Forex trading beginner : What do I exactly need to learn ?

occulti · 6/7/16

Hello,

I am a software engineer with a basic background in Math.

I started learning forex trading recently, spent some time on technical analysis (japanese candlestick patterns, Fibonacci retracements, etc), but realized that I need something scientific. I thought trading must not be that simple : looking at a chart, recognizing a pattern, waiting for the confirmation, and then enter a trade.

After doing some research I found out that quantitative/financial mathematics is the concerned field of study for this matter (please, correct me if I'm wrong).

I work full-time and I can spend 4 - 6 hours a day to learn. Could you please guide me ? I really need to know what is true and what isn't, and what should I focus on, as an independent future trader.

Thank you

P.S : I have got this book Mathematical Methods For Foreign Exchange: A Financial Engineer's Approach to start with.

Alexandre Chretien · 6/7/16

Do you want to trade simple FX futurs or CFDs or do you want to trade derivatives on FX ?

occulti · 6/7/16

I want to trade simple Forex (a major currency pair, probably EUR/USD)

Alexandre Chretien · 6/7/16

I think your book is a bit overkill. It talks mostly about derivatives pricing on FX.

What you want to learn is the dynamics that move the FX markets.

You should try to learn about central banks, not only the US fed but all the important ones.

Learn about macroeconomic news and their impact on the markets.

Here are a few books I read recently that I think go straight to the point :

The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities (3rd Edition)
by Bernard Baumohl
Link: The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities (3rd Edition): Bernard Baumohl: 9780132932073: Amazon.com: Books

Global Macro Trading: Profiting in a New World Economy (Bloomberg Financial)
by Greg Gliner
Link: http://amzn.com/111836242X

An other one that gives a good understanding of the overall FX market is

Global Investments (6th Edition)
by Bruno Solnik et al.
Link: http://amzn.com/0321527704

This last one is good but not the best... I think other authors are better but haven't read any other on the subject.

Anyways,

Good luck!

If you have other questions, keep them coming!

occulti · 6/7/16

Thank you for your reply.

What do I need to learn next ? I am actually asking because I want to know somehow the path I need to follow to learn trading myself (by reading books and using forums on internet) : from the basics of macroeconomics and finance to the profitable trading.

My second question is : why do many people "learn trading" (or at least, think so) throughout the thousands of tutorials and articles about technical analysis with no knowledge of quantitative mathematics ? Does an independant (professional) profitable trader need quantitative mathematics ? Excuse me if these questions seem "stupid" to you, but I'm asking as someone who is not from in the field. And from the time I spent on many forums / reading several articles, I can tell that most of "wannabe traders" learn TA and so on.

Thank you again.

tfors · 6/8/16

occulti said:
Thank you for your reply.

...
My second question is : why do many people "learn trading" (or at least, think so) throughout the thousands of tutorials and articles about technical analysis with no knowledge of quantitative mathematics ? Does an independant (professional) profitable trader need quantitative mathematics ? Excuse me if these questions seem "stupid" to you, but I'm asking as someone who is not from in the field. And from the time I spent on many forums / reading several articles, I can tell that most of "wannabe traders" learn TA and so on.

Thank you again.

Wanting to get rich quick with minimal effort I suppose. But then you're probably better off opening a carwash or two.

pingu · 6/8/16

occulti said:
Thank you for your reply.

What do I need to learn next ? I am actually asking because I want to know somehow the path I need to follow to learn trading myself (by reading books and using forums on internet) : from the basics of macroeconomics and finance to the profitable trading.

My second question is : why do many people "learn trading" (or at least, think so) throughout the thousands of tutorials and articles about technical analysis with no knowledge of quantitative mathematics ? Does an independant (professional) profitable trader need quantitative mathematics ? Excuse me if these questions seem "stupid" to you, but I'm asking as someone who is not from in the field. And from the time I spent on many forums / reading several articles, I can tell that most of "wannabe traders" learn TA and so on.

Thank you again.

You know how you learn trading? By trading!! put some skin on the game, lose some money, make mistakes. You will see. Web sites, tutorials, lessons will only get you so far.

occulti · 6/8/16

pingu said:
You know how you learn trading? By trading!! put some skin on the game, lose some money, make mistakes. You will see. Web sites, tutorials, lessons will only get you so far.

I get your point. But when you want to learn how to drive, you first should know the basics.. That's all what I am asking for

I already have a demo account, and I always take a look at others' traders analysis on EUR/USD pair. Even though their strategies differ, but I think it gives me an idea of how / what the trading community think of the price movements.

pingu · 6/8/16

occulti said:
I get your point. But when you want to learn how to drive, you first should know the basics.. That's all what I am asking for I already have a demo account, and I always take a look at others' traders analysis on EUR/USD pair. Even though their strategies differ, but I think it gives me an idea of how / what the trading community think of the price movements.

no demo account. Real account. Learning happens really fast when you start losing real ca$$.

occulti · 6/8/16

pingu said:
no demo account. Real account. Learning happens really fast when you start losing real ca$$.

