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 ....
Friday, April 6, 2012
Wednesday, March 14, 2012
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.
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.
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.
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