What I Had Hoped For Has Not Happened
I'm still struggling this week, now down a total of 131 pips in January. It doesn't look as bad because I started out January with 247 straight winning pips. Since January 8th, I'm down 378 pips. What I'm trying to get at is that things could be better. Things could be a lot worse too though. I haven't strayed from my trading strategy and have not impulsively took on trades. One thing that I had hoped for though hasn't happened. I was hoping that by using the Lien Schlossberg service, their trade signals may balance out my own personal losses. What has happened mainly is that I've broken even for the month and their signals have been most of the share of losses. It may sound like I'm placing blame but I'm really not. Since I'm mixing their trades in with mine, I want to make sure I keep everything in perspective so that I can still accurately measure my own performance. I'm sure there will be a time when I am contributing more to the losses and their signals will be helping to balance things out. I guess I'll just have to wait and see.
I'm not exactly sure how long I'm going to use their forex signal service. I'm definitely going to give it until the end of February. The more I listen to other people's signals though, the more I doubt them and the more faith I place in myself. This may be ultimately where I stand at the end of February; using my own judgment only.
Getting Kicked Around
Trading Forex this month has proved difficult. The last couple of months of 2006 was smooth sailing compared to the first 17 days of January. Similar to yesterday, I've had a couple of losses that have dropped my monthly tally to -76. http://www.forexproject.com/My_Forex_Goal/
I've lost a couple of trades on my own today and Lien Schlossberg had a losing call today also. I've lost 110 pips using their service this month. On a side note, I received an email from them yesterday asking me to confirm that I wasn't giving away their signals on this site while a trade was still open. Supposedly, a visitor to this site sent them an email saying that I may have been. I've never posted anything in real-time stating any of their trade specifics so I don't know what they're worried about.
This is sort of unrelated (or is it) to the email I was talking about above but I'll continue voicing my opinions and critiques with integrity. I'm sure I'll continue to get emails from people once in a while who aren't happy with them. I don't usually mention these emails because it's better to just address it with them directly and then let it go. There should be an understanding that this site expresses my opinions and my opinion only. If someone isn't happy with my take, they are certainly welcome to comment. I don't censor comments and never will.
Why Forex Trading Signals Haven’t Worked For Me
The Lien Schlossberg forex trading signal service hasn't worked out well so far. It isn't so much the losses they have incurred as much as the inability to act in an expedient manner to execute a trade based on their signal. Here are a couple of reasons why it hasn't worked out for me:
- I lost a little bit of confidence in them last week. They made a couple of trades last week that I felt were impulse based on previous losses. This is strictly my opinion because there is no way I could actually prove this. I could be totally off base. They did state in a weekly recap email that they made "boneheaded" calls.
- As I've stated before, their trade calls have to be followed very closely. When I get a text message or email from them, I must execute the trade right then and there. They have sent out trade calls during many different times so I've had to be on my toes. I can't always be in front of a computer with my trade platform open though so this has not been easy. For instance, yesterday I was in a USD/CAD trade that had a set profit target and stop loss. They jumped in at 7:15 am to tell me to get out of the trade. I couldn't because I was in transit. Instead of making a tiny profit, I lost 4 pips. This is totally acceptable to me considering the ever changing market conditions so this is not a knock on them. This is more a question of whether these type of trade calls fit my schedule.
- I haven't received the trade calls via text message because they failed to be delivered. I don't have real-time access to my email all of the time but I do to my phone. They finally stated after I had asked them a couple of times that Verizon was failing to deliver some of their text messages due to overload. It seems like they may have addressed this issue. I'll have to wait and see.
I'm going to stick with this for now because I've never used a forex signal service and I want to experience it for myself. There is no question that Lien Schlossberg have a lot of pressure on them this month. At the end of this month if you are not happy with the service, you can get a full refund. So if they don't turn a profit, many people may exit in droves. I know that a month doesn't tell the story so I'm not going to cancel. I feel like they are realistic in their expectations of the market and that is what I do like about them. From what I can tell, they are being honest and up front with me. I guess I'll just have to wait and see if using a service to "diversify" my trades is viable…
My Trading Actually Wasn’t Over For The Week
I received a Lien Schlossberg signal this afternoon so it turned out that my trading was not over for the week. The first lot has already closed out for a profit so I'll add an additional 14 pips to my total. The second lot is up 20 pips right now. The trade is a USD/CAD short.
This week, they've had 3 trade calls. All 3 have hit their modest first profit target. It remains to be seen if this trade will be the first to have the second profit target hit.
Lien Schlossberg Trade Missed
The Lien Schlossberg service sent me out a trade alert at 8:19 this morning to go long on the EUR/USD but I wasn't ready for the trade so I missed it. It hit its first target shortly thereafter for +19 and they are still in the trade with the second lot at a profit target of 1.3282.
Let me state for the record that although I do allow forex companies to advertise on this site, they don't have any say in what I do or write. I am not influenced by them to promote their product nor will I ever hold back from giving an honest opinion on their product if the subject did arise. I just wanted to clear this up because a trader that I have respect for made an accusation that I was censoring comments. They felt like I had a vested interest in this company and therefore was not approving comments because of this. I can assure you that this is not true. I cannot be paid to compromise my integrity. Either way, I don't take offense to his comments because if you look for forex information anywhere on the web, you usually find scams and ulterior motives. Believe what you want but my goal for this website has and always will be to promote my trading and in the process yours.
Lien and Schlossberg Performance Graphs
As I previously mentioned, I am currently only trading the GBP/USD on my own. In order to
diversify a bit, I've decided to start trading Kathy Lien's and Boris
Schlossberg's signals.
