Eupho's ForExperience

[euphoricism]

Thats Foreign Exhange, for the layman (I can say that because ive been reading about it for a whole week!). In a nutshell, its buying and selling currency and taking advantage of inconsistencies in the exchange rate (IE if the dollar is gaining value, buy another currency with dollars, wait for the dollar to gain some more value, sell your currency and pocket the difference. Easy $$, right?)

Notice: As of writing, I'm still paper-trading ( aka play money -- but more worthwhile than poker play money) and will continue to do so until I am 100% SURE that I am profitable. Right now im -$200 on my $5k starting balance.

So yes, I'm starting a second blog, for my forex experiences. I've got a *very* simple system which I'll explain briefly below (and yes, you can do it too!). Other than that I'll be posting what I've done right and what I've done wrong. I'll start right away.


Brief description of system:

First notice that there are four colored lines on each graph. The green one is the markets current selling price. The pink one is the average of the last 100 minutes. The red one, the last 20 minutes. The Blue one, the last 5 minutes. The system is very simple, when the blue is below the red AND the pink, the market is going down. When the blue is above the red AND the pink, the market is going up. When its inbetween, its too close to call which way it will go, and no trading is done.

Its a very simple system, think of it like AOK's 19 hand strategy. You'll be a winner, but you probably wont be a HUGE winner. There are certainly other far more complex systems which will increase your profits but to be honest I barely understand why this one works and I am in NO WAY ready for a more complex one!

So here's todays graph:




Point A. This is the euro/USD exchange graph, looking at 30 minute intervals. The Blue line crosses below red and pink. Huge indicator that the market is going down so take a short position (aka buying on margin, aka selling. Essentially youre "borrowing" money at one price, hoping the cost drops and then giving it back at price B, pocketing the difference).

BUT, I wasnt at my pc, and I didnt see it happen. As such, I got in at point B. Notice that theres already a significant drop in effect, and I missed a big opportunity for ez cash. Thankfully the market is continuing to drop, and its actually way below that point right now so I'm not too late.

Point C Blue line crosses beneath the red and pink, so again take a short position. I got in right on time! But as you can see.... it didnt drop this time. The blue line crossed the red again at point Dand I *should* have closed my position and taken the very tiny loss, but again I wasnt at my PC (see how big of a mistake this can be What if the market went upward?!?!). Dont day trade if you cant watch the market!

Thankfully I got LUCKY and at point E the blue line crossed again and it looks like the market really is going down this time. So if you draw a line between point C and point F, thats my profit so far.

(since I started writing this, its dropped even more! Good profit!)

Remember how I said i was -200 at the start of this post? Well that was because I didnt trust the system in a few places. I was SURE I knew better than the system, and I closed my positions before the system said to. Go figure, I LOST! So number one rule is trust your system. Number two rule, is watch the market.

Its 10:30 at night now and I've entered this position. This means I could be up for a very long time watching the market making sure I dont miss my exit point. This problem can be alleviated with stop-losses (automatically closing the position if you lose $x) and take-profits (automatically closing the position if you MAKE $x) but i've got finals to study for so I'll probably be up anyway.

Rule number 3, don't go to sleep with open positions unless youre very confident and/or (and being the favorite here) you set your stop losses at the break even point!

Guess thats enough for now, I'll update when I close the position.


AGAIN, let me REPEAT, I'm a BIG FUCKING NEWBIE. I've been paper-trading for just over a week and I've LOST money. Take EVERYTHING I say with a BIG FUCKING GRAIN OF SALT.

[JJDAMAN]

I don't know anything about anything you just said, but I would start smoking if I were you.

[euphoricism]

and why would that be?

[euphoricism]

Closed positions. First graph, euro, looked like a loser so I just cut and ran. Bought around A, sold at B. Just got in too late and took a gamble and lost. -$80

GBP was a good grab though, opened a short (sell) position at C, sold at D and picked up an even $200 in profit. I should have held it a *bit* longer, but its bedtime and it looks like its about run its course anyway.



Total is +$120.

And apparently my math was wrong from before as I am still $180 in the hole overall. Not bad.

[euphoricism]

An example of a good long position -- the classic buy low, sell high.



Blue line passes above the red and the pink, and the green (actual market) line follows. Its really that simple.

But unfortunatly this happened around 11AM GMT -- and thats about 6 am here. So I missed it. Sucky sucky.

[Ash256]

How do you go about getting into this? Looks fun.

[euphoricism]

lots o googlin

[JJDAMAN]

and why would that be?

This sounds really stressful, smoking will help keep your nerves cool...

A couple questions though. What type of return are you looking for? Do you put your entire bankroll at once? Did you make up this system yourself, or are you using someone elses?

[euphoricism]

and why would that be?

This sounds really stressful, smoking will help keep your nerves cool...

A couple questions though. What type of return are you looking for? Do you put your entire bankroll at once? Did you make up this system yourself, or are you using someone elses?

