Two sides of a coin

Just a quick update on my take on the G/U. Apparently, the market didn't stay quiet for very long...take a southwards direction for about 150 pips before a minor trend set in. Butright now it's readjusting to the overly strong southward move, hitting a 60 pips north from the low set just hours ago. Since it managed to hit the fibo of 38.2, I believe there's a strong reason to believe the downward trend might continue for a while.

I pretty much wanted to write quite a bit when I was at work today. Seems like I kinda forgot what there is to write.

Oh! 1 issue is that I decided I shall be disciplined enough to track my expenditure for the whole of feb...this is part of the wider move to regulate my income into savings, expenditure and investment accounts...

And I might someone who actually has 10K in stocks right now. Well...quite interesting as he said it's all from his savings...but like I told him...forex is what it is for me now...

Fluctuations

As it is, the G/U is experiencing a trend, from what I heard in videos, called market noise. Classic indication of not knowing where to go or the general direction from here. From it's peak of 1.9916, it slide to slightly below 50% fibo level, which I thought would mean it is likely to continue it's downward trend. But for now, it's stabilised - in a period called consolidation? The up trend is not strong though. And the last active period of around 10pm to 12pm local time traders didn't seem to be able to decide which way is better.

Now, that makes me wonder...when does the market enter into cosolidation? And how do I tell it is not a reversal? It seems the market is cyclical. As long as I have enough funds, and patience, I will get earnings?

Anyway, my job is mundane. And I might only have 1 month at it. Wonder what's my next move.

Mild disappointments

Two things. One, the job wasn't as good as I thought it would be. Yes, the pay is pretty acceptable. And after calculation the CPF contributions will add up to close to 3k...which means I can help with the home installments is needed. But it was very much admin...the time talking to customers is far lesser than the cut-and-paste operations. I can't believe they don't have a integrated system to capture and transfer info easily.

In any case, my 3 months contract might not be fulfilled...not due to any of my fault...but we'll see how that goes.

Two, the G/U is fluctuating. Given my not-strong-at-all trends analysis, I totally can't tell where it's going. I know the fibo levels of 31.8, 50 & 61.8 are important, but I don't know how to use such knowledge. I can't even tell if the trend if supposed to go up or down. Right now, there seems to be a possibility of an upward movement, but, again, I don't know how to gauge how strong is this reverse trend.

Day 2 of work tomorrow. Maybe I'll call my employment consultant.

I've a job!

Ok...I really can't remember if I mentioned that I've officially a contract full time job for at least the next 3 mths...I believe it can easily become a 6 mths affair anyway...

Can't disclose the company...but my job is to be an ah long...haha...meaning debt collector...not the physical way of going to the door...but to call customers to remind them to pay their bills..

I know I am courteous and polite enough not to offend any customers because of my attitude or manner of speaking...but I still gotta be careful of the mines which are present in every battle..

Alright, it's time to go...this being my first day at work...I'm sure I can let my "work ethic" shine through...

This means I've lesser time to learn in the forex field...but I've already made more progress these 2 days as compared to before...Just a tip for everyone who is learning...look for videos sources which show you on the graph how people analyse and draw all their fanciful lines...

For now I'm still going short on G/U, because the overall trend says so...and just before I go...I will set exit target at 62.8...haha...I learn slightly about fibo too...

So all the best and hope you guys have a great week ahead!

Library visit

Today I felt an urge to pay a visit to the library to see if I can gain some insights into forex trading from some books.

Well, I was rewarded with a pretty cool beginner's guide to technical analysis...but it so happened that it was the last of the pile of 8 books i picked.

And basically today I read about identifying trends and some basic guidelines as to note when trendlines are breached and whether or not the trend is sustainable etc...

I kinda come to the conclusion that I might be better off with online resouces...but indeed the book covers the topics in much more details...

Just as a note...I've a very nice forum mate who posted some very relevant links to videos on forex trading and skills involved...here's the link...http://intelnova.net/forum/index.php?showtopic=3111...

What's in progress now is still my model of pips los tolerance applied to my current strategies...but I could go very far today...tomorrow I should be able to fgure it out...

A useful formula

It's not something new. Just that I needed to find an easy way to find out how much I can trade out of my margin. I know unless one is an expert at spotting trend reversals, one can never be sure how many pips sometimes the trend can go against you before it goes your way. So using 100% of the 1:100 margin to trade is not an option.

