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Juggernaut
06-09-2008, 04:17 PM
Hi everyone,

Im new here, I am wanting to get into FX trading and only know the basics at the moment, from reading this thread you all seem very clued up on the in's and out's of FX trading :D

Would someone be able to run through some basics on getting into fx trading, ie: common terminolgy and its meaning, basic TA signals, what to look for, what TA charting software is best, how much is fundamental analysis used and where to access this info,

I have access to a trading platform already and basic knowlege of TA - moving averages, fibonacci retracements, RSI, and some signals (H&S, morning star etc), but thats about it,

Any replys would be much appreciated :cool:

dumbass
07-09-2008, 09:20 AM
hi juggernaut and welcome to the forex corner

you have asked a detailed question so here goes.

There are many technical disciplines used in forex trading all having there advantages and disadvantages and there is certainly no one system that works all the time.
I have tried to develop a basic understanding of a few and wait for multiple confirmation to enter and exit trades. it sounds a little complex but once you have put the time in to learn, it becomes quite automatic.
The way i learnt was to focus on the individual areas for a few months see what i liked and didnt like and then take that information and move on to the next discipline.
I think the best place to start is to develop some basic techical skills eg trendlines , patterns (triangles, wedges ,head and shoulders etc) , indicators , moving averages.Lots of info on the net and some biblical textbooks.

Fibonacci is worth a good look

Once you are up to speed i would study harmonic patterns. the main posters on this site use these set ups frequently, so you can see lots of real examples posted and excuted very successfully.This link is a start
http://harmonictrader.com/price_patterns.htm

Next i would spend some time studying candlestick patterns , they are a vital part of trading and again simple to learn and understand.
Now you should be getting to a stage where you could be thinking about starting trading,
so its now time to learn the least covered but most important area MONEY MANAGEMENT
skip this at your peril !

I would then have a dummy run on demo mode , where you can download a trading platform and develop your trading skills
ONLY when you can trade consistently proftably should you risk your own money
if you are flat in your first year you probably have got what it takes to trade for a living !

There are many other areas you may develop as your skills improve Elliot , Gann etc but in my eyes these are a little more advanced and will come in good time.
If i had followed this blue print i would have saved myself a lot of expensive lessons but lessons i have learnt none the less.
Hope this helps a bit and make sure you post lots here because the guys are knowledgable and patient.

arco
07-09-2008, 01:34 PM
Welcome Juggernaut

I think DB has covered your question well.

There is always something to learn in this game.....I've been
trading for many years and I'm still learning.

Looking forward to your participation.

rgds - arco

AMR
07-09-2008, 10:12 PM
Arco, peat, dumbass,
I'd be pretty interested in how your trading styles evolved over the years you have traded forex.

Cheers
AMR

arco
08-09-2008, 08:30 AM
AMR

1984 Bought first IPO (British Telecom)....made $13,000.
Bought many more IPO's, and started buying other UK shares.

1988ish Started buying commodities. First contract in Deutschmark
- made $2000 overnight. (My first FX trade).
Then bought Coffee - got very lucky as
there was a frost overnight in Brazil....made $60,000

I guess you could say at that point I was really hooked on trading.

Bought first TA book in the 80's - couldn't understand what
is was all about......persevered, and probably have well over 100
trading books now.

1994. Moved to NZ - started buying Aussie and NZ shares.
Purchased my first charting program - Metastock, and started
checking the SP currency charts.

