Biggest Loss Yet

As I stated in a previous post, I have been trading according to Trade Money. There have been ups and downs trading this strategy. Up until last night I was slowly making gains and my account balance was slowly but steadily growing. Last night, I was trading a fundamental announcement on the GBP/USD. The price shot up around 50 pips in less than a minute. Following the strategy in “Explosive Profits” from the afore mentioned web site, I waited for the price to pull back. Then I placed an entry order above the price with a stop of 20 pips. It was not very long and my order was triggered, and then stopped out for a 20 pip loss. I was trading 7 micro lots so that was a 14 dollar loss. I tried another entry, again stopped out. Before it was over with, I was down over 100 dollars. I am aware that a hundred dollars is not a whole lot of money. It is however a lot when compared to the total amount of money in my account. My account total was $1467, the loss of last night brought me to $1367. This is about a 7% total loss of my account. That is a lot for three hours of trading. These losses came as a result of a break of my trading rules. One of my rules is quit trading after two consecutive losses, which was not followed. As a result of last night I have come to realize that trading this way is unsustainable, if it continues I will not last much over a year if that. These losses really caused me to rethink my position on trading Forex. The way that I see it I have four choices, and they are as follows.

1. Quit trading Forex altogether.
2. Strictly demo trade for a while.
3. Continue trading as I have been.
4. Lower my lots by quite a bit till I get everything under control.

Option #1 is totally out of the question. I am in this for the long haul, I will trade until I am forced to quit. Hopefully I will eventually be able to make a living off of this.

Option #2 Demo trading is good for learning the trading software and good for trying out new strategies, but I have come to realize it is not like real trading. I demo traded until I was profitable for a full month, then when I went to a real money account I was unprofitable. The main reason for this is that demo trading does not involve emotion. When there is real money on the line you are tempted to move your stop to breakeven or to a small profit. This sounds like a good idea. What happens though, is your gains are a lot smaller than your losses. This means that you have to have a higher percentage of successful trades. For a few weeks I have had a 75%+ success rate on my trades. But still, my losses far outweigh my gains. Please note these are my opinions on the subject, I do suggest that you demo trade until profitable. Just be aware that real trading is quite a bit different.

Option 3 is totally out. As I have stated, this type of trading is not sustainable. If I lasted a year it would not be much longer. Not to mention the fact that I cannot take many more losses of that magnitude.

Option 4 is the only real option for me. So, this is what I plan to do. I will trade a single micro lot and keep trading the same strategy. Most of my losing trades have been from not following the rules. Also, a lot of my trades have been profitable. The problem is very few have made it to my full profit level, due to me being overly cautious and moving my stop too early. I plan on using the compounded gains method as taught in Forex Surfing from Trade Money. When I get to the point where I am consistently profitable for a week I will raise the amount of lots by one. On the weeks that I am not profitable I will lower the lot by one. This will be the method I will follow until I am again trading 1% of my account, consistently profitable. When I make it to this point I will trade 1% for a month profitably, before I consider moving it to the 2% mark. This last rise will be a lot at a time as well.

I am sorry that I have not been posting very much, between work, trading forex, learning forex, and other projects, I have been pushed to the limits. Now, things have slowed down a bit, so hopefully I will be able to post at least a few times a week. I hope to eventually post every day.

Happy Trading

rgrace

Forex Strategies

There are many forex strategies floating around on the internet.  In my brief forex adventure thus far, I have tried several strategies.  Money has been lost with them all.  I believe a lot of it has to do with my implementations of the strategies.  The strategies that I have tried are making money for the authors.  I firmly believe that.  The point I am trying to make is, regardless of what strategies you use, you will lose more money at first than what you will gain.  All strategies are subjective,  and they all take practice.  Find a strategy you enjoy trading, learn as much as you can about forex, and trade small amounts of money or demo trade the strategy for a while.  Demo trading will be a subject of a future post.  Of all the strategies I have tried, none of them has been complete.  Not only that, but I have not enjoyed trading any of them.

 That is until I found what I believe to be the ultimated free forex strategy.  This strategy is incredible,  the basic strategy is incredibly simple.  It can be expanded to be as complex as you would like.  It is a complete trading methodology.  It consists of 4 ebooks, each ebook covering a different set of strategies.  This system can be used in any market conditions, whether ranging or consolidating.  This system also does not require a huge stop loss, which means you can trade more lots total while still not exceeding your risk percentage.  

What is this system you may ask?

Trade Money .  These books are written differently than any I have seen thus far.  Most of the other books I have read have tons of history and extraneous theory that will never be used.  And quite frankly, most of them are so dry and boring that it is hard to stay awake after reading them, much less learning anything from them.  This system is different,  the books are easy to read.  The system is understandable with very little forex knowledge.  And thus far, I have been more profitable with this system than any other.  Yes, I have lost money with this system.  Most of my losses are, however from not following the system, or from marginal trades that I knew I should not have made in the first place.   This system is incredible and worth far more than the cost.  Did I mention it is free?  Visit the site, start reading.  Start with the book “Forex Surfing”.  Read the ebook, then apply the methods either in demo, or with tiny amounts of real money.  Then read the book again, and practice the system more.  With me the first 2 times I read the book and practiced, I realized I was actually trading the strategies wrong.  I was not waiting for a trading opportunity, I was trying to force one.  Only after you can successfully trade that strategy, should you move on to others.  These books cover consolidation, fundamental announcement trades, trends, patterns, range trading.  The thoughts and methods can also be applied to any other trading strategy or method you are familiar with.  This is an incredible system and the best I have seen thus far.  This is also the only strategy I will be using for a while.  Results will be posted as time goes on.  I hope you have a wonderful day and have fun trading.

rgrace

Free Forex Education

Forex education is vitally important for any trader.  As I stated earlier, that is not what this blog is about.  There are many places on the internet to get an education in Forex.  There is also a lot of information available for free.  The best general overview course I have found is The School of Pipsology.  After going through that course a few times, you will begin to get a basic understanding of the market.  It is not a complete education in Forex, such a thing does not exist.  Forex is such a large market, with so many factors affecting it, making it impossible to know everything.  If you decide to trade Forex, you will need to make a commitment to education for the rest of your trading career. 

 

The School of Pipsology

This is an amazing course.  It touches on a lot of topics.  When you leave this course you will not instantly be profitable.  This course introduces a lot of different methods, and explains the basic terminology.  It will create a firm foundation upon which to build.  It does not delve deeply into the topics it covers, but it does give an excellent broad overview.  That should give you a sense of direction to further your forex education.  The course is full of information and, best of all, it is free. 

The School of Pipsology.