Rich is Trading Forex Again
So after yet another hiatus from trading forex, I just recently had my first trade in months. It was a successful one also. But the question I want to answer is, “Is this blog dead?” The answer is no. I’ve made a living over the past 3 years ducking in and out of here depending on what’s going on in my life. Sometimes I’m just too swamped at my real job, other times I just don’t feel like writing, but I always come back. The great thing is I’ve built up a lot of content over the years so a lot of it applies to the type of forex trader you’re trying to become.
So where do I go from here? I’m in the mood to start trading forex again so that’s what I’m going to do. I’m also going to talk a little about stocks. I’ve had a lot of success, believe it or not, trading the stock market in the last couple of months and I think I’ve learned some things that I could apply to trading forex. So you’ll hear me talk about some of these things also.
Stay tuned….
Popularity: 70% [?]
Places To Get a Great Forex Trading System
It’s very important that if you’re exploring forex trading or already trading that you have a trading system. One aspect of that trading system are the actual setup rules which usually contain entry and exit techniques. Traders put a lot of time and effort in developing these setup rules too often neglecting other aspects such as position sizing or relative size of your profits compared to losses. Therefore it’s important to find a comprehensive forex trading system.
Where can you find a comprehensive forex trading system? Throughout the last three years, I’ve been through many trading systems obtained mostly from books, forums, or other websites. I’ve found that almost every time, I’ll mold that system into something totally different than the original incarnation, something that fits my personality and style of trading. Many times, the original system will also need to be expanded to include things that were neglected or forgotten. Those of you searching for the perfect system may find this method of modifying existing forex trading systems desirable. There are places where you can find the whole package without any need for modification.
This brings me to the question, "where did you get your forex trading system?" I think there are four main ways of getting a trading system.
- Buy it. There are tons for sale out there on the net but heed caution. Many were just copied from forums, books, or other websites. Sometimes when you buy forex education, part of the package will include a trading system. For instance, Rob Booker provides his Arizona rules as part of his mentoring program.
- Get a free one. There are many free systems that can be found in books, forums, or other websites. I guess one can question whether a system found is a book is free since you paid for the book.
- Create an original system yourself. My main trading system is an original creation. There may be other systems out there that are similar to it since it’s a culmination of years of exposure to other systems and experiences.
- Modify someone else’s system and make it your own. As I stated above, I have done this many times.
I’ve created a poll that asks you this question here. http://www.forexproject.com/forex-polls/
Popularity: 99% [?]
The Bad News About Forex Automated Trading
I’ve read a lot about how automated forex trading systems just don’t work in the long run but I can’t conclude this from personal experience. I’ve never seriously traded forex using automation. The following is an email from a trader who can conclude this from his experience. I found it totally worth sharing.
I came across your blog this afternoon whilst casually surfing the various forums in lieu of watching rubbish on TV.
I find your search for trading success an interesting one as in many respects it mirrors my own experience in many ways.
I spent well over two years, pretty much full time, searching for automated solutions to trading, having been in the process automation business for 25 years. To summarise, I have concluded it is a futile exercise with the technologies currently open to the average retail trader. I have yet to find any expert that is reliable enough to be left trading on its own and have pretty much concluded that most are really curve fitting solutions. I have seen no strategies posted anywhere that are consistent or reliable and capable of being automated without significant risk. I see some that pertain to be profitable (Artemis would be an example) but it needs constant adjustment and tuning which makes it akin to semi automation, not full automation.
However, there are manual strategies that are available that are profitable; they just do not lend themselves to automation due to the ability of the human braoin to make decisons based on proce movement that are pretty much impossible for any expert to make. So I abandoned my search for full automation solutions a year ago and concluded semi – automation was probably the right route. I trade manually today, with a few automated aids.
Linked with that, money management and certainly trading psychology are massive keys to success, the first to ensure you are alive to trade tomorrow and the latter because it takes time to get your mental state right to be able to trade at all, and that is what takes the time Rich. Sure, you need to understand the basics of trading, but without the right mental state, you’ll never be consistently profitable.
Your target of 50% per annum is achievable so keep up your search.
Popularity: 100% [?]
Is Rob Booker Forex Training Any Good?
This is a question I receive often and unfortunately I can no longer give an honest answer which is the only answer that I ever want to give. This is due to the fact that I haven’t dedicated myself to Rob Booker’s training since 2006 making my experiences outdated. The good news is that over the coming months, I will be able to give you an honest opinion because I am in the initial phases of giving his tutelage another go. This is possible because he has no expiration date on his training. According to his training contract, "You have as long as you need. You never have to pay me anything again…."
