The primary reason why I started the Forex Project is to determine if trading as a career is a viable option. Before doing this, I followed the financial markets because I found it interesting and also necessary since my job as a IT professional on Wall Street required at least some knowledge of it. Most of my investments were in mutual funds and I dabbled in the equity markets here and there. I was reading the Wall Street Journal one morning and happened to stumble upon an article about a Forex Day Trader. I wrote about this experience a while back and will include it here.
This summer I was browsing the Wall Street Journal when a headline caught my eye. I don't remember it exactly but it stated, "Disc Jockey Plays the Hits by day, Trades Forex by Night." It turns out that this DJ worked for WDHA, a radio station down the road from my current job. I continued to read how he was a "Forex Moonlighter" and was going to eventually trade full-time. This DJ stated that he made $170,000 trading last year and this year he was planning on making more. It went on to say that he did this all in the comfort of his own house on the internet. It also stressed the difficulty with being successful doing so.
Either way, this got my attention. A couple of hours later I went to the Barnes and Noble and tried to find any book on Forex I could. That book turned out to be James Dicks, "Forex Made Easy: 6 Ways to Trade the Dollar". It turns out that this book was nothing more than a glorified sales pitch. He kept mentioning his "4X Made Easy" software. Either way, it started me on my way so for that I'm grateful.
Working in corporate America for the last 8 years or so have opened my eyes to the ways of the world. The chief concern of most corporations are how they can increase profits for shareholders. They won't hesitate to outsource jobs overseas if it's going to decrease expenses. One day, they may feel the need to send my job overseas. I understand that it's just business but I have to think about myself and my family. I don't want to have to rely on another to provide for me. I feel like trading can provide me with this financial independence and freedom.
This isn't the only reason why I'm trading. In addition, I enjoy statistics and charts and find trading an overall enjoyable experience. The appeal of trading from anywhere and from home is also a reason why I'm trading.
I will be trading the Foreign Exchange market only. Specifically I will be looking to trade the EUR/USD currency pair only until I can develop a consistent trading strategy. Once I become more comfortable trading the EUR/USD, I will slowly integrate more currency pairs into the mix. I will allocate 100% of my fund to trading forex.
This year, I want to look further at trading the following:
· Mini-sized Dow (YM)
· E-mini S&P (ES)
· E-mini Nasdaq (NQ)
· E-mini Russell (ER)
· Soybeans (S)
· Mini-sized gold (YG)
· Corn (C)
· Wheat (W)
· Crude Oil (CL)
· Mini Crude Oil (QM)
Withdraw 100 percent of any trading profits at the end of each month and place in a money market account with +4.0% interest
Since I will only be trading the foreign exchange market, all monies will be allocated to Forex only. I will trade between 1 and 3 lots per trade. I’m not sure if I will stick with the following plan but I may try it:
3 lot trades are reserved for trending markets and when the trade is in the direction of the trend. 1-2 lot trades will be reserved for momentum trades in non-trending markets
I cannot classify my trades as swing trades or day trades because my entry/exit will not be based on time. I may or may not exit a trade the same day I entered it.
I will have 2 types of trades, swing trades and momentum trades. Swing trade set ups require an established trend while momentum set ups are best set up when there is no prevailing trend.
I will use the Squeeze on any time frame I’m watching which most likely will be the 60-minute, 240-minute, and Daily.
Trading Rules
i) Look for a red dot on the Squeeze Indicator which will indicate a “heads up” that a trade signal is setting up. This indicates that the Bollinger Bands are trading inside of the Keltner Channel
ii) The signal is the first blue dot after the series of red dots. This indicates that the Bollinger Bands have made their way outside of the Keltner Channel
iii) Once this blue dot appears, I will look at the momentum histogram in the Squeeze indicator for trade direction. If momentum is above 0 and increasing up, I will go long. If momentum is below 0 and decreasing down, I will go short
iv) If the interval of the chart is 60-minute or 240-minute, set a 20 pip stop. Set a 100 pip stop if the squeeze play is on the Daily chart
v) Scale out of 1 contract once a 10 pip profit has been reached. Move the stop to breakeven minus 10 for the remaining contracts
vi) Use the momentum histogram to exit the remaining contracts. Once momentum starts to fade, which is indicated by a failure to make consecutive higher highs if long or lower lows if short. Wait for 2 consecutive higher/lower bars before exiting at the market on the remaining contracts
I will use this setup on the 30-minute only
Buy Trading Rules
i) Buy long when 24 period RSI crosses above 30
ii) Exit position when 24 period RSI crosses below 70
Sell Trading Rules
i) Sell short when 24 period RSI crosses below 70
ii) Exit position when 24 period RSI crosses above 30
eliminating 5 common trading mistakes 
Eliminating Five Basic Mistakes 