Oh my god I actually made a Forex trade!  This is shocking.  What used to be a part of my daily life has slipped completely out of my life.  My last trade was back in mid June!  Some people may see this as slacking.  And, quite honestly, they might be right.  I have slacked a little bit.  But I have also been realistic.  It was easy for me to spend time completely focused on charts back when I had a full time job.  As a student, I just don’t have the time.  I am usually doing some kind of school work or I am working out.  I spend so little time watching the charts that I don’t feel completely comfortable with them anymore.  I am going to try to spend more time at this so I can get sharp again.  Today was a day where I actually had time to do this!  This was different than most of my evening trades.  In those trades, I mark off a safe zone - an area I feel the currency wants to stay within.  When it gets to the top or bottom of this zone I wait for signs that it is about to bounce off and then I trade.  During the day things happen a lot faster and you can’t trust those zones.  You really need to pay special attention to momentum and correlation of similar currency pairs.  When you see those other currencies spike, you know that yours will probably follow.  That is what happened late this morning when I got into this trade on the EUR/USD pair.  I saw a nice spike downwards and I got in.  I was in this trade for probably 5 seconds before I bagged my 3 pips and walked away.  Now, the currency did continue a nose dive and I could have easily bagged another 10-20 pips.  But, I just as easily could have had the thing rebound on me and screw me into a loss.  I always walk away when I have made my safe profit.  I am completely happy with 1-2 pips per trade.  One of the best things about trading mid day is the spread.  At 0.9 pips I don’t have to be too right in order to make money.  The smallest of movements will get me a profit.  Here is to hoping I can get in some more trading like this next week!  As always, the charts and details of the trade are below.

Trade Summary:

Sell EUR/USD - 1.4727
Close Trade - 1.4724
Pips= 3

Ah, finally something Forex related!  I have previously posted about getting your start in Forex.  You can check out that link for some info on how I feel you should start your journey in this world.  And, if you already started, it can’t hurt to go back and learn some shit!  Now this is something that is probably the most simple topic in theory, and the most difficult in practice.  Not trading.  That’s it.  It sounds so easy.  Right now you are reading this so you aren’t trading.  That’s how easy it is, right?  Wrong.  This is probably the biggest mistake people make especially when they are new traders.  I won’t lie, this was something I struggled with when I was first learning the ropes.  I would sit there at my computer looking for a trade even though I knew I had to be out the door in 5 minutes.  The problem was that I made money so if I just got to get in on a deal I could make some quick cash.  More often than not it screws you over.  You force a trade by seeing something that isn’t really there.  You see it because you want to see it.  Trading is all about pattern recognition and if you really want to you can make a chart look like anything.  Not trading is something that must be practiced.  I know that sounds weird.  Practice not doing something.  It actually works.  If you trade with a demo account you need to work it like you would if it was real money.  I know nothing can actually simulate the feeling of using real money, but use your imagination.  Practice firing up the charts when you are in a bad mood or when you are rushed for time and force yourself to not make a deal.  You will try to rationalize it sometimes and say it is only fake money.  Slap yourself on the wrist and try not trading again!  You have to think that you aren’t paid to trade.  You are paid to wait for the perfect trade!  Waiting for that perfect setup is your job.  This isn’t like using a machine gun, trading is like a sniper rifle.  One shot.  That brings me to my next point.  Rebound trading.  You just screwed the pooch on a trade and you bailed on it.  You are sitting on a loss for the day.  This is probably the hardest time to not trade.  It is for me.  The problem is that you know you have a winning strategy.  Odds are your next trade will score you money.  Let’s get right back in there and make back what I lost.  Hell no!  This is the best way to drain your account dry.  This is gambling and not trading.  It sounds similar, doesn’t it.  Only one more.  Let me win my money back.  This is why most people kill their accounts within 6 months.  You can have five and a half months of wins and 2 weeks where you attempted trade after trade just to win back any losses.  At the end you are broke!  A loss is a loss.  Walk away.  You are paid to wait!  The last reason not to trade has to do with outside forces.  Anyone who has read my blog for a while knows that I avoid news announcements like the plague.  Some people trade these times and make a lot of money.  It is way too risky for my liking.  The spread goes up and you can jump 50 pips a second.  I can’t handle that roller coaster.  I like smoother movements.  So, anytime a news announcement is scheduled I stay away for 30 minutes leading up to it and 30 minutes after.  Sometimes more, sometimes less.  You can tell when the impact of that news is no longer driving the pattern.  Staying away from the news announcements was a bigger issue when I was trading in the mornings.  Since I switched to the evenings it doesn’t affect me nearly as much.  The best way to find out when all these announcements are coming out is by going to Forex Factory.  That link gives you a daily calendar with everything you need to know.  They even rank the impact of the announcement which is a great thing.  Low impact announcements are fairly safe to be in on a trade at.  Don’t even think about going in when those impact symbols are red!  Once again, this is all based on my style of trading.  I don’t like risk.  I don’t need Forex to provide me with excitement.  I am getting plenty of that with my attempts to become a firefighter.  Forex is my little cash machine.  Part of keeping myself in the black is knowing when not to trade.  There is a reason why my account hasn’t taken any hits this year.  I know when to stay away!  Learn that skill and you will find your win percentage will shoot right up!

