Experiences of a Forex Day Trader http://www.forexproject.com Sun, 11 May 2008 23:12:10 FeedCreator 1.7.2 http://www.forexproject.com/Blog/Investing_and_Trading/Where_Have_I_Been?/ It's been a while; a little over two weeks in fact since my last blog post. My last trade was 18 days ago and today was the first time I opened up a chart since then. Am I quitting? Has the forex market taken its' toll on me? No and no.I started a new job about two months ago and it has been so draining mentally and physically that I just haven't had anything left for forex. Trading forex has since fallen to the bottom of my priority list next to watering my cactus. The unfortunate thing is that I took this new job because I thought it would give me more time to concentrate on forex. I feel like my added responsibilities are started to loosen a bit though as I become more acclimated to my new full-time job. The fact that I'm finally posting something on my blog for the first time in two weeks may be evidence. The question will be whether I jump head first back into trading forex or ease my way back in. Either way, I'll probably wait until May 1st for psychological reasons. I'm up 2% for the month and I'd rather not threaten this by trading hastily before month end. Stay tuned. I'll be back soon. Hope everyone else is still chugging along making progress and money. Blog - Investing and Trading Mon, 28 Apr 2008 23:23:08 http://www.forexproject.com/Blog/Investing_and_Trading/What_Do_You_Think_Is_Holding_You_Back?/ You have been at this forex thing for a while now and still are not achieving the results you had originally hoped you would achieve. What do you think is holding you back? Simple question but nevertheless a good one that made me think. I have been forex trading for almost three years, not a sophomore and not a senior. Three years ago I had high hopes of trading full time within one years time. These hopes faded as the reality quickly sunk in. The results I was hoping to achieve back then were just totally unrealistic. I'm a firm believer that trading takes experience so there really is no way of rushing the learning process. The more you rush, the more chance you have of getting so discouraged that you want to run as fast as you can away from the market. After rethinking my initial goals, I limped around for quite a long time. I couldn't even put together a profitable month. During this time, I got extremely discouraged and couldn't even hope for achieving anything. I was probably two months away from quitting. Then about six months ago, I got my motivation back and wanted to give it one more shot. A lot of things seemed to come together quickly for me and I felt good about my trading. This was the point where I felt like I could start setting realistic goals and I did. Since then, I think I've made great progress toward reaching these goals. In fact, I think I've surpassed the expectations I had six months ago. So in response to the comment, I think I've achieved the results that I had hoped six months ago not three years ago. In response to the question, the only thing holding me back now is my renewed motivation to excel in my non-trading occupation. This was a bit unexpected but one must have a backup plan. I worked hard to get where I am and I don't want to throw it all away. Ultimately, I want to work for me and I think trading gives me the best shot at doing that. Blog - Investing and Trading Sun, 13 Apr 2008 00:40:28 http://www.forexproject.com/Blog/Investing_and_Trading/What_Is_More_Important_In_Forex_Than_Making_Money?/ I haven't been able to make any progress monetarily in about a month. I'm up about 4% this month but breaking my account balance all-time high has been a struggle. I'm pretty much stuck where I was around this time last month. I'm not all that concerned and shouldn't be considering I was preaching patience a couple of days ago. It's just that everytime I open my trading platform, the account balance is just staring me in the face. It's more important that I progress as a risk-aversed trader. For newer traders, it's very important for you to understand that learning methods to control your risk should be a priority. Making gains monetarily is obviously important but making gains and strides elsewhere are more important. When I first started trading mostly with demo accounts, I had some unbelievably profitable trades but my strategies were random and my risk and leverage too high. A lot of this is just pure luck and not going to take you to the next level. Your account balance shouldn't be used as a guage for success. Some questions to ask yourself to guage your success may be: Have you managed to minimize your risk and maximize your reward? Have you maintained consistency? Have you been able to control your emotions? Have you developed a complete trading system that you've been able to follow without deviation? If you haven't been profitable, have you at least been able to turn those gushing drawdowns into slow bleeders? If you're new to trading forex or have been trading for a couple of years, the #1 goal is to stay in the game as long as you can. I've talked to many traders over the