I sabatoged myself. I took a loss of $3400 last night! Ouch! That one still stings.
So how did this happen? Monday morning I had been scalping along and I had been doing well going LONG the Kiwi. I felt like the rise of the Kiwi was peaking. So I went SHORT around 9:00am. I thought that it could move a lot so I set my take profit (TP) at 40 pips. It only went about 15 pips and then reversed, I had manually moved my stop up and I was stopped out at +1.5 pips, so I still made a small profit on that trade.
Over the next couple of hours the Kiwi kept moving up and I read some analysis reports that sounded favorable to the Kiwi continued rise, and I bought into the sentiment. This was my first mistake, listening to a "talking head" rather than doing my own analysis.
Next, I second guessed my own analysis that the Kiwi had peaked for the short term, I reversed my own sentiment and opened a LONG position in the Kiwi. This is mistake number two. I had a TP of 25 pips and stop loss (SL) set at 17 pips.
Mistake three is that looking at the charts, the RSI was still positive but the MACD was muddled and according to my own rules this was not a valid signal, so I had ignored my own trading rules, in addition I was also trading at the worst time of the day. I initiated the trade around 4:30pm (AZ time). I keep telling myself not to trade the Asian session unless I get in after about 6pm when Japan and China are in full swing because the volume just inn't there.
Well this trade immediately turned on me and the Kiwi started dropping. As it got near my stop, I was hoping that it would reverse and keep my win streak alive and then I made the biggest mistake and I removed my SL. STUPID! STUPID! STUPID!
To make a painful story shorter, I started using "happy hope" that the market would reverse and come back up, but then some real news came out from the Reserve Bank of Australia (the Kiwi does whatever it's big brother does and tracks it tick for tick most of the time and this time was no exception), and they said they were keeping interest rates the same but would think about reducing them in August. To add to this the RBA governor said he thought the Aussie dollar was still overvalued. This send the market into a tailspin and before I knew it I was -60 pips.
I decided to hold one through the Europe session. It did make a modest recovery and I got back to almost even, but was still -15 pips by about 1am. I should have got out then and taken my loss, but no! Happy Hope was still swirling in my brain and the US session killed me.
I rode it all the way down to $.7715 from $7830. I semi-panicked when the Europe session started again and closed my position not wanting to suffer any more losses.
There was a big international conspiracy. Everyone was waiting for me to close my position so that they could stick it to me. As soon as I closed my LONG postion, I went short (because the "trend is your friend" and that is what all the talking head analysis was saying that it was going to go lower still). This triggered a reversal in the market and the Kiwi rose all the way back up to $.7790 (-40 pips from my original trade, I could have gotten out with only this weeks gains as a loss).
Of course since I was "mad trading" at this point, I didn't have a stop in so now I'm sitting on a trade and I'm -65 pips. Grrrrrrrrrrrr!
None of this would have happened had I stuck to my rules of engagement. Instead I'm kicking myself in the head over what could have been. Who knows, if I was an "obedient trader" I could be up another two or three thousand more dollars in my account.
More valuable lessons to learn as a trader.
July 3, 2013
July 2, 2013
Good Start to this Week
I started out this week with a few trades. I'm trading 30 contracts of Kiwi (NZD\USD) right now. Each contract is 10,000 units of currency. I have banked 47 pips for $1400 profit.
One may be asking, "Why trade the New Zealand dollar?" It's simply mathmatics. I can trade more contracts of Kiwi for the same amount of money. Kiwi is valued at about $0.78 to one US dollar. A mini-contract is 10,000 units and I am trading on 50:1 leverage. Here is the math:
$0.78 x 10000 = $7800
divide by leverage value to get how much money you need to put up to buy one contract
$7800 / 50 = $156 (per contract)
Multiply by the number of contracts traded
30 * $156 = $4680
When trading a mini-contract (10,000 units) on 50:1 leverage, each pip is worth $1.00, so if I trade 30 contracts then each pip equals $30.
If I were to trade Euro's (EUR\USD) which is about $1.30 for every US dollar then my cost per contract would be about $260 per contract, so 30 contracts would cost me $7800. Almost twice what it cost to trade the same amount of Kiwi!
So why would anyone trade Euro's when Kiwi is almost half the price? One reason why is becuase of the spread between the bid and ask price. Euro spreads are typically 1 to 1.5 pips and Kiwi spreads are typically 3 to 5 pips with my FX broker, Oanda. So if I am trying to get 10 pips, the Euro has to move at least 11 or more pips from my entry price so I can cover the spread and get the 10 pips, the Kiwi has to move 13 to 15 pips to get the same 10 pip profit. Another reason is the volume of trades, more Euro is traded than any other currency (that is one reason why the spread is so low) and seems to be a little more predictable.
