New Year's Tasks.

People in the west have a tradition of making "New Year's Resolutions". Normally, these things are like losing weight, quitting smoking, finding a new job, or something along the lines of that. The problem is, within a few weeks, they normally have forgotten all about them. Because of this, I am titling this a list of "Tasks". Unlike so many other people, this isn't a "Wish List" for myself. It's what I have decided I am going to accomplish in the next twelve months.

I am only writing this for two simple reasons. The first reason is that it will help me become "accountable" for my goals, and to be able to look back at what I was thinking. The second reason, is because perhaps someone out there will start thinking about things they need to work on. I sincerely hope this helps someone.


1 - To learn to let profits run.

This is a killer for me. I am actually pretty good at analysis, and am starting to "see" price movements. However, I am still selling myself short by not letting profits run. This can all be traced back to fear. I still remember when I started, there were so many times that I was up 5 pips, only to be stopped out for a loss of 20. Somewhere in all of this I developed fear. (At the time, I didn't know I was trading in "noise".) Like most bad experiences, this one has stuck around for far too long.

I now use better position sizing, so it's ridiculous to take profits at 5 pips. (or whatever.) However, this doesn't apply to my "play account". I think having this will do one of two things, either make letting profits run on my long-term account easier, or develop bad habits. I will be watching this possibility very closely.

I believe the "Letting profits run" part of trading is the next step in my "Trader Evolution".


2 - To continue with what has been working.

There is absolutely no reason for me to stop what has been working. A lot of traders fall into the "optimizing" trap. I have been seeing returns of about 4-7% a month on a somewhat steady basis. That is nothing to sneeze at. However, I have seen a lot of guys try to do better. (Of course, we always want to do better, right?) This is natural, but only in addition to what I have already been getting. There is no reason to throw the baby out with the bath water.


3 - Keep my eye on the "Big Picture", in trading, and life.

When we have a loss, we tend to get upset. However, as I have been recently looking at returns on a monthly basis, and not a trade-by-trade basis, it becomes easier to accept these losses. I have yet to have a "perfect" month. I also suspect that I never will. Losses happen, and that's life. Also, I have learned that sometimes the idea is correct, but the timing wasn't. That is alright, because when the timing is correct, you normally are talking a bigger move anyway...which will more than cover the losses on the "bad timing" trade.

As far as life is concerned, the "Big Picture" reminds me that Foreign Exchange isn't the whole world. I have a son, and another baby on the way. That is much more important than trading. (Although at times it feels like it is debatable.) But the truth is, my son doesn't care if I make 20 pips on this trade or not. And truthfully, I shouldn't either.

I am not suggesting that losing doesn't matter at all, and to become fearless to the point of recklessness. I am just saying that it pays to keep what's important in perspective. My son is more important than the fucking Yen.


4 - To be a better person.

This might seem odd to put on a trading blog. Truthfully, it wasn't originally on my list. However, the older I get, the more I realize that Karma comes into play.

Think of it this way: If you are constantly angry, do you think that it effects your mental state? And if it does, do you think that it might effect your trading? I do.

Being pissed off, (for example.) it would be really easy to take a loss personally, and try to revenge trade. "I will make that damn Aussie Dollar pay!!!" As most of you know, it doesn't pay. Or care. It just does whatever it wants to. It's bigger than us.

Besides, can becoming a better person really hurt anything?


5 - Increase my "Financial IQ".

I am currently reading "Why we want you to become rich" by Donald Trump and Robert Kiyosaki. They continually belabor the point that most people just don't understand money, and how to make more of it. I could not agree more. The amount of knowledge I have obtained in the last year on money in general is staggering when I look back at it.

As far as understanding money, it's actually not that hard. It's just that most people think it's "boring". They get a mental picture of some guy in a bow tie talking about "Gross Domestic Product" and things like this. The truth is, I suspect that there are plenty of people out there that approve of most people's perceptions. The people that approve - the ones that have all of the money.

There is a lot of money to be made in other people's ignorance. Take MTV for example. I grew up in the 80's and MTV was great. Now, they hardly ever play music, and it's all "reality" television. (Do not get me started on "reality" t.v.) They literally tell kids it's alright if your biggest ambition in life is to have a Cadillac Escalade with 22' rims.

