I have about $100k that I can use for trading, which is currently sitting in cash earning no interest. I feel can use this money to take some calculated risks in the market as my retirement, kids education etc. is taken care of via other accounts, and I am not counting on this $100k for immediate or future needs. I made my small stake old fashioned way - work and savings. I am still climbing corporate ladder, and probably 10 - 15 years away from peak earnings, so I feel somewhat financially secured.
As I work in corporate treasury, I have been watching FX, interest rates and commodities markets for some time as a hedger, with majority of my time spent tracking G7 FX due to the nature of the risk profile of the company I am working for. As I watched FX markets long enough, I started seeing things - structure of trends, patterns, etc. In other words I think I am seeing something resembling an order in the foreign exchange markets. As such, I want to test my theories with real money.
As I am not eager to blow $100k on the untested theories that may be just an optical illusion, I will start an experiment with very small amount - $500. The thesis is that if I cannot make money with $500, I will not be able to make it with $100k. If I lose $500, it is not a big deal - a small price for a lesson.
My plan for a year is as follows:
As I work in corporate treasury, I have been watching FX, interest rates and commodities markets for some time as a hedger, with majority of my time spent tracking G7 FX due to the nature of the risk profile of the company I am working for. As I watched FX markets long enough, I started seeing things - structure of trends, patterns, etc. In other words I think I am seeing something resembling an order in the foreign exchange markets. As such, I want to test my theories with real money.
As I am not eager to blow $100k on the untested theories that may be just an optical illusion, I will start an experiment with very small amount - $500. The thesis is that if I cannot make money with $500, I will not be able to make it with $100k. If I lose $500, it is not a big deal - a small price for a lesson.
My plan for a year is as follows:
- Open an account with one of the retail brokers. I like Oanda, the spreads are low and interface looks easy
- Start trading with approximately 30:1 leverage ratio to begin with. Adjust leverage ratio as I ago along to find my "comfort zone"
- Publish my thoughts on the markets daily, and trading statistics weekly in this journal
- Trade only in G7s, mostly in EUR, JPY and CAD
- Evaluate my results on Dec 31, 2012 and decide if it is worth risking $100k starting in 2013 on currency trading
- ... or stop trading if account balance gets below $100, then close the account and donate residual to charity