Month 1, Day 11 - 36-month forex trading challenge - discipline and EURCHF short.
London was amazing, but I hadn't quite realised how tiring travelling to the big city and back could be. Yesterday I was exhausted, not just the usual weekend tiredness, but something different. I'm very conscious that good trading requires good energy and thankfully I'm feeling better this morning, but there are a few cobwebs still to clear.
News out of China overnight, while not great was interpreted as better than expected by the market. This saw bids in AUD and NZD pairs. I'd rolled my stop to entry on my GBPAUD (T10S) short just in case the consensus saw things the other way and price is now nearly at T.
We're not quite at T and the temptation is always to rush to take profits early, but discipline is everything in trading. Compromise your discipline once and you'll do it again and again – it's just not worth it.
Last week was a difficult one. After a good end to the first week of the challenge (2.1% gain on opening capital), week two saw me back to square one and worse with a drawdown on opening capital of -1.9%. This means I'm in negative territory and it's now the start of the third week.
I have to admit this made me a little hot under the collar at the weekend, but it's important not to panic. If you panic in trading you make irrational decisions (trust me I've done it), and again discipline needs to kick in here. Losses and periods of drawdown are an inevitable part of the trading life. Although I hadn't wanted to be in this position at the end of week two, there are still over two weeks until the end of the month with all to play for. What's more, my trades in GBPAUD and USDCAD (T9S) both are in profit (see chart for GBPAUD above and USDCAD below).
Given the positions of the monthly and weekly SMAs on both pairs I have a lot of confidence in these trades. I should say that this is not biased confidence where I'm not prepared to change my mind if things begin to go the other way. If things change, my discipline in the form of my rules will exit both positions. There will be no thinking about it or emotions involved, just execution.
Back to the drawdown – I downloaded a book entitled The Formula For Success by Samuel Leach yesterday and have read the first few chapters already. The statement that to take £1M from the markets you'll need to be prepared to lose £500K along the way really hit home. A losing trade is only a losing trade if I don't follow my rules. No trader in the world is profitable on every trade, and a period of drawdown is simply part of the bigger picture, which has been carefully planned to deliver growth in capital.
In terms of other trades, my AUDUSD (T7S) short was stopped out on Friday. Price took me out on my initial stop, and reflecting on my GOLDEN GATE strategy I have no clear rules on getting out earlier if things begin to go the wrong way. I've subsequently added to my rules and will now exit 1/3 of my position if price closes back beyond the 200 SMA, and another 1/3 if the same happens with the 50 SMA. I never want to be taken out by my initial stop to lose 2% of capital on any given trade. If my initial stop is hit, unless there's a surprise news announcement that couldn't be anticipated, there must have been signs to get out earlier. My exit rules are designed to get me out even if my emotions are encouraging me to stay in.
This morning I've entered a new position in EURCHF with my FULL HOUSE strategy.
A similar signal showed up on USDCHF, but due to margin limitations on my short account I was only able to enter one trade, despite my risk management rules permitting a maximum of two positions exposing me to any one currency pair.
Although somewhat of a pain, these margin requirements are making me more selective in entering trades. At the moment it's looking like three open positions is the maximum in either my long or short account. I've yet to take a long opportunity – I've known for a while that I have a natural tendency to be a short trader and it will be interesting to see if this continues as the challenge progresses.
Back to the subject of discipline and something I'm not happy about at all.
Last night when the market opened I checked my positions in both my private broker account and eToro, and was horrified to find two open GBPAUD long positions in the latter. I'm short GBPAUD (T10S), but had made no long entries, and certainly not two that are identical.
As far as I'm aware neither of these positions were open ahead of the weekend despite having a time stamp of 12:16pm on Friday. I was on Regent Street in London at the time, so know I didn't place these live in the market. I keep meticulous records in an Excel spreadsheet and have no record of these trades ever being considered, let alone placed.
With eToro's 'Help Center' not open I was left with a difficult decision. With overnight news out of China I had to get out of these trades. Also, having no knowledge of these trades and with no strategy behind them there were two even bigger reasons to get out. I closed out both positions for a loss on my eToro account of $105.20 ($52.60 x 2). I've logged a support ticket and am waiting to hear back. I've requested a full explanation and that this loss be reinstated.
Again, this shows the importance of discipline in trading. I took the loss there and then rather than waiting until this morning. If I'd have left these positions overnight I'd be carrying a much bigger loss today!
Is it really possible to turn £50K into £1M? Over the next 36 months I'm going to find out by trading my personal account with full transparency.
Follow my 36-month challenge to turn £50K into £1M.