At first glance, there have been many changes to his training. His chart school, which are Rob’s trade ideas for students in video format appear to be more interactive. He provides a web conferencing platform where any of his students can attend and ask questions via messenging or voice. Other basic course materials seem unchanged such as the course introduction, FX basics, backtesting, support and resistance, moving averages, and similar topics. These are really basic though and I don’t see any reason why these would ever change. The course materials are also for the totally inexperienced forex trader, someone who has really never explored Forex outside of this course.
His primary trading system which has many components to it is called the Arizona Rules. He was just developing this system back when I lost interest in his training so I haven’t really explored it. If anything, it seems like Rob’s attempt is to provide his students with a well tested and possibly profitable trading system while also providing a comprehensive trading plan and system that one can take knowledge from to develop their own forex trading system.
I’m just getting involved again so I cannot comment further at this time but keep checking back here in the upcoming days and weeks for more details on Rob Booker Training. You can also read my previous and new experiences at http://www.forexproject.com/category/rob-booker-training/.
Popularity: 91% [?]
Does Your Forex Trading Plan Encourage You To Overtrade?
Welcome Ryan, the author of this Forex Project guest post. Ryan trades from a quiet country lake house and helps traders through his blog at http://www.ryanokeefe.com.
Does your trading plan encourage you to over trade?
Recently I started a survey on my website asking traders to answer this question:
“What is holding you back from trading successfully?”
Currently the number one answer is “I make some money, and then I give it all back.”
Multiple factors contribute to this result however over trading is the most frequent concern struggling traders email me with. I have some thoughts to avoid over trading I hope you’ll find useful.
Consider Your Trading Plan
Over trading may be baked into your trading plan without you realizing it. I received an email from a concerned trader who struggled with taking too many trades although they were following their trading plan. I asked to look at their trading plan and found it was built around the 60 minute chart, the opening of each trading session, support and resistance levels plus the MACD indicator. How many opportunities do you think their trading plan generated on a daily or weekly basis?
I’m a big fan of slowing things down with longer time frames. Using a longer time frame automatically reduces the number of trades you will consider which reduces your trading plan’s built in propensity for over trading. You won’t be tempted to take a “valid signal” 10 times a day trading a daily chart. The vast majority of my trades are planned on the daily chart with the entry taken on a four hour chart.
Consider a Weekly Goal
In my trading plan I have a weekly goal of 50 to 100 points. This is a realistic goal for me to achieve and having the number written down reminds me that once I’ve made my weekly goal there is no reason to place it at risk. When the goal is achieved it is time to do anything other than trade. If you’re trading a lower time frame I think setting a weekly goal is even more critical because as we have discussed, shorter time frames offer more “trading opportunities” which place your profit at risk. I’ve had this weekly goal established for years and it works well against over trading.
Some traders may think a goal of 50 to 100 points a week is too low but keep in mind there are as many ways to configure a trading account as there are ways to trade it. With the right mix of leverage, lot size and risk capital you can do a lot with a goal of 400 points a month. Most important is to set your goal according to your personality; whatever you believe you can achieve and doesn’t stress you out in the process is best.
Do you really need to take that trade?
Before I open a trade I ask myself this question every time without fail. It seems obvious but so is lowering the landing gear before landing yet some pilots still manage to land with the gear up. Consider your emotions before you take a trade. Are you tired? Are you angry? Did you miss a good trade and now desperate to make some pips? Have you made your weekly or monthly goals? If you have met your goals you don’t need to trade, period. If you can honestly answer this question with a “yes” then pull the trigger but if not, don’t put your capital at risk.
Be accountable to somebody other than yourself.
Rob Booker pitched this idea in a presentation I watched online and I believe it is the strongest action you can take to eliminate any propensity you have to over trade. Whoever you report to should have a basic understanding of your trading plan and be able to question you on each trade in a constructive setting. This is a full disclosure exercise so find somebody you can trust.
I report to my Wife every Friday morning with a print out of our account statement. We go through every trade while I explain what system I used, why I took the trade, what mistakes I made and what I could do better next time. We also discuss what I should be doing during the upcoming week if goals are already exceeded.
If knowing you need to explain why you put hard earned profit at risk for an unnecessary trade at the end of the week can’t keep you from pulling the trigger, nothing will.
