Skeleton Model Forex

My forex experiment for August is....

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

The big advantage is that its easy and simple. Not a lot of time is spent on over analyzing a currency pair, let alone a dozen, looking for a good trade.... guilty as charged on that count.

Is it me or is my voice in the video have a lot of echo in it more then usual?

Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Portfolio Management stop on Forex trading

I knew that 4 losses to start off June was a bad sign...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

So I have to stop trading for the week which means no trades today or tomorrow. If I was trading live money the next deposit would have to go into the Trading account to ensure that it grows. That is very critical at this point. Otherwise I could be trading making $5 here and $2.50 there for quite awhile. By having the deposits cover strings of losses I will still be increasing my portfolio while I am learning. Once I deem myself ready to trade with real money the learning process doesn't stop. It takes years to master a skill and the markets are always changing. I know a commodity trader who has been trading for 16 years starting up Forex and still learning.

As I mention in the video, I do want to hear your ideas on future Trading account rule changes. Hitting the $3,500 mark isn't as far off as it sounds. If I push hard that could be 3 months with the extra monthly deposits.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

May Forex Trading update

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

Overall I am pretty happy with how May went. June is starting out rough with 4 losses in a row.

In the past that would have distracted me, bummed me out, perhaps even made me start questioning myself and what I was doing. After having the string of losses from my coin flip experiment its a lot easier to handle now.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

What to do when you have a "bad" trade

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

I placed the word bad in the title in quotes for the same reason I did it for the bad investing video. A losing trade where my account has a loss of money is not a bad trade it was a losing trade.
As traders we will have losses. We do our best to plan the trade and predict the market direction and we will be wrong. That can be calculated in. What can be controlled and needs to be controlled is making stupid choices that we know we shouldn't

While this trade was important and shouldn't be blown off as no big deal it also shouldn't be made more then it is. It was one bad trade. It was a learning experience which is what the demo account is for. You can be sure I will take this trade with me for quite awhile.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

The 2 in a row strategy

Going to start up a new forex experiment...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

I sat down and reviewed the numbers from last month. As I mention in the video everything was kind of all over the place as far as strategy. I knew that it would as my main goal of last month was really just to start doing trades and practice. I ended up not liking that even though liking it wasn't the goal or point but we need to be comfortable with what we are doing. My eyes then turned back to the coin flip account.

In moving away from the coin flop idea to a more free form trading style I asked myself if perhaps I had discarded too much. I had kept the trailing stop/profit stop ratio but was there more. From that I came up with the 2 in a row idea.

My goal here is to see if I can get the stability and ease of automation with the coin flip but increase the accuracy. If it looks good I will use it with real money if its consistent. I'm not above doing that and admitting my own skills in trading need work. My long term goals are to make money, not sitting here thinking about how awesome I am... or in last month's case how I am not.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Forex trading review 4-13-12

A Friday the 13th appropriate update to my Forex trading...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

Well it was intended to be quick and then ended up being a 15 minute video.

Numbers wise, I am off to a terrible start but to be honest, I couldn't be happier. Well I would with profit lets be serious but in analyzing my first couple trades, I am doing the right things at the right times with the information I have in the moment of the trade. As I mention in the video, that will be the key to success. How can I be sure though? Lets look at other industries...

You have your professional athlete on any team sport. Baseball, Football, Soccer, Hockey, they are all the same. Yes an athlete can read the play book and memorize it but put them on the field in front of tens of thousands of viewers and the opposing team running at them and.... oops the other team scores.
The player then goes back to review recordings of their play and they can tell themselves they wont make the same mistake again. Next game they keep making the same mistake.

As traders and investors we will be put in front of a lot of potential oops moments. You can read all the technical analysis books from the safety of a comfortable chair and your favorite beverage. Will you remember that point of wisdom from chart 48-B on page 212? Or will you lose 5% of your account?

Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

What happened to the coin flip account?!

What an interesting turn of events...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

At this point I do not think the Coin Flip methodology will work for me for live money. Stress on the ME part of that sentence.  Its money management is still very good and over the long run I should have excellent runs of numerous big wins. It is the lack of control that I am not liking.