years and many of them have been in and outers. They'll jump in head first, blow up multiple accounts, and jump out never to be heard from again. There are other traders I've known who couldn't consistently turn a profit and instead turned into mentors or forex marketers. Heed caution... There are also others who couldn't stand the non-regulation of forex and went back to trading futures or stocks. There are a couple traders still around since I started but I can count them on one hand. It takes years to become a trader and I can't even say that for certain. I'm still not there but I'm still around and giving myself at least 5 years. If it doesn't work out for me or you after 5 years, just think of the countless people who have gone to college and have never entered into the field of their degree. Blog - Investing and Trading Wed, 09 Apr 2008 23:14:15 http://www.forexproject.com/Blog/Forex_Announcements/Most_Popular_Forex_Websites/ Forex On Top (http://www.forexontop.com) was updated this afternoon and there are a lot of big moves. Why visit? The most informative sites tend to bubble up to the top. With so many forex websites out there, it's tough to disseminate the good from the bad. Granted, there are a lot of broker sites in the top 50 but there are also a lot of non-broker sites mixed in that get just as much traffic. This is impressive considering they're competing without expensive advertising campaigns. Check out sites ranked 1-50 (http://www.forexontop.com), 51-100 (http://www.forexontop.com/forex_trading_websites_page_2.html), 101-150 (http://www.forexontop.com/forex_trading_websites_page_3.html), and more. You can also check out the forex websites that have increased their rank the most from last week at Forex Movers (http://www.forexontop.com/forex_movers/move/movers/). Blog - Forex Announcements Sun, 06 Apr 2008 19:02:05 http://www.forexproject.com/Blog/Trader_Psychology/Be_a_Patient_Forex_Trader/ Patience is a common trait among successful traders. Unfortunately, patience isn't inherent in many of us. My belief though is that patience can be separated into two worlds for traders. The first world consists of the patience you exhibit in your non-trading life. I'll be the first to admit that I absolutely hate to wait in lines. I don't discriminate against particular lines like waiting in line at the supermarket or waiting in line at the DMV to renew my driver's license. I hate all lines. The second world consists of the patience you display when trading. Here is where I show very good patience with intermittent lapses. What I'm trying to stress here is that just because you don't have patience in the first world doesn't mean you won't have it in the second. I don't believe they are conditional of one another. So don't assume that your won't be a patient trader if you have no patience outside of trading. With experience, you can learn tricks that will help you develop more patience. For me, I just stopped watching charts. I'll scan them in the beginning of the day but I don't have the desire or time to watch every tick. I also stopped letting myself be influenced by what others were saying. Every month I'll hear everyone talking about trading the NFP report and every month I'll ignore it. Just because everyone is talking about trading it doesn't mean you have to. Other things you can do and think are increasing your preferred time-frame (ie: from 30-minute to hourly) and knowing that there will be more plenty more trading opportunities in the future if you miss a trade. Your trading patience doesn't have to emulate your non-trading patience. It may take some time to separate the two but you can do it. Blog - Trader Psychology Sun, 06 Apr 2008 15:40:57 http://www.forexproject.com/Blog/Investing_and_Trading/Other_Forex_Traders_Had_a_Rough_Month/ David had a good observation in a comment post today. He says: This may be coincidence but you, Colin at Forexspirit, Simon from Simon Super Trader, and myself all had good Febuarys[sic]. But those same people had a pretty bad March except Simon but he did say in his blog that he had some very rough trades. Is this a coincidence or was the market acting really different? Colin at Forexspirit was up around 8% in the middle of March. I too was up over 6% on March 20th. He ended March down over 17%. He states in his post that he had a lot going on throughout the month and his energy level was depleted, something I can relate to. It's tough trying to become a competent forex trader when it's not your primary job. The best solution I had for this problem was to mold my trading strategies into and around my life keeping it higher up in my priorities yet not at the top. Colin's March forex trading review can be found at http://www.forexspirit.com/2008/04/01/march-2008-review/ (http://www.forexspirit.com/2008/04/01/march-2008-review/) Simon had a mixed month of trading hitting a losing streak but then recovered towards the end of month for a 180 pip gain. In his March review post, he does bring up an excellent point about blogging forex. He stated that he only had a certain amount of creative energy and a lot of it was being used at his full-time job. This