your mind to take such a stupid trade amirite?
Do stats on your operations & backtest to confirm
1 step further: After checking your history, and getting an idea of what you were great at and sucked up.
There are 2 reasons you might be good or bad at something: You actually being good or bad at it, and secondly luck.
You want to go backtest dozens of cases to check "ok is this typically good or bad", "wow this pattern sure appears often in this situation".
And then go even further, as we like to say in France "above it is the sun", you are such a natural born speculator that you take all of your worse trades, and go "ok then, I will do the exact opposite".
Revenge trading and fomoing has done so much for me. It made me immensly more profitable (because of so much more opportuinites).
I could not believe my eyes at how often I won and how much R I got through revenge trading and fomoing...
I did it intelligently thought, not a recommendation to go double down on a lousy trade and risk 10% at once.
By revenge trading I hear "taking the opposite side with reasonable size after getting stopped twice". "While cursing".
Combat your addiction to stats
Ye at that point you'll always need validation from the charts & the stats. Feel down? Go make yourself feel good with some stats. Feel good? Go get a high by looking at some good stats. Worried a trade might not work out? Go spend a few hours on stats to reassure yourself.
It can get pretty bad. It can take over. You sometimes might run home in a hurry to get your chart fix. At your job or someone house you will break at the urge and just jump on your phone "just to check that pattern a little bit". Oh wow I just realized I'm not even really joking.
Well at least it is a useful addiction, and you do need to have the most information as possible. But know that you cannot know everything, and if you get paralysis from not being 100% sure then... I guess you are a coward and better quit :D
Mental health is important, as well as being a winner and wanting to do MOAR WHATEVER IT TAKES TO WIN.
This ain't a wagecucking 9 to 5 sit on your *** job. It is one of the most competitive activities in the world and you have to WANT to be the best, to be the best.
You don't even care about the money, you just want to crush the competition and you are unhealthy-ly obssessed with it.
But just as with lifting, sports at pro level, esports (lol), you do not want to suffer overtraining, burnout (lol what is burnout? Sounds like a loser word), or emm going completely bananas (too late for me :/).
With speculative investing, every day is chart day. And news day. And monetary day. And economic lesson day. And...
How about rest days? Yes it is important to know when to rest. Know when you'll get plenty of refreshing rest? WHEN YOU DIE.
Oh well this paragraph did not turn out how I intended it to.
Improve your strats rr or build a new one even
In my opinion the easiest best way to improve performance is to improve the risk to reward.
Prices bounce on levels a certain % of the time. You cannot change that. You cannot make the trend go further more often.
But you can learn what the best areas are, allowing you to slightly improve your stop and enormously your payout.
Imagine you have a 0.25% SL, 1% tgt, and you notice the price always goes a little against you and not a single winner gets very close to your stop. You enter slightly later and have a slightly tighter stop, without being over greedy. SL is now 0.20%. You went from a RR of 4 to 5 with the same WR, this is huge! say with your wr you had an average payout per trade of 1.5 (winners*wr - losers*lr), now it is increased to 2.5! you are 2/3 more profitable. It is not that hard and you increase your profit by so much.
Do not be worried to give up a bit of winrate if it tremendously will increase your payout.
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Emm bonus or something
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Constantly accumulate knowledge
Every single day. In permanence. The more you know the better you'll be. Not to mistake with being drowned in information.
Heard of MOBAS? Over 100 playable character with several different abilities. You cannot know them all at first, but the big nerds that play 10 hours a day end up knowing not only all the abilities, but they also know what all abilities do under other abilities, their effects, the time they take, their mana cost, how the abilities work with different items & builds (these games have magic and physical damage which are different for example, as well as true damage, also magic and armor pen), the interaction with other champions and abilities. It quickly gets overwhelming, there is a huge amount of info, and that's just for 1 video game. If you know LOL you'll have to learn DOTA from scratch, it will go faster that if you were a complete noob, alot of things are similar, but you will have to relearn everything.