To be clear let us review what control I would have over my trades in the markets...
1: When I enter a market.
2: How much money put into the trade
3: When I exit the market.
That is it. Who knows how big a winner could be before it turns against me. With slippage I cannot even know what my loss will be. For that matter, the argument could be made that I will not even know exactly I enter or exit depending on when my orders get filled.


Can I have it both ways though? The money management with me being in control? I think that I can as the lack of control aspect was in not being able to change when I entered (through the use of technical indicators or anything really) nor being able to make adjusts to losses (nothing to change with the plan).
The money management in the form of the trailing stop and profit stop are independent.



Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

February review of the Coin flip account

Its the end of the month so lets review how the forex trading went...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

Its easy to spend time working towards the goal of becoming self sufficient financially. Its also easy to dream of the benefits but talked less often is the drawbacks.

The size of the losses should not be underestimated. Hopefully one will be able to focus on the profit and total net gain in accounts. If you think you cannot then perhaps trading and investing is not for you. That is not to dissuade anyone but to bring up all aspects of this lifestyle we choose to pursue.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.  

Time difference with the Coin Flip account Part 2

I continue talking about what I found with the demo forex trading and what changes I plan to make.

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

Static Stop Loss order vs Trailing Stop limitation with MT4
I used the term trailing stop and stop loss back and forth but I want to be sure everyone is clear about the differences as far as it pertains to Metatrader 4 (MT4).

MT4 software interacts with a broker's software. It can place a trade, place a profit stop, and place a regular stop loss order with the broker and that is stored on the broker's servers. The local MT4 client installed on your computer manages a trailing stop. Once a trade hits the MT4 trailing stop it sends a market order to exit your trade to your broker software. From your broker's point of view there never was a trailing stop, it only received an order to exit the trade. The danger is in if your computer losses its connection to the broker server you have no protection if you were only relying on the trailing stop. The broker server sits there watching your account go bankrupt wondering when you are going to tell it to stop.

What MT4 will do though is send a stop loss order that is static in price. This appears on the Oanda software when I look at it through their software. The trick will be in programming MT4 to check the amount of profit and move the stop up to match making a synthetic trailing stop loss but it is still technically a regular old stop loss order as far as the Oanda server is concerned. Then if my connection is lost at least I do have something out there protecting me.

Shrinking Synthetic Trailing Stop
I also want to go into a bit more detail about how the synthetic trailing stop will shrink as the trade becomes more profitable because in reviewing the video I kept using decrease, shrink, increase in possibly confusing ways. Right now with a 50 pip trailing stop I will always give up 50 pips. The following chart shows how many pips in my favor a trade goes before reverting and hitting its trailing stop and the net amount of pips. The 100 mark hits the profit stop so the trailing stop is not triggered.

100 pips profit, 0 TS, 100 net pips
90, 50 TS, 40
80, 50 TS, 30
70, 50 TS, 20
60, 50 TS, 10
50, 50 TS, 0 net pips break even point
40, 50 TS, -10
30, 50 TS, -20
20, 50 TS, -30
10, 50 TS, -40
0, 50 TS, -50

Now my plan is that for every 4 pips of profit I will decrease the size of the trailing stop by 1 point, making it small so that the more profitable I get with a trade the more I will keep.

100 pips profit, 0 TS, 100 net pips
90, 27 TS, 63
80, 30 TS, 50
70, 33 TS, 37
60, 35 TS, 25
50, 37 TS, 13
40, 40 TS, 0 net pips break even point
30, 43 TS, -13
20, 45 TS, -25
10, 47 TS, -37
0, 50 TS, -50


This does a number of things.
1: It keep me in the trades that go immediately against me the same amount of pips so that I can survive the volatility and hopefully make it to the 100 pip level
2: The smaller sized losses are lessened but still give ample room, 43, 45, 47 pip stop losses are still a good level. A few pips shaved off each loss will add up.
3: The break even point is now 40 pips vs a maximum of 50 pips loss. This shifts the averages to my favor.
4: The moderate wins I am keeping more.
60 pips keeps +15 more pips then the previous trailing stop.
70 pips keeps +17
80 pips keeps +20
90 pips keeps +23

What would this have done to the results? I would have gained +273 pips for +$30.03 more then a 50% gain in profit.
However, and this is important, I would have been stopped out a little bit earlier in some of these trades. That is one of the dangers of back testing that you fit the data to make it work your best case scenarios.

