Currency Trader Expo

April 30, 2006

I wanted to mention that FXCM is hosting a Currency Trader Expo in New York on June 3rd and June 4th.  I've heard of this before but I just got something in the mail about it so I decided to take a closer look.  

It looks like there will be a lot of traders/authors that a lot of us have heard of including Rob Booker, Alexander Elder, Jack Schwager, Kathy Lein, Boris Schlossberg, Steve Nison, and more.  Most of the workshops are free (40 of them) except for a four that are under $200.   The schedule looks packed with some great stuff.  

I will certainly be attending for 3 reasons:

  1. I want to see the faces behind the words of these "successful" traders
  2. It may help in improving my trading
  3. I am 8 miles away from it so it's convenient

If you cannot make it, I will try to be your reporter.  I'll take pictures, notes, and whatever else I can.  We still have a couple of months to go though so I'll remind everyone beforehand.

Read more about the currency trader expo

Flogging Anyone?

April 28, 2006

I appreciate Greg's comments and agree with everything he says.  In particular, I agree with the facts that:

  1. I am getting flogged.  If this was actually happening physically, I'd be a bloody pile of mess.
  2. The 5% who consistently make money are taking the other 95%'s money (including mine) 

The reality is that though I have lost money, it hasn't been more than $2000 (give or take a couple hundred.)  It has cost me a lot more in time and effort.  I don't consider the loss of thousands of dollars a waste considering the 6+ months of experience I have received.  The $1000 for a mentor is also money that I feel is well spent even though the results have not been realized yet.  I was chatting with Rob during the US session today and as far as I can tell, he is trading for real during these times.  It is also no wonder that most mentors are probably failed traders that decided that they could do well teaching others a very difficult thing.  This doesn't mean that they know how to make money trading forex.  You can compare it to a professional sports coach who was never successful as a player but is as a coach.  There are many examples of this.  They aren't necessarily there to tell you what to trade but are there to prepare you for when you do decide to trade.

The goal of this site is to be truthful and honest.   I can tell all of you that though I have thought about not posting a losing trade in my trade history because of fear from criticism, I never did not post it.  I feel strongly that if you cannot be honest with others, you cannot be honest with yourself and therefore you will never learn. 

As always I appreciate all the comments that come in and hope that I can and others can learn from this.  If after 2 years, I'm still posting crap about losing, then shoot me down because I should not be doing this.  I promise that I will not enter the world of mentoring either.  I am not without faults in my trading (specifically with randomly trying things with real money, emotional trades, overtrades, and all the rest) but after 6+ months, I still have confidence I can do this for a living.  It's not going to be easy but think of all the hope it will give others if I can manage to beat the odds. 

Don't come to this site if you want trading advice (THAT'S FOR SURE… at least not yet) but if the 95% of you want to see someone going through exactly what you are going through, come on in.  Post your comments because I truly respect every one of you that has and if I am successful, I will attribute it to you.  

Enough of this Rah rah rah…  After reading this over, it sounds like I'm about to cry…. Smile

Not Following the Rules Can Hurt!

April 28, 2006

I am attaching a PDF file that includes all of my trades this week with date/time, P/L, max drawdown, max run-up, and important commentary about the trade including whether I followed the rules.

While I was putting this together, I realized that I failed to follow the rules 50% of the time.  Do you know how many pips I lost because I didn't FOLLOW THE RULES?


113 

How many pips did it cost me for following the rules?

43

This doesn't count the fact that I failed to follow the rules today in my GBP/USD trade that cost me 30 pips or more!  

If I would have followed the rules 100% of the time, I would be about even. 

I take full responsibility for my trades and blame only myself.  I should also note that though this trading system has rules, it is discretionary.