2000ish - moved more over onto FX trading.

arco - still learning

Juggernaut
08-09-2008, 10:43 AM
Thanks for the welcome guys, and thanks for the reply dumbass, you have been a great help, I have got a lot to learn by the looks of it, that website on harmonic patterns looks very interesting, I hope to contribute to these message boards as much as I can :D

dumbass
08-09-2008, 11:17 AM
hi juggernaut , no problem at all

i think the harmonic pattern set up is a good example of what i believe to be a good approach to trading.
i bought the book and passed it around to arco and peat.
The author (name escapes me for the moment ) sold it as an all encompassing trading system with different variations to the two basic patterns of the Gartley and Butterfly.
When a pattern presented he recommended trading it.
From our personal experience trading it, it wasnt so reliable and all the add on patterns were complex to find eg Bat , Crab , etc

so we came to the conclusion there are two set ups to look for

d wave completion at 78.6 with a b wave at anything from 23.6, 38.2 50 and 61.8 retracement and called it a Gartley

d wave complation at 127 with a b wave at most lkely 61.8 and 78.6
and called it a Butterfly

when this set up links with a trendline or divergent indicator or candlestick confirmation or elliot count its much more successful.

so we took a system simplified it and applied it to other disciplines.

its worth having a good look at the patterns but i much prefer our simplified system

Juggernaut
09-09-2008, 10:12 PM
hi dumbass, very interesting post, thanks for that, I have spent a good portion of the day today scouring the net, reading and learning about TA and harmonic patterns, it was a very productive day and i am feeling confident with TA now. With harmonic patterns I am going to focus on gartley and butterfly patterns as you say, as there are to many to learn all at once!,

Quick question about harmonic patterns, in your last post you were quoting numbers such as 23.6, 38.2 50 and 61.8, these are the angles of the sides of the waves, how do you measure these on charting software?, or is it just a general 'angle formation looks close enough to a gartley', kind of method used? on my charting software (latitude FX) I cant seem to find a function to calculate angles,

cheers

AMR
09-09-2008, 11:02 PM
Those are fibonacci retracements. To add them on latitude fx charts, it's the button to the left of the "T" and just to the right above the timeframe selection. My understanding of it is you connect up the ultimate high and the ultimate low and fibonacci gives support/resistance levels.

Didn't realise there were others here with latitude fx. Perhaps we should start a thread on the platform sometime.

dumbass
10-09-2008, 05:50 AM
hi juggernaut,

i have labelled usdchf a little clearer

this is a potential bearish gartley

1 wave down labelled XA

3 wave retracement labelled A B C

its not a classic gartley in that B wave retraced at 50% rather than 61.8% of XA

however its respecting the fibonacci retracement levels of wave XA

eg B nailed the 50 % and C Wave the 23.6 %

so this set up provided an area to have a look for a reversal eg D wave at 78.6 % marked

by the box.

i then followed the hourly and 10 min charts to wait for confirmation and enter short

so far looks ok, 2 positions 100+ and 110 +

hope this makes it a bit clearer

Juggernaut
10-09-2008, 11:08 AM
AMR - thanks for that, do you use latitude aswell?, how do you find it?, Ive been using it for 2 weeks now and I am finding it great,

Dumbass - thanks for that post, that has made it alot clearer now, can you have a look at my attachment and see if im on the right track, not sure if my fibonacci retracement is 100% correctly plotted, but i spotted what could have been a gartley if the B wave retracted at 50 and not at 85, c wave is correct for a gartley at 23.6 right?

Am i on the right track here?

arco
10-09-2008, 12:09 PM
J

Heres a tip ................


....if B is 618+ the pattern is more likely to be a Butterfly.

arco

dumbass
10-09-2008, 12:45 PM
good start , the key levels in the pattern are the b and d retracements

i wouldn't be bothered if c wave wasnt perfect.

now you are in a position to watch picture perfect set ups fail and ugly imperfect ones work

the lesson being you need confirmation from other sources and the perfect nature of the set up bears no relation to sucess.

just one of the weird things of this game

Dr_Who
10-09-2008, 04:06 PM
I am in need of some lessons. Just dropped a few grand and covered my short position. OUCH! It is brutal if it goes against ya. :mad:

AMR
10-09-2008, 04:13 PM
I'm finding latitude to be pretty good as well. It's cheaper than CMC Markets, and I can run their platform and trade without lugging my laptop around. This new charting platform is much better than their old one, much more responsive and quick.

