$1,000 a Day Is Doable (So Far)

Account balance: $107,437.16.

Reaching my 1% gain today was a bit more challenging that I thought. It took three trades: One fast $600, and four shaking $90+ trades.

My last trade was this evening, and it was a long position in the EUR/USD. Technically I shouldn't be executing any long trades because the price action is below the 100 EMA, but the 5 min chart showed the RSI passing 70.

My suspicion that a trend reversal on the EUR/USD was around the corner might not be farfetched after all.

$1,000 (or 1%) a Day

Account balance: $106,107.49.

I had a great morning of trading.

First, I woke up early! My alarm went off at 6 a.m., and I didn't automatically hit the snooze button. The goal of rising early wasn't to be prepared for FOREX trading. My intention was actually to attend a morning yoga class. I misjudged the amount of time it would take me to get dressed and walk over to the studio though, so I actually missed the class. This gave me plenty of time to pull up my Oanda account and dailyfx.com chart and trade.

Trading on the EUR/USD started off slow and confined. There wasn't much volatility. Then, as if out of nowhere (but actually because of a Spain downgrade), the price hit the lower Bollinger Band and kept descending.

I posted a $3,000 profit executing about three sell trades.

It was a bit unexpected considering that before the start of trading on Friday, I was almost certain we were in for some kind of EUR/USD bounce back. I suspected this after spotting the RSI divergence on the daily EUR/USD chart.

The Spain downgrade caused a change in the tide, and instead of fighting the flow ... I decided to go with it.

I've been thinking a bit about daily goals I can set for my Oanda demo account. Short, attainable daily goals seem like a practical way for a practical gal like me to trade without the emotional ups and downs that I know would accompany my risk-taking.

Aiming for 1% a day (or $1,000 on a $100,000 account) seemed right. On a day like today, $1,000 is not only doable, it can probably be accomplished in about a five-minute trade. On days where the price movement is tight and confined, I might have to look into breaking that $1,000 goal into four $250 sub-goals or 10 $100 sub-goals.

I do have concerns about setting any goal in monetary terms. I don't want to be distracted by the cliched dollar signs flashing in my face, playing to my ego. But so far, I seem to be letting the charts determine my entry and exit strategies--just as I had originally planned.

Emotions are in check and profits are up ... go figure!

My Strategy With Stocks

My FOREX trading strategy has not translated well to stock purchases. I purchased CIGX and JMBA last week, strongly believing they met all my criteria for going long.

But that was with the old EMA 100 strategy.

I've yet to try one stock with the Two-Touch Bollinger Band approach.

I'm having a bit of mental block with finding the pip value equivalent to stock prices. Pips don't necessarily equate to cents. One option in my exit strategy for this approach is to take a profit at 20 pips. How can I possibly apply that to a stock like JMBA? Should I be thinking in terms of percentage gains?

My gut tells me I should aim for a 3% gain with each of these trades. The problem is I don't want to miss out on a potentially lucrative stock run. Taking a profit at 3% when a stock has a 10% run will feel like a failure.

I need to devise a way to lock in a 3% gain but still leave myself available for more profits, should the opportunity present itself.

A trailing stop loss percentage seems to be my only option.

Perhaps tomorrow I'll make my first purchase under this new strategy!

The Optimum FOREX Trading Windows

I'm not a morning person. It's embarrassing to admit, given my age, but I slept until 10 this morning.

This presents a certain dilemna given my interest in stock market and FOREX trading.

Trading tends to slow down around 1 p.m. PST, coinciding with the close of the U.S. stock market. That gives me only a few hours to get a few trades in before the afternoon lull, when the price movement seems to bury itself into a tight Bollinger Band tunnel, only to emerge around 6 p.m. PST, when the European markets open.

I can't help but feel like I'm sleeping through some optimum trading. My only solution seems to be to adjust my sleeping routine for an earlier wake-up time. Perhaps I don't need to get up as early as 6:30 a.m., but getting up just one or two hours earlier may provide me with more opportunities to increase my account balance.

Grow, Baby, Grow

Account balance: $103,012.58.

I scored some lucrative trades last night--all going short. The "sell mode" continues.

This morning the charts are looking too promising though. The 5-min chart shows a frustrating horizontal side movement in the price action. I suspect the EUR/USD is in for a pull back, and I don't want to risk placing a long order when the price is below the 100 EMA. That would go against my strategy.

I'm also not confident enough to place trades while the price ping pongs back and forth in the horizontal Bollinger Band channel.

I want to "grow, baby, grow," but there isn't much in the charts that leads me to believe that's a viable option at this point.

So I'll wait and try to be patient.

I still plan on keeping my eye on the 5 min chart. If the price crosses the lower Bollinger Band, I might consider putting in a short trade. Worried that the price won't hug the lower Bollinger Band, I'll probably put a Take Profit order after 5 or 10 pips.

Now It's Time to Make Some Money!

The account balance reads $100,655.18!

I did it. I finally got my account balance back in the positive. All it took was two trades this morning.

I'm still in "sell mode" on the EUR/USD, and sticking with the Bollinger Band two-touch strategy has worked well.

Not every trade is successful though. I lost sight of the RSI divergence, and I actually put in a sell trade yesterday evening when I should have opted out of trading at all. At that point, I was so close to reaching $100,000, I was devastated at taking a step back again.

I learned my lesson though and have since avoided that mistake.

Now I'm looking forward to earning some money!!

Approaching $100,000

No doubt I need to refine my exits and entries for this new strategy.

But even still, my account balance reads $99,736.76!

Will I make it to back to the start sometime today?

Let's see if I can avoid screwing this up ...