was leaving less creativity for his blog. I too have had the same exact problem. My new job has been creatively demanding also and it certainly does affect my quality of writing. His March review can be found at http://simonsupertrader.blogspot.com/2008/03/march-review.html (http://simonsupertrader.blogspot.com/2008/03/march-review.html) I don't know if David has a blog so I can't give you any details on his results. I can only imply that he had a pretty bad March. I quickly scanned my charts over the previous three months and don't see any major differences in market reaction. Maybe you do. If so, please comment. Blog - Investing and Trading Tue, 01 Apr 2008 23:34:49 http://www.forexproject.com/Blog/Investing_and_Trading/March_Was_a_Losing_Month_Trading_Forex/ Trading for the month of March is over and it was a loser for me. I lost 3.2% of my total account balance. I don't consider this a set-back though. It's just part of trading forex. I'm up 13.3% for the year so I feel good about my chances going forward. I did make some mistakes and one particular trade sticks in my mind. Last week, I was certain that a trade would eventually setup according to my rules and I pulled the trigger before it was confirmed. The setup never occurred and I lost. I also got a little too discretionary with one of my systems and really missed some great trades. In April, I won't enter a trade before my setup has been confirmed and I'm going to take trades that one of my systems generate without overthinking it. Overall, I stuck to my trading rules as I had the previous two months. This month didn't work out like the others but I'm still not going to change a thing. I'm on-track to reach my 18-month to 2-year goal (My_Forex_Goal/) I set before 2008 began. To see all my trading graphs updated as of today, go to My Forex Graphs (My_Forex_Graphs/). I hope you all had a great month trading. As always, feel free to comment and let me know how you all did. Blog - Investing and Trading Mon, 31 Mar 2008 21:13:04 http://www.forexproject.com/Blog/Forex_Announcements/Forex_Position_Size_Calculator_Bug_Fix/ There was an issue with the position size calculator at http://www.forexcalc.com (http://www.forexcalc.com) that came to my attention last week when determining the position size of the CHF/JPY. For example, when selecting CHF/JPY, the calculator needs the current price of two pairs, the CHF/JPY and the USD/CAD. The bug was preventing the output of the second pair needed to determine position size, in this example, the USD/CAD. The pairs affected were: CAD/CHF, all pairs with CHF in the base, all pairs with DKK in the base, and the HKD/JPY. This has been fixed. Blog - Forex Announcements Sun, 30 Mar 2008 16:15:41 http://www.forexproject.com/Blog/Investing_and_Trading/My_Forex_Trading_Mood_Is_Better_This_Year_Than_Last/ I was in gloom and doom mode around this time last year (2007). Without getting too personal, I had just concluded a divorce so that definitely had a lot to do with it. My advice would be to stay away from doing anything that involves risk, especially trading forex when you're going through a life changing event. Here was a post from last year:Is my forex trading dedication waning, are my priorities shifting, or have I come to a realistic conclusion? I'm talking about the time I actually spend sitting at my computer trading. There was a time when I was getting up way before the crack of dawn trying to trade the European session at 4 a.m. EST. I also used to watch the charts closely during the Japanese session. Those times are over though. The time I actually sitting in front of charts has lessened by the month at this point and I'm not sure that's such a good thing for someone at my stage of learning. I get a lot of emails like, why don't you do this or why don't you do that but the reality is that I just can't do most of those things. Some of these things are trading the news and trading shorter-term charts. I certainly appreciate the feedback but can someone with a limited amount of time actually be a trader? I'm not sure but maybe I'm taking the wrong approach to all of this. Maybe someone short on time shouldn't be trading short-term charts or trade news releases. Maybe I shouldn't even think about day trading. I've been trading a daytrading system for a while now mainly because it was a set and forget system. I could set my orders, stop losses, and profit targets and wake up most of the time to find the trade already complete but this certainly doesn't give you any flexibility. Particularly, I'd find it very difficult to implement a breakeven requirement to my trading plan unless I automate this via a Metatrader broker. So do I have to give up trading 30-minute and 60-minute charts and move toward 4-hour, daily, or weekly? Perhaps I will have to do that. Some things remain the same as last year and some are different. I'm still trying to be a forex trader but with a lot more success. I still don't spend a lot of time sitting in front of my computer trading but this is by choice. I have strategies and plans that fit my trading personality now so I can scan charts quickly and know whether there's a