Popularity: 77% [?]
How Do I Begin Trading Forex?
I’ll assume that you have some knowledge about Forex either from a book or website. I’m not going to give definitions of a pip or explain what a base currency is. There are plenty of places you can find this information. What I want to provide are practical lessons for the beginner, lessons that can help straighten the learning curve.
There’s a lot of information out there on forex, some of it good and some of it misleadingly bad. Be careful. Trading forex is many times portrayed as a way to get rich fast; a home-based business. This is the furthest than from the truth. Trading forex is risky and though it may be possible to turn it into a home-based business, you need a lot of capital and experience. To give you an idea, a very experienced and respected currency trader had the following yearly returns: 71% in 2004, 433% in 2005, 53% in 2006, and 30% in 2007. Let’s just say for a minute that you were as successful as this trader and started 2007 trading forex as a home-based business with $5000. Could you live on the $1500 you made in 2007? I doubt it. I’m not trying to discourage you from trying but I think it’s important to be realistic. If you dive into currency trading with unrealistic expectations, you’re not going to get far.
Maybe you’ve read a book on forex, read something about trading forex on the internet or you went to a trading seminar. This is something that interests you, something you want to commit time to, initially as a hobby and maybe one day for a living. After you have this basic knowledge, where do you begin?
- I’d recommend buying a book on forex because it contains a little of everything. It explains what the forex market is and answers other basic questions. In addition it should contain information on reading charts and technical analysis. Read the book from cover to cover. When you’re done, move on to step 2.
- Download and install Metatrader which is a free trading and charting platform. You will prompted to open a demo account after installation. You can download Metatrader from any number of places. One such place is http://www.interbankfx.com. Start playing around with Metatrader to learn what capabilities it has. You’re not going to find a Metatrader book in your bookstore but you will find online manuals on the internet. There is also a huge user community around Metatrader. You can find any one of these communities by googling "metatrader forums."
- Start applying some of the things you learned from the technical analysis sections of the book to your charts. Draw some trendlines or add some indicators. Start placing some trades also. Don’t be concerned about how much you’re risking or whether you’re going to win or lose. Just get a familiarity with how to place a trade. There’s only two directions you can trade in, long (buy) or short (sell) but there are many currency pairs. Try concentrating just for consistency on the EUR/USD, GBP/USD, USD/CHF, or the USD/JPY (the four most popular currency pairs.)
These three steps should keep you busy for quite some time. Take some time to get familiar with it all then you can move on.
Popularity: 76% [?]
FX Engine Performance
Currently I am trading a live mini-account with FX Engines to evaluate it. I’m using real money and my own money to prove whether this is as good as it looks.
FX Engines focus on the ability to trade the news automatically through their platform. Since news tends to create major short-term moves in currency prices (sometimes in just the first 1-10 tics after the announcement), they see the potential for profit with a limited amount of risk. In fact, most trades orders are placed with a stop loss of only 10 pips.
| Week # | Pip P/L | Gross P/L | Total # of Trades | Total Winning Trades | Total Losing Trades | Total Even Trades | Avg. Winning pips | Avg. Losing pips |
| 0 | 0 | $0 | 1 | 0 | 0 | 1 | ||
| 1 | 58 | $58 | 2 | 2 | 0 | 0 | 29.0000 | |
| 2 | 22 | $22 | 5 | 2 | 3 | 0 | 20.5000 | -6.3333 |
| 3 | -51 | $-51 | 4 | 0 | 4 | 0 | -12.7500 | |
| 4 | 19 | $19 | 6 | 3 | 3 | 0 | 18.3333 | -12.0000 |
| 5 | 3 | $3 | 5 | 2 | 3 | 0 | 10.0000 | -5.6667 |
| 6 | -3 | $-3 | 1 | 0 | 1 | 0 | -3.0000 | |
| 7 | 41 | $41 | 3 | 2 | 1 | 0 | 38.5000 | -36.0000 |
| 8 | -5 | $-5 | 2 | 1 | 1 | 0 | 18.0000 | -23.0000 |
| 9 | -35 | $-35 | 1 | 0 | 1 | 0 | -35.0000 | |
| Total | 49 | $49 | 30 | 12 | 18 | 1 |
Popularity: 2% [?]
Forex Engine Trades
Currently I am trading a live mini-account with FX Engines to evaluate it. I'm using real money and my own money to prove whether this is as good as it looks.