Dr Who, what did you short? I surely hope it was not the USD over the last month.

Juggernaut
10-09-2008, 06:39 PM
- thanks for the reply arco, dumbass,

Bad luck Dr Who, this is the right thread to learn in, some very clued up people on here,

On that note, would someone be able to awnser a few other questions I have .. :o

- 1st, How do you draw a Fibonacci retracement correctly?, is it from the highest peak to the lowest trough?, surprisingly I cannot find a simple awnser to this anywhere on the net..

- 2nd, what is the best timeframe for MA, 21 days?, and is 2 MA a good idea?


lastly if you look at my attachment...

What do you do when there is no clear patterns that you can see, and its just bouncing around all over the place, no clear up or down trend, the only pattern I could find was a reverse head and shoulders,

It just doesnt seem to make any sense changing positions each time the price goes below the support line, or starts a downtrend, shown in the far right of my attachment, as you wouldnt even make your bid-ask spread back by the time you need to exit/enter the market,

hope that makes sense, much appreciated fellas

AMR
10-09-2008, 08:19 PM
That's the one minute chart, I don't think any of us scalp like that...If I were confronted with such a chart on a stock on the dailies, I would shelve it and either look at something or set up alerts as soon as the price makes a new high for a breakout trade. The biggest mistake I'm doing now is trying force trades and to create "something out of nothing". It's called overtrading.

You'll find better formations and trends on the longer term charts.

dumbass
11-09-2008, 07:20 AM
-
- 1st, How do you draw a Fibonacci retracement correctly?, is it from the highest peak to the lowest trough?, surprisingly I cannot find a simple awnser to this anywhere on the net..



fib retracement can be drawn from any significant high to a significant low

usually this is upper wick to lower wick eg candle high to candle low.

sometimes it may not be the absolute peak and trough and i may search other peaks and troughs in a larger move to see which fits the fib retracement the best.

never force trades if the action is sideways, simply wait for a good set up.

nzd usd rate decision at 9 am.

triangle on 1 hour chart , have a go on demo at trading it .

its normally a pretty wild ride.

dumbass
11-09-2008, 08:24 AM
triangle broke out to the downside for 60

Juggernaut
11-09-2008, 09:23 AM
That's the one minute chart, I don't think any of us scalp like that...If I were confronted with such a chart on a stock on the dailies, I would shelve it and either look at something or set up alerts as soon as the price makes a new high for a breakout trade. The biggest mistake I'm doing now is trying force trades and to create "something out of nothing". It's called overtrading.

You'll find better formations and trends on the longer term charts.

Thanks AMR, I am starting to get the hang of this now.

Juggernaut
11-09-2008, 09:30 AM
triangle broke out to the downside for 60

Cheers dumbass, I have spotted the triangle aswell, I waited untill 6535 to short NZD for some reason and missed out on the big drop, DOH! awell Im only playing on demo at the moment,

cheers guys

dumbass
11-09-2008, 11:38 AM
hi juggernaut,

i draw my trend lines a little bit different to yours.
i would only connect the candle wicks not the bodies.
a confimed trendline requires 3 points so the lower trendline would have given an earlier break.
just have a go and redraw it and see how the situation changes.

with trading in general i have learnt ( difficult some times ) to trade the charts only.

the rbnz anouncement was a triangle breakout trade, so my trade got hit prior to the anouncement. see how the technical break gave the clue to the decision.
some people will say thats rubbish but ask arco or peat how its always in the charts.

AMR
11-09-2008, 11:44 AM
yes I use EoD prices for stocks (longer timeframes) but use the high/low prices for forex.

BTW, what unit bars is that chart of the breakout in?

I have a lot of trouble when the price action moves up and down around a trendline or support. How do you decide when the price has broken through the support or when it simply penetrates slightly and bounces? Do indicators help with that in some regard, or is it simply "the trend is your friend"?

Dr_Who
11-09-2008, 12:38 PM
@#@$$ !!!!

