FOREX for living and better future

Chaz · Newbie Joined: Aug 27, 2005 Posts: 4

Mornin all! Im Chaz, this is my first message on this forum...I took the time to read some of the topics listed here and came across some interesting stuff.

A little bit about me, Iâ€™m 20 years old and Iâ€™m totally new to forex and money trading, however I first came across forex (I had no idea what it actually was before or that such things existed) on the 11th of August, I quickly read some info on the web to get more familiarized with forex trading and opened a demo account. I must admit the graphs and trading technique seemed quite difficult first but in 2-3 days I kind of got the hang of it and start to know where I was and what was going on. To be honest, about a year ago I was very into gambling and especially the French Roulette (its a roulette with one 0). However I soon discovered that I was not much interested in the money making of the roulette system itself but more into the mathematics and probability behind it. I was making up combinations and drawing statistics charts and analysing them to understand it more and to come up with a unique system of beating the house edge. It took me a whole year to understand that if you want to make money in a casino the only way is to own one! Theoretically I did create a system that worked (I tested it for 3-4 weeks and it seemed working alright) But practically a system like that already existed and did not really work in practise (in the short-term) Anyway, my point being, I found a lot of similarities between forex trading and the roulette in terms of mathematics, probability and statistics.

This topic: The reason why I started a new topic even though there are a lot of topics on this forum about the benefits, the pros and cons of forex trading is to share with you how I improve myself in trading as time goes along. At the moment I know enough about forex to fully understand what it is, how it works, and what you can make out of it. I also would like to make this topic as my personal diary of a trader and give the opportunity for everyone who wishes to trade online to learn and advance in this area. As well as consult with the professional and more experienced traders on what Iâ€™m doing wrong and where and how I can improve myself to become a better trader. I hope this topic becomes one of the important topics here, on this forum, and I hope it will help a lot of new traders (like myself) improve.

So, lets start discussing the trading system on forex! When I first understood how forex works and after I opened a demo account my goal was to learn the software I was using and literally simulate how I would trade in real life with a real account (this being the whole point of any demo account). I learned how to open and close positions how to buy and sell, what "leverage", "candle sticks", "MA" and etc. terms meant. As you have understood already I new nothing about forex before, this was and still is a whole new territory for me to explore. Several days later I started to make profit. It was not big profit, but I was happy at what I was making and I thought if I was to trade like this in real life with real money and real account, I have no right to complain! I started a demo account with $5000 and literally just by guessing how the trend will turn was placing my positions. At this moment I thought, if in roulette you place your positions and have no clue what the next number will be, in forex, the trend is quite predictable if you know what you are looking for. Because I live in London, UK at the moment (no, Iâ€™m not British) I thought that it would be quite relevant to follow with the GBP/USD graph. I was analysing the graph and what the channel of the currency fluctuations over a specific time period was. I was looking at a 5 min, 15 min and 2 hr chart and how currency was valued over previous years just to familiarize myself more with what I was dealing with. I might be wrong here but I think the GBP related to the dollar is quite stable. It has fluctuated up and down from 2002-2005 but in general it stays in the 1.8200-1.7800 channel. Parallel to graph analysing I was searching for more info on the web (I found that it is not that easy to find a lot of free info about forex on the web apart from the general stuff like introduction to forex, rough description of candle sticks and etc.) and this is what I came across with, there are two types of traders on forex, the ones that trade based on technical analysis and the ones that trade based on their fundamental judgements. Obviously, the first ones are short-term traders compared to the second category. Because traders that trade according to their fundamental predictions, predict currency change in the long term, over several months/years. I personally think that it is a lot easier to be a technical analysist rather than a fundamental one. I quickly saw myself in the first group. It offered me exactly what I needed: graph analysis, quick in, quick out positions short-term profit. And also I personally think that it is a lot easier to enter the trade when you got your predictions based on concrete data that you catch from the graph and forex news relatively to fundamentalists. Anyway, lets get back to what I actually was making. Even though it was virtual money that I donâ€™t own I felt quite excited about what I was making. Few days later my profits zoomed up to $6200, because I left the open position running over night and simply because I was lucky enough the trend took the profit making direction bringing me the extra $1200. Next day I discovered what â€œlotsâ€ were. Thatâ€™s where the fun started! I read on the web somewhere that to buy an extra lot of currency at a given price you need another $1000 on your account. So if I had $5000 on my demo account I could buy currency maximum up to 5 lots. I read more and more on the web, found out what â€œpipsâ€ were and what is the price of one pip. In GBP/USD 1 pip is worth $10. when you buy currency, say, at 1.8000 and in a few minutes it moves up to 1.8005, at 1 lot, you make 5(pips) x $10 x 1 lot = $50! The next thing I did was open another demo account with $1 million as my deposit. Unfortunately the software that I was using only offered me to buy 50 lots and not more, but even so that 5 pip increase comes to be 5 x $10 x 50 = $2500. Now look at that! Huge difference between $50 and $2500 profit isnâ€™t it? I noticed that GBP/USD graph can fluctuate roughly 10-15 pips up or down in any given hour. I quickly thought â€œcatch that difference of 5 pips in one hour and pull out $2500 a day which sums up to $75 000 a month! I mean what more can you expect? Is there a person on this planet that is not going to be happy with $75 000 a month income????? And that is just 5 pips! What if you catch that difference of 5 pips 4 times? That means spend not 1 but 4 hours watching the graph, so? Iâ€™ll personally shoot anybody who wont be happy with this kind of income! That comes up to be $300 000 a month!!!!!!!!!!!!!â€
Then I found another software which is a bit more complicated than the one I was using at the moment, but it allows you to buy as many lots as you want. Well, at least it let me buy 100! Iâ€™ll leave the calculations to you to figure out how much that is in a month. However, thereâ€™s one downside to it as well, I read on the web that it is not recommended to use more than 10% of your margin per lot. Meaning, even if forex allows you to buy another lot with extra $1000 on your account, pros recommend to buy a lot only when that $1000 is 10% of your margin. So, for every lot that you buy you need another 10 grand! To buy 50 lots you would need about $500 000 on your account. Still not bad I think!