Building Wealth From Very Little

I hope to one day be wealthy. I'm not inclined to the lifestyles of the rich and famous. I can't imagine dropping more than $100 on a dress. I don't dream of buying nice cars. Just can't see myself driving something luxurious through an In-N-Out.

But I do aspire to wealth because of the relative security of it. Figuring out how to get there from where I am has been frustrating.

So much of the information on finances is geared either toward guiding those out of debt and helping those will massive sums of money create more massive sums of money.

Don't get me wrong. Getting out of debt is crucial. I avoid debt like it's the plague. I legitimately fear my parents would disown me if I accrued anything more than $100 in debt. (They're big saving and "live beneath your means" kind of people.)

But at the moment, I'm in no serious danger of going into debt and I'm nowhere close to having massive amounts of money that can be invested in real estate, business ventures, etc.

So how do I begin building wealth with only $4,000 or so to my name? Many web users have posed this question on Bing, Yahoo Ask, etc. The only viable option put forth is to save money until you reach "the massive amounts of money" phase.

For someone like me, in the writing and editing business, it will take me until retirement to get there.

In my subtitle to the "Samantha Learns ... Forex" blog, I state that my objective is to supplement my (meager) income.

I'm beginning to rethink that objective.

Building wealth is important to me. I'm single, don't want to rely on a man or my parents for support, and I have dreams and goals (to be discussed later) that might require some steady cash flow.

It is with all that in mind that I pursue FOREX trading. Clearly, I will need to save some money (real money!) to get things going. But I hope and aspire to become comfortable enough with my trading strategy that I will be able to grow my meager savings into something substantial.

I once heard J.K. Rowling tell a group of college graduates that rock bottom is a great foundation on which to build your life. I'm nowhere near rock bottom, but I hope whatever foundation I'm laying now is good enough for the life I want.

A New Strategy--Bollinger Band Two Touch

Forget what I said about sticking to a strategy until it works. I'm into something new ... and I'm excited about it.

I'm still using the same indicators: RSI, Bollinger Bands, and the EMA 100.

Here's what I'm doing. On the 1-hour chart, if the price action is below the EMA 100, I prepare to go into what I call "sell mode." Then, I switch over to the 5-minute chart. When the price touches the lower Bollinger Band for the second time and the price and RSI are lower than when it crossed the first time, I place a sell order.

I pull out of the trade when there is an RSI divergence. If I anticipate being away from my computer, I place a "take profit" order at 15 pips below my entry price. My stop loss ("parachute") is 20 pips above my entry price.

We'll see how it goes ...

Almost Back to Even ... With the FOREX Account

My account balance now reads $99,049.35! That $100,000 is in reach.

I'm tempted to try a few short trades to see if I can inch my way forward. Patience is key though. I don't want excitement to overrun my strategy and send me further down into the hole.

Taking It to the Stocks

Tried the EMA breakout strategy with some hypothetical trades in the stock market.

I'm not losing hope, but so far I don't seem to have any winners.

I "purchased" JMBA at 2.02 this morning. It now sits at 2.01. I was hoping for another big move up. Everything about the setup looked so promising. On the day timeframe, the price crossed the 100 EMA, and it was hugging the upper Bollinger Band. Perhaps today was merely a correction from yesterday's big gain and tomorrow I'll wake up to some good news!

I also "purchased" a stock called CIGX. It had the same setup as JMBA, except the price was not hugging the upper Bollinger Band. I entered at 3.56, and it currently sits at 3.40. I go back and forth on what I should do with the stock. I'm not confident it's poised for huge breakout, so more than likely I place a sell order for a meager 2%-3% gain.

Almost Back to Even

I closed out of the EUR/USD shortly before 1 p.m. PST. I originally sold on Sunday evening, only to go deep in the hole before finally posting a gain. I added $2,000+ from that trade, which brings my balance to $99,844.57. Almost back to even!!

Looking at the various time frames, it's hard to tell if the EUR/USD will continue going down or whether it will have a rebound and then go down.

The Bollinger Bands are starting to chanel downward on the day time frame, which is a sight for sore eyes after the horizontal trend of the past week. I simply don't trade well in range.

I placed another sell (short) order for the EUR/USD. If it drops below its previously low of  1.2911, I'm in!

Taking It to the Stocks!

It may be premature, but I decided late last week to try out the EMA 100 strategy on stocks.

I'll keep you posted on how that goes.

Watching the S&P

I'm no expert. Clearly! But I noticed these past few months of pretend trading in the FOREX market, that the dollar actually gains strength when the S&P 500 drops. (It's not suppose to be the case, though. Read here for more information.)

My charts lead me to believe the S&P may be in for another pullback. (There's a clear RSI divergence.)

I'm banking on that happening, which is really the only reason I'm holding the EUR/USD short.

Keep pushing on that lower Bollinger Band buddy!

Holding ... On

Sold a new batch of the EUR/USD on Sunday--when it opened up below the lower Bollinger Band. I was so sure it was going to go down, but it rallied up to the 1.3050 level before coming back down below 1.3000, where it clearly belongs. I was too afraid to see how much in the hole I was, but finally got the nerve to look this afternoon. I'm $2,000 in the hole on this particular trade, but I feel confident it will continue heading down.

The expert analysts at DailyFX.com said this rebound was a good time to enter into a strong sell position.

EMA Breakout Strategy

Here's a copy of the EMA Breakout Strategy I'm currently using:

Sooner or later all Forex traders begin experimenting with different EMA settings.
Quite often very interesting combination can be spotted. Here is one Simple Forex system based on 50 EMA indicator.