My god I actually managed to get a trade in!  This was a pretty easy one to see.  I like it when the currency settles into a little valley down near a low for the day.  This makes it easy to get into a buy trade with some confidence.  That’s exactly what I saw when I fired up the charts at 5:45pm and immediately got into a buy on the EUR/USD.  I didn’t have to wait long for this one to pay off.  At 5:49 I got a swift little jump upward that went about 3 pips in my favor.  I decided to walk away at that point.  This early in the evening you generally get very small movements in the 5 minute candles.  I didn’t want to stay in this trade just on the hope I would squeeze out another couple of pips.  Besides, my strategy is all about small gains that add up over time.  3 pips is more than enough for a couple of minutes of work.  I know I haven’t traded much at all this year, but I have managed to make pips every time I do.  I can’t wait until school is done so I can do this more often!  I know I have yet to release any kind of strategy guide on how I trade.  I honestly didn’t think school was going to suck so much of my time.  I am in the middle of my 2nd of 3 semesters.  3rd semester is a lot lighter.  Hopefully I can put something together at that point.  I would be happy to see how much money people could make using my strategy!  Here is the chart for today’s trade.

Trade Summary:

Buy EUR/USD - 1.3834
Close Trade - 1.3837
Pips= 3

I know I haven’t been very personal with my posts lately.  Unfortunately I am in the middle of a crazy-busy schedule.  I barely have time to eat and sleep!  Wednesday is supposed to be my day off where I can catch up on school work and study for tests.  Instead, I will be going to the fire training grounds in Mississauga (near Toronto for you outside of the area).  Although this fucks my schedule pretty hard, it is going to be pretty cool!  We are going into the training buildings to do some search and rescue.  They smoke the place out so you can’t even see your hand in front of your face and then get you to move around in teams doing rooms searches.  It can get pretty tough with all the bunker gear and breathing apparatus.  They also make you go through some confined spaces that are barely large enough to squeeze through so you need to remove your air pack while staying on air.  This is definitely not something to do if you are claustrophobic.  They run things like the military so it probably wont be a good idea to stop and take pictures, but I will see if I can snap a few pics off my blackberry after I am done.  On Saturday we go back to the training grounds and do live fires!  Now that will be really cool.  Anyways, as a result of all this madness I really haven’t been looking into the charts.  I know the EUR/USD has risen sharply over the last week so the timing works out for me.  I don’t like these sharp rises because it usually means new highs are created in the evening hours.  That isn’t good for my style.  My robot is still trading though and I will let you know if he was able to recover from an absolute ass kicking he took on Friday.  More details on that will come tomorrow.  So, for today, I give you a comic from SMBC that is related to the life of a student….a student whose mom is Chuck Norris!

I figure the middle of the week is a good time to bring you an update on what my Forex robot is doing.  It is excellent timing for this little experiment because I really do not have the time to trade right now.  When I do manage to find some time to fire up the charts I find patterns that I don’t like.  What turns me off is when I see new highs and new lows being hit during the off hours when I trade.  That is a big warning sign for me to stay away.  These last couple of days have been steady risers for the EUR/USD so I have been staying out of the market.  Remember, I need a nice up and down range for my type of trading.  It works great in sideways markets but not so great in rapid ups or downs.  Anyways, when I last reported on the Forex Robot, the thing was getting it’s ass kicked by the market.  It had a really bad 24 hours that hit my account hard.  I still liked what the robot was doing, although I didn’t like the number of sell trades it was in.  In total the robot is still getting into sell trades twice as often as buys, but that is actually an improvement from last week.  The robot has gained almost 13% from one week ago today!  It would have been higher had it not been for a trade that was entered right around a major news announcement.  Obviously the logic doesn’t take this into play and lets the robot go ahead and make deals around news time.  Not my cup of tea.  Even though it didn’t work out, I will let the robot do it’s thing for at least a complete month before I criticize it.  And, you can’t argue with results.  Overall I am up almost 5% in two weeks.  That’s awesome!  Imagine if your mutual funds would bring you 5% every two weeks.  Here are the details of the activity so far.  I know this image is a little crunched, so just click on it to get a larger version.