In any case, I came up with a simple formula.

Given x is the amount in the account (i.e. your own cash)
therefore the margin is 100x, and
given y to be the amount traded (using the 1:100 leverage)

Then,

One's pip loss (risk) tolerance = [(10,000x)/y] -100

In the case of having 1000 in the account, and therefore can trade up to 100,000, and using 20% = 20,000 to trade,

Then the maximum pips can lose before a margin call = [(10,000 X 1000)/2,0000] - 100
= 500 - 100
= 400

This trader, under such circumstances can lose up to 400 pips before he is forced by the platform to close his losing position instead of waiting for the trend to reverse.

In other words, this simple equation allows you, my dear readers, to calculate how much of your margin you can trade given your risk appetite or what you believe is the appropriate pips you might lose.

As for it's application for me, since I use a recurrent opening of positions if the trend is against me...I'll have to do a few more sums before I can fully use this model.

Inactivity...

I was in the midst of typing this entry some 10 hours earlier...but my itchy hands accidentally switched the power for the computer off.

But anyway...I forgot about it. This morning I decided to take profit from another one of my 130 pips positions, the last one anyway.

I did that because I have no way to tell if there's gonna be a further drop in the trend of it'll reverse like it did a few weeks back. The US figures don't look bad though...and the economy seems to have avoided a housing crash...too soon to tell...

Anyway, I opened another short position on G/U, just before I headed out from home. And it's 30+ pips in the red now. I'm not gonna make any move now, but I'll wait for further price changes. If it goes north another 100 pips or so, I'll double my current 1% margin usage and short it again using 2%. That will bring the average shorting price to 2/3 higher than the lowest one I am at now.

Of course, if things go the other way round...well...I'll need to learn or figure a way to handle that...esp when to take profit.

That means I need to learn the fibonacci...I'll put that down as one of my must-learns for now.

Experiment in progress...

In my last post I mentioned that I had a forum mate who uses stop-loss and targets even if he is in profit...

After all my interviews today, I came back home to be pleasantly surprised (well, I kinda expected it, otherwise I wouldn't short the pair) by a gain of 170+ pips on my G/U short position. I suspect I could go down further, but having seen what happened in the earlier part of the month when the trend went downwards but headed straight back for the 2.0000 resistance line again, I decided I'll use the method taught (though indirectly thru a forum post) by my fellow forum chatter.

So I set a stop-loss 30 pips away from the then 170+ pips gained level and a target for about another 200 pips southwards. The position closed within half an hour. And I ended up with 148 pips gained.

On hindsight, I could have set a bigger allowance for the stop-loss as the charts fluctuate in cycles to reach their final destination. (maybe the other end of the graph)

I need to set a standard, but I am undecided now. 30/170 is around 18% of the total gain, maybe I can set about 25%.

I'm sure you guys have realised by now that I do not use any technical analysis tools for now. Just read a introductory book on equities and trading shares, and I found my experience in forex and studies of economics in JC really useful.

For now it is more short of the G/U!

The second attempt

So, with the past few weeks as a recovery phase, since I wasn't able to do any trading lest it affect my margin even more, I am all ready to go out and practise my forex trading again.

Yesterday night, just before I slept, I saw that the GBP/USD graph is at 1.9898...very close to the strong resistance level of 2.0000...in fact historically the high is at 2.0105, occuring ard the the start of October 1992.

I was prepared to go on more than a simple swing trade for this move. In fact it has a fair chance of continuing its upward movement. If that had occurred, I would have put in another percent of my margin, and wait for the drop to come.

This morning I found that there was a gain of 90 pips from my short position. That gain however has been limited by a slow sideways, but upward, movement of the graph.

Come to think of it, I remember a fellow forum mates technique. Say he decides to short G/U, and the movement did go southwards, but falls short of his target of 100 pips. What he does is, at this point of mayb 50 pips, he puts a target for 100pips but a stoploss at 30 pips gain. This is his actions to allow him a chance at getting to his target level without risking all his gains. I'll need to experiment with this system before I can give my dearest readers any evaluation or more info.

HALT!

Today, I faced the huge loss of almost the whole amount of my virtual account with Marketiva...

The two 100k short positions on GBP/USD closed as my remaining margin limit was breached. On analysing my other 100k short position for the EUR/USD, I also decided to stop the trade.

