Ready to Give Up?

I'm ready to give up, but not quite giving up yet.

That reckless trading day, started a series of events that led me to this fortune plant.  It's an indoor fortune plant.  Hopefully it'll bring me some good luck trading Forex for the rest of my life.

I created this blog not only to serve as my trading journal but also so that some of you who are thinking of taking up Forex to trade for a living can have a legit reference on how it's like trading the forex market.   I hope my articles have been helpful somehow and for the sake of transparency you can view my forex trading performance in this page.

August 5 to 9: Don't be Stubborn

That reckless day didn't just turn out to be a day after all, the recklessness continued for a whole week! 

Even when I knew that my trading bias (BUY USD) was wrong, I still kept on pursuing similar trades within the week.  As a result, my equity was down to 657 USD.  I've lost 34.3% of my equity in just a month of trading.

Forex Trading Lessons I'd like to take home from that dreadful experience.

• After a series of profitable or losing trades, it would be best to take a short break from trading the Forex Market.  When you're winning you begin to think your invincible which can lead to reckless trades.  When you're losing, your pride kicks in, you want to win back what you've lost, and as a result you enter trades with abandon.  There is a technical logic to taking breaks even after a series of profitable trades - that is, technical corrections! Prices will need to correct before they can rally again and if you continue to trade using your bias, sooner than later you'll be losing money.
• Be like Jack, be nimble and quick. When you see that the trend is starting to correct against your trading bias, don't hesitate to pull trades out right away.
• Don't hesitate to cut loses.  I noticed that on losing trades I tend to hold the position hoping that it will still turn even when I already see signs that the trade will go against me.  Next time, I definitely want to cut losses short.  
• Capital Preservation! I really need to implement proper risk management this time around.  I started doing the no. 1 sin that traders commit, and that was to move stop losses further away.  I noticed that I could have had more than a couple of profitable trades if only I moved my stop losses further away.  This became the death of my account eventually because for no known reason (no news release), spikes can happen in the prices - this week happened to GBP and USD.

August 12-14

The start of this week provided another stellar trading streak for me.  My trades were not flawless but it felt like I'm really getting the hang of things already.  Earned about 80 USD in 2 and 1/2 days.  I'll be honest, this was a breath of fresh air.   

Trading BIAS this time was to BUY USD.  It worked like a charm this time around.  Apparently, we were a week too early to speculate that the USD will rise.  And all this was happening despite positive economic news for EURO!  Fundamentals were being ignored, or as analysts would like to put it, the good news has already been priced in.  

August 14-16  

What's the opposite of a Milestone?  As I could not think of a suitable word, I'll say that I hit a MILEROCK today! 

Before you get excited for me though, I'll tell you frankly, that MILEROCK was actually a MARGIN CALL! I was talking on the phone when my laptop suddenly shrieked an annoying buzz sound.  I had to put the other line on hold to check what was going on.  I got margin called :-(

MILEROCK: MARGIN CALL August 16, 2013 01:30am

I got called when the USD suddenly dropped for unknown reasons - meaning not news related.  

In the news, the DJIA was down 200 points or about 1.4% because of fear that the Fed will push through with reducing their asset purchases (tapering) in September.  In the event that tapering will push through in September, the normal reaction would actually be for the USD to rise or for a RISK OFF sentiment to dominate.  This did not happen though.  This was the reason why I was so confident to leave my trades overnight.

The currency that gained the most from the drop in the USD was the GBP.  The GBP was in rally mode this week after economic data proved positive for GBP.  This was the first warning sign that my trading strategy/bias for the week has already been compromised.  I should have paid attention to it.  

August 15: Equity was at around 400 USD

August 16: Equity is down to 199.70 USD (80% Loss! After Margin Call)

My equity is down to 20% after I got called on margin.  Sigh.

Forex Trading Take Outs 

• Risk Management.  Dumped risked management by setting absurd stop levels and trading bigger lot sizes!  I started with 2k to 5k trading lots last month but then I got bored because each PIP would not equal 1 USD and so I started trading with 10k lots!  That's how I was able to earn 80 USD on a single day, but this is also the reason why I lost 100 to 200 USD on a single trade!
• Flat is a Position.  It's not necessary to keep on entering trades the whole day even when you want to do this for a living.  
• Don't Lose Sleep!  It's not worth it.  Set and pick a time when you want to trade the market.
• It's unwise to set unrealistic goals.  Goals like earning a certain amount per day or month is counter productive.  It will only pressure you to enter into trades even without the proper timing and setups.  I believe the best approach would be to only take the opportunities and setups as they come.  It would be unwise to force the situation.  So if you want to trade Forex for a living, consider saving up whatever extra money you earn for a certain month because the opportunities might not present itself the following month.    

These are of course thoughts and insights that of a novice trader only.  These can still change as the I continue with trading the forex market for life.  Yes, the Happy FX Trader is down but he won't stay down for long.    

I won't blame the market.  I won't blame Mark So.  

There's only myself to blame.  There's no time to be bitter.  It's time to get BETTER.

Now that I'm down to my last 20% (199 USD), What do you recommend I do?

a) Harakiri Time!  Go ALL IN on 1 TRADE
b) Add More Equity - How Much?
c) Try Trading while Managing Risk Properly this time with whatever's left.

Would love to hear from you.

Pips Be With You!

p.s.  I'm beginning to notice lots of flaws when you simply copy Mark So's trades.  I hope I would be able to compile them and come up with a solution or at least a set of recommendations to help those who simply rely on copying his trades.