March did not treat me to kindly. I can tell you I have no one to blame but myself. I ended the month down -4.76%. Ouch! So you ask, what went wrong and what went right. Bottom line I took a lot of discretionary trades. In other words I did not follow the tried and true path to profits. I tried to circumvent gravity and gravity won, as it normally does.
As discouraging as -4.76% sounds it doesn't feel that bad. My two standby strategies that have continually worked for me for months now has continued to hold up in a difficult trading environment. My focus for April is to not play catchup as we all know the outcome of that type of trading. I'm going to stick with my two main strategies, and trade very small.
As soon as I figure out an easy way to display some cool graphs of my trading stats I will get all the details of the month added.
Monday, March 31, 2008
Friday, March 21, 2008
Starting Fresh
I was reading http://simonsupertrader.blogspot.com/ and read a really good post. Actually there are a lot of great thought provoking posts on the SimonSuperTrader blog. This post hit me because of the place I'm as a result of mediocre results
Currently I'm tracking my performance on a monthly basis. As a result, I get this refreshing sense of starting anew. It is like starting a new year. It is actually very therapeutic for a couple reasons. First, if you are having a great month you are excited of capping the month off with a positive result for the record books. Secondly, if you are having a bad month then you have that sense of a new start with better things on the horizon.
SimonSuperTrader talks about this resetting feeling and how important it is to his trading. He does this 'resetting' every week. I'm not sure why but I have never thought about doing anything different than once a month. To me once a week makes perfect sense. It causes someone to focus a little more intently. I need to think about it over the weekend but I think it may help my performance.
Currently I'm tracking my performance on a monthly basis. As a result, I get this refreshing sense of starting anew. It is like starting a new year. It is actually very therapeutic for a couple reasons. First, if you are having a great month you are excited of capping the month off with a positive result for the record books. Secondly, if you are having a bad month then you have that sense of a new start with better things on the horizon.
SimonSuperTrader talks about this resetting feeling and how important it is to his trading. He does this 'resetting' every week. I'm not sure why but I have never thought about doing anything different than once a month. To me once a week makes perfect sense. It causes someone to focus a little more intently. I need to think about it over the weekend but I think it may help my performance.
Wednesday, March 19, 2008
Why is profitable, consistant trading so dang difficult!
Why is profitable, consistent trading so dang difficult! I have been asking myself this question lately. Of course I've been asking myself this question because I haven't been having the greatest month. Not a blow out or anything like that just can't get a decent trade going my way. Everything I put on I'm getting stopped out. I'm afraid to check but I might be down 5% right now. Very frustrating to say the least.
Last month was a total unemotional month. I just plodded along made a few trades and somehow ended up with a big 6%+ month. I think my biggest losing trade was under $40.00. This month I'm pissed off and I have made some bad trades because of it. I have a couple trades of -$100.00 plus.
The good thing is the strategy that I have been talking about as far as my perfect strategy. Well, it ticking along perfectly and actually having a really good month. All my other strategies have been in the tank and causing my month to look like shit. I'm thinking I need to dump all my other strategies and just focus on this money maker because it is so consistent and profitable.
I know for right now I'm going to step back for a couple days at least and trade my one profitable strategy. This way I can take a small break and hopefully make some profitable trades without having to really think about things. It seems every time I trade with emotion it kill my profits. Hope you having a better trading month than me.
Last month was a total unemotional month. I just plodded along made a few trades and somehow ended up with a big 6%+ month. I think my biggest losing trade was under $40.00. This month I'm pissed off and I have made some bad trades because of it. I have a couple trades of -$100.00 plus.
The good thing is the strategy that I have been talking about as far as my perfect strategy. Well, it ticking along perfectly and actually having a really good month. All my other strategies have been in the tank and causing my month to look like shit. I'm thinking I need to dump all my other strategies and just focus on this money maker because it is so consistent and profitable.
I know for right now I'm going to step back for a couple days at least and trade my one profitable strategy. This way I can take a small break and hopefully make some profitable trades without having to really think about things. It seems every time I trade with emotion it kill my profits. Hope you having a better trading month than me.
