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Seeking a Mentor
- Thread starter arncap
- Start date
Damn so close. Everybody knows you become profitable after 11th year trading against bucketshops.
Forex was a rollercoaster. I went through some rough times and then there were stretches of time when I did extremely well. I had a goal in mind; I was close but had not yet reached that goal. Then when the pandemic hit 14 months ago, I got caught in a mess with a long list of losing trades. I was in bad shape but hung in there. Within about 10-11 weeks, the value of my account returned to just about where it was prior to the pandemic. So, when I got that close to where I was 10 or 11 weeks earlier, I shut down all my trades and then my account. I didn't want to take more major risks, and given my previous experience in the stock market, I decided to go that route again.
Back in 2010, I had a plan. The USDJPY was in the low 80s. I was confident that over the next 3-6 years the USD would gain considerable strength and I could make a lot of money. My plan and outlook was definitely a good one. Had I done a better job of managing my trades and been patient, I could have made a boatload of money. The fact is that the volatility was high with that pair and I overinvested in it. It forced me to close trades and re-open them etc etc. Had my account had 2-3 times more money in my initial investment, I probably could have withstood the swings. Unfortunately, like I said, I overtraded and had to protect my account and take losses before I was able to ride the swings back up. In the end, after nearly 10 years, I came out in good shape but didn't reach my goal. I traded a variety of currency pairs, but was mainly focused on the major ones.
It was complicated because I am living in Canada now and all of my funds were in USD. So, another reason for the timing of closing that account was due to the strength of the USD at that time. I wanted to buy a lot of physical Canadian $$ and the time was right. Unfortunately I wasn't able to do so on the day the markets dropped in mid-March (when for a couple of days I could have made 45-46.6% on the exchange) because my $$ was all tied up in a lot of bad trades. But even 10-11 weeks later, it was a good time to buy CAD as the USD was 38% stronger on June 1. Definitely better than it is now! For a few months I did some buying and selling of USDCAD and finally settled with the amount I am happy with in each currency.
So, I hope that gives you a little understanding of why I walked away from forex when I did. I neglected to mention that I learned a ton over the years as well. I learned about a lot of currencies and I learned a lot about risk and reward. I also learned about patience and strategies. In addition, I learned a few things that have transferred well into my investments and daytrading. I had reasonably well on the stock market prior to getting into forex. That is considering I was well-invested during the crisis in 2009!
Back in 2010, I had a plan. The USDJPY was in the low 80s. I was confident that over the next 3-6 years the USD would gain considerable strength and I could make a lot of money. My plan and outlook was definitely a good one. Had I done a better job of managing my trades and been patient, I could have made a boatload of money. The fact is that the volatility was high with that pair and I overinvested in it. It forced me to close trades and re-open them etc etc. Had my account had 2-3 times more money in my initial investment, I probably could have withstood the swings. Unfortunately, like I said, I overtraded and had to protect my account and take losses before I was able to ride the swings back up. In the end, after nearly 10 years, I came out in good shape but didn't reach my goal. I traded a variety of currency pairs, but was mainly focused on the major ones.
It was complicated because I am living in Canada now and all of my funds were in USD. So, another reason for the timing of closing that account was due to the strength of the USD at that time. I wanted to buy a lot of physical Canadian $$ and the time was right. Unfortunately I wasn't able to do so on the day the markets dropped in mid-March (when for a couple of days I could have made 45-46.6% on the exchange) because my $$ was all tied up in a lot of bad trades. But even 10-11 weeks later, it was a good time to buy CAD as the USD was 38% stronger on June 1. Definitely better than it is now! For a few months I did some buying and selling of USDCAD and finally settled with the amount I am happy with in each currency.
So, I hope that gives you a little understanding of why I walked away from forex when I did. I neglected to mention that I learned a ton over the years as well. I learned about a lot of currencies and I learned a lot about risk and reward. I also learned about patience and strategies. In addition, I learned a few things that have transferred well into my investments and daytrading. I had reasonably well on the stock market prior to getting into forex. That is considering I was well-invested during the crisis in 2009!
How much of your own capital did you invest in Forex and how much did you use with leverage?
For instance I have $10k of my own and regularly use $20k (borrow $10k from the broker), sometimes reaching $40k.