Strangely I'm not quite sad or affected by this, but I can't say the same if it were real cash. But I now know I've learnt one of the most impt lessons in trading, apart from how to read trends and directions, and that is proper money management. I have decided that I will make a proper study of what's the most comfortable ratio I can work with. Currently, I will not use more than 10% of the total 100x given by the platform. This would allow me to lose 900pips before the margin is breached.

I have also decided to focus on one currency pair, that is GBP/USD, so as to better understand this partner-friend of my mine on the forex journey.

Having said that...I have close to USD1900 in my virtual account. This, from now, shall be a serious experimentation of what I have learnt.

May more important lessons come.

The saga continues

Haha...so here I am facing 3 SAGAs, so to speak, although I'm not sure if there actually is a plural for that word.

One is that my shorts of GBP/USD have continued to be in the reds of 300 to 400 pips...but that seems to be reversing...whether or not it's a long term trend is hard to say for now though...and anyway...I still can't do indepth technical analysis to judge...

Second issue is that I still have not gotten closer to a job. Did get a call from one of my job consultants, telling me of a job offering doing office hours as a call centre personnel at quite a reasonable rate. I agreed for her to send my resume. My other option is another pretty well paid call centre job...but I've received no reply since I sent my resume in.

Third one is...I can't seem to get very much off intelnova.net's forex subforum...mmm...think i might have to go straight to the step of finding good traders' blogs to read to absorb from them the wisdom...

Confusion

Recently I was discussing a question with my student during a tuition session. It was asking abt whether one agreed that the free economic system eoncourages the ills or problems we find in the economical side of a society...

And my first response to it is "sure, it does"...but I later realised, at least theoretically, the invisible hands of the mkt economy actually also limits negativities such as "profit motive"...since it is due to consumers' unwillingness to pay too high a price for gds that producers cannot fully satisfy their insatiable desire for profit by setting the prices way too high...

But I stand corrected...or rather...I was corrected...I attended a talk on vegetarianism...a very gd account or summary of it is presented in http://hip2horay.blogspot.com/2007/01/vegetarianism.html ... and it left me thinking...

During the talk...a video showed how inhumane conditions were where we raised the animals that we find everyday on our plates...in Yuven's words..."Live 'imprisoned' in a very tiny cages where they can't even turn their bodies, injected by chemicals which make them grow faster till their legs can't even support their weight again, electrocuted and tortured when they don't move in the right direction, immersed in a tub of boiling water while they're still alive or even shot when they are too weak and can't give any benefits for the company.. "

And why such conditions? because of cost savings? because of profit motive? because even if we wanted to b humane, the demand is so huge that we can't afford free roaming animals?

It really sets me thinking...is it that our free economic system limits the ills of society? Makes me see economics in a wider picture...it's not just economic problems that we have to talk abt in the course of studying econs...but social ones...values...beliefs...courage...mayb even philosophy...

But I see a glimmer of hope...demand changes everything...if people aren't willing to pay for meat that came tortured...and full of intoxicants and fear and depression...then mayb the situation can b made better...

So the key is not only vegetarianism...it's also education and telling people how impt this is...we can't go on living as if we didn't know about other living creatures suffering simply to satisfy our desires...just like we can keep thinking that the earth can support our demands for long...

Lessons learnt (and still learning)

Alright...I must say I'm shocked that 6 days have past since my last post...One thing I realise is that I do have to post more frequently and consistently...otherwise nobody will read me rite?

For all friends and readers who have so kindly lent your support and time reading, a big Thank You to you guys for it really motivates me to continue blogging...

To be honest...I'm not in a trough or valley in terms of financial learning...but I just don't seem to know what to put here.

For the past week...I've been on my job hunt again...and although I still don't have a job at this point in time...I believe the job's just round the corner...latest next week I foresee the coming of my official 6mths job...haha...

I still must say...I love customer service!

I'm no longer affected by the fact that my virtual account with marketiva is abt to go bankrupt...just needs another 75 pips north of the current position of GBP/USD and then there goes all my experiment cash...but I am happy...because I learnt the lesson of not going beyond a certain level of margin without losing a single real cent...and that calls for fiscal discipline...linked to emotional freedom and what not...for now...I'm gonna be conservative and invest no more than at a 10% margin...

Reflections

I'm beginning to step into a more contemplative, and, in some sense, religious mood. Not that I am a fundamentalist or anything. But I really wonder where I am heading with all these efforts in forex, looking for a job and stuff.