NOW IMAGINE THE MARKETS THAT ARE SEVERAL ORDERS OF MAGNITUDE MORE COMPLEX WITH MILLIONS OF PARTICIPANTS AND THE WHOLE WORLD INVOLVED MONETARY POLICIES GEOPOLITICS VARIOUS OPINIONS AND AGENDAS AND THE DOZENS OF MARKETS THE THOUSANDS OF STOCKS AND BONDS ALL HAVE SPECIAL INTERACTIONS AND INFLUENCE EACH OTHER AND IF YOU WANT TO HAVE DECENT OPPORTUNITIES YOU NEED A WATCHLIST OF MAYBE AT LEAST 10 GAMES (TICKERS) HAHAHAHAHAHAHAHAHAHA 💥.
You don't have to be smart to do well they say, oh yes of course, memorising and understanding the thousands of patterns, the billions of interactions, the billions of trillions of variables, and DYNAMIC probabilities in a highly complex highly abstract activity with non stop conflicting info, dogmas every one believe in that go against the truth, disinformation, competing with the best in the world, does not require any intelligence at all, sure, makes a lot of sense.
Intelligence is far from being sufficient, yes this is very true. It does not mean it is not sufficient lol imagine not being able to tell the difference between necessary and sufficient conditions and trying to give advice to people we found out why these guys sell hopium courses to new traders 🤣
Work on psychological failures
Anger is a sign of weakness. Regret is a sign of weakness. Fear is a sign of weakness. And the weak shall fear the strong.
Obstacles are designed to make you stronger, only the weak avoid them. And the gods have no obstacles.
Jesse Livermore said: "If you cannot sleep because of your stock market position (you are weak), then you have gone too far. Reduce your positions to the sleeping level."
Man is oftentimes weak-minded enough to be caught in the snare of greed and heneyed words.
Listen to Gandhi, best warrior in India (am I allowed to say this was his caste or is it unwoke? xd), he won a war without fighting. Don't get greedy & keep a rational mind as opposed to trading throught feeling because someone said "the price will collapse" and it scared you.
Giving up is not a sign of weakness but a sign of strength.
To know that you can't win a particular battle is wisdom.
=> Very important. Are you a genius like Napoleon that retreated from Russia, or an idiot politician that thinks he knows warfare like Hitler that insisted and led to millions of dead and lost WW2?
Do not short Tesla you cannot win (well actually now shorts got wiped out maybe it is possible but I'd wait for a downtrend).
Cut your losses what is the point of holding bags? Swag?
Don't try to defeat the market and don't get married to any commodity or idea.
Fail, lose money, and quit
Hey this can happen too. How many is it? 90%?
Day traders are overrepresented here.
According to fxcm data traders that had a reward equal or greater than 1 times their risk were making money at 53% (over 1 year in 2014-2015), versus traders with a RR under 1 (but why? xd) of which only 17% were profitable.
The people that made most money were those the less leverages, while big size "get rich quick" clowns got absolutely wiped out.
They do not show data for day traders versus long term ones, they're a broker they make money off commissions so they won't show this UNLESS it shows day traders making more, so you just know they're the ones getting decimated the most and the longer term ones are the ones cleaning house. It is a certainty.
I've looked at plenty other data and you had such numbers, with over 1 year 83% people losing money, 88% over 2 years, 94% over 5 years, and so on (it tops logarithmically of course).
People smart enough to trade with high (but not greedy huge) reward to risk, and on higher timeframes, are the ones doing best.
So it's not all that bad, if you put in the hours and have a working brain (intelligence is important I said but you don't need to be an absolute genius to just be in the green).
It's clearly possible.
Making money does not mean making millions!
It does not even mean outperforming the SnP.
It does not even mean outperforming inflation.
Few people outperform the SnP.
Alot manage to make some money but not enough for it to be a viable business.
But even if people end up quitting they did not waste their time, they learned a valuable lesson: Do not try to stand up to MrRenev.
Nah I'm just messing around.
Even if one does not outperform the SnP, he can use what he learned to:
- Continue trading short term for diversification & to reduce portfolio volatility
- Not miss out on generational moves (USO, Oil contango, Gold, Bitcoin...)
- Use knowledge to manage risk or whatever
- Use a fraction of their net worth to speculate with large size (but not casino large) to have more volatility and more returns
- And plenty more... consolation prizes