Here is the file:

pdf Forex Trade Report 28/04/2006,00:08 11.74 Kb
  

It’s My Fault

April 27, 2006

A transcript between a couple of us today:

Wim Says:

Hi Rick,

Minus 180 pips on 3 days of trading seems not that
great. Wow, I would be pissed of, part of learning.. Are mentors really
that great..
Why would you coach someone if you make a ton of money?
I would not spend my time trying to learn somebody for $1000 if I can
make 50K/month with my personal trading.

Some time ago, I
took the FXCM euroshop ($169), well in my eyes, it is worth nothing. it
looks really nice on their website until you pay for it.
3 methods but none of them actually work in my eyes. Everybody can make a course or call himself a mentor.
Personally,
I won't spend a dime to education or learning anymore. Being in this
business for 3 years, I make money now but not the first 2 years.

I
think a combination of knowledge and market understanding is a lot more
worth then pulling up some indicators and following them blindly.


Magdalena Says:

Wim,
A couple of questions for you:
1) Are you saying you didnt make money in the first 2 years and are you trading full time?
2) What in your opinion is the best way to learn how to trade and gain the knowledge of the market, how did you do it?

Rich,

What
is the "touch of emotion" and how big of an impact it had on your
trading recently? Are you saying that Rob's methods work and you simply
didn't have enough discipline to stick to them, cuz that's exactly what
happened to me recently when using Raghee's setups.


Craig Says:

Hi Rich,

Bummer, I have been making a bunch of losing trades as
well. I was looking though your trade history and trying to figure out
why you made all those AUD/USD trades on the 25th, the pair was going
sideways. Is it possible to elaborate on your current stratergy?

P.S.
Have to say Wim's comment is pretty on the mark.


I Said: 

I'm getting my spreadsheet together to analyze these trades but before
I jump over Rob, I have made some mistakes with execution and did so
specifically with my lost GBP trade this morning. I entered incorrectly
and got stopped out by 5 pips before the 100 pip move up. This cost me
huge. Some of the other trades were also executing issues. I can
honestly say that without even analyzing and from the top of my head,
if I was more experienced with this system, I would probably be up. A
lot of his strategy utilized multiple lots so that you can let some
more profit run. I'll post more when I know more.


I Said again: 

Magdalena, I think Rob's strategies can work. I think they give you the
best shot at making money doing this. The touch of emotion happened 2
times to me:

The first was with my Aussie trade where I entered
before the candle closed. Rob says you can enter before the candle
closes but he waits and recommends you wait. After this trade, I would
definately wait also.

The second time was with my trade today. I
entered 2 candles late on the GBP/USD trade and set my stop without
reflecting the price 2 candles ago. If I would have set a stop based on
the price if I had entered 2 candles ago (when I should have) I would
have made MANY MANY pips today. Like I said before, I think I would be
in positive territory if I didn't make these mistakes.

Rob Booker Training Update

April 27, 2006

Well, the bottom line is that since my first winning trade, I have had all losers.  It is quite discouraging but part of trading and training.  Rob really recommends using a demo account or a mini-account but I'm going to continue to chug along here.  I am using a lot of Rob Booker's methods with a touch of emotion so my results are in no way related to his performance.  I'll be entering my trades later today so everyone can view my performance so far.  They will be listed to the left menu in, My Trading History or the My Goal & Performance links.

I'm going to put together a spreadsheet for this week to more closely analyze my losses.  Rob Booker's methods for trading the 15 minute chart really don't give more than a 1:1 risk/reward ratio and going forward I would like to keep track of maximum drawdown so that I can see if decreasing the stop/loss is possible.   

Magdalena Speaks About Her Forex Experience

April 25, 2006

I like to post some of your comments sometimes because I find them so beneficial to my learning process and know that they can do the same for you.  This is an email I received from Magdalena yesterday.  I can totally relate to her comments because we are at similar stages.  Maybe you are to.

I started learning about Forex last October and was totally amazed for two reasons:

  1. The whole concept of trading FX seemed so perfect and natural that
    I felt like I discovered the best way to make a living there is.
  2. My master thesis was on hedging foreign currency transactions in
    international trade yet it has not occurred to me until then you can
    actually make money yourself trading forex.

