Weak One !!

So the end of the first week and almost 40% down, to the naked eye this doesn't look to good, indeed to the fully dressed eye it doesn't look to good !

However the second half of the week was in fact much better with 2 days showing profit. So why the loss. At first I blamed it on the Middle East, seems only fair. But to be honest it was a case of paying the price for poorly educated placing of positions.

My main issues were really around to much of a high expectation, coupled with too tightly coupled stop losses, meaning even if I was right I was getting stopped out of positions that ended up where I expected them to go. I was also entering at the wrong time and trying to some extent to predict change. This is silly early on when your knowledge is basically poor. I have, as I initially intended started to look for a more conservative approach of following a trend.

I'm using a combination of fundamentals (news) and technical analysis. To expand on this, most trading platforms will provide you with a news feed, that lets you know when announcements will come and provides you with enough information to discern the red and green lights such an announcement might have on a trading pair. So with my more successful trades I have been finding a fundamental that will send a pair in one direction (eg Libya causing concerns over oil supply sent money to a safe harbour, which in the land of currencies is the Swiss Franc, this I believe is based on the fact that in good times and bad, we will consume chocolate.).

Once I have established a fundamental I look for an entry point, I am using very basic TA, looking for pull backs in a trend as an entry point, comparing the 2hour chart, 1hour chart, 5min chart to detect this and then entering on the 1 minute chart. This allows me to be quick enough to get in at a good point and at the same time be quick enough to execute to a plan.

When I stick to that I do well.

I fail when, I place a position because its after evening meal and I have sat down at the computer and its time to place a trade, so I look for things that aren't there and make bad decisions. I need to stop doing this. Hence the title "weak one" because that is what costs you, poor discipline.

Despite being disappointed that I cant yet socialise with the rich and famous after a whole week of being a Foreign Exchange player, I seeing more and more, how the value of investing time to learn and refining your understanding can improve your prospects, like, well just about everything else in the world.

The upside of Forex trading is, its very easy to get into, no high entry costs, cheap fee's per transaction (that scale to your smaller positions) and no real infrastructure needed to trade...just a half decent computer and net connection. Although I already feel the need to have at least 6 monitors.

I am going to write up a post on how I have been using Trailing Stop losses and where I see there value.
Till next time.