Forex-Trading-Method

Forex Is Chic?

2008-06-08T22:00:00.001-07:00

Here's one trader's perspective of what big banks will mean to Forex.

I actually think the development of the big banks coming to Forex is a good thing. They delayed their entry for years because of the "reputational risk" that exists when average joe trader does not like a fill or Trusting Joe lets Shady Jim blow, I mean manage his Forex account, and post nasty things about the dealer. The good thing is that their entry makes Forex chic to a huge number of people who did not know about forex or who were sitting on the fence. Their marketing budgets are much deeper than that of the large FCMs. With more traders coming on board, the clout of retail trading will just get much bigger than the 10% of the daily turnover that we currently represent. I think a thing or two should be said about the "smart money" that is already part of the system. The logic is: smart money -> more operational sophistication -> more safety for investors. Of course, money alone will not be sufficient to make Forex free of Refco-like implosions, but it will make it less likely. Several very well funded private equity firms are equity partners of multiple Forex dealers: Gain Capital: 3i, VantagePoint, Tudor Ventures, Edison Venture Fund, Cross Atlantic Capital Partners, and Blue Rock Capital; FX Solutions: Francisco Partners; Interbank FX: Spectrum Capital; Oanda, GFT, the list goes on. . . most FCMs with $10m or more in adjusted net capital today have private equity money helping them to compete with the likes of DB and Citi. I think it makes it very interesting for all of us going forward.

Financials Are a Dog, Stock Market Rolls Over

2008-06-06T13:00:00.001-07:00

Remember that "famous" video where a sweaty, somewhat scary Steve Ballmer is rallying the troops at Microsoft with the chant: Developers, developers, developers?Well, substitute the word "financials" for "develo

Scandalous Details Revealed, But YHOO-MSFT-GOOG Dynamic Remains Intact

2008-06-06T12:00:00.001-07:00

Documents unsealed Monday evening reveal some sexy details on the process inside Yahoo, but probably don't change the dynamic with Microsoft, Carl Icahn -- or Google, for that matter.Among the highlights:

Watch Out: Bernankeâs Shocking Dollar Comments Could Rock Markets

2008-06-06T11:00:00.001-07:00

Ben Bernanke shocked the financial markets Tuesday with some uncharacteristically blunt language about the dollar, saying he supports "ensuring that the dollar remains a strong and stable currency."Previously, Bernanke has deferred to

GFT Forex News

2008-06-06T10:00:00.001-07:00

Global Forex Trading

Lehman's Laughable Damage Control: Don't Need to Raise Cash, Just Might Want to

2008-06-06T09:00:00.001-07:00

From Clusterstock, June 3, 2008:Lehman Brothers (LEH) was hammered yesterday on fears that the company will have to sell more equity in another emergency capital raise. The WSJ put the amount at a highly dilutive $4 billion of common equity on an $18 b

Dems Embrace Obama's Call for Change: McCain Asks, 'To What End?'

2008-06-06T08:00:00.001-07:00

Last night made for great political theater, with major speeches by Hillary Clinton, John McCain, and Barack Obama.In failing to congratulate her opponent and acting as if the race isn't over, Clinton did herself (and her party) a disse

Paulson Goes Begging as Bernanke's Dollar Defense Comes Too Late

2008-06-06T07:00:00.001-07:00

Hank Paulson's tour of the Middle East has taken on an unseemly quality as the Treasury Secretary has been effectively reduced to begging for both cash and relief from high oil prices."We are urging all oil-producing countries to open oil markets to

Judge Unseals Yahoo Shareholder Suit: Severance Poison Pill Key to Complaint

2008-06-06T06:00:00.001-07:00

From paidContent.org, June 2, 2008:While things have been pretty quiet on the Microsoft (MSFT) and Yahoo (YHOO) front (knock on wood: this looks to be a busy week), hereâs an interesting note on the legal side of things: According to Yahooâs o

WSJ: Icahn Lashes Out at Yang, Yahoo's Board Slated to Meet

2008-06-06T05:00:00.001-07:00

Carl Icahn is mad as hell and he's not going to take it anymore."It's no longer a mystery to me why Microsoft's offer isn't around," the WSJ quotes Icahn saying after the famed financier reviewed the court documents pertaining to (among other th

Debate Rages on Oil: Is It a Bubble About to Burst?