I should have held on to my NZD AUD short position!!! :mad:

dumbass
11-09-2008, 01:10 PM
trendline breaks are always a little subjective .

i would always draw my lines to price extremes so as to reduce the chance of a false breakout.
You should look out for sharp impulsive moves breaking trendlines rather than a sideways drift.
Learn your chart patterns to second guess direction better.
Set trades past a trendline to cover against false breaks.
If you miss the trade dont chase it , you may have a chance to reenter as trendlines are often tested again and again.

Juggernaut
11-09-2008, 07:00 PM
hi juggernaut,

i draw my trend lines a little bit different to yours.
i would only connect the candle wicks not the bodies.
a confimed trendline requires 3 points so the lower trendline would have given an earlier break.
just have a go and redraw it and see how the situation changes.

with trading in general i have learnt ( difficult some times ) to trade the charts only.

the rbnz anouncement was a triangle breakout trade, so my trade got hit prior to the anouncement. see how the technical break gave the clue to the decision.
some people will say thats rubbish but ask arco or peat how its always in the charts.

Cheers DA, Ive attached updated image, it looks better now, looking back now i should have got in as soon as I saw the 3rd confirmed point leading to a downtrend. Well I just sold out of my demo run, made 75 pips in total

Fundamentals vs technical analysis, there is always going to be a debate about which is better, I think the fundamentalists just dont want to believe that there might just be something to technical analysis!



yes I use EoD prices for stocks (longer timeframes) but use the high/low prices for forex.

BTW, what unit bars is that chart of the breakout in?

- that chart was set on 1 hour, is that what you were asking?



I have a lot of trouble when the price action moves up and down around a trendline or support. How do you decide when the price has broken through the support or when it simply penetrates slightly and bounces? Do indicators help with that in some regard, or is it simply "the trend is your friend"?

- I also have trouble deciding when a support has been broken, over the last few weeks I to have noticed the price does bounce slightly over and under support/resistance lines, does anyone have an awnser to this ?

dumbass
11-09-2008, 07:22 PM
heres my chart on nzd h1

Juggernaut
11-09-2008, 10:25 PM
heres my chart on nzd h1

Cheers DA, that is quite a bit different to my chart, I see what I did wrong, you took the starting point from alot further back, do most of you guys work on 1 hour graphs?

NOCASH
12-09-2008, 11:20 AM
Hi,
Just wondering playing in FX is more risky than NZX?,
i mean do most of you do margin lending when buying FX?
Is $2000 nzd to little to play with in FX

AMR
12-09-2008, 11:53 AM
Hi,
Just wondering playing in FX is more risky than NZX?,
i mean do most of you do margin lending when buying FX?
Is $2000 nzd to little to play with in FX

FX is much less risky than stocks. You never get gaps unless you hold over the sunday. $2k is definitely enough, I'm playing with 1k right now.

arco
12-09-2008, 12:08 PM
Nocash

You need to get that car registered......you're bound to get caught :)

Try trading FX with a demo account first, then you can see if you can become one of the privileged 5%.

$2000 is not enough IMHO

arco

http://tbn0.google.com/images?q=tbn:yIr1r1f_ZS4J::uk.geocities.com/tradcarclub/images/ReliantRobin.JPG

AMR
12-09-2008, 11:41 PM
What a crappy week days forex wise. I lost $40 when my pips were only 20-30c each.

Maybe the moral of the story is not to assume that a major support identified on the weekly chart is broken by spending a few hours beneath the support.

IMO it is better to trade tiny pips rather than play an FX game. The psychological factor comes into play a bit and you can learn to handle your frustration by means other than smashing the top of your desk :)

arco
13-09-2008, 07:52 AM
AMR

Yes, you are definitely better trading 'live' with real money, but its also a good idea to use a demo for experimenting with trading ideas.

Hope next week will be better for you.

rgds - arco

AMR
17-09-2008, 09:49 AM
Neatest thing I've found so far is that support and resistance seem to get routinely violated by just a little, just enough to take out a stop.

