Tuesday, February 28, 2012

Preparing to Crash and Burn

I'm no pessimist. But I'm also no eternal optimist. When someone asks me if I see the proverbial glass half full or half empty, I want to answer "both" (I never do because the few times I have I was accused of dodging the question and then the conversation became awkward and strained).With my third day of trading almost behind me, I should feel mighty optimistic about my future in the forex market. In just three days (I took a day off for my 30th birthday weekend trip), I turned $50,000 into $58,058.72. Instead of bouncing off the wall, rejoicing in my success, I'm focusing on the "half empty" side of the glass. I'm worried about the "down" after the "up" for one reason and one reason only: I don't yet have a second parachute to back up my first one.
The first parachute in this scenario is me--my eyes watching the forex charts and getting out when things don't look to be going my way. Obviously this parachute needs her eight hours of beauty sleep and occassional breaks for food and my actual job. The thing about parachutes and skydiving is this: For the most part skydivers will only use first parachutes their entire skydiving career. Not having a second one on hand, though, is just plain stupid. When you need the second one, you really NEED it. I won't die if I only have first parachutes in place my trading career, but I would view a loss of all my hard-earned money as an equally crushing "game over" situation.
FXCM, the broker through which I have my demo account, has a stop limit / trailing stop loss option to orders. I just can't figure out how to use it. I thought working with pips would be the same as working with dollars and cents. Fidelity has a stop limit / trailing stop loss option and I use it quite a bit, so I thought FXCM's would be a piece of cake. Now the few times I've set up a trailing stop loss--in pips--I was almost immediately closed out of the position. Not the plan at all. Generally speaking I like a pretty loose buffer because I know everything market related comes with dips and pullbacks that are mere bumps or respites on the road up.
Am I doing quite well with my one parachute? Yes. Am I the stupid enough to continue without a second "parachute"? Hell no! So tomorrow I'm going to do something I haven't done once since entering the stock market game. I'm going to ask for help.
I received a welcome call on Saturday from a sales broker at FXCM I'll call "Paul." He left me a very nice message welcoming me to FXCM and offering himself up as a point of contact for all my forex trading-related questions and concerns. He may not be accustomed to newbies like me actually taking him up on the offer, but the sucker left his email address and phone number in a follow-up email shortly after the missed phone call with me. He'll be getting to know this newbie!!

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