Read my blog here: https://stgforextvforexchallenge.blogspot.com
Subscribe on YouTube here: https://www.youtube.com/channel/UCyGySJ5IeDjq-DIJPU7nYvw
[Please note, the information presented is general educational material and does not constitute trading advice.
Trading foreign exchange (forex) on margin carries a high level of risk and may not be suitable for you or your circumstances.
Before trading forex you should investigate all of the risks, including the possibility that you could lose more than your initial investment.
It’s important to consider your investment objectives, level of experience and risk appetite. If in doubt seek advice from an independent financial advisor.]
News out of China overnight, while not great was interpreted as better than expected by the market. This saw bids in AUD and NZD pairs. I'd rolled my stop to entry on my GBPAUD (T10S) short just in case the consensus saw things the other way and price is now nearly at T.
Last week was a difficult one. After a good end to the first week of the challenge (2.1% gain on opening capital), week two saw me back to square one and worse with a drawdown on opening capital of -1.9%. This means I'm in negative territory and it's now the start of the third week.
I have to admit this made me a little hot under the collar at the weekend, but it's important not to panic. If you panic in trading you make irrational decisions (trust me I've done it), and again discipline needs to kick in here. Losses and periods of drawdown are an inevitable part of the trading life. Although I hadn't wanted to be in this position at the end of week two, there are still over two weeks until the end of the month with all to play for. What's more, my trades in GBPAUD and USDCAD (T9S) both are in profit (see chart for GBPAUD above and USDCAD below).
Back to the drawdown – I downloaded a book entitled The Formula For Success by Samuel Leach yesterday and have read the first few chapters already. The statement that to take £1M from the markets you'll need to be prepared to lose £500K along the way really hit home. A losing trade is only a losing trade if I don't follow my rules. No trader in the world is profitable on every trade, and a period of drawdown is simply part of the bigger picture, which has been carefully planned to deliver growth in capital.
In terms of other trades, my AUDUSD (T7S) short was stopped out on Friday. Price took me out on my initial stop, and reflecting on my GOLDEN GATE strategy I have no clear rules on getting out earlier if things begin to go the wrong way. I've subsequently added to my rules and will now exit 1/3 of my position if price closes back beyond the 200 SMA, and another 1/3 if the same happens with the 50 SMA. I never want to be taken out by my initial stop to lose 2% of capital on any given trade. If my initial stop is hit, unless there's a surprise news announcement that couldn't be anticipated, there must have been signs to get out earlier. My exit rules are designed to get me out even if my emotions are encouraging me to stay in.
This morning I've entered a new position in EURCHF with my FULL HOUSE strategy.
Although somewhat of a pain, these margin requirements are making me more selective in entering trades. At the moment it's looking like three open positions is the maximum in either my long or short account. I've yet to take a long opportunity – I've known for a while that I have a natural tendency to be a short trader and it will be interesting to see if this continues as the challenge progresses.
Back to the subject of discipline and something I'm not happy about at all.
Last night when the market opened I checked my positions in both my private broker account and eToro, and was horrified to find two open GBPAUD long positions in the latter. I'm short GBPAUD (T10S), but had made no long entries, and certainly not two that are identical.
As far as I'm aware neither of these positions were open ahead of the weekend despite having a time stamp of 12:16pm on Friday. I was on Regent Street in London at the time, so know I didn't place these live in the market. I keep meticulous records in an Excel spreadsheet and have no record of these trades ever being considered, let alone placed.
With eToro's 'Help Center' not open I was left with a difficult decision. With overnight news out of China I had to get out of these trades. Also, having no knowledge of these trades and with no strategy behind them there were two even bigger reasons to get out. I closed out both positions for a loss on my eToro account of $105.20 ($52.60 x 2). I've logged a support ticket and am waiting to hear back. I've requested a full explanation and that this loss be reinstated.
Again, this shows the importance of discipline in trading. I took the loss there and then rather than waiting until this morning. If I'd have left these positions overnight I'd be carrying a much bigger loss today!
*********
Is it really possible to turn £50K into £1M? Over the next 36 months I'm going to find out by trading my personal account with full transparency.
Follow my 36-month challenge to turn £50K into £1M.
Read my blog here: https://stgforextvforexchallenge.blogspot.com
Subscribe on YouTube here: https://www.youtube.com/channel/UCyGySJ5IeDjq-DIJPU7nYvw
[Please note, the information presented is general educational material and does not constitute trading advice.
Trading foreign exchange (forex) on margin carries a high level of risk and may not be suitable for you or your circumstances.
Before trading forex you should investigate all of the risks, including the possibility that you could lose more than your initial investment.
It’s important to consider your investment objectives, level of experience and risk appetite. If in doubt seek advice from an independent financial advisor.]
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