FX Engines focus on the ability to trade the news automatically through their platform. Since news tends to create major short-term moves in currency prices (sometimes in just the first 1-10 tics after the announcement), they see the potential for profit with a limited amount of risk. In fact, most trades orders are placed with a stop loss of only 10 pips.
Week 9 Trades
| Entry Date (EST) | Pair | Lots | B/S | Open | Close | P/L | Gross | Release |
| 2006-08-08 00:00:00 | EUR/USD | 1 | b | 1.2869 | 1.2834 | -35 | $-35 | Release |
| Pip P/L | Gross P/L |
| -35 | $-35 |
Popularity: 1% [?]
H Trading System
This is where I will put all information pertaining to my production trading system called the h-system. I won’t give the specific details of this trading system NOT because I don’t want to share but mostly because I don’t feel like giving it out will be of any help to anyone for the following reasons:
- It is important for everyone to create a system that fits their personality and trading style. I’m not a successful trader yet but I’ve heard that doing so can lead one closer to success.
- I don’t want to feel responsible for someone using this system and then losing money because of it.
- I am using real money to trade this system and I’ve spent a lot of time backtesting and forward testing. Since I just started trading it for real, I still don’t feel confident that this system will be a success (see #2)
What I will say is that this system has very simple rules. It uses technical analysis but nothing that anyone hasn’t heard of. Here are the rules I will state:
- Trade the GBP/USD only
- Trade using the 30min chart
- Trade during the hours of 2am EST and 11am EST only
- Always enter with 3 lots at the same entry price (unless slippage occurs)
- Always exit 2 lots after 30 pip profit each (60 pip total)
- Once the 3rd lot reaches 30 pip profit, trail the stop using the last candle high (if in a short position) or the last candle low (if in a long position)
- Place stop loss at the 34 low EMA for all 3 long positions on entry and place stop loss at the 34 high EMA for all 3 short positions on entry. Adjust the stop loss every 30 minutes if the 34 EMA high or low has changed.
- If trade was opened right before a hot zone (economic announcement), get rid of the stop loss and use a mental stop. If 1 minute after the economic announcement the price is below the stop loss in a long trade or above the stop loss in a short trade, exit. This rule is to allow the emotion to clear before exiting a position that may reverse.
- DO NOT TRADE DURING MAJOR ECONOMIC RELEASES. (RED RELEASES FROM Forex Factory)
The entry is just on price with only 1 confirming indicator. I’m looking into using an additional indicator for confirmation but as of yet, it hasn’t proved to be useful.
| Month | Pip P/L | Gross P/L | Total # of Trades | Total Winning Trades | Total Losing Trades | Total Even Trades | Avg. Winning pips | Avg. Losing pips |
| 4 | 294 | $2940 | 12 | 7 | 5 | 0 | 99 | -80 |
| 5 | 279 | $2799 | 12 | 8 | 4 | 0 | 83 | -95 |
| 6 | -28 | $-420 | 7 | 4 | 3 | 0 | 39 | -61 |
| 7 | 61 | $610 | 7 | 5 | 2 | 0 | 60 | -120 |
| 8 | 467 | $4670 | 12 | 10 | 2 | 0 | 56 | -47 |
| 9 | -697 | $-6817.4 | 34 | 14 | 20 | 0 | 57 | -75 |
| 10 | 0 | $240 | 4 | 2 | 2 | 0 | 30 | -30 |
| Total | 376 | $4021.6 | 88 | 50 | 38 | 0 |
Popularity: 2% [?]
Forex Contests
Join the Forex Project Trading Contests!
As long as you have a demo (FXGame) account with Oanda, you can join the contest. FAQ’s regarding the contest can be found at https://fx2.oanda.com/mod_perl/fxcontest/fxcontest.pl?rm=help#q6.
If you don’t currently have a demo account, you will be prompted to do so when you join a contest.
January 2008 Forex Trading Contest
Starts: Tuesday, January 1st, 2007 at 00:00 EST
Ends: Tuesday, February 1st, 2007 at 00:00 EST
Prize: Sorry, no prizes this time. Last time I offered $100 Amazon gift certificates to three winners. I wanted to see how this contest went and maybe offer prizes again in February.
Link to join: https://fx2.oanda.com/mod_perl/fxcontest/fxcontest.pl?rm=contestDetails&contestId=482
Popularity: 2% [?]