If that's a goal, I am all for it. But here's the question: "How in the hell are you going to pay for it?" That's something that most kids won't learn. Luckily, my son and future son/daughter won't be one of them. They will know. They will understand that not just hard work will get you where you want to be. You have to "See the Big Picture".

Also, part of increasing my "Financial IQ" involves getting rid of wasteful spending. I have recently quit smoking. This is a great step. We also eat at home quite a bit now. This also helps.

My next thing: Quit giving so much money to Starbucks. Bastards have me hooked. But, I figure if I can kick the smoking habit, wasting money at Starbucks should be easily beaten.

As I am working on a grand plan, I am willing to kick these one at a time if need be. So for the moment, Starbucks will be alright. I figure that one goes in about a week or so.

Here's something that got my attention: Between Starbucks, smoking, and eating so much fast food, I was wasting roughly $12,000 a year. I wonder if you can find some wasted money in your habits? It truly is amazing how we are conditioned to throw it all away.

Till '08.....

Ok, so here we go....

Well, I went ahead and did it. I decided to enter the "Mini-Account Challenge" for Interbank FX.

The minimum size for one of these accounts is $250. I decided to go ahead and fund it with $300, just if nothing else it gives me a little more wiggle room for trading. But, as this is going to be my "play account", I made a couple of trades...

Not that it counts for the contest, but I am up $26. Not bad I guess. I used to be a bit of a scalper, so sometimes I see things that are somewhat obvious. Plus, if you think about it, what's more likely to happen in an uptrend: A 5 pip gain, or a 300 pip loss? So the secret here will to ALWAYS trade with the trend.

I am using EUR/USD mainly, because of the 2 pip spread. When we are talking using high leverage, every pip counts. Everyone in the contest must make a minimum of 10 trades for the month, which actually ends on the 25th for some reason???

I am thinking that somewhere along the line next month, there should be a big move. If it presents itself, I will try to make that one particular trade stretch as far as possible. This way, I only have to get it right once to get a huge return. After that, I will dial down leverage for the rest of the month. We will see......sounds simple, doesn't it? (Like everything else in Forex...)

This last month was crazy in this contest, the winner had something like a 386% return. However, that is not normal. Looking at past months, it seems to be more like 150% is more the norm.

Oh well, we will see. I do plan on trading my normal account as well, but only on 4 hour or above charts. I have had a really good run with it lately, and look to continue in 2008. Perhaps over the next few days, I will post my "New Year's Resolutions". I have made several actually, and I think they are good things to think about.

Talk at you soon, and have a good New Year everyone.

Wow! 2 pips!

Well...

From the headline, you can see I really haven't traded at all this week. In fact, I just happened to spot a little scalp on the USD/JPY pair today, and that's it. Of course, I have only been checking the charts every 4-10 hours....

Besides, it's an extremely illiquid time. That means you could get erratic movement in a tight range. Not exactly a great environment to work in. Oh, and I have a ton of stuff to keep up with. Holidays are like that.

However, I am starting to look into entering the Interbank FX mini-account challenge. I don't know, still thinking that one out. (It's only a minimum of $250 for the account.) I wouldn't use my normal account, because I could easily blow it up. The recent leader is up something like 328%, which means I am going to have to be reckless with it. Which also means I am going to have to not care one way or another. We will see. It is run every month, so maybe January...

My biggest fear is developing bad habits.

Happy Holidays all.

It's your business. Treat it as one.

*** Warning: Some of this isn't Forex.***

Hi all -

I just wanted to share a little bit of information with you. This post will be aimed at some of the newer traders. You older ones probably won't get any more out of this than the last 10 posts. ;-)

First, I must give you a little background on myself.

I have never traded stocks. Never traded bonds. Never even heard of the idea that you could "trade money" until about a year ago. Like a lot of people, I was lured by the potential of huge profits. Besides, it had less "stocks" to follow. And I have an interest in global politics and news, so the Foreign Exchange Market was a natural fit.

However, through the magic of Excel, I have discovered a flaw in being so "sheltered". We Forex traders have to "watch" so many other things that affect our beloved Euro. (Or, pick your favorite currency.)

One thing many of us do is focus entirely on Forex. But as a trader, or investor, we are supposed to make money. So here are a few things I have done recently:

I have began to put money away in an online savings account. Check out bankrate.com for a list of savings options. I currently get a touch over 5% on this account. Is it going to make me wealthy by itself? Of course not, but I know it's making money. Also, it can rolled into a larger profit potential in the end. (I am interested in buying property here in the USA after a few more years. I want to see blood on the streets.)

