Samantha Learns ... Forex Trading

$1,000 a Day Is Doable (So Far)

2012-05-30T22:57:00.000-07:00

Account balance: $107,437.16.

Reaching my 1% gain today was a bit more challenging that I thought. It took three trades: One fast $600, and four shaking $90+ trades.

My last trade was this evening, and it was a long position in the EUR/USD. Technically I shouldn't be executing any long trades because the price action is below the 100 EMA, but the 5 min chart showed the RSI passing 70.

My suspicion that a trend reversal on the EUR/USD was around the corner might not be farfetched after all.

$1,000 (or 1%) a Day

2012-05-29T11:31:00.000-07:00

Account balance: $106,107.49.

I had a great morning of trading.

First, I woke up early! My alarm went off at 6 a.m., and I didn't automatically hit the snooze button. The goal of rising early wasn't to be prepared for FOREX trading. My intention was actually to attend a morning yoga class. I misjudged the amount of time it would take me to get dressed and walk over to the studio though, so I actually missed the class. This gave me plenty of time to pull up my Oanda account and dailyfx.com chart and trade.

Trading on the EUR/USD started off slow and confined. There wasn't much volatility. Then, as if out of nowhere (but actually because of a Spain downgrade), the price hit the lower Bollinger Band and kept descending.

I posted a $3,000 profit executing about three sell trades.

It was a bit unexpected considering that before the start of trading on Friday, I was almost certain we were in for some kind of EUR/USD bounce back. I suspected this after spotting the RSI divergence on the daily EUR/USD chart.

The Spain downgrade caused a change in the tide, and instead of fighting the flow ... I decided to go with it.

I've been thinking a bit about daily goals I can set for my Oanda demo account. Short, attainable daily goals seem like a practical way for a practical gal like me to trade without the emotional ups and downs that I know would accompany my risk-taking.

Aiming for 1% a day (or $1,000 on a $100,000 account) seemed right. On a day like today, $1,000 is not only doable, it can probably be accomplished in about a five-minute trade. On days where the price movement is tight and confined, I might have to look into breaking that $1,000 goal into four $250 sub-goals or 10 $100 sub-goals.

I do have concerns about setting any goal in monetary terms. I don't want to be distracted by the cliched dollar signs flashing in my face, playing to my ego. But so far, I seem to be letting the charts determine my entry and exit strategies--just as I had originally planned.

Emotions are in check and profits are up ... go figure!

My Strategy With Stocks

2012-05-16T12:16:00.000-07:00

My FOREX trading strategy has not translated well to stock purchases. I purchased CIGX and JMBA last week, strongly believing they met all my criteria for going long.

But that was with the old EMA 100 strategy.

I've yet to try one stock with the Two-Touch Bollinger Band approach.

I'm having a bit of mental block with finding the pip value equivalent to stock prices. Pips don't necessarily equate to cents. One option in my exit strategy for this approach is to take a profit at 20 pips. How can I possibly apply that to a stock like JMBA? Should I be thinking in terms of percentage gains?

My gut tells me I should aim for a 3% gain with each of these trades. The problem is I don't want to miss out on a potentially lucrative stock run. Taking a profit at 3% when a stock has a 10% run will feel like a failure.

I need to devise a way to lock in a 3% gain but still leave myself available for more profits, should the opportunity present itself.

A trailing stop loss percentage seems to be my only option.

Perhaps tomorrow I'll make my first purchase under this new strategy!

The Optimum FOREX Trading Windows

2012-05-16T12:06:00.000-07:00

I'm not a morning person. It's embarrassing to admit, given my age, but I slept until 10 this morning.

This presents a certain dilemna given my interest in stock market and FOREX trading.

Trading tends to slow down around 1 p.m. PST, coinciding with the close of the U.S. stock market. That gives me only a few hours to get a few trades in before the afternoon lull, when the price movement seems to bury itself into a tight Bollinger Band tunnel, only to emerge around 6 p.m. PST, when the European markets open.

