3 most important facts I wish I knew about Trading when I started

3 most important facts I wish I knew about Trading when I started

... and what you should definitely do instead!

As you may have read in my first blog post, I am not a super fan of the idea that Trading is making easy money online. Although Trading is for me the best job in this world, it takes more than just a good-will and enthusiasm - and of course - the hunger for money.

Back in the days when I started Trading, I made some horrible mistakes that I still kind of regret today. Because without these ones, I would have made faster progress. But hey, it took me where I am now. So why complaining...

Lets go on with the 3 most important facts I wish I knew about Trading when I started

1) CFD Trading is for Beginners
of course, this is a fact that is spread all over the world that Beginners should start with CFD Trading. The only reason I can agree with this is because you don't need that much money to start a CFD Account. That's the only good thing I experienced. I hardly found Traders that were profitable with CFD Trading. Without cursing or creating false beliefs (I met a two or three persons that were profitable with CFD - but only from time to time), I think it is very hard to stay in the profit zone when Trading CFD.

CFD are contracts for difference, which means that you trade synthetical financial derivates (created by the bank itself), which participate on the movements of their bigger brother- and sister-markets (like a SP500-CFD makes nearly the same movements as the real SP500 market) but is created by the bank itself. That means that your order will never leave the bank system. You do not trade on the real stock markets. You only trade against the bank - which makes it in my eyes not better.

CFD Brokers make money because they open positions against you. Which means that they set a bet against your order. Guess who will win this battle in the end.

Without having evidence or claiming this as a betrayal - I compare this to a casino - Long term the bank wins. And same with gambling in  a casino - you should know that this is a fact. As long as you are good with this - that's okay!

Some CFD Brokers are Market Maker - so they set their own prices. Some are ECN brokers - means that they got their prices from a community place where all ECN Brokers get their prices.

In that case - I prefer ECN brokers! Definitely!

My tip: If you have at least $2,000 or more to trade with - start with Micro-Futures or Forex. In Forex, take ECN Brokers. That's the best thing you can do. Today I trade also Forex at ECN Brokers which works very well!

If you don't have $2,000 on your Trading account, trade ECN Forex or shares! You can trade shares and even Penny Stocks with only a few Dollars!

2) The Risk Reward Ratio has to be always over 1!

The money you risk should be the first target to reach with a Trade - and the other way around. This Is a myth that is remaining strongly in the Trading Business. As it is set as a basic rule for Traders, I became very skeptical when I realized that 80% of all Traders out there fail hard on the stock markets!

So I decided to question all these "rules" everybody should necessarily use for Trading. Because: If everybody should do this, and 4 out of 5 people fail... is there maybe a connection?

Yes, it definitely is! My fact was proofed when I met a few really successful traders and saw some of highly profitable Trading algorithms. And the fact why the risk Reward Ratio does not has to be always greater than one is confirmed by easy mathematics:

If you got a hit ratio like 90% for example, that means that you make profits 9/10 Trades. Even when you got a Risk Reward Ratio of 0,25 (which means you risk 4 times what your profit is) you lose 4 units (One loss Trade with 4 risk units) but have 9 win Trades with 9 win units summed up - you have an overall result of +5 units. You can do this math with other examples of course. This is how I became profitable in the end.

3) Trade on small time frames

Although Scalping is per definition defined by trading within M1 or M3 chart, I would see it now that even M5 and M15 belong somehow to scalping. I made the experience that bigger timeframes like M30, especially H1 and H4, are the real ones that matter!

On these timeframes, you really see all these chart formations and price actions people talk about. On a M5 chart, you have nearly no chance that a market structure really results in that what it suggests. Price Action, so the movement of the market, really matters on bigger timeframes! Especially when it comes to Forex Markets. Because they are open 24/5, you got six full H4 and 24 full H1 candles you can see in the bigger picture of the superior D1 chart. With that, you can really get an idea of what the market will tell you - and what it does not tell you!

Try it! You will find all these patterns like Butterfly structure, Price channels and so on when you trade on higher time frames.


these are three big mistakes I made back in the days. I hope that you can get an advantage of these lessons and improve your Trading at the very beginning.

Good Trades,
Dominick