Thursday, March 13, 2008
The Perfect Forex Trading Strategy!
I have found the perfect forex trading strategy! Well at least looks that way. However, I know all good thing must come to an end. And I know this strategy will not continue to churn away profits forever. I know better, really! However let's look at what I think is a perfect strategy.
There are a few things that must exist to be the perfect trading strategy, at least according to my little world. When I say perfect I am not talking about hitting 100% or 99%. The following is what I'm talking about:
1) The perfect strategy would be profitable. Obvious, not at all. My guess is that most amateurs have traded profitable strategies that would have made them a lot of money. However, most traders can not identify a profitable strategy if they were handed one on a silver platter. For example, if you offered a trader a strategy where he got paid $1.10 for every time a coin landed on heads and he had to give away $1.00 for every tails. My guess is that this exact scenario extracted to the Forex world would result in a losing strategy for the trader.
This is what would happen. The trader would trade along for a day, two, three or 30 and then come across a losing streak. The streak would be 4, 5, 6, 7 losing trades in a row and they they would quit. If you know anything about statistics, you know that 4, 5, 6, 7... losing trades in a row will happen. A long losing streak is a statistical fact if you do this game long enough. So you better know a losing streak is coming and be prepared to handle the draw down. However, if you know you have a profitable strategy, you learn to embrace those long draw downs because you know what is around the corner. Sadly this is one of the most important components that I have missed. I would venture to guess that 98% of all amateur traders miss this one too.
2) Strategy must have enough trades every month to have the results end up with statistical significance. What I mean, is if you have a strategy that trades only a few times a month you will not be able to tell if your strategy is worth trading until you have about a year of trading results. For me, I'm impatient and don't like to wait a year for anything. For me a perfect strategy would be to trade between 20 - 100 times a month.
3) The perfect strategy would enter trades on facts. For example, when certain criteria align, you would enter a trade. You simply would enter a trade, no fuss no muss. No emotion, none!
4) The perfect strategy would enter trades, exit trades at predefined limits. Yes, I mean limits and most importantly STOPS.
5) The perfect strategy would run while you are out on the golf course or climbing a mountain or whatever floats your boat.
Well I have a strategy with all the above criteria. Strategy is set once a day, has had over 150 trades since Jan 1, 2008. This equates to 2.5 months. It has a 52.67% win rate and it wins more than it loses. There is absolutely no emotion involved. 99.9% of the trades are done while I'm doing something else.
Since I have what I define as a perfect strategy, you ask why do my monthly results not show spectacular returns. Let me answer that for you. First and foremost, I'm trading this strategy with 1 mini lot. I'm trading with a mini lot because I need a little more time to confirm this is truly a positive expectation of a trading strategy. At which point I deem it to be worthy, I will slowly increase my trading size. Secondly, the reason my monthly trading results have not shown spectacular results is because I'm trying not to put all my eggs in one basket. I know sometimes things can seem too good to be true. As a result, I'm continuing to trade this strategy and develop other strategies. These other strategies have not been entirely smooth sailing.
I do have some of the most encouraging results I have ever seen trading. I'm not talking about my numeric hard monthly results, that will come with time. I'm talking about the fact that I know exactly why this one strategy is so successful and confirms everything I have learned. It is not pie in the sky thinking and hoping it continues to work. I know this exact strategy can be translated to other strategies. Only time will tell if it is the real deal. If it is the 'key', I can't believe how easy it is. This is what gives me scepticism.
There are a few things that must exist to be the perfect trading strategy, at least according to my little world. When I say perfect I am not talking about hitting 100% or 99%. The following is what I'm talking about:
1) The perfect strategy would be profitable. Obvious, not at all. My guess is that most amateurs have traded profitable strategies that would have made them a lot of money. However, most traders can not identify a profitable strategy if they were handed one on a silver platter. For example, if you offered a trader a strategy where he got paid $1.10 for every time a coin landed on heads and he had to give away $1.00 for every tails. My guess is that this exact scenario extracted to the Forex world would result in a losing strategy for the trader.