Only actual testing will tell.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Trading psychology benefits of demo trading.

I entered in today's second forex trade for the coin flip account and noticed something of my mentality that I wanted to share. Here is a screenshot of the trade. Its a 15 minute chart of the EUR/USD. About 4/5ths the way to the right is a green arrow. That shows my trade's entry point.

Notice for most of the recent past the candlesticks were very small. Not much action. Then as I am getting ready to enter my buy trade we get possibly the largest 15 minute candlestick of the day going against me.... as I enter the trade. The next candlestick started to go down further.

What were my thoughts? Was I yelling at the coin for coming up heads? Perhaps yelling at myself for logging on at the time? No. My thoughts were of something new this trade vs other ones.

"Yeah that's not a good start but my trading history shows on average a trade gets me +$0.81. There have been plenty of trades that looked bad at the beginning that turned around. The 50 pip stop loss gives plenty of wiggle room. By entering this trade there is no reason to think this trend shouldn't continue."

At the beginning of this coin flip experiment I was keeping a close eye on each trade. Guessing what was going to happen and guessing where I would be stopped out at.  After 28 trades I have realized that the begging and pleading does little good to will the market into a direction. The trades have become a routine pattern. Flip, enter trade, done.

This is a benefit of demo trading that I think some experts do not realize. The practicing and conditioning of ourselves is as beneficial as practicing our trading strategy.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Results of the Coin Flip Forex Demo account

So the results are in....

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

The savings account is almost to its first goal of the year of $1,000 emergency funds. The trading account needs its next goals mapped out and I do so here.

In the video I used the term "live" a bit too much so want to be sure everyone is clear about my plans for the Forex trading account.
February: Test different technical analysis tools. Do some test trades.
March: Finish testing and come up with a trading strategy combined with our existing money management trade rules. Further testing done.
April: Reset demo account funds to $1,500. Start with a new trade record of 0 trades, and implement the trade strategy keeping track of trades similar to what was done for the Coin Flip account.
May: Continue testing and refining strategy.
June:  Continue testing and refining strategy.
July: Continue testing and refining strategy. If having consistent profit then can go live with real money with the existing Trading Account funds.

As I mentioned in the video, while most of the deposits go into the Investing account there will still be plenty of trading going on.



Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Quick Trading update

Its probably not a good thing that the coin came up heads and I get into a long EUR/USD trade immediately after a 92 pip 2 hour run. I expect this one to be over very soon but I take solace in the fact that I wouldn't have gotten into this trade on my own.

On the other hand the markets have been known to be crazy from time to time.

On a more positive note I noticed something this morning I wanted to share...
Keep in mind Rule #4 from the Rules of the Model Portfolio
"Rule 4: The portfolio is organized into 3 accounts: Savings, Investing, and Trading.
These 3 accounts play off of each other's strengths and weaknesses."

Now take a look at the different accounts...
Trading: Coin Toss demo account total losses -$6.36
Investing: Average monthly income estimate: $6.83

What a great example of portfolio management. Even with a  troublesome 25% trading accuracy rate the portfolio is still positive for the month.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Interesting start to the week for demo trading

The market giveth...

I logged on this morning to see if yesterday's long trade finally got stopped out and found this...

A full 100 pip $11 win was a nice addition. It helps overcome the psychological draw down of the more numerous but smaller losses. We can see a whole lot of nothing happened yesterday in the EUR/USD until later in the evening.

The coin came up heads again and you'll see the profit stop (pink line) and the trailing stop (purple line). Not the manliest of colors I admit however

The market taketh away...
I came back from walking the dog to close things up and I was stopped out for a near full 47 pips, -$5.52.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Reviewing the Coin Flip account

Yesterday morning I made a video as I was reviewing my demo Coin Flip account and decided to make a video on it...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

Analyzing my trades individually and then collectively is important to me. What story do they tell? Am I getting out of trades too early or too late. Is my stop loss at the right size to protect the account. Am I missing something.
Most experienced traders I have talked with state the importance of this post trade review. Its not unlike how sports coaches reviewing tapes repeatedly to see where the  mistakes were.