possible trade brewing. I no longer sit and search for a trade. This is the worst thing that you could possibly do and a common mistake inexperienced traders make. I've modeled my trading style around my schedule and this allows me to day trade. It is possible to day trade without sitting and staring at a screen in the middle of the night and all morning. I find that my best trades are those that occur when a chart is nowhere in sight. I made my best trade of the year this month. I traded jobs and left Bear Stearns two weeks before the blow up. This will probably be the best trade of my life.Success? Time will tell. Persistence... Read more posts like this at http://www.forexproject.com (http://www.forexproject.com). Blog - Investing and Trading Tue, 25 Mar 2008 20:56:49 http://www.forexproject.com/Blog/Forex_Watchlist/Forex_Watchlist_for_March_24%2C_2008/ Here are the currency pairs I'm following for possible short-term trades:SHORTUSD/JPYUSD/CHFLONGNONE Blog - Forex Watchlist Sun, 23 Mar 2008 16:32:01 http://www.forexproject.com/Blog/Investing_and_Trading/Secret_Rhythms_of_Forex_Time_Zones/ I've mentioned in the past that I don't trade the Asian session. This year though, I have opened GBP/JPY positions. No other pair I've observed has as much volume as the GBP/JPY during this session so if I like what I see, I won't hesitate to pull the trigger. But other than the GBP/JPY, most other pairs don't exhibit the volatility that a shorter term trader would prefer. Asian session characteristics: quietest, least volatile of the three Forex trading sessions account for 15% of daily turnover typical 20-30 pip ranges for the EUR/USD spreads increase price action more due to Australian and New Zealand economic announcements than JapaneseThe European trading session is a better time than ever to trade the volatility of the Forex market. I trade this session more than any other and find it suits me. I know most times at what price I'll enter a trade so a lot of my positions trigger automatically sometime between 2 am and 5 am EST. Many times, they'll also close automatically during this time range without me ever knowing because I'm asleep. This suits me because it prevents me from micromanaging positions which I sometimes have a habit of doing. European session characteristics: London is the heart and soul of FX and has over 200 market maker dealers 35% of daily trading volume whipsaw moves spreads decrease some observe the first price move during this session to be false as dealers run stops and explore support and resistance levelsI trade the US trading session but not as much as the European. I'm strictly a technical trader and since the US economic announcements move the Forex market like no other, I don't feel that comfortable. I used to trade more during this time but found that Forex brokers made it more difficult to properly manage a position (platform slowdown, increased spreads, wild swings.)US session characteristics: account for 25% of daily turnover 10% of turnover from Greenwich, CT, the hedge fund capital of the world some observe that all price action that occurred during the Euro session is reversed the focus turns from European economic news to US economic newsSource for some of the information came from the article titled, Secret Rhythms of FX Time Zones at http://www.sfomag.com (http://www.sfomag.com).Explore these additional posts at Forex Project relating to Forex Time Zones: Is Trading The Asian Session a Waste Of Time? (Blog/Investing_and_Trading/Is_Trading_The_Asian_Session_a_Waste_Of_Time?/) Most Volatile Pairs during Asian Session (Rob_Booker_Training/Week_1/Most_Volatile_Pairs_during_Asian_Session/) Blog - Investing and Trading Sun, 23 Mar 2008 00:59:27 http://www.forexproject.com/Blog/Trading_Performance/New_Forex_Trader_Graphs/ I've added a new section to the site that will display all different types of graphs of my performance. Currently I have: Monthly Profit/Loss in USD - This graph shows my profit/loss in USD for each individual month. A month is treated as a totally separate entity from every other month. My Equity Curve - a graph rebased to a starting level of $20,000 USD. This shows my rolling profit/loss in USD from month to month. The value of the last data point on the graph will show my most recent capital amount. Monthly Profit/Loss Percentage - This graph shows my percentage gain or loss for each individual month. Rolling 12-month Profit/Loss Percentage - This graph will show my rolling percentage profit or loss for a 12-month period. The value of the last data point on the graph will be my total profit/loss percentage for the year. I don't know how much I'm going to increase or decrease these numbers after this month. I've had an up and down month on the positive side. I currently sit at +3.0% for March with no open positions.The link to the graphs will always be located under the Trader Rich menu and is titled, My Forex Graphs (My_Forex_Graphs/). Blog - Trading Performance Thu, 20 Mar 2008 13:19:34 http://www.forexproject.com/Blog/Technology/Trading_Forex_on_a_Mac_or_Linux/ My primary computer at home is a MacBook Pro running OS X 10.5.2 (Leopard.) My other two