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.
Wednesday, March 14, 2012
Tuesday, March 13, 2012
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.
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.
Monday, March 12, 2012
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.
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.
Friday, March 9, 2012
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.
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.
Thursday, March 8, 2012
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 ...
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 ...
Wednesday, March 7, 2012
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.
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.
Tuesday, March 6, 2012
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.
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.
Monday, March 5, 2012
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!
Thursday, March 1, 2012
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.
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.
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