2008-06-06T04:00:00.001-07:00

"Is there an oil bubble that's about to burst?" That's what a story in today's Wall Street Journal asks and, by way of an answer, quotes a Lehman Brothers analyst who compares recent actions in the oil markets to the 1990s dotcom bubble.That's a

Icahn Slams Yang, but Needs a 'Plan B'

2008-06-06T03:00:00.001-07:00

In calling for Jerry Yang's ouster yesterday, Carl Icahn turned up the rhetorical heat on Yahoo's CEO."I'm very cynical about many of the boards and CEOs in this country, but even I am amazed at the lengths that the Jerry Yang and the board went to e

Forex On Top Back From Hiatus

2008-06-06T02:00:00.001-07:00

Forex on Top was updated this evening with the latest and greatest traffic rankings. Check them out at http://www.forexontop.com

Forex Watchlist for March 24, 2008

2008-06-06T01:00:00.001-07:00

Here are the currency pairs I'm following for possible short-term trades:

SHORT

USD/JPY
USD/CHF

LONG

NONE

Access To High Leverage Does Not Mean You Have To Use It

2008-06-06T00:00:00.001-07:00

The May issue of Currency Trader Magazine is out. Highlights include:

Forex Margin - You have access to extremely high leverage in the forex market, but that doesn't mean you have to use it.
Can anything stop the Euro?
Time the Euro using short-term momentum.
Currencies and stock markets.
The latest on the Aussie and kiwi dollars.
Bank of Japan get a new chief.

You can download the issue for free at http://www.currencytradermag.com

Forex Position Size Calculator Bug Fix

2008-06-05T23:00:00.001-07:00

There was an issue with the position size calculator at http://www.forexcalc.com that came to my attention last week when determining the position size of the CHF/JPY. For example, when selecting CHF/JPY, the calculator needs the current price of two pairs, the CHF/JPY and the USD/CAD. The bug was preventing the output of the second pair needed to determine position size, in this example, the USD/CAD. The pairs affected were:

CAD/CHF, all pairs with CHF in the base, all pairs with DKK in the base, and the HKD/JPY.

This has been fixed.

Citi and Goldman Break Into Retail FX

2008-06-05T22:00:00.001-07:00

Citi has been in the retail FX market for a couple of months now but it signals a continuing trend of big financial institutions trying to get a piece of our forex action. Deutsche Bank was the first big bank to get in a couple of years ago (from what I remember) but it's interesting to note that all these big banks did was partner with the bigger forex firms. They blew up the sub-prime mortgage business, will they do the same to Forex?

Here are the notable partnerships between big banks and forex specific firms:

Deutsche Bank is partnered with FXCM.

ABN Amro and UBS are partnered with Oanda.

Citi is partnered with Saxo Bank.

Goldman is partnered with CMC Markets.

Most Popular Forex Websites

2008-06-05T21:00:00.001-07:00

Forex On Top was updated this afternoon and there are a lot of big moves. Why visit? The most informative sites tend to bubble up to the top. With so many forex websites out there, it's tough to disseminate the good from the bad. Granted, there are a lot of broker sites in the top 50 but there are also a lot of non-broker sites mixed in that get just as much traffic. This is impressive considering they're competing without expensive advertising campaigns. Check out sites ranked 1-50, 51-100, 101-150, and more. You can also check out the forex websites that have increased their rank the most from last week at Forex Movers.

May 2008 Performance

2008-06-05T20:00:00.001-07:00

May 2008 was a very inactive forex trading period for me. I only made 7 trades compared to my average of about 20 per month in previous months. I was still able to increase my year-to-date return. I was up 2.1% in May to bring my return for 2008 to 15.7%, which is almost the high for the year.

All of my flash performance graphs are up-to-date as of tonight and can be viewed always at http://www.forexproject.com/My_Forex_Graphs/.