Any currency pair.
Time frame: 90 minute or 3 hour chart, 4 hour chart
Indicator: 50 EMA.

Entry: watch for a candle to pierce 50 EMA and finally close above (to enter Long) or below (to go Short). Enter with the second candle after it makes 5 pips higher than the previous one.
Exit: not set.
Stop loss order: 15 pips below 50 EMA.

This strategy and others can be found on forex-strategies-revealed.com.

I didn't realize it until now, but the author of this strategy, Edward Revy, is also the website creator. This newbie is impressed!!

The EMA 100 and Me!

According to my new strategy, I need to wait for the price to reach 5 pips below the previous candle's low before putting in a sell order (or going short).

I switched to a daily time scale on DailyFx.com and altered the EMA to a period of 100 instead of 50. It was recommended by the author of the strategy to increase the period value when increasing the time  scale. (Good thing I read all the comments following his original posting!)
One of these days I'll figure out what EMA periods I'll need for all the different time scales. That way I can avoid this waiting!!

Regroup Part Deux

Time to find a new strategy!
Enter the wonderful website that is Forex-Strategies-Revealed.com. This website is user-generated and allows newbie traders like me the ability to explore different FOREX trading strategies and learn new trading techniques.
I was drawn to the simplicity of one user's strategy--involving only the Estimated Moving Average.
(You might recall that my old strategy had three indicators.)
Check out what Mr. Edward Revy contributed!

I applied his strategy to my loser $97,000 account and posted a sweet $900 gain. I'm working my way back to even!!

Where Have I Been?

Yes, it's been awhile. A good friend of mine from college always jokes that I begin my emails to her by saying "I'm sorry for not writing sooner. Things have been crazy."
The truth is, yes, things have been crazy. In the past month, I moved apartments, mostly by myself, but with a little help from my parents. I began searching and applying for jobs. I even had my first interview in four years. (If you're wondering how it went, please don't ask.)
But have things been so crazy that I didn't have time to update my blog? No.
The reason I haven't updated it is because I'm a little disappointed and ashamed in my results so far with the Oanda practice account.
Right now the balance reads "$97,010.87." When I went as low as $96,000, I thought I was the biggest loser on the face of the planet.
I can get a bit dramatic sometimes ...
I started thinking about why this strategy was leaving me so insecure about my abilities to successfully trade FOREX.
Despite years of learning about the stock market and technical indicators, in many ways I still feel like a beginner. Under what circumstances then did I think it'd be a grand idea to create my own strategy and stick to it--even with fake money? ... Not a clue.
I had two options: throw in the towel or regroup.
There is a common theme that runs through most success stories: a setback and determination to keep going forward.
That's what I've decided to do.

Time to Set a New Habit

Account balance: $103,647.61

I checked into my charts--1 hour and higher--throughout the day, and not once were my criteria met. So I cheated again and switched to the 5-min chart.

I'm not proud of this, but I didn't once have a losing trade. I believe I traded three times based on what I saw on the 5-min chart and I posted a $1,000+ gain.

What worries me looking back on the day was that not once did I put in a stop limit or trailing stop loss option with my orders.

Oanda has by far the easiest order sheet. (So far loving Oanda--check them out!) I can put in the stop limit at the same time I set my sell/buy order. It may be a case of simply not being in the habit of doing so. Or perhaps I justify not putting in a stop limit on my 5-min chart orders because I know I won't be in them for long. In fact, on all three orders today, aside from switching windows on my laptop af few times to check email, I never once left my trades. Those are just excuses though. Even if I intend on staying "near" my trades, I should have my backup parachute ready to go.

That will be my goal for tomorrow. I still haven't decided if I'll set an overnight trade. The longer charts (1 hour and above) don't show any promise. The Bollinger Bands are trending horizontally for the most part, and if they do trend up or down, it isn't convincing so in either direction to induce me into a trade while I sleep.

So Far So Good ... With a Little Bad on the Side

Account balance: $102,178.11.

Don't be fooled. I actually got off to a slow start. I traded a small bundle--going short--and it didn't work out so well. I lost $77 of my $100,000. I knew immediately exactly what I did wrong. I lost sight of my strategy.

I was stopped out of that trade overnight, while I was sleeping. That's right, I successfully adminstered a stop loss (something I often refer to as a parachute or safety net). I shouldn't be "thrilled" I was stopped out of a position for a loss, but considering the issues I had with FXCM's stop loss oders, I am moderately pleased.

I didn't put in another trade order until this evening. Has anyone else noticed the slowdown when the stocks market closes? I can't stand those turtle ticks ...

Not feeling comfortable with the 1-hour chart, I took a look at the 2-hour picture. (For those of you familiar with my rules, one item on my "no-no" list is not to go short-term until I've mastered the long-term.) I liked what I saw. The price had just crossed the upper PSAR dot, the Bollinger Bands were channeling upward, and the RSI just reached a new high value. I put in a big order this time--1,000,000 units--going long. The result was around a $2,000+ profit in a little over an hour.

Cha-ching!

Of course I felt cocky, and of course I broke my previously stated rule. I switched to the 5-min chart to see if I could eek out a couple hundred more bucks in profit. My gamble paid off, and I got my balance up to the number listed above. What can I say? Being bad sometimes results in something good.

I haven't decided yet if I'll put in a position overnight. The 1-hour chart and its older siblings aren't looking promising either way.

Speaking of siblings, my sister's birthday is tomorrow! Perhaps in her honor I'll make a killing tomorrow ...

A New Demo Session Begins

After some quick Google research, I decided my next Forex trading demo account would be with Oanda.