I previously posted about how to get your start into Forex.  Some people will tell you that robots are the easiest way.  Some people will tell you to avoid them like the plague.  I sit somewhere in the middle.  I think it is critical for someone to know how the market works before trusting their hard earned money with a robot.  You really need to know how things work before a robot can help you out.  The marketing pages always play these things up as something that requires no experience.  That is a load of bullshit.  There are many customizations you can make to a robot and unless you have experience trading you won’t know what to do.  Hell, if you aren’t used to manipulating charts you probably will have problems even getting the robot up and running properly.  Used properly, these robots can be a huge help in your trading.  I am the perfect example of someone to benefit from a robot.  I know how to trade.  I know how to trade successfully.  Unfortunately, I am not able to trade as often as I would like.  Having a disciplined system running for me 24/7 can be a massive boost to my income.  The key is finding, and tuning the right robot to fit my needs and goals.  I am testing out a free robot from Expert Advisors.  Yes, FREE!  You can download the thing yourself and give it a try.  As always, you should thoroughly test a robot on demo before risking real money.  It uses the Metatrader4 platform, so you can use any compatible broker you want.  I just want for the easy setup for FXDD on a demo.  I have been running the thing since the night of March 3rd.  This robot appealed to me because it’s risk/reward ratio is 1:1.  Meaning the target is 40 pips and the stop is 40 pips.  You would be surprised at how many strategies have a small profit target but have a massive amount of risk.  Who cares if you win 10 trades but then wipe out 20% of your account on your first loss!  So far this system seems interesting.  I would prefer a smaller profit/loss level of maybe 25 pips, but I am not sure that is realistic.  I will run it as is without any tinkering for a while.  As of right now it has lost 5 trades and won 4.  I still have one trade open.  This means I am sitting at a loss of about 40 pips.  Not enough time has passed for me to make some accurate assessment, but so far this thing has not done well during the day.  All losers have been during the daytime and the winners have been at night, including 3 winners last night!  This is where knowing about the market helps.  I didn’t agree with any of the trades this robot made yesterday during the day and sure enough they lost.  There were some news announcements and a weird chart pattern and the Euro was trading fairly low.  Difficult time to get in on a sell trade.  Had this not been a test I would have shut down the robot until things calmed down.  These robots are powerful weapons.  When used properly, along side your own trading, they can help you make a lot of money.  If relied on blindly, you will lose your money.  It is that simple.  Here is the summary of what the robot has done for me so far…

As I think about developing a strategy guide to outline exactly what my trading strategy is, I often think about what got me into this whole Forex world.  Like most of you traders out there, there are quite a few reasons that all came together.  The first major reason was that I wanted money.  I wanted lots of it.  And, I didn’t want to do anything to earn it.  Unfortunately I learned that was pretty much impossible and anyone selling that idea is only padding their accounts and not yours.  The other major reason was that I always had an interest in the stock market and wanted a chance to apply some of that knowledge.  So I was turned on to Forex.  This was like a dream come true.  Forex has a ton of retail brokers, low deposit requirements and a market that is liquid for most of the day.  My problem was that I had no freaking idea what I was getting in to.  Over the next year or so I soaked up a ton of info by buying ebooks that promised to make me $3,243,564.00 a year.  After reading most of that crap I learned almost nothing.  I did get into some more expensive courses from some other pros.  Some I liked.  Some I didn’t.  All of this and my trading experiences lead me to break out of the mold of my mentors and forge my own strategy.  As you can tell from my charts, there really isn’t much going on.  My theory is that the market is so much bigger than I am so 4 million indicators on my screen still only leads me to an educated guess.  The key is to find very simple signs that a currency will be moving in a direction and then knowing when to get out.  Trust me when I tell you this, the very last thing you will ever learn is when to exit a trade.  That is something I am still working on to this day.  It all seems so easy when you use fake money in a demo account.  When it comes to your actual dollars, your emotions will get the better of you from time to time.  Anyways, back to the reason I posted all this.  I don’t want people to waste their money on the crap people push out there.  Sure, Forex robots sound great…but you really should know how to trade on your own so that a robot can augment your trading.  Nothing comes without a little work.  Take the time to learn Forex and it will be worth it.  You wouldn’t trust a doctor who completed med school over night, so don’t think you can become a trading expert because you read an ebook.  You really should ignore the crap and start your training over at Baby Pips.  This site is free and loaded full of awesome information.  They have a link on the main site called “school” that starts you off in Forex kindergarten and takes you right to college.  Did I mention this is free?  Honestly, 99% of the ebooks and courses about Forex that cost a fortune don’t give half the information that Baby Pips is giving you for free!  From there it is all about finding a trading style that you are comfortable with.  Some people like to carry large trades.  Not me.  I am in and out in moments and am happy as a pig in shit when I have 2 pips.  Compare as many strategies as you can.  Try them in demo accounts.  After time you will find the one that fits you best.  Once you have that one it is time to go live and put the pressure on.  Even if you only risk a dollar a trade you need to know what it feels like to use live money.  From there you need to constantly re-evaluate.  The markets will change.  Your life will change!  I changed jobs and trading in the morning no longer worked for me.  I shifted my strategy to something that works in the evenings.  One thing is certain, you should never stop learning.  People who became complacent are the same idiots that sank the stock market.  Hehehe…I probably shouldn’t get into a rant about that.  I am definitely trying to have some kind of Forex strategy guide out mid year.  How much will this valuable information cost you?  Absolutely nothing.  And, it certainly should not be your bible.  It should only help to form your own strategy.  That’s how this game works.  That’s what separates the people who will make a killing in Forex, and the dreamers that will never achieve a thing.

