After thinking about
publishing my forex demo account stats here, I finally came to the conclusion
that I must share my results and my trades with you guys. In my previous
article I wrote that it's possible to earn some money, but you have to practice
a lot in fx practice account until you come up with a trading strategy that
works and money management that is good for your capital and doesn't blow it up
within a week or two.
Right now I have several
demo accounts where I am testing various strategies (trend, swing, range) and
money management techniques.
What I find interesting is that almost all my
strategies work one way or another, but even my demo accounts are blown up from
time to time. So I started thinking why it’s happening like this. What's wrong
with my trading, and why profitable strategies turn my account to losers?
What I found out after analyzing
my trading style and character was shocking. It's not my strategy that's
important here. It's my character and discipline. So right now I am keeping to
strict trading discipline and money management, because it's more important
than just having a super strategy bringing thousands of pips per month. That’s
just some thought to take into account, when making the next trade...
Let's head on to my trading
account and my trades...
Yesterday I was buying
several EUR/USD pair positions from 1.3405 with stops at 1.3379. As it was my
demo trading account, I made some trades without any stop losses and forgot
that there was a FOMC and rate decision to be made by the US officials in
the evening. I got pretty much busted, when I opened my demo trading account
and saw that my EUR/USD trades without stop loss orders are in deep sh...(OK,
OK…minus). I closed them instantly and opened opposite trades selling EUR/USD
from 1.3290. It’s a pity that EUR USD price went so much down in the first hour
(more than 140 pips), but anyway, it's best to trade with trend than against it.
Right now I suggest waiting
for the price to touch at least 1.3285 and then sell euro and buy dollar again.
We might see the pair retrace to this level today in the evening or tomorrow,
depending what kind of news the US
releases. Today we will hear the initial jobless claims and existing home sales
reports later in the afternoon and those might trigger the market in either
direction, especially when there is such an extended trend. If prices shoot up
for the EURO and other currencies against the dollar, I suggest buying USD from
safe levels after the storm calms down and the emotions in the market cease. On
the other hand, if US
news comes out better than expected, then we will see the extension of the USD currency
trend against all other currencies.
I am also on the lookout
for USD/CAD currency as it seems that this pair is ready for major moves up. The
best entry level is right at 1.0287. Stops should not be over 100 pips and if
the market moves in your direction then stops have to be moved to break even
levels to preserve the capital and money.
I have learned one lesson in my early
trader’s life: you can never be sure about the next move in the currency
market. Just when you think that the new trend is beginning and the old one is
finished, the price comes back with a new momentum, breaking all the resistance
and support levels and taking all your stops losses. So, it’s better to be
prepared for any unexpected moves.
Thursday, June 20, 2013
Monday, January 24, 2011
Is there any profit in forex trading
Oh yes there is - this is my answer and here is why...
The instructions that are discussed in this article may be on the list of most valuable in forex currency trading and ought to be mastered by each trader in order to make some money. The one thing standing between the wining and losing side is the ability to live by those principles and methods. Don't get me wrong at this point - the rules in currencies' market are the same for everyone (apart from a few financial institutions or companies, manipulating billions of dollars) and only those traders who understand the value of following the guidelines, remain in the market. The real problem arises when we observe our currency investing in action, and very often the majority of traders either fail to remember what they have learned, or foolishly ignore it. The answer to this question can be somewhat plain - persons who already had burnt their capital, learned that lesson and may be much more precise and watchful. Take, for instance, this forex blogger who burnt his whole capital and started over. He is trading very carefully and his trading signals that he gives are always with less that 50 pips of risk. Besides, when he makes few mistakes, he stops his trading for a few days. You can follow his signals on his forex signals forex blog. On the other hand, new investors and beginners quite often fly away from reality with their hopes and wishes of reaping a million in few months. So why should they bother using some dull "do this and don't do that"? Let's find out by reading some advice below...
Don't risk big. The risk proportion of 1 trade operation compared to the entire account capital is typically approximately one or 2 %. This way you could be losing only a fraction of your entire invested account even with a several wrong trades successively. Those repetitive loses might occur, and sometimes very often, and being ready for multiple losses is necessary. Only imagine what could be the result, if you were putting six or 10 pct of your account in just 1 trade operation. This kind of beginner trading will, of course, end quite soon - in a couple of weeks. Do not nose-dive into large capital risk for 1 currency pair trade. Too often, in my past trading in forex I used over 9 percent of my balance for one trade - it was quite foolish. Forex is a business where your predictions and wishes are generally not fulfilled, if you know what I am trying to tell. You may make four bad trades in a row without any room for less probability of making errors in the future. The odds of missing the next time are smaller (it depends upon your investing strategy, tactics and currency market conditions), however they still remain in the market. Go into your currency trades risking the minimum amount that you can bear with. You have got to reduce the risks to a small number, and using this method even a bad technique cannot destroy your trading account completely. It is especially true when speaking about numerous forex trades, for example, 11 in one day. In addition, you cannot forget the psychological issues - dealing with 5 small losses in a day is far better than witnessing 2 unsuccessful trades that cost forty p.c. of your account capital. Remember, it's pretty easy to lose your trading account capital in a day, when the risk is ten or twenty percent for every trade and that is already a catastrophe. Newbies have to be even more careful than professionals, because their forex technique and strategy is new and only the time might show if they are applying the successful forex signals. I could personally recommend trading in some training account using a suitable forex platform - just to test your currency trading techniques.