I blame it on the fact that
I got my master's in Poland and my home town university's curriculum
missed a lot of practical and useful information, since I refuse to
admit that it's probably me being a dummy and it never dawned on me
before.
  After an initial immersion into the market I opened my first demo and
doubled it within a month without much effort and occasionally missing
trading days. I didn't have any strategy whatsoever, I went with my gut
feeling and basically after a while, my way to trade would be to open
(I only traded EUR/USD) 2 positions on the same currency just in
different directions waiting for each position to make a 10 pip profit.
I didn't use any stops based on an assumption that what goes up must
come down and vice versa – pretty naive thinking for someone who has
degree in finance. It worked beautifully for a while though. Then came
December and a couple of big loses that I had to take which pretty much
ate all my profits from previous month. This is when I decided to
actually learn something and went on a crazy search for a Holy Grail. I
guess we all do that at some point 🙂 Hundreds of websites, offers and
promises. The only reason why I didn't buy any system or program is
because
 simply couldn't afford it. But I kept on looking and got every book
from the local library that something to do with trading. And after a
while I got to a point where I didn't know anymore what works what
doesn't and worst of all I stopped trusting my own judgment. I was
dazed and confused.

  Then I bought Raghee's book and all of the sudden realized that there
is no perfect system. That you can chose basically any strategy and if
you have the discipline (the hardest part of it all !!!) to stick with
it, you will become successful. So this is where I am at now… Trying
to train my eye to see set ups as described in the book and get my
personal feel for the market. So far I have found that I get some
pretty good trading ideas, however my execution sometimes is not up to
par.
  I could ramble on about my trading experiences for hours since no on
around me shares the interest…Right now I trade a small mini account
just to get the feeling of the real account and hope that within next
few month I will have enough to open standard account and will be
consistently making profit.
   
 

Talk to you soon,
   
Magdalena

Rob Booker 1 on 1 Training Going Well

April 25, 2006

So I ended today up 26 pips which surpasses the goal I set in the beginning of the week which was to end the week up 20 pips.  The week hasn't ended yet though and I'm not going to stop trading because I'm learning. 

I know 26 pips doesn't sound like a lot but I really have to attribute this to Rob Booker.  I also have to admit that I really haven't talked to Rob much since starting the training but from his Chart School and other lessons I've been able to gain more confidence and clarity.  I'm thinking that I will have more questions once I'm a little furthur along.

Trading Full-Time continued

April 25, 2006

Thanks to Forex2stay for the following comments.  Visit his blog at http://forex2stay.blogspot.com/

I do think it's possible, but I believe money mangement is the key.
This needs to be a marathon not a sprint. One thing I've realized is
that you can't use the same lot sizes for all of your trades. For
example on one trade you might be risking 30 pips and another 20 pips.
So if you trade 4 lots on both of them (standard account) you'd be
risking $1,200 on one trade and $800 on the other. That's not good
money management and it can get you a person in trouble.Here's what I do…..

When
I position trade (4hr and daily charts), I won't trade unless I have a
2:1 risk reward ratio. I figure out the proper stop loss for my trade,
based on TA. So for this example say that's 40 pips. I then make sure
based on TA that I'm comfortable getting at least 80 – 120 pips profit.
Once i'm comfortable I put my information into the following formula.

S=(E*R) / (P-X)

S = Size of Trade
E = Account size (Cash)
R = Maximum Risk percentage per trade
P = entry price on the trade
X = pre-determined stop loss or exit price

So let's put in some numbers…..

My account size $10, 000
Entry price on EUR/USD 1.2600
Currently I'll risk 3% of my account on a trade
My pre-determined SL is 1.2560

So how many shares of EUR can we buy with our money management rules??

