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!

Oh my poor little robot.  I had already mentioned that last Friday my robot got the shit kicked out of it on a couple of bad trades.  This was mostly the result of having weighted these trades very heavily.  It’s tough when one loss is about 10-15% of your capital.  Things started to look back up for the start of this week.  I was hoping to be able to report that the robot managed to get back to where we were last Wednesday.  No dice.  The robot got pimp slapped on some trades during the day and I am now down about 23% from my initial deposit into the demo account.  Again, I am using a demo because I don’t know anything about this robot.  I plan to give it another couple of weeks to see how things go and then I might scale back the pip target/stop loss down from the default setting of 40 pips.  But, you do need to give these things time to work out.  Every trading system will have some losses.  As you can see from the details below, I do have one large trade still open and it is in profit.  If it hits the target I will be back to last weeks total.  One thing that you should notice is the drastic rise in buy trades.  It was something I bitched about over the last two weeks.  I noticed the EUR/USD rising and couldn’t understand the sell trades.  It seems the robot figured it out and has been buy happy all week.  Since the currency actually was rising I think the timing on the entries was poor because these stopped out even though the currency ended higher.  One obvious way to solve this is to make the stop loss much larger.  That is not what I will do.  I like the security of the 1:1 risk:reward ratio.  You can click on the image below for more specific details on the robot’s activity to date.  The graph is a great visual as to what has happened.  You can see the very sharp drops.

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.

Yesterday I mentioned that I would be posting the results of the Forex Robot I was testing.  I mentioned in this post last week that Expert-Advisors has a free robot to test out.  I figured I might as well give it a shot, the price was right.  When I mentioned that I was going to give an update on results I had it up and running for almost a week and was up about 7%!  Unfortunately the robot got it’s ass kicked as the EUR/USD has risen sharply over the last day.  For some reason, this robot seems hesitant to get into buy trades.  It has made a total of 36 trades in the last week which seems pretty high to me.  Of those trades, only 6 were buy trades.  Considering the upward movement in the Euro over the last 24 hours and the fact that the robot made 9 sell trades I question the logic.  But, it doesn’t take a genius to trade this market.  It takes a system that can make money and an ability to follow your own rules.  The robot can’t break it’s own rules as it has a hard stop set for all trades at 40 pips.  Let’s see if it can recover and bring the account back to profit over the next week.  Here is the account summary.  You can click on the image to get a larger version if you can’t read this.

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…

No trade for me last night.  I was hoping to make up for a bad (yet profitable) trade from the previous night.  I went to the gym and when I got home I planned to fire up the charts.  Instead of trading, I went to see “Taken” with a buddy.  I posted about how I was dying to see this movie quite a while ago.  I finally saw it and was not disappointed.  It was exactly what I expected…non stop action!  This thing was like a slightly longer episode of 24.  Liam Neeson kicks ass.  He kills everyone in this thing.  So, I don’t have something Forex related for you today.  I will probably not be trading tonight because I have a hockey game in the evening.  But, you never know!  Instead I will give you another comic from Explosm.  This really takes hangman to the next level!

Last night was a little dicey for my tastes.  I will save you the suspense, I still traded and made a profit.  Unlike most days, I didn’t like the way this one played out.  Since I am usually only looking for 2-5 pip gains, I don’t like when trades work against me more than 5 pips.  Most nights I would bail on a trade that went against me because the charts stop lining up and things start looking screwy.  Last night I actually stayed in the trade even when it was against me by 9 pips!  The movements were very jerky and the EUR/USD looked like it didn’t know what it wanted.  I felt that I would get a crack at a positive trade and stayed in until my low goal of 2 pips hit off.  I immediately walked away and was rewarded with a slip in my favor of an extra pip.  The trade actually went positive for me earlier but it wasn’t long enough for me to exit.  All in all this was juts a weird trade.  I think I may have been more lucky than good.  I guess my discipline allowed me to get out without getting greedy!  As you can see by the chart, if I had stayed in I most likely would have hit my limit and walked away with a fairly large loss.  I think the problem here was entry timing.  I really should have been more patient.  My upper barrier proved weak, but I didn’t give the market enough time to prove that for me.  My trades don’t usually take 27 minutes like this one did.  Tomorrow I will get a chance to do things right!  Here are the details…

Trade Summary:

Sell EUR/USD - 1.2576
Close Trade - 1.2573
Pips=3

Well this worked out nicely.  I just finished explaining my thoughts on Forex and now I have a trade to show you from yesterday evening.  I am especially proud of this trade because the EUR/USD was pushing down all freakin day.  That made it tough to find a range to work in.  I finally found a lower barrier that I could work with and I waited patiently for a buy trade entry.  A buy trade in these conditions can be very dangerous, so you need to get out quickly when things go bad.  This is another example of strong support from my correlating currencies.  The USD/CHF was tipping me off to a little upward swing.  I got into the buy at 7:25pm.  This one fluttered around for a long time.  I got a little nervous and thought about bailing when I was at zero and could have walked away with no loss.  The USD/CHF kept me thinking I could at least bag 2 pips from this movement.  So, I waited.  Finally at 7:33pm I caught a little movement and walked away with 3 pips.  Not bad at all.  Remember what I wrote about trade exits?  See, I am still learning.  I almost walked away from a nice profit.  The reason I didn’t is that I had confidence in my reasons for entry and nothing changed in the charts to make me think this was no longer a good trade.  Gotta have faith in your system!

Trade Summary:

Buy EUR/USD - 1.2674
Close Trade - 1.2677
Pips=3

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.