I'm not back into the routine of trading yet but I'm starting to feel it again. The key is to get into a routine at my new job which is starting to happen. Another key to get back into trading is to start writing here more consistently. All of these things are happening and it's a good sign that I updated my May performance graphs and also Forex On Top today. (The Forex Project has plummeted in the rankings over the last couple of months due to my inactivity)

A Good Start

2008-06-05T19:00:00.001-07:00

It's only one day but after a terrible May, I'm committed to consistency. I have systems that literally take a couple of minutes a day to look at so if I don't put an order in, I'll have to consider it laziness.

I started this oath of consistency by placing an order yesterday and broke my seven trade losing streak with a profitable trade.

With that said, don't be surprised to see little bits of blog posts from me. I need to start writing more again and I find that starting out a little at a time gives me a mild sense of accomplishment that will hopefully get the creative juices flowing again.

I can't believe that this summer will mark three years of trading forex for me. It hasn't been uninterrupted but I'm still here. Keep plugging away...

Where Have I Been?

2008-06-05T18:00:00.001-07:00

It's been a while; a little over two weeks in fact since my last blog post.

My last trade was 18 days ago and today was the first time I opened up a chart since then.

Am I quitting? Has the forex market taken its' toll on me?

No and no.

I started a new job about two months ago and it has been so draining mentally and physically that I just haven't had anything left for forex. Trading forex has since fallen to the bottom of my priority list next to watering my cactus. The unfortunate thing is that I took this new job because I thought it would give me more time to concentrate on forex.

I feel like my added responsibilities are started to loosen a bit though as I become more acclimated to my new full-time job. The fact that I'm finally posting something on my blog for the first time in two weeks may be evidence.

The question will be whether I jump head first back into trading forex or ease my way back in. Either way, I'll probably wait until May 1st for psychological reasons. I'm up 2% for the month and I'd rather not threaten this by trading hastily before month end.

Stay tuned. I'll be back soon. Hope everyone else is still chugging along making progress and money.

March Was a Losing Month Trading Forex

2008-06-05T17:00:00.001-07:00

Trading for the month of March is over and it was a loser for me. I lost 3.2% of my total account balance. I don't consider this a set-back though. It's just part of trading forex. I'm up 13.3% for the year so I feel good about my chances going forward. I did make some mistakes and one particular trade sticks in my mind. Last week, I was certain that a trade would eventually setup according to my rules and I pulled the trigger before it was confirmed. The setup never occurred and I lost. I also got a little too "discretionary" with one of my systems and really missed some great trades. In April, I won't enter a trade before my setup has been confirmed and I'm going to take trades that one of my systems generate without overthinking it.

Overall, I stuck to my trading rules as I had the previous two months. This month didn't work out like the others but I'm still not going to change a thing. I'm on-track to reach my 18-month to 2-year goal I set before 2008 began.

To see all my trading graphs updated as of today, go to My Forex Graphs.

I hope you all had a great month trading. As always, feel free to comment and let me know how you all did.

New Forex Trader Graphs

2008-06-05T16:00:00.001-07:00

I've added a new section to the site that will display all different types of graphs of my performance. Currently I have:

Monthly Profit/Loss in USD - This graph shows my profit/loss in USD for each individual month. A month is treated as a totally separate entity from every other month.
My Equity Curve - a graph rebased to a starting level of $20,000 USD. This shows my rolling profit/loss in USD from month to month. The value of the last data point on the graph will show my most recent capital amount.
Monthly Profit/Loss Percentage - This graph shows my percentage gain or loss for each individual month.
Rolling 12-month Profit/Loss Percentage - This graph will show my rolling percentage profit or loss for a 12-month period. The value of the last data point on the graph will be my total profit/loss percentage for the year.

I don't know how much I'm going to increase or decrease these numbers after this month. I've had an up and down month on the positive side. I currently sit at +3.0% for March with no open positions.

The link to the graphs will always be located under the "Trader Rich" menu and is titled, "My Forex Graphs."