I can't help but feel like I'm sleeping through some optimum trading. My only solution seems to be to adjust my sleeping routine for an earlier wake-up time. Perhaps I don't need to get up as early as 6:30 a.m., but getting up just one or two hours earlier may provide me with more opportunities to increase my account balance.

Grow, Baby, Grow

2012-05-16T11:50:00.000-07:00

Account balance: $103,012.58.

I scored some lucrative trades last night--all going short. The "sell mode" continues.

This morning the charts are looking too promising though. The 5-min chart shows a frustrating horizontal side movement in the price action. I suspect the EUR/USD is in for a pull back, and I don't want to risk placing a long order when the price is below the 100 EMA. That would go against my strategy.

I'm also not confident enough to place trades while the price ping pongs back and forth in the horizontal Bollinger Band channel.

I want to "grow, baby, grow," but there isn't much in the charts that leads me to believe that's a viable option at this point.

So I'll wait and try to be patient.

I still plan on keeping my eye on the 5 min chart. If the price crosses the lower Bollinger Band, I might consider putting in a short trade. Worried that the price won't hug the lower Bollinger Band, I'll probably put a Take Profit order after 5 or 10 pips.

Now It's Time to Make Some Money!

2012-05-15T11:48:00.000-07:00

The account balance reads $100,655.18!

I did it. I finally got my account balance back in the positive. All it took was two trades this morning.

I'm still in "sell mode" on the EUR/USD, and sticking with the Bollinger Band two-touch strategy has worked well.

Not every trade is successful though. I lost sight of the RSI divergence, and I actually put in a sell trade yesterday evening when I should have opted out of trading at all. At that point, I was so close to reaching $100,000, I was devastated at taking a step back again.

I learned my lesson though and have since avoided that mistake.

Now I'm looking forward to earning some money!!

Approaching $100,000

2012-05-14T14:57:00.000-07:00

No doubt I need to refine my exits and entries for this new strategy.

But even still, my account balance reads $99,736.76!

Will I make it to back to the start sometime today?

Let's see if I can avoid screwing this up ...

Building Wealth From Very Little

2012-05-14T14:51:00.000-07:00

I hope to one day be wealthy. I'm not inclined to the lifestyles of the rich and famous. I can't imagine dropping more than $100 on a dress. I don't dream of buying nice cars. Just can't see myself driving something luxurious through an In-N-Out.

But I do aspire to wealth because of the relative security of it. Figuring out how to get there from where I am has been frustrating.

So much of the information on finances is geared either toward guiding those out of debt and helping those will massive sums of money create more massive sums of money.

Don't get me wrong. Getting out of debt is crucial. I avoid debt like it's the plague. I legitimately fear my parents would disown me if I accrued anything more than $100 in debt. (They're big saving and "live beneath your means" kind of people.)

But at the moment, I'm in no serious danger of going into debt and I'm nowhere close to having massive amounts of money that can be invested in real estate, business ventures, etc.

So how do I begin building wealth with only $4,000 or so to my name? Many web users have posed this question on Bing, Yahoo Ask, etc. The only viable option put forth is to save money until you reach "the massive amounts of money" phase.

For someone like me, in the writing and editing business, it will take me until retirement to get there.

In my subtitle to the "Samantha Learns ... Forex" blog, I state that my objective is to supplement my (meager) income.

I'm beginning to rethink that objective.

Building wealth is important to me. I'm single, don't want to rely on a man or my parents for support, and I have dreams and goals (to be discussed later) that might require some steady cash flow.

It is with all that in mind that I pursue FOREX trading. Clearly, I will need to save some money (real money!) to get things going. But I hope and aspire to become comfortable enough with my trading strategy that I will be able to grow my meager savings into something substantial.

I once heard J.K. Rowling tell a group of college graduates that rock bottom is a great foundation on which to build your life. I'm nowhere near rock bottom, but I hope whatever foundation I'm laying now is good enough for the life I want.

