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.