I never borrowed any money but I leveraged a tremendous amount at times. A big part of having success in the forex market that people don't fully understand is that if you have a lot of money in your account, you have a plan, and you are patient, you can do well. You just have to be able to withstand the volatility.
Let me just say that when I mentioned that the pandemic hit and I went into a panic, on that fateful day in March, my account was down about USD350k from where it was at its peak in February. Like I said, within a few weeks I was just about back to where I was prior (within US5k) and I said 'enough'! It wasn't too different from being down 80-90% of my NLV when the market crashed in 2009. Things shot right back up fairly quickly on the rebound. I just wish I could have and would have dumped all that money into the market when it hit rock bottom. The sad part is that even people with a lot of cash were too scared to buy stocks. Warren Buffett kept telling people he was buying lots at that time!
In addition to the reasons I mentioned above for choosing to close my account and get out of forex, there is one more I neglected to discuss. In the back of my mind I was always a little worried that should something go wrong with my broker (in Malta) I might end up in big trouble. I actually thought about shutting it down previously, but like I said I had goals in mind. Then I almost shut it down early in 2020, and then the pandemic struck and I was really upset that I didn't. Anyway, it all worked out I suppose. It is what it is as they say.
Let me just say that when I mentioned that the pandemic hit and I went into a panic, on that fateful day in March, my account was down about USD350k from where it was at its peak in February. Like I said, within a few weeks I was just about back to where I was prior (within US5k) and I said 'enough'! It wasn't too different from being down 80-90% of my NLV when the market crashed in 2009. Things shot right back up fairly quickly on the rebound. I just wish I could have and would have dumped all that money into the market when it hit rock bottom. The sad part is that even people with a lot of cash were too scared to buy stocks. Warren Buffett kept telling people he was buying lots at that time!
In addition to the reasons I mentioned above for choosing to close my account and get out of forex, there is one more I neglected to discuss. In the back of my mind I was always a little worried that should something go wrong with my broker (in Malta) I might end up in big trouble. I actually thought about shutting it down previously, but like I said I had goals in mind. Then I almost shut it down early in 2020, and then the pandemic struck and I was really upset that I didn't. Anyway, it all worked out I suppose. It is what it is as they say.
I should also add that for me the toughest part of trading currencies was deciding when to take profits. I found that a majority of the time, if I had a trade that was well 'in the money' (as they say in options), and I waited to see if it would keep moving in the right direction for me, I would end up losing my profit. Sure, I would set a stop-loss to prevent any loss, but it seemed like 98% of the time or more, that currency pair would bounce around and the trade would close as my stop-loss would kick in. I had several strategies to deal with that volatility. In the end, it always seemed wiser to take the profit and make new trades rather than watching them bounce up and down - in the money-out of the money etc etc. The other issue to consider were the swaps. Those interest rates could get ugly. I eventually started watching them a lot more closely later in my forex years. After all, I wasn't privileged to have a 'swap-free' account as some!
FX vol is 5-6% annualized. Look at today's vol in equity mkts and EURUSD moved 30-40 pips. Trading FX (as a biz) is an IQ test. My second real gig out of undergrad was on a top five (capitalization) bank FX Majors desk. Those desks were wildly profitable with phone dealing. There is absolutely zero profitable retail FX trades as can be seen daily on ET's FX forum.
Yeah, me too when I try discretionary, I have an uncanny talent of buying right at the top and selling near the bottom. When a trade is still profitable and I close it, I later discover that I made 5x less than what would have been if I kept it a bit longer. But most of the times when I make a trade the market goes against me. So I wait for it to turn so I can hedge at a more favorable price, never happens. Finally price has dropped so much and the whole market looks like it's another COVID+2007 crash, I sell. Next second whole market changes direction and keeps going up. Now I lose in an accelerated manner in the other direction and I know that if I don't buy it will keep raising. So resigned, I buy and through some quantum entanglement process I cannot understand, the stock immediately changes direction and starts dropping.
You don't need a mentor if you are good at trading the underlying.
Buying/selling underlying or options (their derivatives) start with a directional bet.
Assuming all numbers are true, you are a good trader already, just zoom in your risk management better, do not take a make it or miss it stop loss strategy, trade smaller size, you will be fine. Leave that come back story as history, do not try to repeat it. Next time you will prob. not be that lucky.