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https://www.youtube.com/watch?v=atGBKuCJ-Jc#t=57

 

Steve Vai answers questions related to success in the music industry at his Private Sessions Event at Guitar Center in Hollywood, CA. The audience included 10 courageous and talented guitarists who were hand picked by Steve to attend as part of a contest through Guitar Center.

 

 

gode visdomsord her også smile.png

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Fant denne hos Tom Dante, låner den hit... : wink.png

 

Everything you always wanted to know about trading...but were afraid to ask!

This one is for the total newbies icon_smile.gif

I thought I'd answer just some of the questions I see asked all over this forum, time and time again and answer them all in one place.

I'm not some kind of guru so you may decide to take what I say with a pinch of salt but I do have considerable experience and I am a consistently profitable professional icon_smile.gif

Here are my views on some pertinent issues. Hope I don't get in a slanging match with anyone - it's just my 2 cents. Everyone will have different opinions. With that in mind, I'm not going to say "in my opinion" in every answer I provide.

Is trading just gambling?

The way most people approach the markets - YES. But a professional trader has an edge that plays out over time, meaning that whilst the outcome of any one trade may be uncertain, the outcome of many trades have sufficiently great odds, that the trader is highly likely to come out ahead. Think about it like this: we all see the person that frequents a casino as a gambler but is the casino itself gambling? Yes and No. A punter may get lucky and take a huge amount of money off of the house but the odds are stacked in the houses favour (the green box on the black and red roulette wheel and the house limits as two examples) sufficiently enough to assure that over the long run, they continue to stay in business.

Is trading as exciting as the media makes it out to be?

Perhaps trading in general is...the possibility of big wins or big losses, the emotional rollercoaster that occurs naturally as a result of entering positions...the steep rises and declines in the global markets and the potential they bring...the pictures in the media of people holding their heads as markets plummet or the clamour of the traders in the pits...this creates an aura of excitement to the novice. But what I have found is that the big earners treat it much like any other job. The longer term traders spend half their time waiting before entering and then entering and sitting on their hands which in itself is somewhat dull...even the short term traders just click away - making profits, making losses...the odd bit of news or extraordinary market move creates a momentary flicker of excitement to relieve the tedium but on the whole...it's just a job like any other. I've found that the more you make and the better you get, the less exciting it becomes.

What type of trading is most profitable? Scalping? Swing trading? Position trading?

Very hard to answer. But I believe the best traders do a mixture of all. They know when to scalp and when to try and run a position.

Should I spreadbet or should I go direct market?

This has caused more debate than anything else on boards like this. My answer is as follows: if you have a small amount of money to begin with, you should start off spread betting. If you are swing or position trading and intend on making a lot of money, you should, again, be spread betting where the spread or manner of execution (delays, slippage) matters little and the tax saving is sufficient to make it worthwhile.

On the other hand, if you want to scalp, you should go direct market where trading execution is paramount - trading at the best bid and offer is of necessity and the true dynamics of the market can be learnt and studied.

Do the people that make millions have any kind of edge that Joe public can't get?

No way. The people that make millions are, for the most part, trading off of patterns that they have observed from watching the markets time and time again. Patterns that form as a result of what everyone else in the market is doing. And support/resistance is always one of the most often watched and used tools among consistently profitable and high earning traders. I have never seen anyone doing anything that cannot be done from the comfort of home. Again, for scalpers, you will need super quick execution (perhaps even a direct connection to the exchange) but apart from that, we are not talking about inside info or magic indicators known to only the privileged few.

How much capital do I need to begin?

If you simply want to learn the ropes, you can start these days with as little as £10, betting pennies to see if you are right or wrong and how you handle yourself. If you want to earn a living off of trading I would say you probably need around £10,000. However, once you know what you are doing, you can get £10,000 starting from next to nothing. I have made that amount many times over from starting stakes of as little as £50.

How much can I earn trading? And how long until I could realistically make £1m?

The sky is most certainly the limit but it really depends on your stakes. It is realistic to assume that a proficient scalper can average at least 20 ticks, per contract, per day, fairly effortlessly and a good swing trader will average the same amount when you divide their net gain by the time taken to make it. So if you are trading at £1 a tick thats £20 a day income, or £10 a tick, that is £200 per day income.

To answer the second part of that question: I took it from a good source who has seen hundreds, naybe even thousands of grads come through his doors, that the quickest anyone has ever made a cool mill from a standing start of zero (with margin to take a trade) is two years.

Who should I listen to on these boards?