computers run linux. There is not an unvirtualized Windows PC anywhere to be found. Despite this fact, I can trade Forex using any broker trading platform and use any charting software available. Why let anyone dictate the type of computer or operating system you're going to run? I like Mac's. I like Linux. Windows XP was O.K. but Microsoft's latest release, Windows Vista is an absolute nightmare. With that said, there are two predominant types of forex trading and charting applications that are offered by forex brokers: Java-based broker applications like those offered by Oanda, Forex.com, and GFT Forex. I don't know of any full-featured charting applications that are java-based. These trading and charting applications can run on any operating system that have java installed. You can run these applications on Windows, Mac, or Linux. Windows-based broker applications like those offered by FXCM. All of the full-featured charting application like Metatrader, eSignal, and Xtick only run on Windows. Your only option is to run these on a Windows XP/Vista machine.Virtualization is getting more popular in the Enterprise and even on the desktop. If you don't have a clue what virtualization is, read the Wikipedia entry at http://en.wikipedia.org/wiki/Virtualization (http://en.wikipedia.org/wiki/Virtualization). All you really need to know is that virtualization allows you to run Windows on a Mac or Windows on Linux and vice versa. You can run Windows alongside your Mac or Linux at the same time without rebooting. Before I get into what virtualization options you have, let me show you a screenshot of my Mac Desktop. That's Mac OS X with Metatrader (a Windows only application) running.You can also do the same thing pictured above on a Linux workstation. You need virtualization software installed on your Mac or Linux machine to do this. You have two options: Parallels VMware FusionI've used both options and they're very similar. VMware has been around for a long time and are the market leaders in virtualization in the enterprise. They were late to the game supporting Mac OS though. Parallels specialize in virtualization on the Mac so are ahead of VMware in this respect. Therefore Parallels has a slight edge feature-wise. Both products offer a fully functional 30-day demo. On Linux, VMware definitely has the edge and has been running virtualization technology on top of it for years. Just recently, Parallels announced that it too can run on Linux.I'm not going to get into all the features and benefits of virtualization but another great feature besides being able to run Windows applications on Mac and Linux are snapshots. They are kind of like backups of your Windows machine but are very quick (a minute at the most for me.) Parallels describe snapshots as enabling you to erase mistakes and recover your virtual machine from system crashes and viruses with the click of a button. It really does this.Virtualization allows you to remain flexible with the computer hardware and software you choose to trade forex with. You don't have to put off buying that Mac or Linux machine just because your broker or charting provider only support Windows. You get the freedom to do whatever you want. Blog - Technology Mon, 17 Mar 2008 21:35:23 http://www.forexproject.com/Blog/Forex_Brokers/FXCM_to_Offer_Metatrader/ This came as a complete surprise to me but I absolutely welcome it. FXCM announces they will offer Metatrader in 2008.FXCM plans to introduce the MetaTrader online trading platform in the beginning of 2008.Because many traders have expressed an interest in this trading platform, we would like to keep them informed of our progress. Please complete the form below if you would like us to send you information about the upcoming release of MetaTrader.http://www.fxcm.com/metatrader-platform.jsp (http://www.fxcm.com/metatrader-platform.jsp) Blog - Forex Brokers Mon, 17 Mar 2008 20:50:46 http://www.forexproject.com/Blog/Investing_and_Trading/How_a_Stock_Meltdown_Today_Further_Confirmed_My_Intuition/ I opened 23 positions in January, 19 positions in February, and 11 so far in March. There were approximately 22 trading days in January and 21 trading days in February. March will provide 21 trading days. It's pretty clear from these numbers that I average about 1 trade a day. I'm not trading everyday though. Trades sometimes come in bunches and on some days, I open multiple positions. It's also clear that I'm a forex day trader. I attribute this to my personality. I'll be the first to admit that I'm a bit impatient. I accept this and therefore design my strategies based on my self-evaluation. This is the only way I can see doing it. Fight yourself and it will show in your bottom line. Until I actually broke down the numbers above, I felt like I was under trading this month. Under trading to me means that I'm missing trades that my systems are generating. The simple fact is that every month I miss trades that my systems generate. So I'm not strictly a mechanical trader because I do use discretion in my trading or maybe it can be called intuition. Intuition usually turns out helping me a lot more than it hurts me. How do I use intuition