Learning To Trade
I started trading on FXCM (a Foreign Exchange Platform) almost the day I got back from Taiwan. I opened a free 30 day $5,000 practice account and started trading. I have only traded the Euro vs US Dollar and the US Dollar vs Yen. I am not saying that I went in it totally blind. I read Ordinary People, Extraordinary Profits: How to Make a Living as an Independent Stock, Options, and Futures Trader (Wiley Trading)
I say I read as much as I could understand because you really don’t understand until you start to do it. You have to do it. Over and over again it is proven to me that just doing something is the key to success. You make mistakes but you get over it and you move on.
Back to trading. After two weeks of practice trading I put in $100. Instantly I was a terrible failure. I know it sounds harsh but I was terrible. I lost $50 on the first day and battled back all week to $58. My lowest was $36 but I started to learn. That is the key, you have to take your lumps to be able to learn.
I also did another thing that is a big personal no-no. I did not keep a journal for the first three weeks. I should have been writing down everything I did and recording my mistakes, and much more importantly my successes so that I know what to do and what not to do. So I start it now.
Today is day two of week two February 24, 2009. Yesterday I was up $48. That is great, and it is my first real advance in my trading. It is also very significant in another way. I am now in the black. That put me at $107. $7 up from where I started. I am a success. But do I stop? Hell no! I have to keep going. $48 a day is good, but I need more. Actually I need to be able to make about $3,000 a month to pay my bills and have money to live on. That is not a huge budget by any means but my goal is to do it on my own. See my lifestyle design tools to learn more of what it takes to have a lifestyle all your own. Broken down the goal is to make $150 a day. Can it be done? Of course!
Today Up $78 at the close and still climbing.
So how did I do this and more importantly how did I do it so quickly?
Make it simple!
There are a lot of tools out there to help you trade. There is so much information out there that it is totally overwhelming and confusing.
This is all I do: I look at the 60, then the 30, then the 5, then the 1 minute trends. I look for trends that are contradictory. The 60 is the main factor, the 30 is an indicator, the 5 tells me what is happening now, and the 1 is what I use to enter and maximize my profits. Whew that is a lot of data, but that is just getting started.
I use the 7 and 21 moving average to see if the trend is up or down. What ever the 7 period average is doing is the stronger trend. The 21 is used as a baseline. If the 7 is above the 21 then the trend is up. If the 7 is below the 21 then the trend is down. Bet on the trend.
But wait there is more. To see how strong the trend is I use the MACD. There is similar trend bands but it comes with a bar graph to indicate trend strength.
If the MACD is above the signal then the trend is up. If the MACD is below the signal then the trend is down. The bar graph tells how strong it is. You simply have to look and observe. Lastly if the MACD is inside the Bar Graph then the trend is really strong. Don’t bet against it. If the MACD is outside the Bar Graph but on the same side then it is really strong. Don’t bet against it.
So that is it. I purposely did not use terms such as Bullish and Bearish because I don’t really care what the pundits say about this. This is my system and that is what is important. Since my lows I have gained 343%. Since I put my money in I have a return of 51% on my money. Pretty good for an amateur.
My Laptop Trading Screen