I set my first trade a few minutes ago, and it just went through. I'm short the EUR/USD and was able to figure out and set a limit order.

My first position isn't using much of my capital. I was given $100,000, and my 10,000 units takes up $650.

It feels great getting back in the game after my short absence!

One Demo Session Comes to an End

Wow, it's been a long time since my last post. Apartment and job searching took priority over my self-imposed Forex learning curriculum. Stress was also a factor. It's been quite a few years since I've heavily job- or apartment-hunted, and to do both simultaneously certainly wore me down. The good news is that I found an amazing apartment. My landlord and I hit it off when we met for a showing. The unit is located in a better area of my neighborhood, and it is cheaper and bigger than my current apartment. It's the kind of place I can see myself making a killing in Forex trading!

Final account balance: $59,241.43

A sharp reversal two weeks ago caught me off guard, and I wasn't able to get the balance back to my former glory $80,000+ days.

An 18.5% gain in 30 days is nothing to sneeze at, but truth be told I'm not convinced my ending balance was the result of strategy. Luck certainly played a role, and while it would be great to go through life lucky and successful, I'd like to have a little more control when it comes to the outcome of my investments.

FXCM had a great platform, and I was quite comfortable trading on it, but I'm not entirely sure it's the right place for me. My 30 days are over and my sales rep "Paul" has been calling frequently asking me if I'd like to invest some real money, open a real account. I told myself when I first started I wouldn't invest real money--no matter how small--until I was confident in my trading and strategy.

I'm not convinced my Forex trading abilities are up to par yet or that FXCM is my best option should I choose to open an account (the leverage on those bundles is something of a turnoff). So it is my goal now to seek out another trading platform demo.

I found FXCM when I signed up for CNBC's Million Dollar Portfolio Challenge. I didn't win (or even post a profit with my fake money), but it did introduce me to that particular online broker. I can't name any other broker, so I'll have to resort to a Google search. Ideally I'd like to find a trading platform not attached to a broker that's free, easy, and will allow me practice without any time limitations. I doubt one exists, but I'll let you know if my instincts are wrong.

By the way, did I mention how much I like the charts on Daily FX? FXCM's charts were a little crowded. Sometimes I could barely distinguish a PSAR dot from a candlestick. Frustrated, I quickly switched over to Daily FX--which I used during the Portfolio Challenge--and was using that as my viewing chart and only using FXCM's charts to execute trades.

So one demo session comes to an end, and the next one is soon to begin ....

It Was Bound to Happen

Account Balance: $73,981.43.

As you can surmise from my depleted balance, my overnight position last night was unsuccessful. I placed a sell order on the EUR/USD upping the number of my lots so a margin call would be triggered before I lost too much money.
I still haven't figured out how to place proper stop losses and trailing stop losses. I did a practice run yesterday afternoon. I thought I placed a fixed stop loss at 50 pips above my entry price, and the stupid program stopped me out of my position a few seconds later. Clearly not what I wanted. The price had not gone up 50 pips, and I was utterly confused. I thought a viable alternative was to use the margin call stop loss.
My trade wasn't successful. I woke up this morning fully expecting to see my account balance hovering around $78,000. (My account balance before I went to sleep was actually near $81,000. I experimented with a few short positions, using my new specificied entry amount, and quickly earned a few thousand dollars.)
I logged into my demo account today and saw that I still had an open position. It was a position LONG in the EUR/USD. I never intended to put in a long position, especially after examining the charts. What's worse, my account balance read $73,981.43.
Turns out last night I also placed a buy order for the same amount as my sell order, thinking that would act as a stop loss. Well, you can guess what happened. My account reached a margin call before the buy order acted as a stop loss. The margin call took me out of my initial position short the EUR/USD, and the buy order acted as a buy order.
I imagine something like this was bound to happen, not because I was careless in my experimentation, but because I'm tecchnically still a beginner and I'm learning without a mentor, someone to scream "Hey, moron! What are you doing?" and act as my voice of reason.

Why Haven't I Been Doing This All Along?

Account balance: $79,562.32.

It's been a recurring theme in my trades that I go into debt before turning a profit. I realize starting in the hole is somewhat inevitable, as most forex brokers administer trades on leveraged lots. But I seem to go unnecessarily far into debt before posting a gain. Last night I traded for a profit of $500+, but at one point during the trade I was in the hole for -$1500. It can be nerve-wracking watching your account balance slip slowly downward, and all last night I kept thinking, "There must be a better way."
This morning I stumbled upon a partial answer in one of those "uh ... duh" moments. In my stock trading I never place market buy orders. I always specify a price. It's not merely to maximize my profits. Jim Cramer, of "Mad Money" fame, explained in one of his books how traders can get gypped with market orders. In essence, using market orders allows your broker--who really has no vested interest in your financial well-being--to choose the price for you.
Yet I've been placing market orders with my forex trading since Day 1. I did so mostly out of ignorance. With short trades I rationalized that getting in quickly was getting in properly. There's no truth to that though. It doesn't take that long to type in an exchange rate price, and as we all know being impetuous is a danger in and of itself.
Today I've been specifying the price of my entries, and it's been working well (to the tune of a $4,000+ gain). I'm still going into the hole a little, but not to the extent that I once was.
Creating specific entry orders is no panacea for an in-the-hole start though. Finding a low leveraged broker is really the way to go. The FXCM demo account has been great, but I might shop around before settling on them with my own money.
Timing is also a factor. In some cases, even when I waited for my indicators to line up, I still jumped to the gun on placing the entry order. Waiting until the tide fully turns and not just starts to turn may better my odds of getting out of the entry hole faster.

When Will I Learn!!

