Breaking into the Forex

Bad Assed Trader:  I have started trading the Foreign Exchange (Forex or Fx) which is, I have to say, much more exciting than the stocks and shares.  Which means you can lose your 1% in minutes rather than days...

I am trying to stick to just a few currency pairs as I've been advised that it's best to become a specialist in just a few.  I liked the look of the EURGBP (Euro against the pound) as it seems to me that the long term trend is clearly down and although it has recently been going up it looks like it's just turned and is heading back down again.  I have done the analysis, drawn on the trend lines etc and so was looking for an opportunity to use one of the strategies I've been taught.

A pivot (bounce) trade came up on Nov 23rd which I took.  The complicated thing with Forex is you have to check four different time frames when you're trading intraday (in and out of a trade within a few minutes or hours).  But I was very careful to check that the four hourly cycle showed the price was about to come down and the hourly one said the same.

There was news that morning which had taken the price artificially high.  I don't trade the news itself as I'm not an economist, but if the news helps to set up a good trade then I'm not objecting.

And so I entered, live at 9.20am and sold the euro against the pound. It wasn't really a very good trade when I look back on it as I'd neglected to check that there was further news to come which meant the price went up a bit and then faffed about for a couple of hours which was a bit tedious.  But then, suddenly, price started to tank and go my way and I was able to sit and watch the money tipping into my account all the way to £113 when I clicked the close trade box followed by "buy" and exited the trade.  I had made my full one percent and was pleased I hadn't jumped out too early.

I'd like to be able to end my blog on that high note, but alas, life is never that simple in trading.  Any faint hearted look away now.

Buoyed with my success I did, the very next day, place two trades.  One on GBPUSD (called "cable" on account of the cable that was used under the Atlantic) and one on the New Zealand dollar.  I figured the pound would go down - and so it did.  But not at 6am when I put my trade on for it to go down (short).  Instead it went up down up down up and by the third up it had stopped me out - because I had moved my stop loss down a smidgen.  If I'd left the stop loss I would have made the 1% as I did guess the direction of travel which then happened at 8.05am when the price dropped by 60 points - a lot more than the modest 20 points that I was targeting.

Oh well, that will teach me not to fiddle with the stop loss prematurely.

And then the New Zealand dollar.  Well, when I look back I can see why I shouldn't have traded it long (to go up) as it had recently had a lower high and so the uptrend was turning.  So I can't say I at least guessed the direction of travel as I actually got it completely wrong - I bought the bloomin thing and then watched the price tank and take me out within a couple of hours.

The net result of those two days was a loss of just over £60 and a sense of humility.  Must try harder. But not put off at all.

Having said that, I'm now on holiday in Phuket and will spend the time doing analysis and maybe some back testing of strategies to improve my technique.  One of the traders I met recently said not to trade near Xmas and he meant from late November as the banks do odd things in the run up to the holiday.

Having said that I could do a teeny bit of trading with the Asian markets now I'm in a different time zone....

And the final results were....

Bad Assed Trader:  So my first group of trades have now concluded, all profits and losses netted off and the results are in.

Bodycote dropped from the 70 odd quid and ended up being stopped out for a loss of just under £40.
IG took me out for a £46 loss
Derwent lost me about £170

So that's £256 down.
But Dominos, bless their cotton socks, brought in £323 - so I'm up £67 on those 4 trades.

I'd like to say that's my conclusion and let you all think that I'm already winning, but I'm too honest for that.

If you're faint hearted then look away now...

On Sunday evening, after my last blog I slipped a trade on Aggreko (still following all my rules I hasten to add) which went up a bit and then went down and stopped me out for my full 1%.  Even worse - it entered me above my planned entry so I ended up losing a smidgen more than my 1%.  All in all, I'm down £73 on those 5 trades.

But hey, I'm learning, that's the point isn't it?

And more excitingly, I've had an introductory course in Forex (Foreign Exchange, or Fx) trading which looks like much more fun - so much faster moving.  There are lot of common principles but some differences too.  More on Fx later as I start to get to grips with it.

Now I know you'll be thinking something like "Shouldn't she get to grips with the stocks and shares first before she plunges into a market with a 3 trillion dollars a day liquidity?" (you were thinking that weren't you??).  Nah!  I'm a bad assed trader, I'm not going to miss the chance to take part in the biggest market in the universe (to my knowledge).

So I'll be analysing some stuff on the weekend and hope to update you again soon....

Mixed bag

Bad Assed Trader: Well yes, Xstrata did of course do exactly as I predicted and currently stands at 1417, a full 174 points up.  My consolation is that I predicted the move, even though I'm not profiting from it!

So what about my other trades?  The bad news first.  IG group went up a bit so the trade kicked in, but after a few days it sloughed back down and as I'd moved my stop loss up rather cautiously it has pipped me out for a small loss - about a third of one percent.

Worse still, the Derwent trade bombed and I had added to my position a little when it looked promising, moving my stop loss up on the first trade to reduce my risk, but sadly it dropped and took me out for just over 1% loss.

But the good news is that I'm still in my Bodycote trade which now stands at 278 (up 11 points) which translates into £79 in my profit/loss account (over half a percent).  Even better, good old Dominos pizza has steadily increased and is currently up to 515 which is a rise of 50 points and has so far put £347 into my P/L account.  Now this isn't over and it could suddenly drop, but my stop loss is tucked right up at 513 so if it starts to drop I'll be out of the trade with most of that profit netted - over 2.5%.

All in all I reckon that makes me up on the trades so far, but I can't say that until the money is banked.

And what I can say is that this is jolly good fun, Bad Assed Trader is pleased to be on the grid....