in my trading? Quite simply, sometimes a signal I get just doesn't feel right. In this case, I won't enter the trade. Sometimes if I'm already in a trade, I'll get out before it completes. I'll admit that sometimes it may be due to fear but many times, it's just gut feeling. After today's total meltdown of a certain financial firm's stock (they were all over the news), I now believe that I should trust my intuition even more. I worked for this financial institution. I left the firm two weeks ago. There were a lot of contributing factors to why I left but every January of every year, I could have left the firm but I never did until this year. Luck? Maybe but maybe not. I think intuition should play a role in every trader's decision-making process. How do you know if intuition, logic, fear, greed, or other emotions are expressing themselves in your trading? The key is to find the right balance which will come with experience. Blog - Investing and Trading Sat, 15 Mar 2008 01:15:00 http://www.forexproject.com/Blog/Forex_Scams/Want_To_Buy_a_Forex_Trading_System?/ Why would you want to do something like that! I've been sent many forex trading systems for free in exchange for the possibility that I'll review it favorable. I have yet to receive one that resembles a trading system. Having rules for entry, exit, stop-loss and targets do not make it a trading system. I'm warning beginners and others after the latest trading system was sent to me. I opened the attachment and it contained the same filler that all the others had, a brief overview of the currency market, simple rules that comprise the trading system, an attached Metatrader expert advisor and bad advice. This particular system I had seen before though; on the Forex Factory trading system forum. The system being sold for over $80 USD was a split image of the Sidus Method that you can get for free at the forum. The website that promotes the system is also a split image of many other forex scam websites complete with fancy cars, boats, a friendly picture of the person selling the trading system (this isn't really him/her) and promises of wealth. DO NOT BUY TRADING SYSTEMS! You will get burned everytime. Most are stolen off websites and forums. They're also packaged with a lot of extras (indicators, expert advisors, e-books, etc) and marketed as the next greatest thing. You can find thousands of free forex trading systems, indicators, expert advisors, and e-books anywhere on the internet for free.I have zero tolerance for scammers so I caution you because they're everywhere and forex is a breeding ground for them. Do you want to learn how to trade? Then be prepared to dedicate yourself to doing so without the thoughts of instant wealth being sold everywhere on the internet. It's not going to happen. If it were happening, traders wouldn't be selling you an $80 trading system. Blog - Forex Scams Tue, 11 Mar 2008 14:51:41 http://www.forexproject.com/Blog/Investing_and_Trading/Forex_Trading_Price_Action_Is_Better_Than_Using_the_CCI/ There's a newer article on Investopedia titled Channel Breakouts with the CCI by Schlossberg and Lien. I read it and don't see why you would want to use this strategy when there's a much better alternative. You can read the article (http://www.investopedia.com/articles/forex/08/CCI.asp) to get a more in depth explanation of the strategy but I'll try to give a quick synopsis. The strategy looks to trade higher highs and lower lows of the commodity channel index. For a long trade, you wait for a reading to exceed +100 and enter a trade on the close of the candle if the reading exceeds the previous peak reading. For a short trade, you do the opposite. I remember reading about this strategy a couple of years ago when I was an indicator junkie. I found it appealing but that was then. Now, I use indicators at an absolute minimum. If you want to trade momentum especially intraday, you have to get on quickly while it lasts. I don't think a lagging indicator allows you to do this. There's a simple alternative to this strategy, trade breakouts of previous day highs or lows. There's other alternatives too if you just set your mind to finding them and doing testing. For instance, you can follow all the rules of the strategy but not use the CCI, use price peaks instead. Remember, every indicator is a derivative of price. Looking at charts, the CCI indicator is always late to the game and sometimes falsely identifies areas of momentum especially when the price is trading in between the previous days high and low range. So while I can't say that this strategy won't make you money, I think that there are other ways of identifying momentum that give you a better chance. Blog - Investing and Trading Sat, 08 Mar 2008 19:42:29 http://www.forexproject.com/Blog/Forex_Announcements/Short-term_Forex_Trading_With_Micro_Price_Action/ The March Issue of Currency Trader Magazine was released. There's an article on short-term forex trading with micro price action that I found interesting and unique. Other features in my order of interest include: Foreign currency mortgages may help borrowers survive Why is the yen trading higher? USD/GBP on the