Juggernaut, how are you finding it so far? Do you know how to set up stop loss as an entry point and then add a stop to that entry? I can't figure out how to do that for the life of me, I'm sure they've shown me how before!

arco
17-09-2008, 11:45 AM
AMR

Welcome to the Pleasure Dome....

You have discovered ones of the many tricks they use to part you from you money. There are others.

:)

Tok3n
17-09-2008, 11:55 AM
AMR

Welcome to the Pleasure Dome....

You have discovered ones of the many tricks they use to part you from you money. There are others.

:)

Brokers target individual retailer traders just for a few bucks?

arco
17-09-2008, 12:49 PM
Tok3n

Suggest you read
Trader Vic--Methods of a Wall Street Master"...... P82


Remember, you will not be the only person sitting with a stop/order just below/above the pivot, support, or resistance line.......you will be one of thousands........including people in the real market. This in itself is a a dangerous area because many traders place their entry and exit orders in the close proximity of those lines.

Metatrader even provide their 'brokers' with special programs to harvest your money.

Slippage and widening of spreads is also a money technique for brokers.

Its a dirty game......you need to learn their possible tricks to get ahead in the game.

arco

dumbass
17-09-2008, 03:46 PM
dig this , i think it was aud jpy i had a stop about 50 pips away from the action and in 1 minute shot down to exactly my stop and then back.
complained about it and they said it was a genuine market spike , so argued the point that you couldnt see spike on other crosses , then they agreed and reversed trade.
i asked for an explanation and they said it was a data supply issue.
On saxo bank there is weird spikes all over the place, so always worth a look to make sure it looks correct.
i think they all use their little tricks.

Dr_Who
17-09-2008, 03:51 PM
DB, which FX broker do you use?

arco
17-09-2008, 04:09 PM
Dr Who

...................heres a clue ....its in DB's post.
.
.
.
.
.
.
.
.
.
.
saxo

Tok3n
17-09-2008, 05:36 PM
dig this , i think it was aud jpy i had a stop about 50 pips away from the action and in 1 minute shot down to exactly my stop and then back.
complained about it and they said it was a genuine market spike , so argued the point that you couldnt see spike on other crosses , then they agreed and reversed trade.
i asked for an explanation and they said it was a data supply issue.
On saxo bank there is weird spikes all over the place, so always worth a look to make sure it looks correct.
i think they all use their little tricks.

Do you get this often with them?

arco
17-09-2008, 05:55 PM
Tok3n

Remember one thing....most of the FX 'brokers' are not real brokers......

........they are only there to make as much as they can out of you. Be aware of their tricks.

If you want a real trading environment you need go with a real broker - not a bucket shop.

arco

dumbass
17-09-2008, 06:28 PM
if were having a bitching broker session then here is a few other issues.

Saxobank has some very impresive titles and lots of strategists , "Head strategist of the glaringly obvious" , "Strategist FX bollocks calls " etc etc.

They provide lots of research and commentary and even had a trading portofolio at one stage which had been running for over a year and amassed the huge total of about - 200 pips.

arco
17-09-2008, 06:51 PM
I think thats the same for many DB

Not sure how FXCM strategies fare...they seem to have a lot of analysts.

I stick to my own trading ideas and try not to be influenced by what I see on websites. If you jump the other way every time you see an opposing view you will be all over the place and never get anywhere.

AMR
17-09-2008, 09:18 PM
I vaguely remember seeing an FXCM TV show or something where they were training a young finance graduate out of college to trade the news. I think the name of the show was Wall Street Warriors or something to the like.

Looking more into trading busted patterns i.e taking on everything Thomas Bulkowski did in his encyclopedia, wait for a failed triangle/rectangle, and then moving in.

As this thread is turning into a bitchfest, I don't trust CMC with my share CFDs. I can't get an order for 500 filled at the offer price even when there's 20,000 in the offer depth, instead they make me pay a cent extra with a requote. It's not like NZO is a particularly illiquid stock.

