I’ve been burning the candle at both ends, so to speak… getting up early (early is defined as 9AM) and going to bed late (the Forex chat I attend is from 11PM-1AM, and I usually stay up trading until 2AM or so.) Combine that with a lot of work at Simpli and meetings after work, as well as trying to make some reasonable time for friends, and I am feeling pretty burned out from pushing myself so hard. Right now, nothing sounds better than a pile of sleep and less stress at Simpli, but since that’s not going to happen, I have to push on and do the best I can. I am feeling exhausted and grumpy right now, so I can tell that the lack of sleep is catching up with me.
I have been making several trades in the Forex market, mostly good. I am finding that it is definitely possible to make a consistent 10 pips a day. The chat rooms have proved helpful too; the 11PM moderated chat is a voice-capable chat, so it’s neat to be able to hear the excitement as the market starts moving.
The two classic emotions to avoid in Forex are fear (“I don’t know if I want to jump in yet”, even though the signals are telling you it’s a good time to get in), and greed (“I’m going to stay in a bit longer and try to grab some more pips”, even though the market signs are telling you to exit!) A classic example of greed showed up last night during the chat. The moderator advised us to get in on a buy. The market went up about 5 pips and then lost its momentum and couldn’t decide which direction it wanted to go. “That’s a warning sign,” the chat moderator said. “I would advise you to take your profits now” (which means close the trade.) No sooner had he said it than a chat participant jumped in and said “I think I’m going to hold my trade… I’m up 6 right now. I’ll sell if I get down to +3.” In the next minute, the market had gone down 12 pips, wiping out that guy’s profit and putting him in the negative. (Fortunately, I got out right before that happened since I took the moderator’s advice.)
The key thing to remember is that when the market is trending sideways; that is, it isn’t really moving up or down, that there is no science to predict where it’s going to go next. Since the Euro is in a general “up” trend right now, you’re more likely to guess right by buying currency rather than selling. But that’s a risky gamble — as I found out the hard way last night, when I put in a trade and lost about 14 pips because the market was trending sideways and I thought it was going to go up. Lesson learned: Wait for the indicators; don’t get impatient and try to guess where the market is going to go!
The good news is, although I’m down slightly from my $5000 start in my demo account, I’m not down much and I do seem to have the fundamentals of making a good trade. I just have to be patient! (If Forex actually teaches me how to be patient, that will be an amazing accomplishment. Heh!)
I’m going to set some goals for Forex. First of all, if I do double my money every 30 days by making 10 pips a day, I should have over $2 million after 1 year of trading. But I am going to set a much more conservative goal — that way, I don’t feel pressure if I’m not a millionaire on my 1-year Forex anniversary!
Here are the goals I’m setting:
1) Spend at least 30 days in the demo account. Make sure I’m making consistently good trades and am “up” (hopefully pretty far up) over my $5000 start (the $5000 isn’t real money, but you trade on the real market like it is) before even considering putting any of my money into the market.
2) Start with $1000 of my money once I’m really comfortable trading. Go for the 10 pips a day goal. But the real goal is just to have consistently more money in my account every day.
3) Once I’ve hit $5000, pull out money as needed to pay off debt, but continue to keep at least $5000 in my account.
The great thing about Forex is that having $5000 in your account does NOT mean that that $5000 is at risk all the time. In fact, on a single trade, you should only have 5% of your account at risk. That means that the most you’re risking at any given time is $250. By setting your stop losses correctly, you’ll never lose more than $100-$250 on a single trade… but you can make $300 or more on a single trade in a matter of minutes.
4) My goal, at the end of 12 months of real trading, is to have made at least $25,000 in the Forex market. How did I figure this out? Well, I spend about 8-10 hours a week on Forex trading. I could be spending that time doing consulting (programming, repairing computers, etc.) at $50/hour. $50/hr x 10 hours a week x 52 weeks = $26,000. So I figure if I make $25,000 in the Forex market, I’ll be doing at least as well as I would have by doing computer consulting, and Forex is way more interesting for me. Also, I think $1000->$25,000 in 12 months is a worthy investment.
There are my goals… I’ll keep updating as my trades progress and I learn more about the market!