It goes without saying that I am in LOVE with trading on the Forex (Foreign Exchange) I am still working on my free demo account through Trading View and Oanda as a platform. It's really wonderful because I don't need to worry about losing actual money. I'm learning the skills I would be doing if I were a pilot using a simulator. You can crash as many times as you wish, and nothing really happens. They just set the game over again, and you mark it down as a lesson learned. I've not yet had to have them reset my account because I'm really overly cautious even with fake money. There was a time I wouldn't even hit the go button on the free account because I didn't want to lose fake money. I'm getting better at it now. I bite the bullet every time still, and I do think about what would have, could have, should have happened, but I'm learning and there is NOTHING better in life than learning.
Many many people trade on the Forex, and because of that fact, there is an enormous amount of money that runs through that market on a daily basis. Literally, every 24 hours (except on Saturdays) more than $6T (with a T) goes through and is dispersed one way or the other! Six TRILLION every day! I can't even imagine that. The other day someone in Illinois won the Mega Millions for just over $1.2B (with a B) and though I really don't believe they actually won it, I am a conspiracy theorist, thinking it is all a scam, I still can't wrap my mind around a single person winning a huge amount of money because they paid for a random cheap ticket! I know, there are folks out there spending $$$ hoping against hope to win, but dang! I wouldn't even know what to do with it. I think I'd have to hire a team of financial advisors, traders, and foundation creators so I could distribute the money correctly. Of course, I could also just ask my 3rd born child! She would seemingly have no issues spending $1.2B - her way.
For those who think trading the stocks and/or on the Forex is like gambling, I will say that I suppose it could be if you didn't have a strategy, a bonafide way of tracking and backtracking, a risk management plan, and they don't typically have a trading philosophy. Most (and by that, I do mean MOST) traders who just start out with an account (either demo or real) don't do their due diligence and they end up belly-up within a few weeks or sooner. The secret(s) are to be emotionless, to go through the steps you've agreed to go through in your plan and to work it rather than to hope it. If you work it, and you stick to it, (providing it's a good plan, to begin with) you're likely to come out on top more than 60% of the time.
Where being successful 60% of the time doesn't sound great, knowing you'll be losing 40% of the time, the other thing to know is when to stop trading and when to leave a deal. It is JUST as if not more important to know when a trade is bad and to have an exit strategy. For me, I use Stop Loss like it's my guardian angel, my guard dog, as well as my best friend. That Stop Loss and I are connected! We talk on an hourly basis. I am well aware of the power it holds and it is well aware of my inability to read the market at this time.
Stop Loss is the tool traders use to set a limit on a trade. Say I'm going to risk 1% of my account on a trade. I can go higher if I want to, but like I said, I am so super conservative in this profession. I am that person you see driving under the speed limit on a rainy day; why would my trading strategy be aggressive? There may be a day when I become more confident and be more like the me who rides barrel horses rather than the me that drives on the freeway. Right now I'm placing Stop Loss wherever and whenever I find it necessary to do. You're going to enter a trade, you're going to risk up to 1% of your account. You press the enter button, and you set both the Stop Loss (at about 10 pips below the last swing low or the last swing high, depending on your mode; bullish or bearish trade.) You place your target at a 1.4:1 ratio meaning if you do end up winning you'll take 1.4x more than you risk.
The market doesn't care who you are. The market doesn't ask questions. The market is not your friend, your partner, your business colleague, or your sweetheart. The market is market. Price doesn't care either. Price can do, and will do one of two things. It will either go up or it will go down. Staying consistent at the exact same level is not really going to happen. You can find that it goes up and down at tiny little intervals, causing the market to become consolidated for a while, but it will eventually go up or down. This isn't gambling if you know this; it's education. You can't control it, but you can become familiar with it using backtesting to see what the market has done over the past several years. Trends are trends for a reason.
I will begin trading for real in November. By putting half of my earned salary into my account each month and trading on it in a relatively aggressive manner I will earn between 6-8% each month on the account. I will leave it in the account for about 6-8 months, allowing for any and all compounding. After the end of May, I will have a decision to make and I think I know what I will do. I think I will visit Scotland for three months and live not only off the earnings, but continue to trade while I'm there of course. After I've had about 90 days in Scotland, I'll decide if I want to stay on a more permanent basis. I will have enough to live off of my account for over a year but will still be using it to trade as well.
I can write books, promote my books, sell my books, put the money back into the account, and continue the process endlessly or until Jesus comes back. I think I want this. I'm not sure. I'll have to see what the next few months bring in terms of my plans and my strategies. So far on the demo (which is exactly what I would have been doing if I had the account up and running), I earn 6-8% monthly, and I can easily do the Math to know I could sustain my plan if I continue to trade without emotion and stick to the plan. I know me. I'm more disciplined than most. I kick my own butt so no one else has to. This will be a good thing. I just have to make it happen one trade at a time and learn how to do that first. It's like baking cakes over and over again. You do it 1000 times and you stop relying on the recipe. Sooner or later there is a slight change and you realize you need to be careful and do it right every time.
Forex is not new, but it's not very old either. People say "If it were that simple everyone would do it." Really? Do you play guitar? Do you just pick it up, strum it, and make it do all that you want it to do? You do? Great, was it always that easy? I don't think so. Just like learning to play an instrument, trading on Forex takes a tame mind, a good plan, a philosophy, and a lot of practice. Eventually, you build up those calluses you know you need to keep working it - - and you also get to know yourself pretty damn good too! I know me. I need my good friend Stop Loss! I'm really glad we met.
Photo Credit: Dreamstime.com
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