down slope A new phase might be unfolding for the USD/CAD What's down with the Australian dollar?You can download your free issue at http://www.currencytradermag.com (http://www.currencytradermag.com). Blog - Forex Announcements Sat, 08 Mar 2008 12:45:59 http://www.forexproject.com/Blog/Trader_Psychology/One_Good_Reason_To_Exit_a_Forex_Position_Early/ Ask my subconscious self why I exited my position early today and he might tell you that it was due to fear. Ask me why and I'll tell you that it was not fear but a necessity to boost my psyche. Let me explain why. I measure my performance month to month. I may have gained 7% in January and 10% in February but to me, March is a whole new month. So when March 1st came, in my mind, I was at 0%. I like measuring this way for two reasons. If you had a bad month, it gives you a chance to reset and start over from 0. Why carry over the loss and put that additional pressure on yourself to get it back. Technically, you are still down compared to the previous month but I think it just puts you in a better state of mind. On the flip side, if you had a profitable month, why risk the chance of instilling overconfidence or invincibility. Reset. A month typically gives you enough time to come to that average win/loss percentage. Measuring week to week is too short. What if you had only one trade. This wouldn't accurately reflect your overall trading performance. Measuring longer than month to month and you might miss the chance to assess your trading before it's too late. End of month performance assessment can lead to important changes that may improve your trading. So why did I exit my position early this morning? I entered a long AUD/USD position yesterday with the intention of holding until I obtained at least a 200 pip target but the pair shot up nicely this morning and I was quickly up 100 pips. I exited here for one reason, to kick the month off on a positive note. This was important for my confidence going forward this month. Exiting a forex position is also a good idea if you're stuck in a losing streak. Why risk the chance of losing the profit and losing even more confidence? Take the profit and put an end to the losing streak. Check out these other forex blog posts. Forex Trading Profit Up 9.6% In February (Blog/Trading_Performance/Forex_Trading_Profit_Up_9.6%25_In_February/) How Many Times Have You Exited a Position Early? (Blog/Money_Management/How_Many_Times_Have_You_Exited_a_Position_Early?/) Forex Trading in the Black (Blog/Investing_and_Trading/Forex_Trading_in_the_Black/) The True Test (Blog/Investing_and_Trading/The_True_Test/) Six Percent Loss This Week (Blog/Trading_Performance/Six_Percent_Loss_This_Week/) Blog - Trader Psychology Mon, 03 Mar 2008 21:39:46 http://www.forexproject.com/Blog/Investing_and_Trading/Fundamental_Analysis_%2B_Technical_Analysis_%3D_Success/ There is a research paper that was brough to my attention by one of the authors which finds that combining two types of information (fundamental and technical analysis) improves risk-adjusted performance of an investment strategy. This paper specifically addresses the success in 23 emerging markets. I asked one of the author some questions. Here are their answers. How long and how much research was put into the paper? The four of us have spent in total about one man-year of work into creating this research paper. We will present it at the emerging markets conference at Cass Business School in London in May '08. Do you or the other researchers have experience as professional traders? Two coauthors of mine are purely academic, but one is at ING Investment Management and I myself am at the Quant Strategies dpt of Robeco Asset Management. I would like to tell you about our quantititave strategies and how we apply our insights in real live portfolios, but our compliance departments do not allow this. So you could mention our affiliation with professional investment teams, but nothing about the practical application. What is the main attraction of the paper? I think the main attractor of the paper is the (slightly changed) abstract: The authors measure the profitability from fundamental and technical trading rules for emerging markets currency investments. Using a sample of 23 emerging markets with a floating exchange rate regime over the period 1995-2007, they document that both types of information can be exploited to implement profitable alpha trading strategies. In line with evidence from surveys of foreign exchange professionals concerning the use of fundamental and technical analysis, the authors find that combining the two types of information improves the risk-adjusted performance of the investment strategies, with Sharpe ratios above 1.4 for emerging currency markets and above 0.5 for developed currency markets. These results indicate that active currency traders may wish to expand their strategies to emerging currency markets, where alpha opportunities seem to be larger. You can download the paper from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1088222 (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1088222) Blog - Investing and Trading Sun, 02 Mar 2008 21:56:52