Mar 23 2008
Pipsnipers or Pipscalpers? There's No Difference
In the last couple of months a former moderator of Trading Post, Jason Deal has started his own service at www.pipsnipers.com. Perhaps this can be seen as a slight at Jason, but it isn't because of any animosity I have against him, because there is none. Rather, as I've thought about this and seen his initial interest of 500 people go his way (probably most out of sheer curiosity), and I wanted to share my thoughts on this and add my perspective.
Jason is providing a service that actively trades the GBY/JPY actively throughout the day. Yes this is the most volatile P/J. He calls it sniping, but at the 5, 10, 15, 20 pip level I still liken it to scalping ESPECIALLY when it comes to the P/J.
I think Jason is truly trying to provide a service that will benefit traders. He also has unaudited documentation of trades that are taken with his service. In order to take advantage of this service, though, you need to essentially be readily available to take trades when they're called.
While this may work for some, this is not a one size fits all solution that perhaps it is made out to be. For many traders making multiple trades of 5, 10, 15, 20 pips in a day isn't as efficient as making 100 pips in two days on one trade.
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As an example, I'm subscribed to Rob Booker's signal service when it was $30 a year (a steal) but now it's $47 a month, which is still very reasonable. It's definitely a less time intensive, but also less hands on way of gaining trading support.
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What would be at the center of the issue is how Jason's service was portrayed at the beginning, insinuating that thousands of pips can be made per month. Disclaimers notwithstanding, this is a
Making claims during any test period and building expectations on that is an extremely risky move. You don't have to a trading expert to know that managing, then fulfilling expectations almost never In a February newsletter Jason made the following comments:
"... Our test forum/site/trading room has been an immense success!
... And last but not least, in a market that is less than desirable, together, we have captured over 2200 Chart Pips in the 5 weeks we have been together!!! What a fantastic way to start our journey. The best trading months in 2008 are yet to come!!!
We are upon the LAUNCH DATE (February 18th 2008)and wanted to inform you of the many choices you have that will fit ANY budget. This room allows your trading to FUND its self!
Here is what you can expect from our paid service,
Secondly our first order of business day to day is to make pips! We will share with our members the details of each and every trade taken by the Pipsnipers Modsquad!!"
I hope you find trading solutions that are right for you - not because you've been convinced by any outside influences that it is right for you. You need to understand what type of trader you are, and what your goals are before you can truly have success as a trader. At the same time you have to set a solid foundation for yourself of solid Forex education.
Lastly, about a month ago I linked to a press release by the British Columbia Securities Corporation that warned self-directed investors of various scams being perpetuated through "communities" and "friends."
Comments
However, I know from my own personal trading experience, that in order to trade fx successfuly and profitably, one has to allow time for knowledge and skill to develop.
Equally, in order to have consistent and steady gains, I believe a trader has to follow a few basic principles and rules.
I adhere to 4 simple principles in my trading:
1. Knowing what type of trader I am
2. Use of consistent and proven strategy that includes a careful written planning of every trade and a sound knowledge of technical analysis
3. Solid Money Management on every single trade
4. Knowledge and full understanding of my own trading psychology
By following those simple principles, I constrain myself from jumping on likely trades, and stick to entry and exit strategy as planned in my daily trading journal.
It is frequently said in press and medias that forex markets operate 24/7 five and a half days a week, and that they can be traded at any time.
This is a myth and it is not true to facts.
It is esential that a trader considers at what time to trade his favoured currency pairs.
Markets move more rapidly when the greatest number of traders participate, which is frequently describd as the time whan he crowd gets bigger.
This is usally a period of first 2-3 hours after the markets open, and it will depend on the currency pair prefered and the market session time ( ie London, NY, Tokyo ).
Furthermore, what is equally essential is a solid money management at all times and on all trades considered or taken.
I have been watching the competitions run by FX Solutions.
On their weekly score rundown, it appears that some traders are gaining the increase of capital by 2000 % in only 5 trading days.
That is not what I would consider to be a solid money managemsnt.
And certainly I would not want to see that style of trading in my fx accounts.
The reason is very simple.
By opening too many lots on a single trade, a trader is risking too much of his trading capital.
So although during the trending market times, this may bring a masive and rapid gain, this is unlikely to be present at most times.
In my exprieonce, everything that happens very fast in terms of forex market trading gains, crashes the other way even as twice as fast.
I ve recenty heard a story of a new trader who grew capital of $ 5000.00 to a $ 600 000.00 level in 6 months.
He became overconfident, kept opening too many lots per trade, and as markets became volatile he kept loosing very rapidly that capital.
Instead of deploying a sound money management, or taking a break from trading, he kept taking a revenge at the market hoping that he will be able to get his lost trades back.
Needles to say, the ending of his trading is just too well known.
In a few weeks of market volatility he got margined out.
For myself, although at times svery frustrating, the slow but steady daily gains have been the best and the most profitable experience of trading fx markets.
By adhereing to those 4 rules, I have managed to uphold a degree of discipline which is neccessary for regular planning and journal keeping.
It may well be a speed of a turtle, but consistent daly gains, with good money management have given me the best of rewards so far.
It did take a long time for me to get a full picture and retain that degree of cosnistency.
However, the patience spent on planning and technical analysis, had given gains.
It also prevented a massive disappointment which is frequently experienced after a period of successful trading.
So really, for anyone wanting to make a fortune overnight, my reccomendation would be - go to Las Vegas, and don't gamble with forex markets - in Vegas you will loose a lot less.
- sam
Trackbacks
PipStop
04/01/2008 02:32PM
Recently I've touched on investing schemes, and the due diligence and caution that needs to be exercised by individual investors. I've also mentioned how the British Columbia Securities Commissions, which may be one of the most stringent of financi