My First Two Days of Forex Trading
Blogged By: Low Hang Wei @ December 12th, 2007 - 2:00 pmBefore I go on with my trading experience, maybe let’s look at the market after the FOMC. Most indexes were down from 1 to 3%, but I should not be that much affected, since I sold off all my fund holdings a day before the FOMC. However, since my holdings are mutual funds, I don’t know what is the transaction date, so I may be affected after all. I should have sold on Monday when I was so sure of a major decline of Wednesday, but I thought one day is enough. Apparently, I did not receive confirmations of my order yesterday although I entered them before 3pm, so I think some funds may be priced as of today’s date, instead of yesterday.
Anyway, back to my experience in trading forex. In my first day, I made 2 trades, both profitable but unsuccessful. My execution was very poor, when my analysis for that day’s behavior was quite accurate. I was reluctant to make any postings when I made money, which is why there is no post until today, where I made quite a big loss yesterday. Well… in terms of dollar value, it’s not a big loss. However, in terms of percentage of margin, the loss was indeed humongous.
I was still profitable in the early afternoon yesterday where I made some trades according to my analysis of the day. Then I went out for a moment and my nightmare began. When I came back, all my trades were profitable. However, at that time, I started making trades for no reason and even going into positions that went against my initial analysis for the day. The worse thing is that I did not set any stop loss for these two trades which were unlike my previous trades. The combination of getting into a trade without any edge and not setting a loss set my account back by 100% in terms of margin.
I don’t know if I was too frustrated after having been out in the rain, therefore making myself impatient or I was simply underestimating the market when my first few trades went out profitable even though I made mistakes. However, I am really glad that I made these mistakes early and got myself to reflect on a few lessons that great traders have always warned about. The percentage losses that I made yesterday really made me wake up because I have always thought that currency markets are not very volatile.
It goes to show that even the market with the least volatility can wipe me out if I’m not careful. At the same time, I’m really excited about the profit potential if I can master the game. I will continue walking down this path and hone my trading skills. If I make it, I gain a skill for life. If I don’t, I lose just $3,000. It’s really an ideal tradeoff. 
Blogged Under: Personal Finance
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December 12th, 2007 at 7:10 pm
Markets are random especially in the short term. Please update us on this random walk…1000 trades later lets see where you’re.
December 13th, 2007 at 12:09 pm
Hang Wei,
Your probability of being a good trader is as good as any other trader because luck and skill are the same thing in forex trading.
Just like the feller who walks into the casino and wins through the night. He walks back feeling mighty good about himeself, his skills must have improved since the last time he gambled.
You said your “textbook” and what you were taught in university tells you that it is possible to trade the market. Plse tell me what they taught you…
December 13th, 2007 at 3:48 pm
Have you thought of getting a broker license instead? In the long run, it is the people who charge commissions who will eventually make money. The more speculators (not surprising in Singapore), the bigger the payout.
December 14th, 2007 at 7:52 am
Sorry, I tend to disagree. When it comes to money, something is worth while not because it is difficult. Something is worth while if it is easy (with a minimized amount of real (not perceived) risk). If you want intellectual stimulation, I suggest you invest in your career. Study and get a CPA or CFA or something, get a job where you can play/invest with other people’s money like in a bank etc.. instead of your own.
Remember you are competing against the institutions which has more capital (they can afford to take less risk to make a tidy profit), sophisticated model simulations and a lot of smart people/PhDs hired out of the top universities in the world.
Even despite that, they do sometimes fail.
Anyway, I may be wrong and I wish you all the best. Just make sure that you don’t get too greedy and put all your money in investments. Remember to put some in ’safe’ savings like US treasury securities, CDs(fixed deposit) (both local and foreign.. just enough to beat inflation).