So why am I trading Kiwi right now? With the size of my account at this time I can can make larger gains. With a balance of $8000 in my account I certainly can't trade 30 contracts of Euro and have any risk tolerance to think of, it only leaves me $200 of margin to work with. So effectively I could only trade 15 contracts of Euro, but with Kiwi I can trade 25-30 contracts. If I capture 10 pips of Euro in this example I would only make $150 for a 1.8% return. With Kiwi, these same 10 pips would get me $300 for a 3.75% return. Same pips, same dollar amount risked, same amount of margin and leverage used....twice the return.
I'm using this to quickly build my account base up and then I anticipate going back to the Euro which will be a little more predicable in it's direction and movement and the spreads are thinner.
One may be asking, "Why trade the New Zealand dollar?" It's simply mathmatics. I can trade more contracts of Kiwi for the same amount of money. Kiwi is valued at about $0.78 to one US dollar. A mini-contract is 10,000 units and I am trading on 50:1 leverage. Here is the math:
$0.78 x 10000 = $7800
divide by leverage value to get how much money you need to put up to buy one contract
$7800 / 50 = $156 (per contract)
Multiply by the number of contracts traded
30 * $156 = $4680
When trading a mini-contract (10,000 units) on 50:1 leverage, each pip is worth $1.00, so if I trade 30 contracts then each pip equals $30.
If I were to trade Euro's (EUR\USD) which is about $1.30 for every US dollar then my cost per contract would be about $260 per contract, so 30 contracts would cost me $7800. Almost twice what it cost to trade the same amount of Kiwi!
So why would anyone trade Euro's when Kiwi is almost half the price? One reason why is becuase of the spread between the bid and ask price. Euro spreads are typically 1 to 1.5 pips and Kiwi spreads are typically 3 to 5 pips with my FX broker, Oanda. So if I am trying to get 10 pips, the Euro has to move at least 11 or more pips from my entry price so I can cover the spread and get the 10 pips, the Kiwi has to move 13 to 15 pips to get the same 10 pip profit. Another reason is the volume of trades, more Euro is traded than any other currency (that is one reason why the spread is so low) and seems to be a little more predictable.
So why am I trading Kiwi right now? With the size of my account at this time I can can make larger gains. With a balance of $8000 in my account I certainly can't trade 30 contracts of Euro and have any risk tolerance to think of, it only leaves me $200 of margin to work with. So effectively I could only trade 15 contracts of Euro, but with Kiwi I can trade 25-30 contracts. If I capture 10 pips of Euro in this example I would only make $150 for a 1.8% return. With Kiwi, these same 10 pips would get me $300 for a 3.75% return. Same pips, same dollar amount risked, same amount of margin and leverage used....twice the return.
I'm using this to quickly build my account base up and then I anticipate going back to the Euro which will be a little more predicable in it's direction and movement and the spreads are thinner.
June 28, 2013
Catching up!
Wow! I really stink at this blogging-post-update thing! I should have been posting something at the end of each week to show my progress with trading. Sorry if you keep coming here expecting something, I resolve to do better.
So here is a quick synopsis of the 7 weeks of trading. In May I did pretty well until the week of the 20th, then it all started going downhill for me. I didn't use some stops and made classic newbie blunders like "revenge trades" and "over trades" and over the course of two weeks I traded my account down to my starting capital plus about $45. At least I had a small profit at the end of May. Pretty depressing since I had traded up to around $5500 in my account and proceeded to decline after that.
So with the start of June I sat back and relaxed for a day or two and took a few deep breaths and reminded myself to follow the system, be patient, stick with it and "momma said there would be days like these."
June Week 1 (6/2 - 6/7):
I ended the week up $1000, so my account was at $3000.
June Week 2 (6/9 - 6/14):
I ended week 2 with another $1000 to the good in my account to close out the week at $4000.
June Week 3 (6/16 - 6/21):
Finished week 3 up $3000 for a total account balance of $7000. The stand-out trade here was exercising patience and waiting to fade the FOMC minutes announcement and Bernanke's press conference. I ended up cashing in on 145 pips by waiting about 10 minutes after the news came out, seeing what direction the herd was moving and then getting in, I manually trailed my stop about 20 pips behind the market and came out smelling like roses.
June Week 4 (6/23 - 6/28):
I ended up with only $700 to the good this week and finished out the week and the month at $7705.
I had a goal to make $4000 this week, and I was on my way to that goal, by Tuesday late afternoon I had already booked $1000. In keeping with my own trading cycles, every three weeks or so I lose money, I made some bone-headed mistakes. The primary one was getting in a trade and not setting a stop loss (SL) and then I fell asleep. Next thing I woke up a couple hours later around 2am to find that I was -95 pips!!!!
I do not recommend this, I rode this roller coaster all week, on Thursday I gave back $500 to avoid a margin call and finally on Friday I got most of it back and then a little more and closed out the week with $7700 in my account.