I also am starting to add small amounts to a mutual fund that invests in developing markets. (Read: India, China, Singapore, Korea, etc.) The beauty of this is that I don't have to risk a ton of money, get exposure to these markets, and don't need to think too much about it. T.Rowe Price has several mutual funds you can buy into for as little as $50-$85 a month.

Also, we know that the Canadian Dollar is effected by oil. So, if you trade that currency, wouldn't it make sense to get into the oil markets? (I don't, but thats an example.)

The point is that we are here to make money. Just as you shouldn't be concerned if you are making Francs, Yen, or Dollars, you shouldn't be too worried about what market you make money from. Forex is exciting, yes. But Forex isn't the only thing. (I know, blasphemy for a Forex Trader to say, but it is true.)

Just explore the options, there are other ones out there to take advantage of.

Mid-December...

Hi everyone -

I didn't completely stay out of the markets this past week. This is due to some pretty big moves. The New Zealand Dollar, Euro, and Swiss Franc were all good to me in the last few days. (They were kind enough to move a bit.)

Some of the "experts" out there are saying that it is a fear that the Fed will not cut rates again. Some say it's end of year profit taking. Some say it's a reaction to the latest Paris Hilton sighting. (Ok, fine....I made the last one up....) But the point is this: It is not my job to read minds, it is my job to make money.

This is why I am more of a technical trader. (Probably 95% of my trading is based on this.) I cannot and will not try to read minds. This took me a while to understand that us mere mortals cannot attempt to understand why the "big boys" are doing what they are, and that we can never have access to news fast enough to make trading decisions.

As this is a business, I prefer to save the $1500/month or more for the proper feed. Like all businesses, keeping your cost low is part of the equation as well. I always laugh at people who insist on paying $1500/month for a news feed to trade news, but will bitch about a 4 pip spread on GBP/USD. (Not to mention spreads get widened drastically during announcements.)

Besides, I don't like a lot of stress. I get enough from having a 2 year-old, and another baby on the way. :-)

So, I am up 5.78% for the month. Guess what? My job is truly done until January. Can I make more this month? Will there be a huge move late in December? I don't know. But, at this point I am not willing to give my profits back. However, this might be a great time to do a little demo trading and research on newer ideas I have.

I will warn you all that as we get closer to Christmas, the markets will probably offer less sound opportunities. The one outside chance is that next week we see either some big surprises based on announcements, or earnings reports for a bank or two. ("What?" "Are you saying that there could be more losses related to junk investments?")

However, even if I were to take a position in the next week - it would be very small. Like maybe even a micro position. So in a nutshell, I'm not confident about anything at the moment.

When January comes, the players will show us what they are buying for 2008. Make sure you get in on the deal. It's your job.

Some weeks are pointless. (NFP and other uselessness.)

So we had several interesting announcements this past week. To be honest, I should have known that last week was going to be pretty quiet.

With a whole list of interest rate announcements, there was potential. But, with everyone talking about the U.S. economy, the Non-Farm Payrolls report was bound to be the main focus.

Canada did a surprise rate cut, and I did get into that for a quick scalp. Nothing to get overly excited about, but it made some pips.

I wasn't around for the BoE rate decision, and to be honest, that's probably a good thing in retrospect. It turned out to be pretty whippy, as it was priced in ahead of time. (The belief is that after Canada cut, most people saw a greater chance of the UK doing it as well. They were correct.)

Friday finally came. Another quick scalp, this time in EUR/USD. Literally nothing worth noting again. I actually made my pips shorting this pair. Which to be honest, was against the final move, so I feel somewhat lucky.

As far as Non-Farm Payroll is concerned, what a load of crap. The numbers are revised every month, it's common knowledge that they are "cooked" anyways, and it's a dangerous time to be in the market in general. The entire week before it normally sucks.

I think I will stay away from trading these weeks. I guess if the right set up comes along, I could enter a trade a few days before, but to be honest, a lot of these weeks turn out like this past one did. Pointless.

Oh well, shit happens.

The point is that it's alright not to trade. I was up only .15% this week. Like I said....nothing major, but it beats the hell out of being down I suppose.