Proof That Trading Forex Is Not Easy

A users comment the other day was this, "Quit all the guesswork. Buy low, sell high. Daily interest guaranteed at any level you choose. You can achieve financial freedom. Investment strategy and income strategy. Check it out at my website." Oh, if it was only so easy.

Proof that trading forex isn't as easy as it looks… Turn 10K into 250K in 1 year? http://fx-experiment.typepad.com/fx_experiment/2007/05/index.html

I'm certainly not knocking this traders optimism but after over two years of doing this, it's just not realistic.

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Forex On Top Movers

Forex On Top was updated yesterday. Who were the biggest movers in the top 100?

http://www.fxinstructor.com – This is a pay to be a member site that costs $29.95/mo. Since this is the case, I can't comment further on the content.
http://www.forexpros.com – "Forex portal" with content pulled from other sites.
http://www.forextester.com – A software simulator of the Foreign Exchange Market which costs over $100.
http://www.pfxglobal.com – Original content including videos, blogs, podcasts, systems, fundamental and technical analysis, and news.
http://www.kathylien.com – A currency analyst's blog. Kathy works for FXCM, writes books, and runs a forex trading service.

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My Up and Down Week

This was an up and down week for me, one in which I ended pretty much breakeven, my account balance down -.003%. I had some decent trades today that helped but as always, I exited too early. How do I know I exited too early? I had my targets set but around noon today, I got a little jittery and closed my positions before they reached them. Once again, if I would have trusted my initial thinking when I placed the targets, these trades would have turned out much sweeter. This has always been a problem I've had. I have to learn to trust my initial thoughts before the trade because this is when my thinking is the least clouded by fear, greed, and general second guessing.

I have to be more patient going forward also. I tried to look at too many currency pairs this week and wound up trading 3 different pairs. I was getting a bit impatient waiting for action on my primary pair so I started looked elsewhere. Not a good idea. I always concentrate on the GBP/USD and this will remain my pair of choice but I will cut out the rest next week except one other, the USD/CAD.

Since I started trading again in the beginning of the month, I've concentrated on improving the following aspects of my trading:

POSITION SIZING
TRADING WITH THE TREND
SCALING IN AND SCALING OUT OF POSITIONS
LEARNING A NEW SYSTEM WITH A BIT OF DISCRETION

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Forex Brokers Will Be Affected

Forex brokers will feel the affects of the amendments to NFA financial requirements section 11 and the interpretive notice entitled "Forex Transactions." These amendments go into affect on December 21st, 2007.

New net capital requirement a minimum of $10 million or 10% of client assets for forex brokers offering greater than 100:1 leverage.
New net capital requirement of $5 million or 5% of client assets are for FDM’s offering 50:1 leverage or less.
In addition to the new net capital minimum, there are other financial requirements. They vary, depending on size of positions taken by a firm as well as the amount of customer deposits held. These new requirements will make the actual requirement much larger for a number of FDMs.

I don't know if the smaller forex broker will be able to survive these requirements. I'm sure we'll see for ourselves come December.

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Negative Expectancy

I'm now carrying a negative expectancy of -0.05 which I think means that for every dollar I risk, I'll lose 5 cents. If this isn't correct, let me know. I do feel like I overtraded last week and was a bit too persistent on a couple of trades at the end of last week. Either way, I don't feel too bad about my trading as I still try to get back into sync with the forex market. I had a good trade going early this week when I rode the GBP/USD long over 130 pips. I took a little profit out and let the rest continue. I set the stop to breakeven and it was hit during the European session this morning. I did get some profit but unfortunately didn't realize anything else on the rest of the position. Breakeven stops are a bit frustrating when their hit but if I didn't set it, I'd probably would have been stopped out at about -100 pips. In hindsight, it may have been wiser to take a profit earlier with the expectation of some range bound activity.

Markets Recap:

DOW down -76.08 to 13231.01 (-0.57%)
GOLD up 1.10 to 815.8 (+0.14)
OIL down -0.10 to 93.99 (-0.11%)
US Dollar index closes up at 75.814

Want to learn about the DMI indicator? DMI Points The Way To Profits

Wall Street Journal Online to be free soon? Murdoch expects to make WSJ.com into free site

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Patiently Waiting

I have no open positions. I try not to trade against the trend anymore so I'm patiently waiting.

DOW down -55.29 to 12987.55 (-.42%)
Gold down big -12.00 to 795.7 (-1.49%)
Oil down -0.80 to 93.82 (-0.85%)
Dollar index up 0.83% to 76.033

What's up for the rest of the week?

Tuesday – US PENDING HOME SALES M/M at 3:00 pm EST
Wednesday – US PPI and BERNANKE speak at 8:30 am EST and 9:10 am EST respectively
Thursday – US CPI
Friday – US TIC at 9:00 am EST and US INDUSTRIAL PRODUCTION at 9:15 am EST

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Markets Recap – November 9, 2007

DOW down -223.55 (-1.69%)
Gold closes at 833.7 down -3.80 (-0.45%)
Oil closes at 96.2 up 0.74 (+0.78%)
US Dollar Index closes at 75.39 up .055 (+0.073%)

Thanks to http://themessthatgreenspanmade.blogspot.com for "The Bernanke Cycle":

Federal Reserve cuts interest rates
Equity markets surge
Dollar decline accelerates
The price of oil and gold soar
Treasury reiterates "strong dollar policy"
Housing market problems get worse
Credit market problems get worse
Dollar decline accelerates
The price of oil and gold soar
Federal Reserve talks tough on inflation <—– YESTERDAY
Treasury reiterates "strong dollar policy"<—– YESTERDAY
Equity markets plunge <———— YOU ARE HERE
Go to step 1

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Forex Arena

I have to say, CMSForex's advertisement is pretty good. The U.S. Dollar, the British Pound, the Japanese Yen and the Euro fight it out in the middle of a coliseum packed with currency traders.

[youtube:http://youtube.com/watch?v=DK8WSNtCIN4]

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