Juggernaut
17-09-2008, 09:21 PM
Neatest thing I've found so far is that support and resistance seem to get routinely violated by just a little, just enough to take out a stop.

Juggernaut, how are you finding it so far? Do you know how to set up stop loss as an entry point and then add a stop to that entry? I can't figure out how to do that for the life of me, I'm sure they've shown me how before!

Hi AMR,

Im finding latitude great to work with, easy to use and navigate,

To add a stop loss as an entry point, have a look at my attachment. Click the SL button next to the currency you want to trade, click on the + sign next to SL, and it gives you an option to set the stop loss as a BUY or a SELL, then add your order and click submit,

If you get an error message saying 'order is in the nofly zone', that is because you cannot place a stop loss buy order within 5 pips of the current price for some reason,

Also remember any SL or TP orders you submit will sit in your order summary and will execute when hit regardless of whether your other SL or TP orders have been hit. I have been caught out by this before, forgot to delete a SL order and just assumed it would become overwritten when my other SL order went through at a higher price.

Tok3n
18-09-2008, 08:27 AM
Out of interest, Arco, AMR etc

Who do you guys trust to trade with then?

cheers

arco
18-09-2008, 09:11 AM
Tok3n

Oanda have been reasonable for me up to present but I think they are suffering from too many customers now. The platform is slower and more prone to freezing than it used to be.

However, you can see their net capital is the highest, and that should give some comfort.

The following firms have net capital above $20 million

PFG $21,695,000
Interbank FX $33,341,000
Gain Capital $67,077,000
GFT Forex $69,497,000
FXCM $78,503,000
Oanda $164,523,000

The following firms have net capital $10- $20 million

ODL $10,500,000
GFS Forex $11,296,000
MB Trading $12,201,000
Alpari $12,810,000
IFX $14,941,000
I Trade FX $16,214,000
CMS Forex $17,996,000
FX Solutions $18,887,000

AMR
19-09-2008, 10:43 AM
Hi Token

I use latitude FX, they use "Straight Thru Pricing".

maknz
19-09-2008, 11:09 AM
I'm using Oanda's demo account for the moment, but I don't like their charting all that much.

arco
19-09-2008, 12:59 PM
.

Yes agree Oanda's charting is not that flash, but its adequate. (If you think its bad now you should have seen it a few years ago).

Latitude state - No manual dealer intervention – you trade on prices generated from commingled wholesale prices.

I doubt if you are dealing direct with the market as you would through Globex for example. So basically they sound like just another 'white label' type operation. Nothing wrong with that if they are sound, and I can see the benefits of having your money locally (ASB).

STP
http://www.algorithmics.com/EN/media/pdfs/Algo-NF0403-eforex.pdf

AMR
20-09-2008, 10:20 PM
After about a fortnight of trading FX intensely and 10 consecutive unsuccessful trades I feel like I'm getting somewhere.

Did all of you start out trading the 1-hr timeframe or on longer charts? Also, what % of your orders are limit entries? (as opposed to market entries).

arco
21-09-2008, 10:07 AM
After about a fortnight of trading FX intensely and 10 consecutive unsuccessful trades I feel like I'm getting somewhere.

Did all of you start out trading the 1-hr timeframe or on longer charts? Also, what % of your orders are limit entries? (as opposed to market entries).

I started trading the day chart.......thats way back before lower time-frames were readily available to the masses. It was so easy then.

Now I use daily, 30m, 1 hr, 4 hr, and sometimes hone down as low as 15 and 5 minute for entries/exits.

Limit/Market entries....hard to put a % on that. I do whatever is required at the time, based on my trading plan.

arco

NOCASH
29-09-2008, 10:05 PM
Arco.. haha how did you know my car did have rego for like 3months, well since then i sold the EVO and got me a Mercedes which i drive to uni daily. spent around 2000$ total on it i repairs. Now is time to save money, and make some cash to increase my status