This is what would happen. The trader would trade along for a day, two, three or 30 and then come across a losing streak. The streak would be 4, 5, 6, 7 losing trades in a row and they they would quit. If you know anything about statistics, you know that 4, 5, 6, 7... losing trades in a row will happen. A long losing streak is a statistical fact if you do this game long enough. So you better know a losing streak is coming and be prepared to handle the draw down. However, if you know you have a profitable strategy, you learn to embrace those long draw downs because you know what is around the corner. Sadly this is one of the most important components that I have missed. I would venture to guess that 98% of all amateur traders miss this one too.
2) Strategy must have enough trades every month to have the results end up with statistical significance. What I mean, is if you have a strategy that trades only a few times a month you will not be able to tell if your strategy is worth trading until you have about a year of trading results. For me, I'm impatient and don't like to wait a year for anything. For me a perfect strategy would be to trade between 20 - 100 times a month.
3) The perfect strategy would enter trades on facts. For example, when certain criteria align, you would enter a trade. You simply would enter a trade, no fuss no muss. No emotion, none!
4) The perfect strategy would enter trades, exit trades at predefined limits. Yes, I mean limits and most importantly STOPS.
5) The perfect strategy would run while you are out on the golf course or climbing a mountain or whatever floats your boat.
Well I have a strategy with all the above criteria. Strategy is set once a day, has had over 150 trades since Jan 1, 2008. This equates to 2.5 months. It has a 52.67% win rate and it wins more than it loses. There is absolutely no emotion involved. 99.9% of the trades are done while I'm doing something else.
Since I have what I define as a perfect strategy, you ask why do my monthly results not show spectacular returns. Let me answer that for you. First and foremost, I'm trading this strategy with 1 mini lot. I'm trading with a mini lot because I need a little more time to confirm this is truly a positive expectation of a trading strategy. At which point I deem it to be worthy, I will slowly increase my trading size. Secondly, the reason my monthly trading results have not shown spectacular results is because I'm trying not to put all my eggs in one basket. I know sometimes things can seem too good to be true. As a result, I'm continuing to trade this strategy and develop other strategies. These other strategies have not been entirely smooth sailing.
I do have some of the most encouraging results I have ever seen trading. I'm not talking about my numeric hard monthly results, that will come with time. I'm talking about the fact that I know exactly why this one strategy is so successful and confirms everything I have learned. It is not pie in the sky thinking and hoping it continues to work. I know this exact strategy can be translated to other strategies. Only time will tell if it is the real deal. If it is the 'key', I can't believe how easy it is. This is what gives me scepticism.
Sunday, March 9, 2008
The Infamous Re-Quote
If you have been trading for a couple years you have probably come across a broker that does re-quotes. I have and I refuse to trade with a broker that does not accept my order. After all they are the one giving me the quote. It just gives me a feeling of the manipulation that is occuring and I need as much to go in my favor as possible. Re-quotes do not bode in a trader's favor in my opinion.
I have never had a re-quote from Oanda in the 7+ years I have traded through them. One of the reasons that Oanda is my favorite broker and I send 95% of all trades through them each month. I have an account with InterbankFx and although I do not trade through them very much I did received a re-quote the other day. I had been thinking of switching that fx account to someone else and now I am definitely closing the account and moving my funds elsewhere. I should also mention that FxSolutions(fxsol.com) gave me tons of re-quotes years ago so I bailed on them too. I do not know if they still participate in this practice but they did for me and that is why I will never use them again.
I'm in the process of switching all my fx accounts under the LLC I created so now is a good time to move things around. I've opened an account at Forex.com. One of the main reasons I chose Forex.com is because they have conditional orders. Specifically I have a strategy that when in profit by 25 or so pips I need to automatically change my stop loss to break-even. Foxex.com is the only broker that does this conditional type order on a server-side basis.