Account Balance: $73,842.It's embarrassing to say, but I was one arrogant trader last night.
First, I traded the EUR/USD, looking at the 1-hour time frame. I didn't wait for the proper entry point (the RSI was above 50 but had yet to dip and rise), but I lucked out and watched the proft from that position grow to $1,500+. I took an actual proft of $850 when I lost confidence that the price would drop farther.
While I was on a natural high from my successful EUR/USD trade, I got the "brilliant" idea to look at another exchange and see what money I could make there. I selected the GBP/JPY because it didn't involve the EUR or USD.
Once again, I didn't wait for my proper entry point. I put in a sell order when all indicators pointed to neutral, and I got burned. Lost $2,000.
Clearly I'm having trouble shaking this habit of jumping the gun and veering from the strategy.
I read a great article on habits awhile ago that explains the re-wiring necessary to create and break a habit. Breaking a habit is harder than starting a new one "because while parts of those worn-in pathways can weaken without use, they never go away." The best I can do in my situation is create a new "pathway" that overrides the old one.
I'm flummoxed about what that new habit could be. In fact I'm not sure any habit can override my wishy-washy one. I think it's best to just simply keep calling myself out when I stray from the plan, regroup, and resolve to aim high in steering, aim long in trading.

Am I THAT Good? Or Is This Beginner's Luck?

Account balance: $76,045.72.
I should be jumping up and down, but for some reason the $16,000+ gain from my overnight position going short feels more like a win from pure luck than actual trading skill.
I woke up this morning feeling good. We're in the middle of warm weather streak out here in Northern California, I am receiving steady work from my employers after a stressful dry spell, and I'm close to signing a lease on a cheaper apartment. All signs pointed to "good to go."
Then, I thought of my FXCM demo account. I knew I had kept an overnight position, and even though I was confident with  the move at the time I placed it, I couldn't shake the feeling that something in the European and U.S. markets would work against me.
I shuffled out of my bed, got some breakfast and tea, and eventually mustered up the nerve to turn on my laptop and log in to my demo account.
I was prepared to see my previous $60,000+ account severred to somewhere in the $40,000-$50,000 range.
So many factors led me to believe this would happen. Chief among them were that I forgot to put my parachutes in place and that I had jumped the gun on my entry point. I usually wait until there is a peak and lower dip below the RSI 50 line. Instead, I placed the order when the RSI value crossed the 50 line. It would have been completely feasible for the price to rebound back up and take the RSI value back above 50. And even though the price pierced the lower Bollinger Band, the Bollinger Bands themselves were not channeling downward. They were still very much horizontal.
For some reason though, none of this persuaded me against putting in the trade. I switched to the 8-hour chart and looked for signs that might indicate a strong move up or down. It wasn't giving me anything definitive, so I moved on to the day time frame. Same deal there. The week time frame is what convinced me to eventually put in the sell order. There was a strong blue candlestick placed right smack in the middle of the last upper PSAR dot, then an equally strong red candlestick. The third candlestick, representing this week, didn't show any signs of redness. The Bollinger Bands were still very much channeling downward. The whole three-candlestick setup looked identical in nature to its previous rebound in the last weeks of October 2011. No RSI divergence had occurred, so I thought the odds were that the price would go down a little bit more.
I was straying from my strategy. I was taking a risk. And it paid off.
Looking forward to next week, I anticipate some more movement down in the price and will probably sell more than I buy.
Although I found evidence in favor of going short, the one thing I need to consider is the possibility that I was actively seeking evidence in favor of going short. There very well good have been evidence in favor of a long position or evidence of staying neutral and out of the game for the day.
I'm often in the habit of believing what I want to believe, and this trait could very well get me in trouble in the future.
My goals for next week will be (1) to finally use parachutes (it's really inescusable at this point that I'm not) and (2) to take up the opposite position before decided to execute a trade.

A Watched Pot Never Boils

When things are going well, it's hard to walk away. It's true in life, and it's true in forex trading.
I hit the $60,000 mark today. A milestone it may not be, but I thought it was pretty darn cool. A 20% gain in just 11 days of trading! My expectations, needless to say, were exceeded ... and then some.
Now a rational trader would take this as validation that the strategy in place works, and he or she would continue plugging away without any changes. After all, as the old saying goes, "If it ain't broke, why fix it?"
I am not a rational trader; I am an emotional trader.
Today wasn't a bad trading day by any means. I posted a profit--$1,800+. But strategy-wise, it was a pretty lousy performance.
Crossing the $60,000 mark made me unnaturally believe that it was me, not the strategy, that deserved credit for the profit. So what did I do? I spent hours analyzing the charts, placed orders, and then watched ... and watched ... and watched.
I full-on broke one of my rules: I was not to spend too much of my day in trading mode.
I have other things to accomplish after all. I still have work for my actual job. My book club meets in four days and I still have a third of the story remaining. And my apartment needs some long-overdue deep cleaning.
Watching the charts turned out to be appropriate punishment though. I would place an order, feel confident that the price would move in the direction I wanted it to, and then, when it didn't--or at least didn't right away--I began stressing. A mental tug-of-war ensued in which my emotional self wanted to sell at a loss to avoid a bigger loss down the road, while my rational self wanted to stick it out and wait for the price to do what all the indicators told me it would most likely do.
My rational self won, but victory was bitter, not sweet. It was exhausting to say the least.
So tomorrow--maybe tonight even--I will resolve to place the order and parachute (i.e., stop loss) and just walk away. Focus on other things.
For my book club meeting, I usually make the hostess a gift as a thank you for the wine and treats I consume throughout the discussion. Last month I made a knit hat. This time I was thinking a purse from an pinstriped man's shirt I found on sale. Today, both the profit and the purse could've been made. It certainly would have been a better use of my time than watching the figurative pot start to boil.
The biggest gains I've ever posted were either overnight trades or day trades that I soon forgot were even in place. Sleep and the day-to-day grind distracted me, and those distractions proved beneficial.
I'd like to think that I'm an asset and not a detriment in this whole process, but until I get my mind and emtions disciplined, I think it's best to just walk away ...

