Case Study: My Adventures in Forex Trading (Update: 2/16)

Posted by 16 February, 2009

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Here is a link to the first post regarding my adventures in Forex Trading. I’m pretty happy with the progress I’ve made over the last month. I probably spend an average of 5-10 hour per week talking with my mentor Mindy while simultaneously trading and watching the market.

I think the biggest surprise for me has been how fast the market can move. The first few weeks of my training occurred during the Christmas and New Years holidays. This time of the year is a quieter as far as Forex trading is concerned and the market wasn’t as active due to many of the large currency traders being on vacation since we are trading the Euro/USD pair.

ACCOUNT SUMMARY
Beginning Balance 15,479.00
Comm Trading Commission 0.00
Rollover Rollover Fee 26.70
PnL Profit/Loss of Trade 1,262.70
Depos Deposit 0.00
Withd Withdrawal 0.00
Option Options Payout 0.00
Comm Options Commission 0.00
AdminFee Administrative fee 0.00
MngFee Management Fee 0.00
PerfFee Performance Fee 0.00
Void Deposit Rollback 0.00
ASPComm ASP Commission 0.00
MargInterest Interest on Usable Margin 0.00
Ending Balance 16,768.40
Floating P/L -2,787.10
Equity 13,981.30
Necessary Margin 300.00
Usable Margin 13,681.30

Above is my account summary for the month. This is a demo account so no actual money is involved. This represents my trading from January 14th to February 15th. The first thing to take note of is my beginning and ending balance. I’ve gained over $1200 or 1200 pips for the month. The rollover fee that you’ll notice in the third line is for any trades that I have executed, but the trade was open after 4 p.m. CST. The bank charges interest for the ability to leverage money and this is represented in the rollover fee. Mindy’s strategy for me is to not hold trades for very long, but I’d much rather hang onto a trade for a little while as opposed to losing money. I do want to point out that while I have gained money in the balance column, if I were to close out my account today and sell my trades, I would still be negative over $1000. I want to make sure I’m not sugar coating my experience. It’s very interesting and I’m making progress, but I would be negative if I were to close out today. Fortunately, there are tactics that Mindy could help me employ if needed – for example if my usable margin (currently at 97.80% as I type this on 2/15) were 80% or lower.

My goal for the next month is to have an equity position that is over $15,000 (my original position).

Have you ever traded Forex? What are your experiences?

Photo by Wili

Other Posts:

The TED Spread and What It Means to You
Book Review: The One Minute Entrepreneur
Interview: FairRepair.com
Carnival of Personal Development – February 2, 2009
Book Review: The How of Happiness


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Comments
February 16, 2009

Wow..well done, hope you will do well with real account!

Posted by Xenon
February 16, 2009

This is interesting but assuming that you move to trading with real money, what is your objective? Is this fun money that you are willing to take a lot of risks with? Or would this be part of your core retirement portfolio? If the latter, I’m not seeing it. Too much work and too much risk for too little return.

Mr. GoTo’s last blog post..Determining the Best Age to Start Social Security

Posted by Mr. GoTo
February 16, 2009

Great post! It’s a good idea to start out with a practice account, since it gives you an idea of how forex trading works. Good luck!

Posted by Miranda
February 16, 2009

Be prepared for a wild ride when trading forex. I had 5-6 years demo trading under my belt before I felt comfortable enough to risk my capital.

I’ve been a manual trader, but I’m seeing if my system can be migrated to an automatic setup at this point.

Good luck to you my friend, we appear to have blogs about the same experiences.

The Geared Investor’s last blog post..The Geared Investor System: Progress on Versions 1.1 and 1.2

February 17, 2009

Forex trading is potentially very rewarding, but unfortunately most successful traders blow their bankroll at least once before they eventually become profitable.

You need immense discipline, good money management skills (ie cutting losses early, letting winners run, etc) and a profitable trading system.

James – Forex Trading Blog’s last blog post..Forex – The Perfect Recession Proof Business?

February 17, 2009

@ Xenon – Me too! Thanks for the comment.

@ Mr. Goto – Great question. This would be money I am willing to lose. A lot of people lose a lot of money Forex trading. I hope that through enough training and mentoring, I will not be one of those.

@ Miranda – Thanks! I couldn’t imagine not having a practice account. When my mentor, Mindy, started trading there was no such thing as a practice account. Imagine that!

@ The Geared Investor – I’d be curious to see how you’ve done in a live account since you had so much experience on a demo account. Thanks for the comment!