Yes, but for the moment, I think I have a lot to learn with the demo account already. Then, I'll move to the real one.

Alexandre Chretien · 6/8/16

pingu said:
no demo account. Real account. Learning happens really fast when you start losing real ca$$.

This man speaks the truth.

pingu · 6/8/16

occulti said:
Yes, but for the moment, I think I have a lot to learn with the demo account already. Then, I'll move to the real one.

You think wrong. You will never really learn until you try it.

Did you learn how to ride a bike by reading books? Same idea.

occulti · 6/8/16

pingu said:
You think wrong. You will never really learn until you try it.

Did you learn how to ride a bike by reading books? Same idea.

But before riding the bike, you learn where to sit, where to put your feet, how to turn the handlebar... the very basics... That's what I need..
Besides (and I think you'll ask me to get get out of here xD), when I'll go on a real account, I'll start with a $500 account, and a 3:1 leverage.
What do you think ?

pingu · 6/8/16

occulti said:
But before riding the bike, you learn where to sit, where to put your feet, how to turn the handlebar... the very basics... That's what I need..
Besides (and I think you'll ask me to get get out of here xD), when I'll go on a real account, I'll start with a $500 account, and a 3:1 leverage.
What do you think ?

Start with whatever amount you feel comfortable with. That's part of your Risk Management

Alexandre Chretien · 6/8/16

Trading CFDs you can even start with a less... Leverage will be higher though.

yetanotherquant · 6/8/16

Dude, listen to pingu!

An obvious difference between the demo and real money account is like going a catwalk, which is 1 meter above the ground vs. going the same catwalk, which is between two skyscrapers.

A less obvious difference is e.g. if you open account by a bucket shop and set the stop loss, be sure it will be triggered (whereas on the demo account it may stay intact).

So good luck and may the force be with you

occulti · 6/8/16

Alexandre Chretien said:
Trading CFDs you can even start with a less... Leverage will be higher though.

I am aware of the sharks in the markets, so I want to play very small (small amount, and small leverage), that way, even if I have the worst trading strategy on earth, all I'd lose is that small amount of money. Honestly, my goal is to be a consistently profitable trader. When I'll be sure that my strategy is working well, and that I found balance between fear and greed, I'd deposit more money, and maybe, put a higher leverage.

occulti · 6/8/16

yetanotherquant said:
Dude, listen to pingu!

An obvious difference between the demo and real money account is like going a catwalk, which is 1 meter above the ground vs. going the same catwalk, which is between two skyscrapers.

A less obvious difference is e.g. if you open account by a bucket shop and set the stop loss, be sure it will be triggered (whereas on the demo account it may stay intact).

So good luck and may the force be with you

Thank you, but I actually didn't get the "less obvious difference". Could you please be more explicit ?

yetanotherquant · 6/8/16

occulti said:
Thank you, but I actually didn't get the "less obvious difference". Could you please be more explicit ?

Of course. A bucket shop is an unserious "broker" that cheats you. Usually they even do not hedge your position on the market but rather just net the stakes of two customers (if e.g. the 1st one goes long in EUR/USD and the second goes short). But if there is nothing to net your position with, a "broker" plays against you.

And if the currency quotes a "broker" provides you with look strange you can hardly complain to a regulator. First of all these "brokers" are usually offshore (Cyprus is a beloved location) and even if they are inland, there is no such thing as a reference exchange rate (contrary to e.g. CFDs on indices, for which there are clear references).

occulti · 6/8/16

yetanotherquant said:
Of course. A bucket shop is an unserious "broker" that cheats you. Usually they even do not hedge your position on the market but rather just net the stakes of two customers (if e.g. the 1st one goes long in EUR/USD and the second goes short). But if there is nothing to net your position with, a "broker" plays against you.

And if the currency quotes a "broker" provides you with look strange you can hardly complain to a regulator. First of all these "brokers" are usually offshore (Cyprus is a beloved location) and even if they are inland, there is no such thing as a reference exchange rate (contrary to e.g. CFDs on indices, for which there are clear references).

Ah of course, I know them as Dealing Desks. By the way, since you talked about Cyprus, the demo account I have (and I am planning to have my real account) at XM.com (wich is incidentally based in Cyprus). I have been doing a lot of research on XM and it doesn't seem to be a scammer, I have found that it's a regulated company, and it seemeds 'secure and safe' to me. But now, I'm thinking again since you brought up Cyprus...

What do you suggest me to do ? I live in Morocco and there aren't brokers inland. So, I need to find a broker abroad.. XM seemed to be a broker that gives a variety of payment methods (credit cards; which is very important to me), plus flexible leverage (not interested in the 888:1, but more in the 5:1) and a small desposit (you can even start with $0). But now, I'm seriously skeptical...

Forex trading beginner : What do I exactly need to learn ?

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