A Slip Up That Paid Off

I had a moment of weakness while trading today. The 1-hour chart was looking a little too horizontal in its price movement, and the RSI stayed in the 40 to 60 range without any signs of a breakout.
After my successful comeback, it irked me to no end to sit around waiting for the next move.
So I did the unthinkable. I went against my drill sergeant alter ego and switched to a 10-minute time frame.
I felt like a contestant on The Biggest Loser who gets up in the middle of the night to binge eat.
It was all so scandalously indulgent!
The worst part though is not that I cheated but that I was rewarded for my deviant behavior. I posted a $400 gain in less than an hour. What could such an act and its glorious consequence mean in the greater scheme of things? I don't know.
Note to self: Patience is a skill I have yet to master.
In spite of the renegade boost to my balance, I decided against indulging again. Why press my luck. I reverted to my old ways of trading. The 1-hour timeframe, as of March 7, 9:12 p.m. (PST), looks like it could burst open upward. I put in a buy order a few hours ago and have resisted taking a $300+ profit twice because I trust the price will move higher.
It's hard to tell as of now if that was a good decision though. I'm concerned that the price isn't moving fast enough upward. There's no momentum at all right, and it switches between two values a little too often for my comfort. It's like a car that keeps stalling on a steep grade uphill.
It might be time for a new rule. Perhaps a wishy washy outlook on a trade should warrant a quick sell. If the price does burst higher, in this case, there's still time for me to reenter and post another gain.
That's really not what I want to do though. I want to switch to a shorter timeframe to see if there are any signs there indicating a strong upward movement.
Would that be going against the drill sargeant? Even if I just snuck a peak? (By the way, I apologize for the constant misspelling of seargeant. I'm not sure how to spell it and am switching between three variations.)
Oh, who am I kidding. It would still feel like cheating. And I don't want to binge trade twice in one day.
The best option I can think of would be to put my parachutes in place and look away from the charts--disengage in the "what if" game playing.
That's probably what the drill seargeant would like me to do.

Lindsay Lohan Take Note--This Is How to Mount a Comeback

That's right, I'm back in the swing of things.
My account balance yesterday hovered around $51,000--almost back to my starting value of $50,000.
Following the instructions of my drill seargent alter ego (see previous post), I didn't trade unless all the indicators met my criteria.
What did I wake up to find this morning? A $58,000+ balance. Woohoo!
I left the trade alone most of the day, but the price started stalling and I wasn't confident about which direction it would head next. I cashed in my $7,000+ gain and gladly waited until all my indicators lined up again.
I'm still waiting ... but I'm not as impatient as I once was. There's no sense of urgency anymore. I'm reconciled to the fact that I won't be the world's most successful forex trader. I'm not yet at the level where I can make money regardless of the market/indicator situation. And that's OK. It feels like a victory just staying on track.
There is some room for improvement though. Although I've resisted the urge to look at shorter time frames on my charts, I still need to work on putting my parachutes in place, especially overnight.
Looking at the 1-hour chart tonight, everything looks in place to put in a sell order, but I still need the RSI to lower beneath its previous low of 45 (by the way, I know I'm not explaining this part of the strategy well; I'll work on getting a specialized chart uploaded), and the price needs to drop below the last PSAR lower dot.
I'm getting tired though and I don't feel like waiting around for that to happen. Therefore, it looks like I won't be holding anything overnight.
I'll look forward to trading tomorrow though. I might even get up early.

I Lost My Way

When I recommended this FXCM demo account to a family member, he--unfamiliar with forex--asked me how trading forex was different than gambling.

At the time I thought I responded well. I told him about my chart setup, going with the trend, and making sure my parachutes were in place to minimize risk.

It was a great response, and true at the time I said it.

But while I've been good at keeping myself in line emotionally and with writing this blog, I have completely lost my way strategically. He was right to assume I was gambling. For the past few days, I have been and I've been losing to the house.

As those of you who follow my blog know, I started off so well. In less than a week I earned $8,000 on a $50,000 account.

My balance today reads $54,022.72.

Now don't get me wrong, it certainly isn't a bad balance. I started with $50,000 and could very well be in the $40K region now.

What really disturbs me about the $4,000 I lost is not that I lost it. I fully recognize that some of my trades will be unsuccesful. It's the fact that this streak of unsuccesful trades was entirely preventable.

One of my rules was to stick with a strategy. I was to use three indicators: Bollinger Bands, PSAR, and RSI. It worked for me in the beginning, so there's no reason it shouldn't continue to work for me in the present and future.

So why is there a MACD indicator on my chart now? Mainly becuase I lost my way. After a few trades didn't work with my go-to three indicators, I thought, "Hey, why not add another." The MACD quickly became my new favorite toy; I couldn't stop playing with it. I ignored the others, didn't even pay attention to what they were doing.

I titled my first forex blog post "Regrouping." It looks like I need to do that again. This time though there needs to be more specific parameters in place.

I confess, since learning how to properly put in trailing stop losses (thanks "Paul"), I haven't once done so. Yes, I'm the stupid skydiver who doesn't have a reserve parachute in the jumpsuit. And to make matters worse, I am the one who wrote a posting about the importance of having a second parachute.