I made a very small trade last night.  It was a very small trade only because of the timing.  It wasn’t anything to do with timing in the market.  It was all about the fact that I had to study for two quizzes today in school.  I had been watching the EUR/USD setting up into a nice little pattern for me.  I was watching the clock cursing up a storm as I was really excited to get a positive trade in.  It finally formed for me at 8:37pm.  I was banking on a very quick upward movement off my lower barrier.  The barrier was tested but held fairly strong.  Unfortunately for me the trade took longer to get it’s momentum than I planned.  I decided to get out 3 minutes later when I was up 2 pips.  I really had to get going!  My initial goal was 10 pips for this trade because the setup was perfect for me.  Had I been able to wait another few minutes I would have been able to bag my 10 pips.  Hell, if I could have waited 10 minutes after that I may have had 20 pips!  By the chart, you can see that this thing really ran.  But, I would have walked away once I hit my target.  Oh well.  Beggars can’t be choosy.  I haven’t been trading too often lately so I am glad that my instincts are right.  I probably could have advised you on this trade a lot better than when I actually go to execute the thing myself.  Given the fact that I was also trying to study, 2 pips is not half bad.  I weighted this trade pretty heavy as well.  So, those 2 pips are a nice profit for me!  Here is the chart.

Trade Summary:

Buy EUR/USD - 1.2960
Close Trade - 1.2962
Pips= 2

Once again, I decided not to trade last night.  I didn’t even fire up the charts.  I may actually stay away for the rest of the week.  The charts didn’t look to bad when I look at them this morning.  It looks like the EUR/USD was moving in a manageable range.  Since I didn’t even look into it last night, I am not sure what the spread was like.  If liquidity wasn’t there then that would have stopped me from trading anyways.  I have been giving more thought to creating a detailed report on how I trade.  It would be nice to see someone take my strategy and do even better than I do.  I will just have to figure out how to structure the lessons.  So much of this is now “feel” and I need to write up some rules that I used to follow when I was new at this.  How much would I charge for this?  Absolutely nothing!  It would be free.  I am not here to sell you an ebook.  My strategy is simple so it isn’t anything that you couldn’t figure out on your own anyways.  It might just take you a while.  I will get to work on that and keep you updated on my progress.  In the meantime here is an XKCD comic that actually is related to Forex!

I have had a few emails this week from people asking why I don’t trade during these market conditions.  They figure that with the massive volatility that big movements can get my quick profits.  The short answer is: you are right.  I COULD get quick profits.  History proves that when there are people making a quick profit, there are thousands losing their shirts.  There is a reason most Forex traders blow out their accounts within a year.  To me, the logic is similar to swimming during a massive storm.  You could do it and it could be fun - but your ass also has a good chance of dying!  I have decided that I enjoy reasonably stress free trading.  I will still lose some trades, but they don’t hurt me too much because my win/loss ratio is pretty good.  If I stray from what I know works for me then I am not trading, I am gambling.  I have no desire to gamble with my money.  I would rather make $100 with skill than $500 with blind luck.  The market is big and I can’t even hope to make a dent in it.  I cannot try to fight the waves or create my own waves.  The waves are made by major financial institutions.  I can only hope to ride the waves they create.  I understand my place in this market and have no delusions.  Just because you spend a year winning most of your trades doesn’t make you invincible.  And if that isn’t enough: the spread is high during these market conditions.  That means the difference between the actual price and the price I pay is high.  It would be like buying a house when the mortgage company is advertising a massively high interest rate for the month.  Why would I spend more to make the same trade I did a week ago?  Patience.  I am not going anywhere.  I will wait out the storm.  It just might save my trading life.