The Forex Project Fraud Scheme

2008-06-05T15:00:00.001-07:00

Let me first say that I'm not talking about my Forex Project. A reader brought my attention to the other Forex Project which I have heard of before and the owner Luis Rivas, who is facing lawsuits and creditors. Apparently, Mr. Rivas promised to make boat loads of money for people and never followed through. "The investors initially received payments, then the flow of money stopped..." It appears that the other Forex Project abandoned their corporate offices back in April, 2008. Some people are out as much as a half a million bucks due to Rivas' "fraudulent Ponzi scheme."

It's interesting that another visitor asked me about Rivas months ago and supposedly had a friend who was getting paid. Here's what he said:

"They also sell promissory notes that pay between 5 and 8% a month. I have a friend who is involved with one of these promissory notes and has been getting his interest payments regularly but it doesn't feel quite right to me."

I hope he didn't follow his friend into this mess. This leads me into another point that I'd really like to elaborate on in another post. A comment was posted a couple of weeks ago asking me why I bother trading forex on my own if I only expect to make 20% a year. According to him, I could invest with a financial institution that could make this for me. The reason why I don't are because of people like Luis Rivas and companies like Bear Stearns. Who do you trust?

Read more about this at http://www.chattanoogan.com/articles/article_128551.asp

My Job As a Forex Trader

2008-06-05T14:00:00.001-07:00

My full-time job and only job is trading forex. I make $100,000 a year doing so and need to make at least this much to keep up with the cost of living in New York City. The first year I started, my expectations were to have returns of 20% a year while risking only about 1% on any given trade. Based on my calculations, I needed $500,000 of starting capital to realize these expectations. I withdrew a half million dollars ($500,000 USD) out of my bank account to use as my initial capital. This was just money I had laying around and could easily afford to lose. I'm doing great.

This is not a true story but I figured I'd write it as a way of answering a comment I recently received. The comment was:

".... I don't understand why do you need a job... if u know and understand so much about forex ... why do you need a job?"

I'm not berating the commenter. It's a great question and one that I felt needed to be addressed. Does my make-believe story answer this question? I'm sure it is possible to make a six-figure salary trading forex with less capital but at the expense of using higher leverage consequently taking on more risk. But don't be lured by the marketers promises of untold riches. The bottom line is if you want to make money trading forex, you need money. How many sites have you seen pop up over the years that are dedicated to turning $1000 into a million dollars in a year trading forex? I've seen quite a few. They last 30 days and then the person running the site mysteriously disappears never to be heard from again.

Be a Patient Forex Trader

2008-06-05T13:00:00.001-07:00

Patience is a common trait among successful traders. Unfortunately, patience isn't inherent in many of us. My belief though is that patience can be separated into two worlds for traders. The first world consists of the patience you exhibit in your non-trading life. I'll be the first to admit that I absolutely hate to wait in lines. I don't discriminate against particular lines like waiting in line at the supermarket or waiting in line at the DMV to renew my driver's license. I hate all lines. The second world consists of the patience you display when trading. Here is where I show very good patience with intermittent lapses. What I'm trying to stress here is that just because you don't have patience in the first world doesn't mean you won't have it in the second. I don't believe they are conditional of one another. So don't assume that your won't be a patient trader if you have no patience outside of trading.

With experience, you can learn tricks that will help you develop more patience. For me, I just stopped watching charts. I'll scan them in the beginning of the day but I don't have the desire or time to watch every tick. I also stopped letting myself be influenced by what others were saying. Every month I'll hear everyone talking about trading the NFP report and every month I'll ignore it. Just because everyone is talking about trading it doesn't mean you have to. Other things you can do and think are increasing your preferred time-frame (ie: from 30-minute to hourly) and knowing that there will be more plenty more trading opportunities in the future if you miss a trade. Your trading patience doesn't have to emulate your non-trading patience. It may take some time to separate the two but you can do it.