Another issue is my indicators. I need to nail down what it is I am looking for when these indicators are in place. Am I buying when the RSI is below 50? No, but yet that is exactly what I've been doing. Am I waiting for the price to pass the last PSAR red dot? In theory, yes; in practice, no.

I admit I'm a little turned off by military training. In my high school sports playing career, I severly disliked coaches yelling at me as a way to bring about my best performance. All it made me want to do is stop and ask them to use their nice voices. You catch more flies with honey than vinegar, right?

But there's something about the structure of the military that appeals to me. You know what you need to do because someone above you tells you what you need to do. I enjoy free-thinking and creativity, but I'm not sure what place they have in forex trading, or money matters in general. Would I hire a "creative" accountant to handle my money? Probably not.

Perhaps I need to approach my goal of sticking with a strategy with some military-like discipline. I'll temporarily split my personality in two: one will be a strict drill seargent, and the other an out-of-shape but determined recruit. Here's how I see the scenario playing out:

Seargent: You will only trade when the following criteria have been met:

• The RSI has dipped above 50 and risen higher than its previous high.
• The Bollinger Bands are tunnelling upward--not horizontally or downward.
• A green PSAR dot is present and the price has passed the last red PSAR dot.

Under no conditions will you execute a trade unless all of these criteria are met. Do you understand!?!

Me: Sir, yes sir!!

Seargent: What time frame will you be using!?!

Me: Nothing below the 1 hour time frame, SIR!

Seargent: Of course nothing below the 1 hour time frame. That would be stupid. Are you stupid!?!

Me: Sir, no sir!!

Seargent: Then why is it that you were frantically switching between the 1, 5, 15, and 30 charts like a chicken with its head cut off!?!

Me: Well, you see, I lost my way a bit. Had an emotional few days--

Seargent: WHAT!?!? Emotion, who? Lost, what? This isn't Oprah, cadet.

Me: Sir, yes sir!! I was stupid, but I won't be moving forward.

Seargent: You better not be. Now what parachutes will you put in place?

Me: I will use trailing stop losses. Forty pips below or above the entry price.

Seargent: And when will you take the profit?

Me: When the stop losses are activated or when I see signs of a price reversal in the charts.

Now, unlike in the military, I will not use physical exercise as a punishment or behavior correction technique. I also will retain my right as a free thinker to amend my stop loss parameters if I feel they are detrimental to my earnings.

Let's see how this new approach of mine works. Soldier, fall out!

Trading on a Bad Day

My overall account balance reads $55,957.72. Oh, how nostaligc I am for the $58,000+ balance of yester-week!Today was rough for me work-wise. I'm self-employed and work for a few California publishers as a copy editor. The year is off to a very slow start. I didn't make enough in February to cover my expenses, and my bank account is not in a strong enough state to play safety net.
This is almost the position I was in last July, when I decided to abandon my blog--this blog--to focus on work. I'm not throwing in the towel this time though.
"Sticking with it" may be the right decision, but it certainly isn't the easiest. I'm faced now with many questions and concerns, chief among them, Should I be trading when the cards are down? When I am down?
Trading on emotions--fear, excitement--is no way to go. But what about trading when dealing with day-to-day emtions? If the answer is no, then I might as well change my position about throwing in the towel. I'm a Pisces. We're emotional by nature.
The only way to unearth the answer to the question is to run a little experiment. It's not really my money (all hail the FXCM demo account), so what's really the downside?
I stayed in the game today and did lose some money. I'm not jumping to the conclusion though that today's loss was due to my emotions. Yesterday I wasn't emotional and I still absorbed a loss. (Have I mentioned recently my longing for the $58,000 of fake money I once had?). For the record, I started off this morning with a $1800 loss and ended up making a few good trades after that. All trades occurred when bummed. No pattern has emerged
Needless to say, the results are inconclusive. It is something I want to revisit though. Knowledge is power after all.

Patience Is a Virtue ... and an Exercise in Willpower

Last night and today were uneventful ... and it bored me about as much as this post might bore you. Sticking with my Bollinger Band-PSAR-RSI strategy per my rules, I didn't see anything in the charts that induced me to take a short or long position in the EUR/USD exchange.
Actually, that's only partly true. Last night, I put in a buy order shortly after closing out a previous buy order for a profit. Doesn't make sense, you say? Well, you're absolutely right. In hindsight it doesn't make sense to me either.
It probably won't surprise you then when I confess that I sold that second holding for a loss about an hour later. This all happened late last night, so I started the day in the negative. Never a good thing with anything in life.
The second trade wasn't just out of boredom. Something in me felt I should be able to create a successful position everytime I look at a chart.
With some immediate self-reflection post-loss, I decided I shouldn't put in another order, especially to hold overnight, if I wasn't entirely confident. And I wasn't. I switched between so many timeframes desperately searching for a clue as to whether the price would soar or sink--all to no avail. I was leaning towards a long position, because the EUR/USD on the day timeframe has been trending upward. But I couldn't find chartology merit to support this inclination of mine.
Selling, or going short, didn't seem appealing either. There was no overwhelming price divergence that would've hinted at the possibility of a sharp reversal in price movement.
I'm pleased with my decision to not go long overnight because I would've woken up today with a loss. For most of the night, the price did creep upwards, but when the stock market opened this morning, the EUR/USD really started to move down in price. It might not have been a substantial loss, but it would've been a negative yield nonetheless.
I'm also glad I didn't go short. I thought it showed some restraint on my part not going against the current. It wasn't listed as one of my rules, but going with the flow/trend was always something I wanted to keep in mind with all of my trades. It's no coincidence that my most successful trades so far have been long ... since, surprise surprise, the trend on the day chart is up.
I have to admit, though, not trading is pretty darn hard. Willpower takes effort, and this little lady is pretty out of shape as far as mental toughness is concerned. When I wrote my rule about emotional neutrality in my forex trading, it never occurred to me that my toughest day emotionally would involve resisting the urge to trade.
In high school, I never took speech and debate as a class or an extracurricular activity. I don't enjoy the sound of my own voice or speaking in public. Small group discussions, without an audience, are more to my liking. I do have some a newfound respect for debate champions though. One in particular from Harvard, who was also a contestant on the Apprentice, said something that struck a chord with me: "Every good debater knows that there's a time to listen and a time to speak." I'm paraphrasing, but you get the gist. Perhaps I ought to get used to the idea that a good trader knows that there's a time to trade and a time to sit it out.
I've been checking back into the charts throughout the day--1 hour timeframes and higher--and I saw an opportunity for a short-term trade a few hours ago. I put in a sell order--going short--and eeked out a $250 gain. That now puts my account balance at $56,408.72, which is a little bit down from $58,058.72, my balance yesterday.  I'll view the $1,650 not as a loss, but as my tuition for my education in the importance of patience and willpower in forex trading.

