Trading Lessons from a Littlefish: What I Wish I Knew When I Started

In a new weekly educational series, Littlefish FX CEO Sam Barry discusses some of the more pertinent trading lessons he’s learnt in his trading career. This week he talks about the key things he wish he’d known about when he started trading…

After thinking about some of the changes in the markets over the years, I got onto the topic of things I would have done differently, and then onto things I wish I’d known about trading today that would have saved me a great deal of time and money in the past. So I thought that would make a good piece for this week’s article, so I share these thoughts with you below…

1. Don’t ever fight a trend – it can be difficult to get timing right and makes trading much harder

Most traders focus on oscillators and trading into a range when they first start out, meaning they attempt to sell at tops and buy at bottoms.

This method requires a lot of work to maintain it, as it’s one of the hardest things to do and is often curve fitted to current conditions, yet new traders still attempt it. I myself wasted a great deal of my time trying to trade ranges, since learning that there’s no point. It’s better to learn patience.

2. Trading news is difficult and requires a lot of equipment to make it worthwhile – it’s better to ignore it until you can be sure it won’t influence your decisions

I’m sure there are many of you reading this that are news junkies, much like myself, whether you’re self-diagnosed, or still in denial. The problem is, as a news junkie, you’re more likely to read too much into a headline and let it impact your trades. These trades tend to play out well a few times, leading you to become over confident and can result in getting burned very badly.

But news trading is for those with very strong trading platforms and great feeds, as well as the time to sit and stare at a screen. The small amount you can scalp news trading, although in a short time, pales into insignificance if you manage to capture a good trend on the COT report for several pips.

Going back to the start I’d completely ignore all the feeds and focus on mastering swing trading.

3. Spend money on a good quality trading platform

Like most things in life, with trading platforms, you get what you pay for. I understand people’s preference for MT4 and other free trading platforms, but more advanced platforms will give you more information resulting in an informational advantage over everyone else. You don’t even need to go for super expensive equipment, but spending a little more on a good platform will make trading easier, and will allow you to focus on what the charts are really telling you.

4. Understand Flow

If I could flag to my former self just one thing, it would be to understand how order flow works and sets prices, this is the most important thing.

Without knowing much about it I managed to do really well, but it’s one of the key things that will really help with understanding the markets and building systems. On this basis, we now operate with systems trading millions and millions every day.

Just understanding the basics will help; what people mean by current flow, understanding the COT report, month end flows etc. You can improve your win rate by looking at these things alongside your candlesticks, whilst still keeping strong risk reward settings. I could have cut my learning time down to less than a year or even six months if I knew about this when I started. Make sure you check out all our educational content on Order Flow here.

Got any questions for Sam? Contact him on Twitter @LFXSam or email him at Sam@Littlefishfx.com