On no account leave your trading plan - with the exception of if it's a complete disaster. Your trading technique may and will surely be tested in some harsh and unforeseen market situations and your plan might not work - nonetheless do not try to alter anything, just don't press the panic button. If you change your tested techniques and in desperation try to recoup your losses by making judgments based upon feelings, it is the fastest road to ruin. My personal advice - turn off your workstation - it really is the best trade operation you could make on that day. There may be a good trade on the next day.
Opening 2, 3 or 4 currency trading positions of one currency pair helps to minimize your money losses and expand your profit. Try to close your several trade positions gradually, when the currency pair reaches your profit levels placed at various levels, say: thirty , sixty, 90 a hundred pips. When you close your first position, your stop loss orders have to be put to 0 to save some profit, in case of a reverse movement. The idea of fixed money already in your account provides a relief which helps to take off the trading pressure. After your first profit, you can just relax, having in mind that rest positions can generate even more profit without much risk, if any.
Those are basic principles and instructions from my experience which, I hope, will make your trading enjoyable and happy experience. If not - then, I fear, you are in the wrong shoes at the wrong time and the only really good optionwould be leaving this business.
More forex articles are soon to be published...
Don't risk big. The risk proportion of 1 trade operation compared to the entire account capital is typically approximately one or 2 %. This way you could be losing only a fraction of your entire invested account even with a several wrong trades successively. Those repetitive loses might occur, and sometimes very often, and being ready for multiple losses is necessary. Only imagine what could be the result, if you were putting six or 10 pct of your account in just 1 trade operation. This kind of beginner trading will, of course, end quite soon - in a couple of weeks. Do not nose-dive into large capital risk for 1 currency pair trade. Too often, in my past trading in forex I used over 9 percent of my balance for one trade - it was quite foolish. Forex is a business where your predictions and wishes are generally not fulfilled, if you know what I am trying to tell. You may make four bad trades in a row without any room for less probability of making errors in the future. The odds of missing the next time are smaller (it depends upon your investing strategy, tactics and currency market conditions), however they still remain in the market. Go into your currency trades risking the minimum amount that you can bear with. You have got to reduce the risks to a small number, and using this method even a bad technique cannot destroy your trading account completely. It is especially true when speaking about numerous forex trades, for example, 11 in one day. In addition, you cannot forget the psychological issues - dealing with 5 small losses in a day is far better than witnessing 2 unsuccessful trades that cost forty p.c. of your account capital. Remember, it's pretty easy to lose your trading account capital in a day, when the risk is ten or twenty percent for every trade and that is already a catastrophe. Newbies have to be even more careful than professionals, because their forex technique and strategy is new and only the time might show if they are applying the successful forex signals. I could personally recommend trading in some training account using a suitable forex platform - just to test your currency trading techniques.
On no account leave your trading plan - with the exception of if it's a complete disaster. Your trading technique may and will surely be tested in some harsh and unforeseen market situations and your plan might not work - nonetheless do not try to alter anything, just don't press the panic button. If you change your tested techniques and in desperation try to recoup your losses by making judgments based upon feelings, it is the fastest road to ruin. My personal advice - turn off your workstation - it really is the best trade operation you could make on that day. There may be a good trade on the next day.
Opening 2, 3 or 4 currency trading positions of one currency pair helps to minimize your money losses and expand your profit. Try to close your several trade positions gradually, when the currency pair reaches your profit levels placed at various levels, say: thirty , sixty, 90 a hundred pips. When you close your first position, your stop loss orders have to be put to 0 to save some profit, in case of a reverse movement. The idea of fixed money already in your account provides a relief which helps to take off the trading pressure. After your first profit, you can just relax, having in mind that rest positions can generate even more profit without much risk, if any.
Those are basic principles and instructions from my experience which, I hope, will make your trading enjoyable and happy experience. If not - then, I fear, you are in the wrong shoes at the wrong time and the only really good optionwould be leaving this business.
More forex articles are soon to be published...
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