Just a note, but the GBP doesn't look like it's gonna go southwards soon. I sure hope my whole virtual account doesn't go empty, otherwise I'll have nothing to practise using. As for the averaging principle I mentioned earlier...I can't possibly practise it when I have only about 3000 margin left and it will be gone should the GBP/USD go up another 100 pips or so.

Just thought I'll put in this entry to mark my issues when I did the fundraising work. Like I already said, what really affected me is the rejections. Someone ever quoted to me "the fear of suffering is more painful than suffering itself" and I agree hands-down. If I could have, not only theoretically, understood that it was simply a "numbers game" - probability of getting a "yes" - I wouldn't be so concerned with the "NO!s" as with asking more people.

My trainer said it correctly, that this is a hurdle I'll have to cross myself. And I recognise it not only in this situation. It's a matter of resolute...in this case if I could forget my ego...and in other cases would I persevere on despite the objections and trials...

I really don't quite know...my life, to me, has been too beautiful, not that I am complaining...Since I was young, I obtained fairly good results and I hear very nice praises from people...and all this don't arise from my own effort...I mean, of course I did some stuff to get my results...but it was never tough decisions or strenous efforts beyond what I believe are my capabilities.

In that sense I am lacking...and I know I will be put to the test no matter what I do or where I go...it is a fundamental process towards success...I once heard..."it is only when we set targets and goals that we start experiencing what we know as resistance. it is such that if we had no goals, life wouldn't be tough as we can just float around with no discontentment arising from the non-achievement of a dream"...

I shall strive on...and my current battlegrounds are the forex market and my need of a job for this 6 months.

Setbacks

Quite a few days since my previous post yeah...pretty eventful week I must say...In short, I failed myself twice, or maybe even thrice, over the course of this week.

Firstly, I stopped going for the job as tele-surveyor...The incident was as such, the second day I turned up for work, I was assigned to call numbers off the classified ads. It was meant to get some advertisers to respond to the survey. The major setback to me, which is part and parcel of this job, is to get scolded by people. After that happened I literally blanked out...the fear of calling the same number again was tremendous and became worse with every call, and so I ended my short day at work.

Second failure came when I tried this job with a company that claimed to be looking for people to join their events crew. It turned out that their current event was doing publicity for a charity. Of course that involved fundraising as well. In any case, the charity is really deserving of help. It's acronym is HOME and it stands for Humanitarian Organisation for Migration Economics. The organisation help to uncover and protect abused foreign workers in Singapore. For more info, do visit their website at http://www.home.org.sg/

Anyway, as for the job, I really wonder why I found the rejections so tough to stomach. After all, I had my challenging cases back with Starhub. But that was all very fun to me. This fundraising one wasn't...maybe because of the general populace's negative attitude towards people who need help. On reflection, probably I've better understood that the job is desire is not sales or marketing, but customer service, solving people's problems and bridging relationships with them on behalf of the company.

I'm getting kind of desperate though, probably wouldn't be as picky as to avoid admin and factory/packaging jobs when I look for my next job in the coming week(s).

As for Forex, I suffered major losses since the GBP/USD actually took a unexpected, to me, turn in a strengthening stance for the GBP. Apparently, I need a lot more polishing to better my technical skills.

Also, I'm gonna get involved in discussion on Intelnova's forum on Forex to learn from the experts. The next step would be to read Forex traders' blogs.

A new job and inaccurate predictions of the candlesticks

First about forex. About 2 days back I bought into short positions on the EUR/USD and GBP/USD, pretty convinced that they will both start going southwards given the candlestick patterns. Strangely it isn't exactly happening yet. I do know that my technical analysis methods at this time are not yet well-formed, maybe even not having started to develop, and I have much to do.

At a certain point in time, I will be forced to look at the importance and integration of various market's opening and closing hours to make more informed decision. So this is a note to tell myself that's the next step to take.

In any case, the two pairs have started heading south again, but GBP/USD is still about 100 pips from my opening position. So following the advice of Firman, I have again opened another short position of equivalent value of the first one. So now my average buying price is 50 pips more than my previous buying price for GBP/USD.

My job, then, which I started yesterday night, was to conduct market research. The company aside, since I can't, ethically, mention the name nor the details of my projects, I did some calling to seek opinions.

To be honest I was amazed. Amazed at how badly I did. For close to 2.5 hours last night. I actually only managed to call about 30 people and have 5 willing participants. And, mind you, that means I probably could pay for dinner, transport to and from my workplace, and maybe nothing much more.