Trading Forex Can't Be a Part-Time Job

2008-06-05T12:00:00.001-07:00

Trading forex takes a lot of commitment and unfortunately in May I lacked it. I paid for this dearly with my worst month in a long time, losing 10% of my equity. While this is disappointing, it's understandable. On the surface, I didn't step outside of my trading or money management plan yet what I did was plain reckless. I traded sporadically throughout the month, watching the market and opening positions some days and ignoring the market altogether other days. Trading strategies are meant to be followed. While trading sporadically could have just as easily put me up 10% instead of down, the point is that if you have confidence in your strategy, each and every signal should be acted upon. In doing so, a balance can be obtained. On the days that I ignored the market, I could have possibly profited by opening a position. I only opened 8 positions this month compared to my average of about 20-22. Typically I'll open a position each and every day but look at the dates of my last 7 losses:

May 7, May 13, May 14, May 15, May 16, May 27

There are huge gaps here where trades could have been profitable. I would have most likely had losses also but there is no balance here and that's the problem.

So the bottom line is that trading forex cannot be a part-time job. I've treated it as such this month and it hurt me. The great thing is that I don't have to go back to the drawing board or work hard to find out what's wrong. In June, the solution is to follow the market each and every day and follow my trading plan.

So this ought to be a lesson to all of you traders. Remain consistent or face the consequences of losing a majority of the profit you made the previous 4 months. Out of the 80 or so trades I made between January and April, seven inconsistently spaced trading days in May wiped out most of my profit.

What Do You Think Is Holding You Back?

2008-06-05T11:00:00.001-07:00

"You have been at this forex thing for a while now and still are not achieving the results you had originally hoped you would achieve. What do you think is holding you back?"

Simple question but nevertheless a good one that made me think.

I have been forex trading for almost three years, not a sophomore and not a senior. Three years ago I had high hopes of trading full time within one years time. These hopes faded as the reality quickly sunk in. The results I was hoping to achieve back then were just totally unrealistic. I'm a firm believer that trading takes experience so there really is no way of rushing the learning process. The more you rush, the more chance you have of getting so discouraged that you want to run as fast as you can away from the market.

After rethinking my initial goals, I limped around for quite a long time. I couldn't even put together a profitable month. During this time, I got extremely discouraged and couldn't even hope for achieving anything. I was probably two months away from quitting.

Then about six months ago, I got my motivation back and wanted to give it one more shot. A lot of things seemed to come together quickly for me and I felt good about my trading. This was the point where I felt like I could start setting realistic goals and I did. Since then, I think I've made great progress toward reaching these goals. In fact, I think I've surpassed the expectations I had six months ago.

So in response to the comment, I think I've achieved the results that I had hoped six months ago not three years ago. In response to the question, the only thing holding me back now is my renewed motivation to excel in my non-trading occupation. This was a bit unexpected but one must have a backup plan. I worked hard to get where I am and I don't want to throw it all away. Ultimately, I want to work for me and I think trading gives me the best shot at doing that.

Other Forex Traders Had a Rough Month

2008-06-05T10:00:00.001-07:00

David had a good observation in a comment post today. He says:

"This may be coincidence but you, Colin at Forexspirit, Simon from Simon Super Trader, and myself all had good Febuarys[sic]. But those same people had a pretty bad March except Simon but he did say in his blog that he had some very rough trades. Is this a coincidence or was the market acting really different?"

Colin at Forexspirit was up around 8% in the middle of March. I too was up over 6% on March 20th. He ended March down over 17%. He states in his post that he had a lot going on throughout the month and his energy level was depleted, something I can relate to. It's tough trying to become a competent forex trader when it's not your primary job. The best solution I had for this problem was to mold my trading strategies into and around my life keeping it higher up in my priorities yet not at the top. Colin's March forex trading review can be found at http://www.forexspirit.com/2008/04/01/march-2008-review/

Simon had a mixed month of trading hitting a losing streak but then recovered towards the end of month for a 180 pip gain. In his March review post, he does bring up an excellent point about blogging forex. He stated that he only had a certain amount of creative energy and a lot of it was being used at his full-time job. This was leaving less creativity for his blog. I too have had the same exact problem. My new job has been creatively demanding also and it certainly does affect my quality of writing. His March review can be found at http://simonsupertrader.blogspot.com/2008/03/march-review.html

I don't know if David has a blog so I can't give you any details on his results. I can only imply that he had a pretty bad March. I quickly scanned my charts over the previous three months and don't see any major differences in market reaction. Maybe you do. If so, please comment.