A New Strategy--Bollinger Band Two Touch

2012-05-14T11:57:00.000-07:00

Forget what I said about sticking to a strategy until it works. I'm into something new ... and I'm excited about it.

I'm still using the same indicators: RSI, Bollinger Bands, and the EMA 100.

Here's what I'm doing. On the 1-hour chart, if the price action is below the EMA 100, I prepare to go into what I call "sell mode." Then, I switch over to the 5-minute chart. When the price touches the lower Bollinger Band for the second time and the price and RSI are lower than when it crossed the first time, I place a sell order.

I pull out of the trade when there is an RSI divergence. If I anticipate being away from my computer, I place a "take profit" order at 15 pips below my entry price. My stop loss ("parachute") is 20 pips above my entry price.

We'll see how it goes ...

Almost Back to Even ... With the FOREX Account

2012-05-14T11:45:00.000-07:00

My account balance now reads $99,049.35! That $100,000 is in reach.

I'm tempted to try a few short trades to see if I can inch my way forward. Patience is key though. I don't want excitement to overrun my strategy and send me further down into the hole.

Taking It to the Stocks

2012-05-09T13:29:00.000-07:00

Tried the EMA breakout strategy with some hypothetical trades in the stock market.

I'm not losing hope, but so far I don't seem to have any winners.

I "purchased" JMBA at 2.02 this morning. It now sits at 2.01. I was hoping for another big move up. Everything about the setup looked so promising. On the day timeframe, the price crossed the 100 EMA, and it was hugging the upper Bollinger Band. Perhaps today was merely a correction from yesterday's big gain and tomorrow I'll wake up to some good news!

I also "purchased" a stock called CIGX. It had the same setup as JMBA, except the price was not hugging the upper Bollinger Band. I entered at 3.56, and it currently sits at 3.40. I go back and forth on what I should do with the stock. I'm not confident it's poised for huge breakout, so more than likely I place a sell order for a meager 2%-3% gain.

Almost Back to Even

2012-05-09T13:17:00.000-07:00

I closed out of the EUR/USD shortly before 1 p.m. PST. I originally sold on Sunday evening, only to go deep in the hole before finally posting a gain. I added $2,000+ from that trade, which brings my balance to $99,844.57. Almost back to even!!

Looking at the various time frames, it's hard to tell if the EUR/USD will continue going down or whether it will have a rebound and then go down.

The Bollinger Bands are starting to chanel downward on the day time frame, which is a sight for sore eyes after the horizontal trend of the past week. I simply don't trade well in range.

I placed another sell (short) order for the EUR/USD. If it drops below its previously low of 1.2911, I'm in!

Taking It to the Stocks!

2012-05-08T17:18:00.000-07:00

It may be premature, but I decided late last week to try out the EMA 100 strategy on stocks.

I'll keep you posted on how that goes.

Watching the S&P

2012-05-08T17:10:00.001-07:00

I'm no expert. Clearly! But I noticed these past few months of pretend trading in the FOREX market, that the dollar actually gains strength when the S&P 500 drops. (It's not suppose to be the case, though. Read here for more information.)

My charts lead me to believe the S&P may be in for another pullback. (There's a clear RSI divergence.)

I'm banking on that happening, which is really the only reason I'm holding the EUR/USD short.

Keep pushing on that lower Bollinger Band buddy!

Holding ... On

2012-05-08T17:07:00.001-07:00

Sold a new batch of the EUR/USD on Sunday--when it opened up below the lower Bollinger Band. I was so sure it was going to go down, but it rallied up to the 1.3050 level before coming back down below 1.3000, where it clearly belongs. I was too afraid to see how much in the hole I was, but finally got the nerve to look this afternoon. I'm $2,000 in the hole on this particular trade, but I feel confident it will continue heading down.

The expert analysts at DailyFX.com said this rebound was a good time to enter into a strong sell position.