In some sense, my job seems brainless. Call people and ask them questions. As if that takes much brainpower. But I realised I don't have this set of skills - skills to engage the opposite person and to keep them interested. And I was ever told by some other sources that using the phone to convey messages is actually much tougher than doing a face-to-face, since all the information about you the opposite party can gather is but your tone, the words and maybe, as some say, from your smile.

So I'm not backing out. This is a battle I must win and have to win. Not exactly for my honour and experience. But also because this is a marketable set of skills I'll have to develop sooner or later. And I choose the "sooner".

Learning candlesticks

Thanks be to the rich merchant who invented such a method to keep track of price movements. But I really wish I can ask him a few questions personally if he were still alive. One is how is it that the opening price of a candlestick can differ from the closing price of the preceding candlestick. In some sense this is related to my query as to how can the closing quote of the currency pair be different from the opening quote after the weekend break. I decided I need an avenue to ask such questions and be guided by experts, if they are willing to do so.

There is an incredible amount of information to pick up from a series or even a single candlestick.

One of the better sites I've learnt from today is http://candlestickforum.com/PPF/Parameters/16_18_/candlestick.asp

But there are way too many patterns which I can't stomach at one sitting, so I guess I'll have to revisit in another few days time.


With whatever I have learnt, I decided to short (using virtual cash) both GBP/USD and EUR/USD. In both cases, on the daily chart, both pair have shown 3 black bars in a consecutive downward fashion, as we can see to the left.




It was a simple decision with the GBP pair. It is pretty near it's historical peak and here it comes tumbling down. No surprise. But the EUR one is kinda a gamble. In any case, I still can using the poker strategy of shorting the currency even more if the trend does head north. Sort of a dollar-cost averaging method.

Now that I've made that decision though, I think I realised some finer points of using candlesticks to make trading decisions. Simply take the 3 consecutive black candlesticks as an example. Had the trend not hit close to historical highs, the lesser body of the 2nd and 3rd black candlestick might mean the market is slowing down in its appetite for shorting the currency. Of course, the 3rd's body is fuller than the 2nd, so that wouldn't make my interpretation very correct.

Firman said I'm beginning to turn from a pro-fundamental analyst to a somewhat technical guy. And he suggested I get forex news off some websites that provide such news. I'm considering that, but I am not done with my experiment, I believe.

The meeting

Ok, today I met Firman and Eusof, partners along this forex journey. And we had a good chat about some directions and how volatile the market has been over the holiday season. In fact, it's been happening since mid-November. I realised I had to study candlesticks proper. Beginning to realise the vast amount of information each candlestick contains.

I can't figure out something though, how is it that there are huge gaps in the prices of the pairs between the previous market close and the current open. Is it fuelled by the trading of currency over the weekend? Shouldn't the entire forex market be closed in that time period?

Not to be cliche, but there are more questions than answers.

I found that Firman has been using the fibo fans, and he said, to great accuracy before the crazy recent holiday times set in. Suggested he tries drawing support and resistance levels and observe if there were any breaches, as such would be an indication of strong movement towards the direction of the breach.

I need to find a hero! Someone to follow and learn from in the forex world. But where to start? At a deeper level, I wonder if that means I've settled the "Why am I in forex?" at a subtler level. In any case, one way is to read other forex traders' blogs. Undoubtedly, they would be far advanced as compared to me along this path, which means much to learn, YEAH!

A stroke of luck

Alright, as a update to my expectation that the GBP/USD will head north in response to the gap between the the pair and EUR/USD, I did long the GBP pair using virtual dollars. And based on the 1:100 leverage, I would have earned a 156% of what I had invested. It's pretty cool, because this gives me more buffer in the virtual account to practice.

Frankly, all this came as a matter of luck. I did not analyse the position at all before making the decision. In any case, I'm still at the very beginning of learning how to analyse currencies and have halted my experiment so far.

Things could have gone very wrong, like my partner Firman did say when I told him of the happening. Had it gone the other way round, which is a real possibility since the divergence would also have closed up in this scenario, I would have lost quite a bit of virtual cash.

On top of this happy occasion, I learned from blogtv.sg that there was a full-time forex trader who was asked to write a book on forex trading strategies, and that was a whopping 6-figure contract! Not that I ever dream of such a possibility, but it's really nice to know someone succeeded far beyond what I aspire to achieve through my blog.