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!!

Long Term Great, Short Term Bad

Last night I almost went to bed defeated. Yesterday started off wonderfully trading wise. I woke up and found that my position long in the EUR/USD yielded a $5,000+ gain. For a $50,000 account, I thought that was pretty darn good. I took a look at the charts and sensed a pullback was inevitable. I didn't want to forfeit my 10% gain, so I sold all my shares and took the profit. For most of the day I avoided trading. Then some downtime in the nightime got the best of me, and I decided to apply my strategy to some short-term positions. What a mistake that was! Not only did I lose the $5,000 I had previously gained, but I also lost an addition $6,000.
I was all set to trot off to bed with my account sitting around $46,000 and no positions long or short for fear I would lose more. Then, I remembered Rule 1 (see Regrouping post): (1) Emotions, whether positive or negative, will be confined to the footnotes section of my trading story (i.e., although present and inevitable, they will not determine my trade actions). Combine that with my other rule, not giving up on a strategy until I make it work, and I had no excuse for not regrouping and reentering the game.
I switched out of the 1-minute chart and into the 1-day time frame. The trend was up. There was a green PSAR dot under the price. And the RSI was at 64, moving up, and had not diverged with the price. It wasn't a guarantee, but I felt good about going long.
I put in the order, had a great night's sleep--emotions in check--and woke up this morning to a wonderful sight: $9,000+ yield on my position. My account balance (equity) read $54,000.
Not wanting to repeat my previous day's mistake, I left my position alone throughout the day, with the exception of taking an $8,000+ profit around 1 pm. (I saw no reason to hold a position over the weekend.) Throughout the day I kept saying "no short-term trading." It wasn't an emotional decision. I merely wanted to reflect on why it was my strategy had been working great for me long-term but not short-term.
A bit about the strategy I employ: I'm trading on chart information--mostly because I want to. The idea of reading up on what's going on with the Euro, Greek bailout, strength of the dollar, etc does not appeal to me. I also think, as an emotional girl, it would be hard to squash my instinct to react to good/bad news and follow the emotional rollercoaster journalists unwittingly build for viewers. It's not always the case, but I assume that most charts, if set up with the right indicators, will contain some visual clues of a loss/gain of momentum before the price crashes/soars.
The indicators I use are: bollinger bands (default setting), RSI (default setting), and PSAR (default setting). When do I buy (or go long) a position? When the RSI is above 50 and moving upward AND there is a green PSAR dot under the priceline AND the price is hugging the upper bollinger band. It's not an exact science and I doubt any rock star chartologists are salivating at my technique, but for the past two days, on my long-term (i.e., overnight) positions, it's been working.
So what explanation is there for why long-term I'm kicking butt and short-term I'm getting my butt kicked? I'm really not sure. Perhaps it's that short-term trading requires more focus and attention on the price movements. And even with my rule about emotional detachment, I'm still susceptible to panicking when prices drop and feeling lucky and greedy when prices soar. At this point, it's probably a benefit to my bottom line that I'm stepping away from the computer after setting an order. One day, I hope to conquer the short-term trade. But for now, I'll stick with my long-term strategy and continue to analyze what's holding me back short-term.

Regrouping

It's been awhile since my last posting. How long, you ask? I'll let you do the math on the dates below. Like with my bank account and taxes, that sort of arithmetic is depressing.

The good news--aside from my absence--is that I'm preparing to get back into the stock market game. I signed up for a demo account on FXCM.com, and for the past two days I've been practicing trading currencies.

My goals have changed a bit since my first post. Making money is important, of course. Like others, I don't want to consistently lose my hard-earned dollars and cents. But I find that goal in the context of the stock market too vague. Instead, I've been thinking of what goals and parameters I can implement on a day-by-day and trade-by-trade basis.

Here they are: (1) Emotions, whether positive or negative, will be confined to the footnotes section of my trading story (i.e., although present and inevitable, they will not determine my trade actions). (2) For every entry, I will have a clear and precise exit strategy, and I will stick to it no matter what. (3) I will stick to one strategy and will not abandon it and jump around until I've demonstrated some mastery of it. (4) I will devote a certain amount of time to my trading daily, but I will not let it consume too much of my daily time. And (5) I will also devote at least 15 minutes per weekday to updating this blog. Writing is just as important to me as learning this new skill.