@ James – I think that’s where Mindy’s strategy differs. She doesn’t cut her losses. She waits for the trade to be profitable. You can do that by offsetting your trades to keep a healthy margin. Thanks for the comment!

Posted by admin
February 17, 2009

Good luck with your trading! Last year I spent some time with the demo account before I finally went to my live account. I hit the ground running on the live account but then stalled when I started to doubt myself. Once you go live just keep plugging away…it’s all about confidence. My strategy is all about small gains taken very quickly. I will be interested to see how your strategy plays out.

-Mike

Mike’s last blog post..Forex Trade – February 17, 2009

Posted by Mike
February 17, 2009

Thanks for sharing your experiences with Forex. I’ve never done any real forex, except when I moved between the UK, Canada, and the USA. But that was just with my money, and for personal reasons… ie. having enough local currency to pay rent or buy food. 😉

I think you’re doing quite well! It’s cool you’ve got yourself a mentor too. I can definitely remember how stressful it was trying to pick “the right time” to trade between my currencies. I guess it becomes more natural the more you do it, right?

Nathalie Lussier’s last blog post..How to Relax Your Eyes

Posted by Nathalie Lussier
February 17, 2009

@ Mike – I’m pretty interested to see how it pans out with real money as well :). Thanks!

@ Nathalie – You’re right! It’s gotten a lit easier the more I’ve done it. When I first started out, I would get buy and sell signals, but I was too slow to react before the signal went away. Thanks for the comment!

Posted by admin
February 18, 2009

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Posted by LC
February 20, 2009

I have not traded on FX but more on options and stocks. The principles should remain roughly the same. Discipline is key! All the best to your trading adventures!

Evelyn Lim’s last blog post..Raising Kids, Removing Fear

Posted by Evelyn Lim
February 20, 2009

I’m curious — and let me first say I’m not educated on this — if you are showing a $1,200 profit… how would you lose money if you sold out at this point?

Are you floating a $2k loss right now in your current positions?

No Debt Plan’s last blog post..Recessionary Customer Service Expectations

Posted by No Debt Plan
February 20, 2009

@ LC – That’s the great thing about having a mentor like Mindy. I’m not relying on a black box system. Right now I’m relying on her almost 10 years of experience, but I am also crafting my own experience.

@ Evelyn – Very cool. I don’t know a whole lot about trading stocks or options. Have you had a good experience with that?

@ No Debt Plan – Great question. I am up over $1200 for the month from the original amount. You can look at it as gross income. Once I take the net income (subtract trades I have in the negative that I’m holding right now) I would have a total equity position of 13,981.30 which is over a $1000 less than my original amount of $15,000. Keep in my this money isn’t real. The good news that my equity position as of today is 14,381.10. I’ve had a few good days of trading. I hope that makes sense. Thanks for the comment!

Posted by admin
March 3, 2009

I would be happy to help you get through the learning curve…

http://www.twitter.com/tradertomdotnet

Thomas DeMattia’s last blog post..Twitter Hit CNBC today Wow going mainstream!

Posted by Thomas DeMattia
March 6, 2009

I wish you best of luck, I am also on my own Forex adventure. It hasn’t been easy but I find trading fascinating and challenging.

GoForexYourself’s last blog post..Signal – US/CHF

Posted by GoForexYourself
March 7, 2009

Forex trading is the important system in the world.This articles gives a very good information for all forex trader.Thanks to the author.The above information is useful for me.I also developed a web page of “IKON ROYAL” for about forex trading.

Posted by Forex Trading
March 7, 2009

Best of luck with your trading and tread carefully.

Cheers – David
http://www.ForextickData.com

Posted by David
March 8, 2009

@ Thomas – Thank you very much for the offer. I have a mentor and am very happy with how everything is going.

@ GoForexYourself – I will be keeping up with your progress. It’s always exciting when people are able to share similar experiences. Best of luck!

@ Forex Trading – You have a very nice website. Thank you very much for your comment!

@ David – I will certainly be careful. I think the sense of being careful will be heightened once real money is involved. Thanks for the comment!

Posted by Dustin
December 3, 2009

Thanks for sharing this great info.

March 5, 2010

Forex trading is really an adventure. Specially last year was very difficult for many from us. I hope you still in the game and make good profits?

Posted by Forex Robots
December 24, 2010

I really appreciate your post and you explain each and every point very well.Thanks for sharing this information.And I’ll love to read your next post too.

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