EMA Breakout Strategy

2012-05-02T19:34:00.000-07:00

Here's a copy of the EMA Breakout Strategy I'm currently using:

Sooner or later all Forex traders begin experimenting with different EMA settings.
Quite often very interesting combination can be spotted. Here is one Simple Forex system based on 50 EMA indicator.

Any currency pair.
Time frame: 90 minute or 3 hour chart, 4 hour chart
Indicator: 50 EMA.

Entry: watch for a candle to pierce 50 EMA and finally close above (to enter Long) or below (to go Short). Enter with the second candle after it makes 5 pips higher than the previous one.
Exit: not set.
Stop loss order: 15 pips below 50 EMA.

This strategy and others can be found on forex-strategies-revealed.com.

I didn't realize it until now, but the author of this strategy, Edward Revy, is also the website creator. This newbie is impressed!!

The EMA 100 and Me!

2012-05-02T19:26:00.000-07:00

According to my new strategy, I need to wait for the price to reach 5 pips below the previous candle's low before putting in a sell order (or going short).

I switched to a daily time scale on DailyFx.com and altered the EMA to a period of 100 instead of 50. It was recommended by the author of the strategy to increase the period value when increasing the time scale. (Good thing I read all the comments following his original posting!)
One of these days I'll figure out what EMA periods I'll need for all the different time scales. That way I can avoid this waiting!!

Regroup Part Deux

2012-05-01T18:42:00.000-07:00

Time to find a new strategy!
Enter the wonderful website that is Forex-Strategies-Revealed.com. This website is user-generated and allows newbie traders like me the ability to explore different FOREX trading strategies and learn new trading techniques.
I was drawn to the simplicity of one user's strategy--involving only the Estimated Moving Average.
(You might recall that my old strategy had three indicators.)
Check out what Mr. Edward Revy contributed!

I applied his strategy to my loser $97,000 account and posted a sweet $900 gain. I'm working my way back to even!!

Where Have I Been?

2012-05-01T18:32:00.001-07:00

Yes, it's been awhile. A good friend of mine from college always jokes that I begin my emails to her by saying "I'm sorry for not writing sooner. Things have been crazy."
The truth is, yes, things have been crazy. In the past month, I moved apartments, mostly by myself, but with a little help from my parents. I began searching and applying for jobs. I even had my first interview in four years. (If you're wondering how it went, please don't ask.)
But have things been so crazy that I didn't have time to update my blog? No.
The reason I haven't updated it is because I'm a little disappointed and ashamed in my results so far with the Oanda practice account.
Right now the balance reads "$97,010.87." When I went as low as $96,000, I thought I was the biggest loser on the face of the planet.
I can get a bit dramatic sometimes ...
I started thinking about why this strategy was leaving me so insecure about my abilities to successfully trade FOREX.
Despite years of learning about the stock market and technical indicators, in many ways I still feel like a beginner. Under what circumstances then did I think it'd be a grand idea to create my own strategy and stick to it--even with fake money? ... Not a clue.
I had two options: throw in the towel or regroup.
There is a common theme that runs through most success stories: a setback and determination to keep going forward.
That's what I've decided to do.

Time to Set a New Habit

2012-04-10T21:02:00.000-07:00

Account balance: $103,647.61

I checked into my charts--1 hour and higher--throughout the day, and not once were my criteria met. So I cheated again and switched to the 5-min chart.

I'm not proud of this, but I didn't once have a losing trade. I believe I traded three times based on what I saw on the 5-min chart and I posted a $1,000+ gain.

What worries me looking back on the day was that not once did I put in a stop limit or trailing stop loss option with my orders.

Oanda has by far the easiest order sheet. (So far loving Oanda--check them out!) I can put in the stop limit at the same time I set my sell/buy order. It may be a case of simply not being in the habit of doing so. Or perhaps I justify not putting in a stop limit on my 5-min chart orders because I know I won't be in them for long. In fact, on all three orders today, aside from switching windows on my laptop af few times to check email, I never once left my trades. Those are just excuses though. Even if I intend on staying "near" my trades, I should have my backup parachute ready to go.

