Month 1, Day 14 - 36-month forex trading challenge - patience and diversification.

It's Thursday and another week is nearly done. I'm very conscious that to hit my 10% target return on opening capital something needs to happen, and something needs to happen soon.

This is the time it's easy to rise to the temptation of entering suboptimal trades, or trades that don't quite meet the rules.

This morning, I'm reminding myself that patience is a virtue, and a quick search on Google found the following quote:

'Never cut a tree down in the wintertime. Never make a negative decision in the low time. Never make your most important decisions when you are in your worst moods. Wait. Be patient. The storm will pass. The spring will come.' – Robert H. Schuller.

I know very little about Robert H. Schuller, but his quote speaks volumes. From a trading perspective I guess you could say I'm in the low time, but hopefully spring is on the way.

And you know what, I think it probably is. I'm still in my four trades, which I ran through yesterday. I'm short USDCHF (T12S), USDCAD (T9S), EURCHF (T11S) and GBPAUD (T10S). 

As I write this, GBPAUD and EURCHF sit in profit, USDCAD is hovering at my entry, and USDCHF is in negative territory. Every morning I ask myself the question: 'Does this trade still make sense?' From a technical perspective should I still be in, or is it better to exit with a loss to free up margin for a better opportunity that could be just around the corner?

The answer today, is that all off my trades still make sense, and as such I'm not quite ready to cut down the tree.

Overnight news out of Australia on employment came in below expectation, but AUD rallied in the majority of pairs I watch, and of course, was good news for my GBPAUD short, particularly as GBP continues to look weak. Go figure the news – it's never the announcement, but the market's reaction to it that's important, and that my friends is very hard to predict.

I have little concern for 'why' in the markets and am more interested in 'what'. I trade what's in front of me in the form of price action – why things are happening is really of little consequence and to be honest, while commentators may serve up theories, nobody really ever knows. 

I don't trade the news, but I protect myself from its potential impact. This means stop loss management, which caps my downside risk, but if the news is favourable the upside potential is unlimited.

As nothing has really changed with any of my trades, I'm not sharing chart images in today's post, but for a more detailed explanation, please visit my YouTube channel, 'Subscribe' and watch out for the video that will be out next Tuesday / Wednesday covering week 3 of the 36-month forex trading challenge.

A quick update on eToro and the rogue trades that popped up in my platform on Sunday's open. I queried this on Monday and am now in dialogue with customer service. They've asked for more information and I'm waiting to hear back. This needs to be resolved by the end of the week or I'm going to have to reconsider whether eToro is a platform I really want to trade on.

The social element is great, but the execution and support has to be right. I'm not playing with peanuts, this is hard-earned cash that I have on the line.

On a related note, when I view my portfolio in eToro I'm more often than not greeted with a message that encourages me to diversify.

I only trade forex and despite the daily prompt am never tempted to do anything else. People often talk about diversification as the way to reduce risk in the markets, but for me it's also the best way to dilute profits. 

Specialising in one financial instrument, means focus. With focus comes a feel for the particular instrument you trade and a better understanding over time of how it behaves and what to expect. For example, stocks behave very differently to currencies and although cryptocurrencies have 'currencies' in the title, they behave very differently to the spot market. 

The analogy I've always used is from the medical profession. In the UK a Doctor / GP (General Practitioner) knows a little about a lot of things. They make an initial diagnosis and if a problem is identified where an operation is perhaps needed, you're referred to a Surgeon / Specialist who know a lot about a few things. 

But who gets paid the most? Well in the UK, it's the Surgeons / Specialists that drive the best cars and live in the big houses. I rest my case – when it comes to the markets I'm a currency specialist, and that won't change.

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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.]