FX Trading Insights

I have been busy refining my trading strategies. And so far, it has served me well. 

I have learned the following in the past 2 - 3 weeks. I will share just 2 points for you to chew on.

• Money management was something I neglected in the past. Have you ever experienced making 3 consecutive winning trades, but giving it all back in 1 losing trade. Guess what? It happened to me ALL THE TIME! The loss weighs heavily on my mind - It affects my confidence. I start to doubt my trading strategies, and the next time I want to place a trade, I am afraid to pull the trigger. Now, I keep my lot size fixed for at least 1 month. I know that even if I lose 1 trade, my capital is still intact. Knowing that my capital is safe allows me to trade without much stress.

• Having a good trading Strategy is definitely one of the most important components in our journey to be consistent. Someone recently shared with me that in a range market, you buy low, sell high. And in a trending market, you buy high and sell low. It made a lot of sense. In the past, I am often afraid to buy high, and sell high, for fear that market will suddenly reverse against me. Instead of buying high, I would sell high in a trending market, making it effectively a counter-trend trade. You cannot imagine how many times I have bled money by trading counter-trend trades. So really, the smarter thing to do is to keep things simple in FX trading. Now, I am confident in my trading method because I know it works. Why? Because following the market always work. At the same time, though, I have room for improvement, and I strive to improve everyday.

 I will share more about my other insights in the next few posts. Stay tuned!

Trading Psychology

The past 2 months is a great example of how a bad mindset can affect your trading results.


My equity curve plummeted in Nov and Dec 2012 because I shifted my focus on trading set ups to trading for money. Because I wanted so badly to make 1000% return a month (after observing how so many people do it on Demo Competition, I wanted it as well), I over-traded, and lost sight of my money management rules. Initially, it didn't occur to me that in order to gain 1000% return a month, my level of risk will be OTT (over-the-top). Only hit me when my DD hit 70%.

After the whole fiasco, I accepted the fact that my method of trading will not bring me 1000% a month. Even if it is possible, it means that my risk will be extremely high.

My trading method can give me 1 - 2 good set ups per day. Because I only have 1 - 2 good opportunities, I have to wait for the trade with the highest probability. 

Well, at least now, I have been profitable in the past 2 weeks. It is not difficult to be profitable, I figured, when one focuses on trading the best set ups, stick to a sound money management plan, and stop expecting to make 1000% a month.