Their trading philosophy is this:
"…every single one
of our trades is a fusion of both fundamental and technical analysis.
We also believe that money management is just as important as the
entry, which is why we practice defensive trading. This means we try to
bank profits as often as possible regardless of the size and reduce our
risk in the market as early as possible. In order to achieve this, we
usually trade lot sizes in multiples of two (2). There is always a
first target (known as T1) and a second target (known as T2). It is our
rule of thumb that whenever T1 is reached, we move our stop on the
remaining position to breakeven (the entry price) so there is no longer
any real risk and we have banked a portion of the profits. This allows
us to NEVER TURN A WINNER INTO A LOSER."
You can find the performance trading with their signals at all times at http://www.forexproject.com/Kathy_Lien_Boris_Schlossberg_Trades or on the left menu under "Lien Schlossberg"
Even the Experts Do Not Make a Killing
I wanted to show Kathy Lien's and Boris Schlossberg's trading results for the last 2 months so that everyone can see what reality is. For those of you that don't know who they are, they both have written books on trading Forex, are both currency analysts at FXCM and they both regularly appear on CNBC. The results below are for the trades that they made public. What goes on behind the scenes is obviously unknown to me.
Their results are good; they made 366 pips between September 29th and today. I'm bringing it up because I think it's important to have realistic expectations when trading. When I first started trading, I thought it would be easier to make a living doing this. I quickly changed my thinking. Also, when you see "experts" making 366 pips in 2 months, you wonder how it would ever be possible to do this full-time.
If you average 400 pips every 2 months trading 2 100K lots, that's a total of 2400 pips over the year. That's approximately $24,000 a year. That's it! That's not a lot of money. I think the only way to do this for a living is to have plenty of capitalization so that you can trade more than 2 lots. In order for you to make $96,000 a year, you would need to trade 8 100K lots each trade. That would give you 4 times as many pips and therefore 9600 pips over the year.
How much capital would you need to start if you wanted to trade 8 100K lots with only a 3% risk per trade to your account. Let's use 30 pips as a stop loss for this example. If you lost 30 pips trading 8 lots, you would lose a total of $2400. Therefore, you need to have $80,000 in your account if you only wanted to risk 3%.
If my calculations are off, let me know but the reality is, even if you can consistently make good trades each and every month, you need a lot of capital to start to make a living. I'm assuming that you have to make $96,000 a year but some of you may require much less. For those of you in the New York City area like me, $96,000 isn't rich and I'm sure it's the same for a lot of other people in California or other parts of the country or world.
Philosophy in the Preservation of Capital
As I've mentioned in the past, a very important goal for any trader should be the preservation of capital. In fact, making this a primary goal ahead of all others may be most beneficial to success. That is why I post anything that's related to this when I stumble on it.
I've been following Kathy Lien and Boris Schlossberg's blog since they started it back in September. If you've followed their trades since they started, you would have made a nice profit. I have not personally taken any of their trades but I follow some of their trades for learning purposes. Currently, they are providing this free service with the purpose of garnering your confidence in them to charge you later on. I have no problem with this. There is probably a lot of work involved in providing this and they have to get paid just like everyone else. According to their FAQ's, they will be moving to a subscription model in a month or two which will be in the range of $85 – $100 a month. I'm slowly getting to my point but what I like about them is that their philosophy is heavily geared towards the preservation of capital. If you've followed any of their trade calls, this is quite evident. They state their philosophy as the following:
"…we
practice defensive trading. This means that we try to bank profits as
often as possible regardless of the size and reduce our risk in the
market as early as possible. In order to achieve this, we usually trade
lot sizes in multiples of 2. There is always a first target (known as
T1) and a second target (known as T2). It is our rule of thumb that
whenever T1 is reached, we move our stop on the remaining position to
breakeven (the entry price) so that there is no longer any real risk
and we have banked a portion of the profits. This allows us to NEVER
TURN A WINNER INTO A LOSER."
If you have any interest in reading more, feel free at http://bktraderfx.com.
Kathy Lien and Boris Schlossberg Blog
Kathy Lien and Boris Schlossberg, currency analysts at DailyFX have a new website that provides free trade ideas, economic analysis, and more. I've read both of their books and find them both very knowledgeable in the Forex market. There are people out there on the web that charge for this type of information whether it's good or not.
I've signed up for their free newsletter and received the following welcome email which may provide more information on what this site is about:
Welcome to BKTraderFX! We are delighted to have you
join our community of active FX traders.
As leading analysts within the foreign exchange
market, we are always looking for new ways to reach
out to our audience. The benefit of working in a
trading team has allowed us to filter out the best
trade ideas. In this blog, each week we will be
reviewing the current conditions in the currency
market on both a fundamental and technical basis in
a more free speaking format. We will bring the
strategies in our 3 books to life and will also be
posting any ideas that we may have, articles that we
find interesting and our takes on key economic and
geopolitical news.
Look forward to many informative emails from us.
You can visit their site at http://bktraderfx.com
or just go directly to their blogspot blog at http://bktrader.blogspot.com
Scaling up a Trade
There's a new article on Investopedia by FXCM strategist, Boris Schlossberg on scaling up a trade. Scaling up a trade is to add to a position ONLY after it becomes profitable. Most traders may be familiar with the scale down trade which is adding to a losing trade. Richard Dennis, a very famous pit trader stated that scale up trades are only successful 5% of the time. This technique seems like it is for more risk tolerant traders and not for me. With great risk sometimes comes great reward though.
You can check out the article at http://www.investopedia.com/articles/forex/06/ScalingUp.asp
