Day 2 of David’s postings and he gives his views on lessons learnt in 2013. You can catch day one here.
2013 started with me having a pretty successful 2012 in shares, mostly in the FTSE AIM market, a high risk market with very dodgy companies with virtually no regulation, but I came out of the profitable in the region of 48%.
I had met a regular from my restaurant who used a spread bet platform to trade shares and quickly one thing led to another (with the attraction of no tax!) and I was trading shares up and down. This was an utterly new concept to me and I quickly had to learn technical analysis because everything I had done in the past was fundamentally driven.
Technical analysis! Wow what a minefield to a beginner. So I started reading up on moving averages, macd, rsi, candlesticks, Fibonacci, Bollinger, Keltner, head and shoulder patterns, ingrowing toenails, shooting stars, milky ways, mars bars…. you get it. Well my brain started to melt. I started trading on the platform anyway to some degree of success on UK banking shares. I was missing a lot and not reading the charts well enough nor did I have an understanding to make me confident enough to trade on FX.
This market interested me mainly because it is so liquid compared to let’s say shares. For example in 1 average day Barclays will trade about 35 million shares which equates to £105million in transactions. Compare that to the EUR/USD or USD/JPY markets! Chicken feed. So my rationale was higher liquidity fairer playground. Also more action and much faster markets in comparison. I’m not saying it’s wrong to trade Barclays or any other shares via spread betting but it must be done on much higher time frames and fundamentals are much more market driving than technicals (or so I believe).
Basically I needed help in learning refining my strategy, plan, targets from a professional who is not a shark.
So I bought a package called Trendsignal. This was a seriously major decision I had to make whether or not I wanted to do this trading properly or not and treat it like a business. I ummed and ahhed for a month and went cap in hand to my father for a wee loan and bought the package along with a computer set up.
Best choice I have made since asking my then girlfriend to marry me.
The Trendsignal basically gives good visual signals to buy or sell across 1000’s of markets with an alarming degree of success. This suited me down to the ground. Their boot camps and learning were a great help in getting me up and running. It gave me a solid base and quite a wide base to build my strategy and help my decision making in taking out trades on the chosen markets.
What I can also say about it, is that it is outstandingly successful. 70% success on all trades taken on 15min charts across 16 markets between the hours of 7-4pm GMT. I work full time so that is out of the window for me but you get the gist.
So I got the program and started trading away. First 3 weeks a decent 20% return on equity deposited. Then things went to the sky trading gold and 20% return very quickly improved to 180% return in about 50 trades. Pretty awesome. The Range Rover vogue was being pictured on the drive!!
Well big boy here thought he could trade big boy trades and went short on gold (which was the right trade) but executed it wrong with the stop in the wrong place and sized using 40% of my equity. Needless to say I got stopped out before it plummeted 1500 pips over the next 2 months!
Confidence dented. Started chasing…yadda yadda, not thinking it could happen to me…..erm it did. BUSTED.
So started again. Properly sizing each trade, trying to take emotion out of positions and taking trades that are going with trend. Success is slow in coming but the donkey big trades no more.
So now how do I trade having learnt so much over such a relatively short space of time? Well I use everything Trendsignal gives me and make a decision whether or not to take that trade looking at the overall trend for example I see a signal on the 240 chart to short GBP/JPY I’ll cross reference it with the weekly chart for trend. The one that came at 2pm yesterday was counter trend but I sort of liked it. Someone reading this will tell me off for this but I did take it! I also look for major moving averages because price action does react off them ie, 200dma is pretty darn powerful. Supports and resistances and price action around them are fascinating. A good example of bounce off support happened on Gold yesterday on the daily chart at $1238 with a strong close above $1250. Pretty bullish action. There was a good signal on the 240 chart for this and it confirmed at 6pm at around $1244. The chart suggests it has further to run, where to though is anyones guess, and although counter trend the gold selling is pretty exhausted right now across most time frames. I’m not on it!
Right now I am short on AUD/JPY having taken the trade at 93.626 off the daily chart 3 weeks ago with a stop at 95.75 and a target of 90.00. This is actually with trend but only just so it could be deemed marginal. I went short on UK oil at 111.59 last night. Although there was no signal it is very much toward the top end of it’s range. I have a stop at 114.5 with a target of 107.5. Knowing my luck world war 3 will breakout and oil will spike to 125! What could go against me on this trade is the quick retrace of the gap down from the Iran deal. I always check middle east news with an oil trade, it helps!
I am looking at the US oil/Brent difference which is sitting at 16.78 as I type. This could well come down soon and might be worth a short but waiting on the sidelines.
I actually have not got anymore trades open at the moment but as always on FX and other markets there is always an opportunity and if you miss one there will always be another.
Do I still make mistakes? Of course I do. Too many in my opinion. Have I perfected my strategy? No not yet, but nearly. Will I be successful at this? Damn right I will be. Have I learnt from my mistakes? Yes. I hate losing. Have I set myself up to be shot down writing this? Of course I have! Ha ha
Today (Tuesday) I am at work slaving away in the kitchen so any questions, comments, abuse or banter I will reply to but not instantly!
Finally for a beginner to trading FX the stuff that is put up on Forexlive is excellent. There are many other sites which do a similar service but this one suits me best mainly because of the analysis and reasons sometimes behind moves. I always like to know why price action happens apart from the bleedin’ obvious like “someone was selling/buying” No @%** sherlock!
So I hope you all enjoy your trading today as much as I do.
Regards.