Anyone as long as they DON'T tell you that something CANNOT BE DONE. If someone says those three magic words, run a mile.

Is there any kind of system out there that can make me big money with little work?

Again, often debated. The simple answer is MAYBE. People often say "If a system is so profitable why is someone selling it"? The reason may well be that the trader who created it, cannot seem to follow it. Again, this is why many (but note, not all) traders who failed to make or keep money become seminar speakers or write books. It doesn't mean they don't know how to trade. They may well be the most reliable fount of knowledge out there but for some reason they cannot do it themselves. They cannot put into practice what they know to be true. This is a very hard phenomenon to understand but it is 100% true. KNOWING AND DOING ARE TWO COMPLETELY DIFFERENT THINGS. But since we are all unique, you don't necesarily need to learn off a doer, just a knower icon_wink.gif

Going back to systems that are sold all over the place though (money back guarantee - 300% profit every 5 days - you know the score), the problem is: if

50% of systems sold are created by charlatans, are useless and don't work and;
50% of systems have an edge but rely on strict following of rules (which most people cannot seem to do)

Where does that leave the system buyer?


What is the quickest way to learn how to trade?

Spend as much time as you can watching the markets and how they move. But rather than starting aimlessly at a chart, use a frame of reference. By that, I mean, look at popular patterns and see how the market plays them out. When the market accelerates towards support is it more likely than not to break or hold? When the market takes out an obviously visible pattern like a head and shoulders does it go without looking back or does it retest? Does the European and US daily trend continue on in the Asian session or is it faded? How far does the market move in a straight line before a pullback? Watch and absorb. Takes notes.
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...denne karusellen er den man bør prøve å unngå.... ikke alltid så lett.. Har selv tilbrakt mye tid der desverre..

 

Nøkkelen ligger i å ha nok trygghet i strategien sin til å ikke gi opp når det butter imot.

Er man i tvil kan det hjelpe med å teste den grundig slik at man VET at den fungerer over lang tid.

 

Det fulgte med et par ord til det bildet :

 

" The attached learning curve is the one most traders, including me, go through when they enter the world of trading. And I started out just like this as well, riding the learnign curve up and down for quite a while, losing money consistenty.

After I discovered fx I went looking for a system and eventually found one that offered great returns without any effort. I signed up, paid some money and after studying hard for one year I could not find any money so I quit and started looking for a new system. I found another one that consisted of 3 indicators, 4 different MAs, Pivots and Bollinger Bands - it was sometimes so hard to see the candles but for me it seemed that the more tools I use, the easier it should be to find a 'good' trade and avoid the 'bad ones'. Guess what, I did not make any money and kept losing. After leaving this system, I started studying fundamentals and went to higher timeframes to avoid the stress and the noise on the low timeframes. Luckily, I did not blow up any accounts but I kept losing money and, in hindsight, it was pure luck that I did not lose much more than I did.

It seemed to me that trading is not the get-rich-quick way that I thought it would be. I quit fx completely for almost 1 year before I dove back in. This time, after talking to a pro trader that I met and became friends with, I abandoned all the indicators and MAs and just started studying price action and horizontal support&resistance. My trading improved significantly but I was still only trading around Break-even. My majors in university by then were quantitive finance and statistics, and studying these things at that specific time was the best that could have happened. I quickly realized that trading is all about statistics and risk-management. I started playing around with different risk-models and crunching numbers. The risk-management that I developed for my own trading by then helped me, finally, to make the jump from a break-even trader to making money consistently and being able to live off trading.

What I want to say is, and you might have heared it hundreds of times already, trading is not solely about entries and that special system with a 85% winrate. No trading system alone can make you profitable. However, you need to have a way of identifying a setup that, together with a tested risk-management model, will give you an edge over the long term. For this it is important that you chose one trading approach, study it rigorously and don't alter your system or jump to another one after having 5 or 10 or 20 losing trades. Any trading system can make you money, if you know how to develop your edge. But jumping from system to system will catapult you back to the beginning of your learning curve.

As boring as it might sound, trading is all about numbers, probabilities, and risk management. Trading should be a 'boring' and repetitive task. You find and study your 'setup' and day in and day out you just look at your instruments, waiting until you see the exact same pattern, then you apply your money- and risk-management. Day after you, you stare at the screen, trading pattern after pattern, doing the exact same things over and over again. You don't have any influence on what is going to happen, but you know that over 100, 200 or 1000 trades, you will end up having more money than when you started.

Wishing you all a great weekend! "

 

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