S=($10,000 * 3%) / (1.2600 – 1.2560)
S = $300 / .40
S= 75,000

Anyway this is the way I do it. I hope it helps…

Forex2stay

How Realistic Am I Being About Trading Full-Time

April 25, 2006

During my workout today, I crunched some numbers in my head to see what it would take for me to be able to trade full-time.  I've tried to find these answers on forums like Moneytec.  I know a lot of you may visit forex forums but I don't find them beneficial one bit.  There is too much garbage to sift through.  Someone on Moneytec asked if it is possible to trade Forex full-time and it wound up being a very long thread with no real answers.  It was full of people stating that it was possible, others stating that you needed a million dollars in initial capital to do it, and pessimists stating that it was not at all possible.  Now it may be that this is not an easy question to answer.  I will attempt to run something by all of you and you are free to bash it at will.  My assumptions may be conservative or even unrealistic.  How would I know the real answer to this question because I have not experienced it yet.  

Here are my assumptions:

  1. You are consistently profitable now
  2. You have a trading system that wins 60% of the time
  3. You make 10 trades a week
  4. Each winning trade averages a profit of 30 pips
  5. Each losing trade average a loss of 30 pips  (Yes, this is a 1:1 risk/reward)
  6. You start with $10,000 in trading capital
  7. You do not risk more than 3% on any trade
  8. You are trading a standard 100K lots
  9. You will not pull any capital out of your trading account until you reach your full-time goal

The first thing you have to ask yourself is how many lots do I need to trade to make a standard of living that I am accustomed to?  I live in the New York City area and for me to maintain my standard of living, I would really need to make $2400 a week.  If I make $600 a week trading 1 lot, then I really need to be trading 4 lots at a time to do this full-time.

  • 1 lot = $600 per week
  • 2 lot = $1200 per week
  • 3 lot = $1800 per week
  • 4 lot = $2400 per week
  • 5 lot = $3200 per week

You are starting with $10,000 in capital, can only risk 3% on each trade, therefore you can only trade 1 lot initially.  Based on my assumptions, you are making $600 a week.  How long will it take to be able to trade 2 lots?

You will need $20,000 to start trading 2 lots so you must continue to trade 1 lot until you make $10,000 more.  Making $600 a week, it will take 17 weeks or roughly 4 months to reach your 2 pip allowance.

Now you have $20,000 and you're trading 2 lots per trade.   I need to trade 4 lots and preferably 5 lots a trade to make a living doing this full-time.  Trading 2 lots at a time, I'm now making $1200 per week.  How long will it take until I can trade 3 lots?

You will need $30,000 to start trading 3 lots so you must continue to trade 2 lots until you make $10,000 more.  Making $1200 a week, it will take roughly 8 weeks or 2 months to reach your 3 pip allowance.

Now you have $30,000 and your trading 3 lots per trade.  How long will it take until I can trade 4 lots?

You will need $40,000 to start trading 4 lots so you must continue to trade 3 lots until you make $10,000 more. Making $1800 a week, it will take roughly 5 1/2 weeks or a little over a month to reach your 4 pip allowance.

So now you have $40,000 in your account and your trading 4 lots at a time.  You are averaging a profit of $2400 a week.  How long did it take you to trade full-time?

About 30.5 weeks, a couple of weeks more than a 1/2 a year. 

Is this correct?  I want anyone and everyone to rip this theory apart!!!  

Obviously the key here is you have to be profitable before embarking on this journey.  Just being able to do that could take years and years.

First Trade 1 PIP Profit!

April 25, 2006

OK.  I closed out the GBP/USD position with a 1 pip profit for 2 reasons:

  1. European session is over
  2. All major currency pairs are consolidating in expectation of US economic reports this morning.

I couldn't set the limit to close out the pair at break-even so I performed it manually.  That is why I profited 1 pip.

Good thing I did.  The pair moved upwards 20 pips right after I closed it.   

I'll regroup and see if any setups emerge during the next couple of hours.

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