This video was made yesterday morning from the time of this blog entry. Youtube took far too long to process my video for me to stick around and wait. So when you watch it keep in mind it will not have the same stats as on the trading page.

In the video I misspoke that a $3 would be 0.33% loss. Based on a $1500 account that would actually be 0.20%. A tiny difference in and of itself but if my weekly cut off was a 2% portfolio stop the difference turns from 6 losing trades into 10 losing trades. Not so small a difference now.

I bring this point up for a reason beyond public admittance of a mistake, which I do feel is important. I bring it up because when analyzing our numbers there are so many ways to look at it, even in this small statistic. If I can do 6 failing trades before I stop I could do one each morning and not hit my portfolio stop regardless off accuracy. At that point I would not need a stop. I would still have one in case of a string of large losses however if my averages hold I wouldn't stop trading. So I have room to increase the stop loss here to fit my account. Or I could increase the order size for bigger winners and bigger losers.

On the other hand with 10 losing trades I know open up the possibility of doing a trade in the morning and a second one of the day when I get home. My average time in a trade is 12 hours so its possible.

Just a few more ideas on what information we can not only find in our trading system but in what we do with that information.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others. I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Demo Forex Trade

Several of you have requested a video on a demo trade. I figured I would roll it into what I am looking at with a spreadsheet for my forex trading...

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

Ok first off... with as many times as I said the words "Support" and "Resistance" I am sure I switched the two somewhere. Hopefully though some good meaty ideas were shared here.

I am pretty pleased with this trade overall except for one slight problem... it was a loss. I am not trading to have warm fuzzy feelings that I have my trade setup and trade management under control. I want to make money. This loss is nothing to be discouraged about but it is something to take as a learning experience in the post trade review.

Reviewing a forex trade or any financial move after it has occurred is important. Not so much on the dwelling on were we right or wrong because that can lead to emotionally questioning things.
I want to review how the trade went exactly happened. Even if we were correct in the sense of the market moving in the direction we wanted did we make a profit? Did we make enough of one to make it worth our while? If the market we traded did not move in our direction was there a reason? Sometimes there won't be an answer here. In looking at my EUR/AUD trade after the fact I noticed most of the pairs with AUD in them moved similarly with AUD weakening. Perhaps there was news out that I didnt hear which would have moved the value of AUD but not result in a pullback like a technical analysis reason might. There are all sorts of fundamental aspects that might be involved.

Also of note from the video is that I wasn't using any other tools like moving averages, MACD, etc. Here I was mostly focusing on the size of my trade and making sure the spreadsheet was accurate. I can, and will, incorporate other technical analysis tools later to hopefully get some profitable trades.

Enjoy your Halloween weekend!


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others.
I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Planning out the Demo Trading in the Forex

"Its about time!"

Tychus, Starcraft II

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

I've fought against trading platforms that I did not like and tried to trade on them. They are a big distraction emotionally at least for me. By itself its no big deal and for the seasoned professional who has thousands of hours of experience in trading its probably no big deal. But for the new person trying to learn and you are using software you do not like, with some background music, with dual monitors and you are doing something else on the other monitor, and kids or a spouse making noise in another room... it can all add up to too much distraction and you lose focus.

Think to when you first started your current job. Were you able to multitask on day one with your job duties or did you need to really focus in on what the heck was going on. Its often said trading is a business, a job, and should be treated like one.

Another consideration to why you need to be comfortable with your trading platform software... you are potentially going to be using it every day for years. You better be comfortable and happy with it for that sort of commitment. There can be enough stress with losses to not have to deal with software problems. Especially in the early stages of learning if we get too frustrated or have too many problems we run the risk of throwing our hands in the air and giving up to look for something else to try. At that point was the problem with trading or the problem with us? If it is with us won't those same problems follow us to our next money making idea?


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others.
I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.