That will be my goal for tomorrow. I still haven't decided if I'll set an overnight trade. The longer charts (1 hour and above) don't show any promise. The Bollinger Bands are trending horizontally for the most part, and if they do trend up or down, it isn't convincing so in either direction to induce me into a trade while I sleep.

So Far So Good ... With a Little Bad on the Side

2012-04-09T22:47:00.000-07:00

Account balance: $102,178.11.

Don't be fooled. I actually got off to a slow start. I traded a small bundle--going short--and it didn't work out so well. I lost $77 of my $100,000. I knew immediately exactly what I did wrong. I lost sight of my strategy.

I was stopped out of that trade overnight, while I was sleeping. That's right, I successfully adminstered a stop loss (something I often refer to as a parachute or safety net). I shouldn't be "thrilled" I was stopped out of a position for a loss, but considering the issues I had with FXCM's stop loss oders, I am moderately pleased.

I didn't put in another trade order until this evening. Has anyone else noticed the slowdown when the stocks market closes? I can't stand those turtle ticks ...

Not feeling comfortable with the 1-hour chart, I took a look at the 2-hour picture. (For those of you familiar with my rules, one item on my "no-no" list is not to go short-term until I've mastered the long-term.) I liked what I saw. The price had just crossed the upper PSAR dot, the Bollinger Bands were channeling upward, and the RSI just reached a new high value. I put in a big order this time--1,000,000 units--going long. The result was around a $2,000+ profit in a little over an hour.

Cha-ching!

Of course I felt cocky, and of course I broke my previously stated rule. I switched to the 5-min chart to see if I could eek out a couple hundred more bucks in profit. My gamble paid off, and I got my balance up to the number listed above. What can I say? Being bad sometimes results in something good.

I haven't decided yet if I'll put in a position overnight. The 1-hour chart and its older siblings aren't looking promising either way.

Speaking of siblings, my sister's birthday is tomorrow! Perhaps in her honor I'll make a killing tomorrow ...

A New Demo Session Begins

2012-04-08T19:32:00.000-07:00

After some quick Google research, I decided my next Forex trading demo account would be with Oanda.

I set my first trade a few minutes ago, and it just went through. I'm short the EUR/USD and was able to figure out and set a limit order.

My first position isn't using much of my capital. I was given $100,000, and my 10,000 units takes up $650.

It feels great getting back in the game after my short absence!

One Demo Session Comes to an End

2012-04-06T00:40:00.000-07:00

Wow, it's been a long time since my last post. Apartment and job searching took priority over my self-imposed Forex learning curriculum. Stress was also a factor. It's been quite a few years since I've heavily job- or apartment-hunted, and to do both simultaneously certainly wore me down. The good news is that I found an amazing apartment. My landlord and I hit it off when we met for a showing. The unit is located in a better area of my neighborhood, and it is cheaper and bigger than my current apartment. It's the kind of place I can see myself making a killing in Forex trading!

Final account balance: $59,241.43

A sharp reversal two weeks ago caught me off guard, and I wasn't able to get the balance back to my former glory $80,000+ days.

An 18.5% gain in 30 days is nothing to sneeze at, but truth be told I'm not convinced my ending balance was the result of strategy. Luck certainly played a role, and while it would be great to go through life lucky and successful, I'd like to have a little more control when it comes to the outcome of my investments.

FXCM had a great platform, and I was quite comfortable trading on it, but I'm not entirely sure it's the right place for me. My 30 days are over and my sales rep "Paul" has been calling frequently asking me if I'd like to invest some real money, open a real account. I told myself when I first started I wouldn't invest real money--no matter how small--until I was confident in my trading and strategy.

I'm not convinced my Forex trading abilities are up to par yet or that FXCM is my best option should I choose to open an account (the leverage on those bundles is something of a turnoff). So it is my goal now to seek out another trading platform demo.