I have to say I dodged the bullet on that one and I am super lucky that I ended up in positive territory, it really was dumb luck, I should have been skinned on this one.
Next week is a short trading week with holiday and I'm going to take Thur and Fri off and enjoy some golf and fishing with my father-in-law up in the pines and get out of this heat for a couple of days. So if I make a few pips on Mon - Wed. it will all be good.
So here is a quick synopsis of the 7 weeks of trading. In May I did pretty well until the week of the 20th, then it all started going downhill for me. I didn't use some stops and made classic newbie blunders like "revenge trades" and "over trades" and over the course of two weeks I traded my account down to my starting capital plus about $45. At least I had a small profit at the end of May. Pretty depressing since I had traded up to around $5500 in my account and proceeded to decline after that.
So with the start of June I sat back and relaxed for a day or two and took a few deep breaths and reminded myself to follow the system, be patient, stick with it and "momma said there would be days like these."
June Week 1 (6/2 - 6/7):
I ended the week up $1000, so my account was at $3000.
June Week 2 (6/9 - 6/14):
I ended week 2 with another $1000 to the good in my account to close out the week at $4000.
June Week 3 (6/16 - 6/21):
Finished week 3 up $3000 for a total account balance of $7000. The stand-out trade here was exercising patience and waiting to fade the FOMC minutes announcement and Bernanke's press conference. I ended up cashing in on 145 pips by waiting about 10 minutes after the news came out, seeing what direction the herd was moving and then getting in, I manually trailed my stop about 20 pips behind the market and came out smelling like roses.
June Week 4 (6/23 - 6/28):
I ended up with only $700 to the good this week and finished out the week and the month at $7705.
I had a goal to make $4000 this week, and I was on my way to that goal, by Tuesday late afternoon I had already booked $1000. In keeping with my own trading cycles, every three weeks or so I lose money, I made some bone-headed mistakes. The primary one was getting in a trade and not setting a stop loss (SL) and then I fell asleep. Next thing I woke up a couple hours later around 2am to find that I was -95 pips!!!!
I do not recommend this, I rode this roller coaster all week, on Thursday I gave back $500 to avoid a margin call and finally on Friday I got most of it back and then a little more and closed out the week with $7700 in my account.
I have to say I dodged the bullet on that one and I am super lucky that I ended up in positive territory, it really was dumb luck, I should have been skinned on this one.
Next week is a short trading week with holiday and I'm going to take Thur and Fri off and enjoy some golf and fishing with my father-in-law up in the pines and get out of this heat for a couple of days. So if I make a few pips on Mon - Wed. it will all be good.
May 7, 2013
Week 2 of "Doing it LIVE!!"
For the second week of live trading, I had a somewhat inauspicious start to the week. I got into a short trade of EUR/USD that I really thought was going to go well but I ended up getting stopped out for a loss. That made me real nervous to start off my second week of live trading. But it was important to stick to the rules of engagement.
Good thing too, because after that trade I took a deep breath and waited for the next opportunity. It didn't take long and the rest of the week was really incredible. In the end I had a very positive week:
Beginning Balance: $2153
Ending Balance: $2800
Weekly Gain/Loss: $ 647
Avg Pips: 162
I need to interject at this point for full disclosure, that I am also trading the Australian dollar (AUD/USD) pair as well as the Euro (EUR/USD). What is great about the Aussie is that it trades for near "par" value of the US dollar.
Why is that so special? I trade on a 50:1 leverage rate, so for every $1 I have in my account I can buy $50 worth of currency. This allows me to trade with "mini contracts" in amounts of 10,000 units of currency. So in the case of Aussie, it works out like this, example: 10,000 x 1.03 (approx. exchange rate to the US dollar) = $10,300 that is divided by the leverage rate, 50 which equals $206. This is the amount of actual cash I need in my account to purchase one contract of AUD/USD. My rule of thumb is to have about twice the value of contract in my account to trade one contract, so this would be about $400.
In the case of EUR/USD, a contract costs about $260 so I would need $500 in my account to but one contract of Euro. So with an account balance of $2000 I would limit myself to 4 contracts of EUR/USD or 5 contracts of AUD/USD. When trading mini contracts, a 1 pip move equals $1 to my account at 50:1 leverage, so if I buy 4 contracts of Euro and collect 10 pips then I made $40, if I buy 5 contracts of Aussie and collect those same 10 pips then I made $50 for the same amount of pips.
Of course the opposite of this is that I could lose more trading Aussie if the trade goes against me. So be careful and watch your risk tolerance.
April 26, 2013
Lets Begin......Again.
I remember as a kid playing with friends, a game of HORSE on the b-ball court, or when I first learned how to golf, and I would make a really bad shot and immediately call out, "Do over!"
