Wake up!

newtrader101

Well-Known Member
#1
My two cents to any newbie trader who thinks that day trading is just taking a calculator and multiplying the initial investment with powers of the daily returns.

That is, if the trader made a profit of 1% the first day with a capital of 10000; the trader assumes that this will be the scenario every day. So they think they can multiply the profits exponentially, leading them to calculate future profits like this:
Profit on day 1: 10000x.01=100
With leverage of 10x. Profit =10000x0.1=1000
Capital=10000+1000=11000

The profit at the end of n trading days each with a minimum of 1% profit=
10000x1.1x1.1x1.1x1.1x...(n times)
or 10000 x1.1 to the power of n.

At the end of 30 trading days=10000 x 1.1 to the power of 30=1,74,494.02

Traders who fall to this fallacy, will learn it the hard way.

If trading were that simple, you can give a calculator to a five year old and he will do this calculation.

Believe me, people have actually posted their expected profits (Crores in weeks) like this on this forum!

The truth seems to be more like this:
Trading is a pursuit of knowledge, profits are a by product.
 

newtrader101

Well-Known Member
#3
I'd like to share some of the transforming insights during my trading journey. This, surprisingly, has come to be more about learning about myself. Hope some of you find this useful, and avoid loss of precious capital and time.

As a trader, do you keep hunting for the 'holy grail' which always guarantees 100% results?

There is no such holy grail. Even the simplest methods like MA crossover are enough to make a living, if you are stable.

Do you make good profits on a trade, but at the end of the day, find yourself, with zero profits or worse, a loss?

This is because trading is not about the markets, its about you. Its about your habits. You need to create trading rules and follow them.
 
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goldenedge

Well-Known Member
#4
I have to argue otherwise. I think it's possible to make ridiculous amounts of profit (I did it). The main problem in the strategy OP mentioned is the trader.

Traders have a problem they always overlook ie., they carry yesterday's emotions!! Trust me, if you made 3 days of continuous profit then on the 4th day they will be overconfident/arrogant/will not take a small loss.

Everyday is a new day and every trade is a new trade. Carrying emotions is the biggest problem these guys have.

I solved that problem by constantly reminding myself (writing a note) which I will read before placing a trade. Unless the thought absolutely sinks into my brain, I will not place a trade.
 

newtrader101

Well-Known Member
#5
Hi Goldenedge,

Thanks for sharing your insight. I agree about the consequences of not taking a small loss--it just happened to me today!

Glad your strategy is working for you.
 
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Hulu Girl

Active Member
#6
It might happen that the strategy works for you, will not work for other. Every one has his own thinking for trading, and strategy which can works for it. But other then that, is is good that you have share your trading style with others.
 
#7
Strategies work differently in different conditions and to make your self a good strategy builder you have to practice well, and as for practicing without any risk i think demo is the best option.
 

newtrader101

Well-Known Member
#8
Re: Wake up! How to start in trading

Most new traders jump into day trading without studying and practising on small trades. Then they fall into over-trading, when their judgment goes awry. To avoid this, it may be better to start with longer time frame swing trading, over several days, without leverage. Candlestick analysis also has more validity on the larger time frames.
 
#9
Wake up from your losses and get to the reality that forex is business, forex is work. You have to realize that to get the pips, you must put in work. You should perfect your experience on one strategy.
 

newtrader101

Well-Known Member
#10
Leverage

If trading is like driving, leverage is like speed. When you are learning to drive, you need to drive at the lowest speeds possible where can you have control. In trading, in the beginning, you should not use leverage if you want to survive. Too risky to learn driving at 200 km/hr.
 
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