What Is More Important In Forex Than Making Money?

2008-06-05T09:00:00.001-07:00

I haven't been able to make any progress monetarily in about a month. I'm up about 4% this month but breaking my account balance all-time high has been a struggle. I'm pretty much stuck where I was around this time last month. I'm not all that concerned and shouldn't be considering I was preaching patience a couple of days ago. It's just that everytime I open my trading platform, the account balance is just staring me in the face.

It's more important that I progress as a risk-aversed trader. For newer traders, it's very important for you to understand that learning methods to control your risk should be a priority. Making gains monetarily is obviously important but making gains and strides elsewhere are more important. When I first started trading mostly with demo accounts, I had some unbelievably profitable trades but my strategies were random and my risk and leverage too high. A lot of this is just pure luck and not going to take you to the next level. Your account balance shouldn't be used as a guage for success. Some questions to ask yourself to guage your success may be:

Have you managed to minimize your risk and maximize your reward?

Have you maintained consistency?

Have you been able to control your emotions?

Have you developed a complete trading system that you've been able to follow without deviation?

If you haven't been profitable, have you at least been able to turn those gushing drawdowns into slow bleeders?

If you're new to trading forex or have been trading for a couple of years, the #1 goal is to stay in the game as long as you can. I've talked to many traders over the years and many of them have been in and outers. They'll jump in head first, blow up multiple accounts, and jump out never to be heard from again. There are other traders I've known who couldn't consistently turn a profit and instead turned into mentors or forex marketers. Heed caution... There are also others who couldn't stand the non-regulation of forex and went back to trading futures or stocks. There are a couple traders still around since I started but I can count them on one hand. It takes years to become a trader and I can't even say that for certain. I'm still not there but I'm still around and giving myself at least 5 years. If it doesn't work out for me or you after 5 years, just think of the countless people who have gone to college and have never entered into the field of their degree.

Secret Rhythms of Forex Time Zones

2008-06-04T12:31:00.001-07:00

I've mentioned in the past that I don't trade the Asian session. This year though, I have opened GBP/JPY positions. No other pair I've observed has as much volume as the GBP/JPY during this session so if I like what I see, I won't hesitate to pull the trigger. But other than the GBP/JPY, most other pairs don't exhibit the volatility that a shorter term trader would prefer.

Asian session characteristics:

quietest, least volatile of the three Forex trading sessions
account for 15% of daily turnover
typical 20-30 pip ranges for the EUR/USD
spreads increase
price action more due to Australian and New Zealand economic announcements than Japanese

The European trading session is a better time than ever to trade the volatility of the Forex market. I trade this session more than any other and find it suits me. I know most times at what price I'll enter a trade so a lot of my positions trigger automatically sometime between 2 am and 5 am EST. Many times, they'll also close automatically during this time range without me ever knowing because I'm asleep. This suits me because it prevents me from micromanaging positions which I sometimes have a habit of doing.

European session characteristics:

London is the heart and soul of FX and has over 200 market maker dealers
35% of daily trading volume
whipsaw moves
spreads decrease
some observe the first price move during this session to be false as dealers run stops and explore support and resistance levels

I trade the US trading session but not as much as the European. I'm strictly a technical trader and since the US economic announcements move the Forex market like no other, I don't feel that comfortable. I used to trade more during this time but found that Forex brokers made it more difficult to properly manage a position (platform slowdown, increased spreads, wild swings.)

US session characteristics:

account for 25% of daily turnover
10% of turnover from Greenwich, CT, the hedge fund capital of the world
some observe that all price action that occurred during the Euro session is reversed
the focus turns from European economic news to US economic news

Source for some of the information came from the article titled, "Secret Rhythms of FX Time Zones" at http://www.sfomag.com.

Explore these additional posts at Forex Project relating to Forex Time Zones: