Consistency

I started a new account with Pepperstone to spread my investments across different regulated brokers.   I have 3 accounts with one trading major dollar pairs, one trading dollar minors and metals; and the newest addition focusing on Euro trades. I thank to God for His blessings for it has been a good week.

Fellow Classmates

One of the most valuable benefits of attending a professional course is having access to a group of classmates that you can learn from. (instead of talking to a volley ball)

In our group, trading ideas are constantly being shared, reviewed and sometimes debated. It helps refine our trading strategies and ensure that our trades have a higher chance of success.

Mentors and friends whom I have never met helping and encouraging each other to get better; sharing our stories, happiness and sadness. They come from all walks of life, from all over the world; men, women from different age group.

To me, this group of classmates whom I have never met have become a wonderful gift God has given me. If you're reading this, you know who you are guys.

Bien Joué!

It's official. The French are better artists, cooks, lovers and voters! Well done. Now for the next round, please continue to do the same.

Forex Trading Basic Part 2

What a month! With North Korean tension starting to ease, surprises at the French election drove the geopolitical tension back up and Theresa May sprung a surprise with snap elections that drove GBP through the roof.

How did you fare with your demo account? The likelihood is that you would have experience some, if not all of the following,

• The market hates me
• It drops when I buy and rises when I sell (unable to catch the direction)
• It drops/ rise farther after I close my trades (unable to determine the optimum entry/ exit)
• I win small but when I lose, I lose big (emotions overtake patience)

Wouldn't it be nice if we can tell with direction the market is heading and when it the optimum time to enter/ exit the market? Technically, there is no way one can know the direction of the market with 100% accuracy unless there is a major global event that affects everyone the same way (a.ka. a binary event).

At this point, you would be right to feel that forex is like playing black and red on the roulette but that would be incorrect.

What if statistically, for every 6 consecutive wins, there is a 89% chance that it will reverse? That changes a lot thing and now, we are getting closer to what forex trading really is.

The fact is, there are ways that you can predict where the market will head and combining that with confirmation derived from real time price action allows a trader to trade with near certainty in most cases.

A simple analogy would be that of a traffic light system. When it is green, you know it will switch to red but you do not know when. Adding an amber light/ countdown helps a driver know with certainty when that change will take place; not counting in the fact that traffic lights do fail from time to time.

Here lies the beauty of God and His creation.

You see, God is a master mathematician and everything in the world we know are all ruled by the same set of sequence through His design; there is not greater proof of creation than this. Businesses use the rule of large numbers to run their business, traders uses fibonacci ratio to plan their trades.

Once a trade plan is in place, a trader just need to wait for the price action (amber light) to confirm the trade plan and execute accordingly.

I've put together a short deck on Forex Trading (dropbox) for a friend whom I gave a crash course to. It would be better to explain the patterns and go through a few examples in person but that will have to do for now; until I find time to write each of these in detail for the next few parts.

💡 Note this is totally insufficient for anyone to trade profitably as it serves only as an introduction. Trading itself is not complicated and you don't need complicated patterns or tools. But you do need to understand the fundamentals of how the market moves and what moves the market.

Technology and ideas sharing sites like tradingview.com has also made it easier for amateur traders to lean on experience and knowledge of professionals.

Finally, below is a free training video from Jack that is immensely helpful to beginners.

Till next time!

Forex Trading Basic Part 1

I'm sorry I have not been blogging for a while. The market has been very volatile in March with FOMC (Federal Open Market Committee) meetings, Europe's geo-political changes and of course Trump.

Earlier this month, I also attended a formal forex trading which opened my eyes and corrected many of my earlier trading bad habits. I would highly encourage anyone keen on forex trading to attend. The fee may seemed like a challenge but you'll make it back in one or more trades. My teacher is Jack Zhang - a very experienced trader and you can find his website here (http://harmonicasia.com)

In this and subsequent posts, I will try to impart what I know and my experiences with forex trading; starting with the very basic so you can get yourself started towards gaining financial independence.

So, without further ado, let's start!


What is Forex

Forex or Foreign Exchange is the trading of currency rate fluctuations between currency pairs. Currency pairs are grouped in to majors, minors, exotic, metals and commodities; majority are traded against USD as the base currency.

Examples of currency pairs are

• Major - AUDUSD, EURUSD
• Minor - EURAUD, USDSGD
• Exotic - USDZAR, USDTHB
• Metals - XAGUSD (Silver), XAUUSD (gold)
• Commodities - Sugar, Oil against USD

💡 Like stocks, you need to be familiar and keep yourself current on what you are trading. As such, it is not advisable to be trading in more than 3 forex pairs for a start.


How do I start?

Forex is traded through CFD (contract for differences). CFD is a derivative in which you do not own the underlying asset. As such, it gives you the flexibility to buy or sell a product without needing the capital to own it first. On the flip side, it also makes it more risky.

Step 1 - Create a demo account and get used to some paper trading before you jump in with real money. I would recommend using IC Market as they are reputable and have the lowest spread amongst the brokers I have tried.

Step 2 - Create a account with TradingView. This is where you can get really good trading ideas and use their chart tool to plan your trade.

Right, you're set.


Forex Trading Basics

Q: How much do I need to start?

It can be as low as $2,000. There are many students in my class who are using forex to pay for their study loan. A larger deposit will enable to trade in larger quantity. The rule is simple - deposit what you are willing to lose.

Q: What is balance, equity and margin?

As you are trading CFD, you are using margin to buy those contracts. Contracts are typically traded in lots; 1 lot usually equates to 100,000 contracts and you can trade 0.01 lot or 10 lots.

Every currency pair has different value per contract. One you lock in a trade, that amount is calculated as your margin requirement and will not change while you are holding the contract.

Equity is how much your account is worth as the exchange rate goes up or down. In simpler term, it is your balance at the point in time if you close all your open trades.

Dividing your equity over your margin gives you the margin level in percentages. This is probably to most important indicator you need to take note of and keep as high as possible. Once your margin gets below 100%, you will no longer be able to execute new orders; and when it goes below 50%, your trades will be closed automatically, realising whatever loses you have.

💡A simple rule is that you should trade a maximum of 2 lots per $10,000 deposit.

Q: Do I have to own the asset before I can sell them and can I be buying and selling the same currency pair simultaneously?

No. In forex, because you are not buying the underlying asset but the direction and magnitude of rate change, you can choose to buy (long) or sell (short) the asset. There are different school of thoughts to hedging. My view is that you should avoid hedging and unless necessary; and if you plan your trade, you would not need to hedge.


Try Out

Before we go into the really understand how to trade. Let's try some basic trading.

1. Install MT4 trader on your laptop and launch it. For a start, let's focus on one chart and close all others. If you do not have USDJPY as your chart, simply find the pair in the Market Watch window and drag the pair into the active window.

2. Right-click on your chart and enable 'One-click Trading'. You should have something like this.

3. Finally, locate the 3rd icon from your right on your menu list and add the following indicators

• Bollinger Bands
• Stochastic Oscillator

You should see something like this..




The last step for the try out. Do one of the following;

1. Green candle touching the top of your band, if the next candle starts red and on your Stoch Oscillator - Red line above Green. Click on the Sell button.
2. Red candle touching the bottom of your band, if the next candle starts green and on your Stoch Oscillator - Green line above Red. Click on the Buy button.

Congratulations! You have placed your first trade.

Till my next post, try it out and see if you are making or losing money by the end of the week. It is certainly not so simple but you will appreciate the next few lessons more once you have some experience figuring out trading on your own.

Cheers!

General Investment & Forex Tips

Forex trading is an art. If I am an educator, I would make sure that there is a module on Forex trading in every university course. It teaches one important lessons in life - money management, controlling your emotions, patience, fear, analytical skills, current affairs. I have never been so aware of the world when I was just doing a job.

Below is my view how one should allocate his resource in building up his wealth for retirement. Forex being both a passive and active option for wealth accumulation.



Learnings and observations

• There are four key markets and each have varied activities. In order of highest activities - US 41% (from 9pm to 3am), UK 16% (from 4pm to 12am), Tokyo (from 9am to 4pm), Australia (from 6am to 2pm). 

• The first 30 minutes of each market open represents the trade direction and that direction usually reverse 30-45 mins before their market closes. As forex is a derivative, they can start with either buy (long) or sell (short) positions but will always clear their positions before the end of the day. Any trade carried forward incurs a swap fee and additional risks.

• There are two quiet periods - 10am-3pm and 5pm-8pm where volatility and price movement are low.

• For intraday trades (scalping), the ideal time to trade is from 3pm to 12am. Always clear your trades or set stop loss before logging off.

• For swing traders (those who has a day job and trades on daily charts), the ideal time to trade is between 9pm and 12pm.

Events

• Before high impact events listed on the Economic Calendar, the trade usually goes quiet as well. Avoid the first 5-10 minutes after the results is announced as there will be high volatility. The audience interpreted the news differently and there could be huge swing up and down; that can be very misleading. It can also create slag - meaning that the prices are jumping so fast that you are not seeing the actual price when you trade.

• Stay up if you need to; especially during wage data, labour data and Fed announcements.

February Performance

February has been a volatile month that thankfully ended with a good note. A lot of changes to my portfolio that can be summaried into

1. Reduction of equities investment and redirecting them into Forex
2. Experimentation of Forex brokers and efficacy of Expert Advisors (EA)
3. Change in growth plans and tuning down of trading activities for a more balanced lifestyle

For the month of February, I ended the month at 314% of February's target and 246% of YTD target; with winnings from Forex contributing a whopping 88%. I made just a few hundred dollars shy from my last drawn 1H OTE in February alone.

With initial success from Forex, I have been spending the last two weeks learning to code my own EA and is in the midst of testing a rather promising EA. It'll be another month before I can declare it a success but I am fairly confident that it'll do well. If that happens, I will retire officially and terminate my rather feeble attempt at job hunting 😄. Stay tuned.