A) Its way less stressful than poker!!!
B) Its said that doubling your return over a *year* is good. Peoples ROI's seem to be all over the map so I cant seem to find a straight answer on whats "average". I think I can definitely beat doubling my return over a year.
C) I'm still in play-money, and I'm still a loser. My bankroll aint goin anywhere CLOSE to the forex until I'm a PROVEN winner.
D) Someone elses system. I'm way too noob to come up with my own.




Alright todays update: Got pwned. Violated the rules *again* and took a position then walked away. This is really easy to do on demo money because.. well.. its not real. Currently -54 -- so it hasnt been bad, thats for sure.The positions I took are both long positions (again, classic buy low sell high) and the markets have been on huge increases since january so I might just let these ride and let the market bail me out.

Worst part is that I'm still -$$ overall, and theres no reason for it other than my own bullshit mistakes and not-paying-attention-ness.

The $60 loss is small... I should probably take it.

-$34 now.. two positions, one slightly negative, one slightly positive (and still "in the green")... I'm gonna close the negative and let the positive run a bit.

Thats about the extent of the stress.

[euphoricism]

Wow completely forgot about this thread. I've been dabbling here and there, still in play money.

Here's the biggest trade of my career:



Note the dates -- let it run for almost 5 days. Not for the weak of heart, but hey its play money.

+$465

[biondino]

Can you post the costs of an average real money transaction, i.e. brokers fee, spreads or any other cossts that have nothing to do with the rate itself?

[Knytestorme]

Eupho, I've got a commerce degree with my major in finance (hedging, stocks, futures, forwards, etc) so if you have any questions feel free to post or pm them and will try to help.

[euphoricism]

The broker makes his money off the pip spread - the difference between the bid and the ask price. A supersimplistic hypothetical explanation: Say i took a buy position on a currency that is $10, well the "real" price is $8 and the broker is selling it to me at a higher price and making money off the difference. The opposite happens when I go to close my position, say I want to sell at $15, well the "real" price is $17 and the broker pockets the extra.

So with forex you dont pay the $8/trade thing, its all figured into the currencies price.

A "standard" spread is 3 pips, but you can sometimes take a cut on a bit of quality service (maybe slower transactions, in the forex maret up-to-the-second information can be vital) for a lower spread.

[baron_greenback]

I'm slightly confused here. When do you know when to close?

[euphoricism]

Look at the following:



A) Indicator to BUY, blue line crosses above red and pink
B) Indicator to SELL, blue line drops below the red
C) Indicator to BUY again, blue line crosses above red and pink
D) Indicator to SELL again, blue line drops below red.

It really is that simple, its just a matter of watching the damned market 24/7. There are ways to automate this whole process, but I'm not experienced enough to do so. Nor am I confident in them because one coding error can absolutely wipe you out.

You eat the commision between B and C but thats a small price to pay. If you dont sell at B, you can take a NASTY drop.



Futher note: This trade took several days. As a day trader, short term oriented trader, Its almost *always* correct to close your positions before you go to sleep. Protects you from nasty shit that could happen overnight. Then just buy back the next morning when you wake up.

I didnt do that here. I was gambling with the trend, and thats ok too, but its a gamble, and its probably a gamble not worth taking for the short term guy.

[Taxi]

Thats cool. I knew it was possible to make money like this - never knew how.
Um, where do u get the graphs from? I looked this up when this thread first appeared, didnt find anything then sort of forgot about it.

[euphoricism]

Im using a program called MetaTrader 4, its pretty much the pro's standard. And unlike a lot of other companies, their play money is really free and they dont hassle you nonstop about
"going live".

highly recommended.

[euphoricism]

I want to restate something on my post at... Tue, 19 Jun 2007, 10:16am

A) Indicator to BUY, blue line crosses above red and pink
B) Indicator to SELL, blue line drops below the red
C) Indicator to BUY again, blue line crosses above red and pink
D) Indicator to SELL again, blue line drops below red.

Should be:

A) Indicator to BUY, blue line crosses above red and pink
B) Indicator to CLOSE POSITION, blue line drops below the red
C) Indicator to BUY again, blue line crosses above red and pink
D) Indicator to CLOSE POSITION again, blue line drops below red.

Just because I want to be clear about the buy/sell terms because they can be confusing at times. A buy (or "long" position) is when we buy low and sell high. A Sell (or "short" position) is the opposit -- we're essentially selling curency we dont own and hoping to buy it back at a profit

[Taxi]

Cool cheers, am gonna take a look some time

[euphoricism]

Discovered my method was a slightly simplified verson of the "Cornflower" system.

http://www.forexfactory.com/showthread.php?t=26205

He adds a few more nuances, and changes the lines a little for accuracy. He also adds another line (which isn't particularly important, but can't hurt). Basically, identical.

Check out the thread.

[Warpe]

euph, what good online resources have you come across besides the above? I need a quick primer 'cause I'm interviewing for a corporate sales job tomorrow with a mercantile firm, targeting mid and large sized companies with foreign exchange needs. I don't need to be an expert, just need to know some basics.