Moral of the story, be picky of who you choose to be your broker. After all it is your money and as traders we need to demand best practices. In addition, if the broker is not going to act in a manner that is suitable we need to let the world know. That is my opinion!
I have never had a re-quote from Oanda in the 7+ years I have traded through them. One of the reasons that Oanda is my favorite broker and I send 95% of all trades through them each month. I have an account with InterbankFx and although I do not trade through them very much I did received a re-quote the other day. I had been thinking of switching that fx account to someone else and now I am definitely closing the account and moving my funds elsewhere. I should also mention that FxSolutions(fxsol.com) gave me tons of re-quotes years ago so I bailed on them too. I do not know if they still participate in this practice but they did for me and that is why I will never use them again.
I'm in the process of switching all my fx accounts under the LLC I created so now is a good time to move things around. I've opened an account at Forex.com. One of the main reasons I chose Forex.com is because they have conditional orders. Specifically I have a strategy that when in profit by 25 or so pips I need to automatically change my stop loss to break-even. Foxex.com is the only broker that does this conditional type order on a server-side basis.
Moral of the story, be picky of who you choose to be your broker. After all it is your money and as traders we need to demand best practices. In addition, if the broker is not going to act in a manner that is suitable we need to let the world know. That is my opinion!
Wednesday, March 5, 2008
Rich Dad Poor Dad
Many of you may realize where the title of my post comes from; many of you may not. If you do not, I highly recommend you get familiar with the concepts behind Rich Dad Poor Dad. Rich Dad Poor Dad is a financial education company co-founded by Robert Kiyosaki. A lot of their concepts go against the main stream logic of save, invest for the long-term using 401k, SEPs.
For the longest time I have conceptualized a lot of the thoughts behind Rich Dad Poor Dad; however, I have always thought I was the lone sheep and everyone else was correct. The old stand-by of invest long-term, save and pray did not seem very logical for me however everyone else was doing it so it must be right. Well the books I have been reading in the Rich Dad Poor Dad series have finally confirmed my suspicions and make perfect sense to me.
"Who Took My Money" by Robert Kiyosaki and Sharon Lechter is one book in a long list of books they have published. "Who Took My Money" is the second book I have read in this series. First of all the title of the book does not fit concepts in the book, it just doesn't give the book justice. The idea of the book is to go against conventional wisdom and not plow all your money into a savings account and or 401k. Robert Kiyosaki states that the financial markets can and will crash in the future so as a result the average person has their money at risk. As a result, Robert Kiyosaki recommends becoming an expert in one or more key areas that can make you financially independent.
His focus is to get across the point that people need to concentrate on cash flow as opposed to capital gains. Figure out what your money can do for you today as opposed to saving, wishing and hoping that your money will increase and be there for you when you retire in 20, 30 40 years. In other words do not stash your money into a 401k and pray that it will be there when you are ready to retire because it just may not be there or at least 30, 40 or 50% might be gone is it was for a lot of people during the tech bust of 2000-2003.
His ideas for cash flow are to start a business, invest in real estate and invest in paper assets. By starting a full-time or part-time business you can gain cash flow, maintain legal protection and increase tax benefits. Then by selectively buying real estate you can rent the properties and gain additional tax benefits and increase cash flow. Lastly, to stay diversified you can invest in the financial markets.
A couple warnings...First Robert Kiyosaki warns and then re-warns about some of the concepts in the book that not all people can perform what he is recommending. I believe he does this because to be successful with this tactic you must be very passionate and educated about what you are doing. In addition, he does not give you a step by step outline of what you must do to be successful. As well as he should not, because it is impossible to do so and will set people up for failure. You must do your own research and due diligence. There are a lot of people that criticize Kiyosaki because they are looking for that hand holding and for someone to tell them exactly what to do and when to do it.
I give this book 5 stars out of 5 stars! I really like the concepts in this book and plan on applying a version of them to my life. I can't tell you how sick and tired I am of working for corporate America. I know there is more to life then going to a job that does not fulfill my hopes and dreams. This blog will keep track of my progress.
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