Anyway folks, its 5:53 AM here and I havenâ€™t slept for the whole nightâ€¦Iâ€™ll come back later today to check up how this topic is doing. Leave some comments here if you want, I want to know what you actually think of this topic in terms of what I think of forex and money trading or the whole story in general. Thanks for reading all! Take care.

Kaabi · Newbie Joined: Aug 28, 2005 Posts: 96

Did you stay up all night writing this topic? Its very informative, and a great first post. I liked how you compared French Roulette to Forex, except there is much more money to be made in Forex then in gambling.

Chaz · Newbie Joined: Aug 27, 2005 Posts: 4

Kaabi · Newbie Joined: Aug 28, 2005 Posts: 96

Yes... indeed. Well, it appears you are very skilled in Forex, and you are one of the people who will probably end up making a living of this.

Chaz · Newbie Joined: Aug 27, 2005 Posts: 4

thanks Kaabi! I really appreciate your comment, sorry i can't write my second big, informative post as I'm working, I guess it will have to wait untill weekend.

Kaabi · Newbie Joined: Aug 28, 2005 Posts: 96

Oh good, now I've mildly inspired you. Now I feel good. Well, make money with Forex, donate it to charities, and spend most of your free time helping the environment. If you do that, I'll do something for you. I can't think of anything I can do that you could make of use, but i'll do something.

Chaz · Newbie Joined: Aug 27, 2005 Posts: 4

Hi all! Ok, here we go my second post....

First of all, I decided to post my Account statement...

I started on FOREX opening 2 demo accounts, one with a $5000 deposit and the other one with $1million. There's a reason for that. The purpose of the first account is to simulate how i would start trading in Forex. $5000 is not that big deposit so I wasn't expecting to make anything at all. But I've set a goal to double my deposit and what I was looking for how much time would it take me to achieve it. From the statement you can see that I opened an account on the 11th of August and my last transaction dates 30th of August. That is just a little bit over 2 weeks of time. So in 2 weeks I doubled my deposit. You can see how I was risking when playing with lots at different times and different rates of GBP/USD. Notice that I only play with GBP, why? Because thats the currency I trust and that's the currency that I'm confident in. As I trade I try to evaluate myself and and try to find keys to understanding the graphs, charts and indicators better. One thing I noticed, GBP/USD graph moves in cycles. Short term cycles and long term obviously. The long-term one could take weeks and the channel borders are roughly between 1.8200-1.7200 (this statement is based on the graph of July-August). The short-term cycles obviously fluctuate within that period, having ups and downs (or I should start getting used to the terminology - being bullish and bearish). Thinking things over again, I really do think that GBP compared to the USD is quite stable. That gives me a solid ground to stand on I guess. I mean if some currency compared to another is not that stable, meaning it can zoom up +100 pips and the next day down 100 pips and then 3 times up again and 8 times down (chaotic movement, random) then it makes things more difficult doesnt it? You obviously struggle to predict how the rate will look like in 3-4 days from now because of its random movement. What I'm trying to say, i bear in my mind that GBP/USD is not going to fall down to 1.4 in the next week, two, it's not that random, unless WWIII starts or some meteorite hits england. So, considering that GBP/USD is quite stable, I'm more confident in placing my bets. However, because I have no clue if GBP/USD going to be bullish or bearish I'm placing random bets. Every single trade in the statement of my account is totally 100% random. I had no clue where the trend will take me, profits or loses? But logically from the rule that I kept in mind when placing my bet, that GBP/USD is quite stable, I thought, what goes up must come down. So, if I placed my bet to buy at 1.81XX (which I did, might not be on this statement), from August 14th, and the trend went bearish (which it did) and as a result I was down by several thousand. It went down to 1.78XX and I thought thats it I lost everything, but look at it now its back to 1.81XX and Im almost back to zero.

To be continued...

Kaabi · Newbie Joined: Aug 28, 2005 Posts: 96

That Forex life story of yours is coming along pretty well. Remember, donate some of what you earn to victims of Katrina.

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