Life is full of "Do-over's" and this blog is yet another do-over for me. I'm starting fresh....again. I will be using this blog to journal my experience trying to make a living as a Currency Trader. This is mainly written for a few family members, friends and colleagues that are semi-interested in how well or how badly I am doing as a trader. So let's jump into it, shall we?
As of the end of today I am +7.7% overall in my account.
Today marks the end of my "soft opening" of live trading. Bear with me for a little bit on the history of my trading and how I got to this point. I have always had a school boy crush on financial markets ever since high school when we played a stock trading game in a business/economics class I took as a softmore. A little over three years ago, after having resisted it's Siren's Song, I succumbed and started studying what currency trading was and is and I was soon hooked.
I started practice trading and within a couple of weeks, and like many before me and no doubt many to follow me, thought I had mastered the craft well enough to trade with real money so I jumped in and quickly blew through my cash in about two months, so I went back to practice trading and then tried it again, this second time around I made it a few more months before losing all my money.
Determined not to have this happen again I studied even more, and practised even more which I have been doing for the last 18+ months which has brought me to this past week when I started live trading again.
I had actually planned on starting in May 2013, but with everything in place I started this week and decided I would ease into it and this would be sort of a practice run at live trading again. It turned out to be a good week of returns and I ended the week in positive territory.
The purpose of my keeping a public journal of my FX trading is not to brag about how well I'm doing (well to be honest, there is a little vainity involved here), but rather to be transparent and accountable to someone else. I feel that if I have all of my trading out in the open, the good trades along side the not so good trades, then I will actually be a little more cautious with my trading and not be so inclined to put on trades that fall outside of the boundaries of my risk tolerance. I also invite those that follow this to ask me the tough questions so as to keep me on my toes. I think this will help me be a better trader.
DISCLAIMER:
I will lay out in future posts, my trading philosophy, strategies and methods along with the mechanics of my trading for entertainment purposes only. Since I am not doing this professionally, but for my own account, here is my disclaimer: Nothing published here should be construed as an offer to buy or sell any commodity, derivitive, option, equity, stock or currency. I am not putting myself out to the public as an investment advisor in any way, shape or form. The opinions expressed on this blog are my own. I am only relating my own personal experience trading and it is not being offered as trading advice. Anyone that reads or follows my blog that chooses to invest or trade in financial markets based on what they have read here, does so at their own risk and should consult their own investment advisors and professionals.
Life is full of "Do-over's" and this blog is yet another do-over for me. I'm starting fresh....again. I will be using this blog to journal my experience trying to make a living as a Currency Trader. This is mainly written for a few family members, friends and colleagues that are semi-interested in how well or how badly I am doing as a trader. So let's jump into it, shall we?
As of the end of today I am +7.7% overall in my account.
Today marks the end of my "soft opening" of live trading. Bear with me for a little bit on the history of my trading and how I got to this point. I have always had a school boy crush on financial markets ever since high school when we played a stock trading game in a business/economics class I took as a softmore. A little over three years ago, after having resisted it's Siren's Song, I succumbed and started studying what currency trading was and is and I was soon hooked.
I started practice trading and within a couple of weeks, and like many before me and no doubt many to follow me, thought I had mastered the craft well enough to trade with real money so I jumped in and quickly blew through my cash in about two months, so I went back to practice trading and then tried it again, this second time around I made it a few more months before losing all my money.
Determined not to have this happen again I studied even more, and practised even more which I have been doing for the last 18+ months which has brought me to this past week when I started live trading again.
I had actually planned on starting in May 2013, but with everything in place I started this week and decided I would ease into it and this would be sort of a practice run at live trading again. It turned out to be a good week of returns and I ended the week in positive territory.
The purpose of my keeping a public journal of my FX trading is not to brag about how well I'm doing (well to be honest, there is a little vainity involved here), but rather to be transparent and accountable to someone else. I feel that if I have all of my trading out in the open, the good trades along side the not so good trades, then I will actually be a little more cautious with my trading and not be so inclined to put on trades that fall outside of the boundaries of my risk tolerance. I also invite those that follow this to ask me the tough questions so as to keep me on my toes. I think this will help me be a better trader.
DISCLAIMER:
I will lay out in future posts, my trading philosophy, strategies and methods along with the mechanics of my trading for entertainment purposes only. Since I am not doing this professionally, but for my own account, here is my disclaimer: Nothing published here should be construed as an offer to buy or sell any commodity, derivitive, option, equity, stock or currency. I am not putting myself out to the public as an investment advisor in any way, shape or form. The opinions expressed on this blog are my own. I am only relating my own personal experience trading and it is not being offered as trading advice. Anyone that reads or follows my blog that chooses to invest or trade in financial markets based on what they have read here, does so at their own risk and should consult their own investment advisors and professionals.
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