If you are looking to trade forex “short term” – you’d better get out your binoculars (as well your microscope) short of taking a bit of advice from a pro.
The short term time frames are extremely difficult to trade. So difficult in fact that I don’t personally believe anything under a 1H time frame offers a new comer any real chance of survival.
Here’s why:
- Depending on the pair, short term volatility will ” far more often than not” stop you out of your trade almost immediately until you completely understand the given pair. For example try trading GBP/JPY with anything less than a full 100 pip stop, and even then – watch you don’t get stopped out. If you don’t know the given pairs “average daily range” or have an idea of how far it can “zig n zag” trust me – your trade platforms “default stop value of -25 pips” will get hit every single time.
- If your entry isn’t absolutely placed at an exact “high or low” of the given time frame ( so in a sense – you’ll need to trade with a laser pointer ) you again – will almost immediately see the trade go against you.
- If you are not trading EXTREMELY SMALL – and I mean so small that -100 pip stop means nothing to you…you will again be completely stopped out before you’ve even seen the trade develop or – even find out if you where close to being right.
It takes an extremely accurate entry as well as “relatively wide stops” in order to survive the smaller time frames. The allure of sitting at the computer for an hour a day trading a 1 min time frame with any kind of leverage – and making ” a killing” is an absolute pipe dream, as the price action is purely “just noise” and offers no tradable patterns that will consistantly produce winners.
Imagine staring at your television at home when the cable/signal is down and try “trading snow”.
Small orders over time at areas of support and resistance, and wide stops “should” go a long way in keeping you in the game.
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That is clearly solid and good sober advice. One does not need to be a forex trader to see that is valid.
Always great advice from you Kong, thanks! So when can we expect to see a book out from you, “Trading like a Gorilla”?
But seriously, it is looking more and more likely IMO that today and maybe tomorrow we will start to see some major fireworks on Long JPY and short USD trades.
As such I like you am positioned small and will be adding as we start to break.
Nice advice kong. I appreciate you sticking around. I agree completely. Trading anything, especially a leveraged instrument is not about ONE trade, but managing your account so that over the life of your career you can steadily build up your account over a collection of many, many trades. Excess leverage ends up causing you to constantly have to make up for your last trade with less capital available to do so.
Hey Warren!
The book is actually in the works! Although not as much about trading, until somewhere closer to the end – but the story is coming together.
You and are are literally on the exact same page…as I’ve now started long JPY’s as well short USD’s in a number of pairs. Should be a good one.
Great trading Warren…great work!
U bet.
Trading small allows a newcomer opportunity to actually ” see a trade develop ” as opposed to just swinging for the fences and getting stopped out before learning a single thing. A small order with a “wide” stop – lets you view “action” in real time – and learn from what you see.
If new traders could just forget about “getting rich” for those first few months, and focus on trade management.
That is most certainly a recipe for disaster. The idea of “making up for a lost trade” likely leads to “larger position size” when a new trader should really be asking themselves – “Hey! – I just bombed on the last trade…what would have me think I can do better on this next one!” Maybe I’ll trade “even smaller” and try again!
Lower the capital goes….smaller the trades need to be.
Replying to my own comments again – gees – gotta love it!
Hey everyone! – as per chatting with Warren, and tweeting out a few entries.
I hate to get too excited these days, as the trading has been tough and my positions have been “relatively small” compared to times when I’ve got both mits on the gas pedal….but……this is shaping up really quite nicely, and I have a strong suspicion this is gonna be “one of those trades”.
Buying / selling smaller orders “around the horn” maybe even into Thurs even but – it’s looking good.
Several pairs “short USD” and several others “long JPY”. Keep your eyes peeled!
Ya I can see a long JPY trade starting maybe late this week or early next and it’ll likely be a ripper
AUDJPY finally breaking out
Can’t wait for the book Kong, I hope it is less about forex trading and more about your philosophy on life.
Plans to make it an ebook available on amazon or are you planning for the dinosaur presses?
DEMO TRADING TIME!!
I got AUD/USD going, I’ll plan on reading up on stuff later… I gotta play around with it first. 🙂
Took profits on my positions. Maybe I’m being nervous but I’d rather be nervous with money. Entered a USDCAD short tonight
The story goes well back to when I was just a boy so…trading isn’t at all the focus.
I imagine the ol “e book” will be the way to go, but do envision a nice “hard cover” edition as well!