I found FXCM when I signed up for CNBC's Million Dollar Portfolio Challenge. I didn't win (or even post a profit with my fake money), but it did introduce me to that particular online broker. I can't name any other broker, so I'll have to resort to a Google search. Ideally I'd like to find a trading platform not attached to a broker that's free, easy, and will allow me practice without any time limitations. I doubt one exists, but I'll let you know if my instincts are wrong.

By the way, did I mention how much I like the charts on Daily FX? FXCM's charts were a little crowded. Sometimes I could barely distinguish a PSAR dot from a candlestick. Frustrated, I quickly switched over to Daily FX--which I used during the Portfolio Challenge--and was using that as my viewing chart and only using FXCM's charts to execute trades.

So one demo session comes to an end, and the next one is soon to begin ....

It Was Bound to Happen

2012-03-14T12:30:00.000-07:00

Account Balance: $73,981.43.

As you can surmise from my depleted balance, my overnight position last night was unsuccessful. I placed a sell order on the EUR/USD upping the number of my lots so a margin call would be triggered before I lost too much money.
I still haven't figured out how to place proper stop losses and trailing stop losses. I did a practice run yesterday afternoon. I thought I placed a fixed stop loss at 50 pips above my entry price, and the stupid program stopped me out of my position a few seconds later. Clearly not what I wanted. The price had not gone up 50 pips, and I was utterly confused. I thought a viable alternative was to use the margin call stop loss.
My trade wasn't successful. I woke up this morning fully expecting to see my account balance hovering around $78,000. (My account balance before I went to sleep was actually near $81,000. I experimented with a few short positions, using my new specificied entry amount, and quickly earned a few thousand dollars.)
I logged into my demo account today and saw that I still had an open position. It was a position LONG in the EUR/USD. I never intended to put in a long position, especially after examining the charts. What's worse, my account balance read $73,981.43.
Turns out last night I also placed a buy order for the same amount as my sell order, thinking that would act as a stop loss. Well, you can guess what happened. My account reached a margin call before the buy order acted as a stop loss. The margin call took me out of my initial position short the EUR/USD, and the buy order acted as a buy order.
I imagine something like this was bound to happen, not because I was careless in my experimentation, but because I'm tecchnically still a beginner and I'm learning without a mentor, someone to scream "Hey, moron! What are you doing?" and act as my voice of reason.

Why Haven't I Been Doing This All Along?

2012-03-13T14:51:00.000-07:00

Account balance: $79,562.32.

It's been a recurring theme in my trades that I go into debt before turning a profit. I realize starting in the hole is somewhat inevitable, as most forex brokers administer trades on leveraged lots. But I seem to go unnecessarily far into debt before posting a gain. Last night I traded for a profit of $500+, but at one point during the trade I was in the hole for -$1500. It can be nerve-wracking watching your account balance slip slowly downward, and all last night I kept thinking, "There must be a better way."
This morning I stumbled upon a partial answer in one of those "uh ... duh" moments. In my stock trading I never place market buy orders. I always specify a price. It's not merely to maximize my profits. Jim Cramer, of "Mad Money" fame, explained in one of his books how traders can get gypped with market orders. In essence, using market orders allows your broker--who really has no vested interest in your financial well-being--to choose the price for you.
Yet I've been placing market orders with my forex trading since Day 1. I did so mostly out of ignorance. With short trades I rationalized that getting in quickly was getting in properly. There's no truth to that though. It doesn't take that long to type in an exchange rate price, and as we all know being impetuous is a danger in and of itself.
Today I've been specifying the price of my entries, and it's been working well (to the tune of a $4,000+ gain). I'm still going into the hole a little, but not to the extent that I once was.
Creating specific entry orders is no panacea for an in-the-hole start though. Finding a low leveraged broker is really the way to go. The FXCM demo account has been great, but I might shop around before settling on them with my own money.
Timing is also a factor. In some cases, even when I waited for my indicators to line up, I still jumped to the gun on placing the entry order. Waiting until the tide fully turns and not just starts to turn may better my odds of getting out of the entry hole faster.