What Size Of A Demo Account Should I Practice With?
I was speaking with a good friend the other day; about demo trading versus live trading, and how to make the transition smooth. He mentioned that he had not yet started trading live, and that he had been offered by a broker a free demo account with an initial balance of fifty thousand dollars. He stated that when he did go live it would not be with that amount. He then asked “Was this a good way to practice trading the platform?”
This is my feeling on the subject. When a broker advertises “Open up a free demo account” with a large dollar amount attached I think it is poor form. This gives the beginner and anyone unable to trade with that large of a dollar amount right off the bat a faults sense of security. I think it is premature and greedy on the part of the broker.
Chin UP!
“Thrice happy is the man that has a glorious history. Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows neither victory nor defeat.”
-”The Strenuous Life”
Successful Traders Summaries
Here are some thought by some of the best stock traders. Good trading principles apply in all markets.
Also, everyone who is truly interested in Forex should read as widely as possible.
Jesse Livermore: The World’s Greatest Stock Trader by Richard Smitten
1. Don’t lose money
2. Always Establish a Stop
3. Keep Cash in reserve
4. Let the (Successful) Position ride…until you have a Clear Reason to Sell.
5 Take the Profits in cash…and place 50% in a separate account
Lessons From the Greatest Stock Traders of all Time by John Boik
1. Trade with the Trend
2. Cut Losses short
3. Let Profits run
4. Manage Risk
How Legendary Traders made Millions by John Boik
1. Understand the General Trend of the market
2. Use the Knowledge of History in your Study and Observation of the Markets
3. Use your Own Research and Don’t Listen to Others
4. Buy the Leaders
These summaries of good traders thought are worthwhile. We thought that you might be interested in what other good traders think about the markets and how to trade.
Market Gaps
We are writing this because of the large gaps in the market at the open on Sunday September 7, 2008. The market does gap but usually it will happen on the opening of the market on Sunday. Occasionally a gap can be seen around a new announcement. It is not as large as the gap at the opening of the market.
What causes the market to gap? Most brokers close for the week end but the market is still moving because the banks are still trading. When a currency pair has a gap it is because the market was trading in a direction which moved away from the price the brokers closed at. This causes a gap in the price of the currency because the broker’s closing price has to align with the banks prices at the time the broker opens.
If you have a stop loss on an order that is open over the week end the market will gap past the stop loss and the order will not be closed at the stop loss price it is closed at the next available price. In most cases the stop is filled at the price the market gapes to. If you have a buy or sell stop and the market gaps past the market order you will be filled at the next available price. This is the price the market gaps to. If you have a sell or buy limit order then it will be filled at that exact price when the market hits the exact price of the limit (pending) order.
This is why many traders do not like to leave trades open over the week end. Position traders (long Term Traders) are not concerned about the gaps because they are trading the long term trend.
Letter From Our Strategy User- Part 1
This is a letter we’ve received from a strategy user and we thought it brought powerful insight that we would like to share with all of you.
Jed
Also, just to let you know, I find it quite amazing that two moving averages and the so-called “mao” can produce so many positive results. It is truly incredible, to say the least! So simple yet so powerful.
Please do share with me your thoughts regarding the natural laws of economics in relation to a personal account growing with such massive momentum. Let me explain what I mean.
I have taken this current MINI demo account from $10,000 to over $19,000 since yesterday morning by ONLY using your system. It is a 1:400 leveraged account, but I am only trading 1.5 to 2 percent of the capital per position. All trades are placed based off of H1, H4, and Daily trends while most entries are placed in the M5, M15, and M30 in order to take advantage of the immediate shift in trend. Currently, I have five positions open on GBPJPY with only 4.1 percent of my capital in the market (there are three very small positions open with two positions open of 1.2 percent each). This position, only counting the current equity held, has yielded over $2,800, which takes the total profit to nearly $22,000.
An Alternate To Hedging By Wayne Jackson
This is a strategy to replace hedging that Wayne Jackson created. We agree with his feelings about hedging in this post and feel that it provides valuable information. We wanted to share this theory because it presents insights into hedging and the options you have. However this is not a post to endorse his products because we have never had the opportunity to test and review his products and services. We hope you find this post as insightful as we did.
DO NOT LOSE SIGHT THAT the prime strategy is to trade medium/ long term and trade with the trend, with a trailing stop.
We have posted this in his words.
“Hedging ” to me is simply hiding a loss under another opposite trade…and sooner or later, when the hedge comes off, there is an ugly loss exposed…I don’t like that concept !!! (However, to those who use them, I say, different strokes for different folks…that is, its a personal choice).
Currently, this is what seems to happen to some Traders…
To Chat Or Trade
I was reading a statement by a trader the other day and I found it quite amusing. This is what he says “Lately it just seemed that some folks where hanging out to catch a trade call and make some money.” I am not sure what a trade call is but I was thinking that most people trade the currency market to make some money.
This person goes on :
“Which we know that later on down the line it will all backfire and then someone will get upset because the account just had a margin call”.
Now that you have started this thread I feel that I can go somewhere to get market views and discussion on what is going on in the world without someone coming in and asking that classic question….”Which way do you think the pound is going today””
Market Guessing Game
I found this amusing. I was asked to go to this chat forum and see what they were saying about the market. Here are four of the comments I saw.
Hi, I join the tread started by ……. and ask you guys the same question about GBPUSD the coming week, any views on where we are going?
My strategy when the market opens above 1.8950 i will set long because the market opens above the resistance
It’s very risky now.
It might have bottomed near term at 1.8834/36 and managing to rally beyond 1.90 again. And if someone expects this, he may not be wrong because stochastic made a positive cross, a doji plus a bullish candle but that’s not too enough.
Someone else might come.. and say no, It’s going down. and he also has good reasons. Why? GBPUSD almost touch the 1.8967-65 resistance, and it might be a place to find plenty of sellers. Also the bullish candle didn’t close above 1.8953 bearish candle open. rather closed at 1.8946
Losing Is Part Of Trading
As a trader we need to accept the fact that we will lose some of the time. If you understand this, then you must have measures in place to protect yourself from the losses when they come.
We can’t avoid all losses, but we can manage our risk. The first thing you need to do is define your risk. One way to do this is simply by using a protective stop. Another way is to have a predefined number at which you will halt all trading if too much of your balance is lost. Know what your risk is in advance and have a plan to deal with it before you find yourself losing a large portion of your account.
A trader must not be to proud to go back to demo trading when they have a losing streak. We all need to keep our perspective and remember why we are trading in the first place. If we are trading as a hobby just expect to lose. If you are trading as a business and expect to make money then you need to follow some rules, set some parameters, and have the discipline to do what it takes to learn the trading business.
Feel Stuck With Your Trading?
If you feel stuck in your trading you don’t seem to be able to make any considerable progress. Maybe you are lousing a little then maybe you should go through your mission statement and business plans again. Review these and reacquaint yourself with what you’re trying to accomplish.
Maybe, you need to get back to basics and take a refresher on the fundamentals. Vince Lombardi would say at the beginning of every new season by holding up a football in front of the team: “This is a football.” He would start with the basics and build from there. When you get to the professional level of playing football you know what a football is. He was trying to stress the point that the basics are of great importance. You might go to baby pips.com and do a refresher, graduate again, before you lose all of your confidence and your account.
You don’t need to be hard on yourself. We all go through slow times. Just step back do something different and start all over again. Do 20 demo trades and keep track of the results. If you do not know what you need to work on then do another 20 trades. Once you are ready to trade live again start out slow and you will soon be on track again.
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