Take Profit When You Should, Hold When You Could

As I was packing to leave office around 4.30pm Friday I noticed EUR/USD moving strongly downward. So, I jumped right in. By the time I reached home, my Take Profit was hit for a 33 pips gain. Somehow, I was not that happy as the price kept heading south.

Later, I received signal that the price was reversing. Again, I jumped in only to find out that I was wrong to go long. The price moved steadily down. I cut lost at 17 pips. Later I thought there was a reversal signal again. Both the stochastics and CCI confirmed a Buy entry. I was dead wrong. The price moved fiercely downward. I tried to get out but somehow it failed to execute. That was a BIG mystery to me. Was it because I had my Stop loss on? It kept moving until it hit my Stop Loss way down. That was a big loss for me. It wiped out completely whatever profits I made earlier and put a dent in my small equity.

I kept watching the screen faithfully since 6pm for reversal. Close to midnight the price eased somewhat and I went long. It remained sideways until 1.30am when I decided to call it a night. I was confident the price would reverse upward in equally big way.

When I woke up on Saturday, I checked my trade to find that I was 53 pips ahead. That was worth the efforts of staying up late. I just hope Monday would be a big move up. I could only hope and pray over the weekend that there wouldn't be another big gap down like the week before.

EUR/USD moved 222 pips before it reversed. IF only I had stayed with my first entry, I would have reaped about 200 pips. That was a big IF. It taught me a good lesson to stay in the profit zone without getting out too soon. Next time I would only get out when the price crossed the Pivot Point Moving Average (3 periods) and opened and closed on the other side supported by Williams' %R. That would be my Exit point. Period.

Forex Expert Seminars

Over the past few months of trading as a newbie, I have come across numerous advertisements from the so called forex experts inviting people to trade forex. The ads dangled the secrets to becoming super rich super fast through forex trading. They normally would give 2-hour free pep talks and after that the participants were invited to join a 2-day class for a fee ranging from RM3,000 to RM5,000. I list below some of the free pep talks that I attended.

I attended the first free preview sometimes before Christmas last year given by Kishore M from PowerUp Capital Network, a regular in local newspapers. He claimed to have "a powerful forex discovery that could earn you $183,000 in just 2 months" with "100% accuracy trading strategy". After the talk, he made it sound so urgent that his 2-day seminar was specially priced at RM4,000 plus if we registered there and then. Otherwise, it would cost us double the amount. A lot of people were actually running to get themselves registered. We were asked to pay a deposit of RM100 to get our place at that special price. For all I know, that RM100 was definitely a genius solution to cover the cost of his "free preview" held at a well-known hotel.

Then I attended another freebie by Rapid Forex. They are the introducing broker of FXCM, my trading platform. For RM500, I registered myself for a 2-day weekend course. That was how I first learned to trade forex. The guys at Rapid Forex were genuinely honest to assist the newbies. After the basic course, I went for the weekly hand-holding session to familiarise myself with the trading platform. For a more advanced course, the fee also advanced to more than RM4,000. I was just not convinced enough to proceed.

Recently, I saw an advertisement that carried the taglines like "Malaysia Most Powerful FOREX Seminar". I could not resist their claim, " Live Performance Forex Seminar". "Live Challenge: See How Much the Professional Trader Can Make in 90 mins". It was presented by Enthuse Elixir under Winning Forex Solution. The expert who called himself Mr. M (or Mo or Bob for short) claimed that his robot trading guaranteed 20 pips per day. Trading by using technical analysis and/or fundamental analysis is the old fashion way, according to Mr. M. He told us that he is making 200 pips per day. Wow! He even showed his account balance in excess of $1.0 million. Double Wow! I was more interested in how his robot can make in 90 minutes. He entered a trade at the beginning of the talk. After the talk, to prove how easy it was to make money in forex, he would show the trade. Unfortunately it was losing more than $1,000 fast. So much for guaranteed pips! His course costs RM3,500 and his robot USD3,000. I was beginning to lose faith in local "professional traders".

Then I attended another free preview on "tornado trading method". It was conducted by Infinite FX. It was presented by a lady. At least she was direct to the point and less on hard selling.

Of all the previews, I was somehow impressed with Lily Thniah of Ringgit Fleet. She spoke of her experience of more than 10,000 hours of trading. There was a doctor who spoke highly of her course. At least she assured those who were present of a personal mentoring from her, something that others did not include in their package. I would go for her course.

I wonder, why would these forex experts already making tons of money as claimed, spend their weekend to help others. May be the fees for the 2-day course ranging from RM60,000 to RM100,000 are actually the ones making them rich in FOREX. I just assume 20 persons in one class paying RM3,000 to RM5,000 each. Just a wild guess!

The Day Trevor Immelman Won the US Masters

I woke up at 3am local time to catch the finals of the US Masters. Trevor Immelman was leading and Tiger Wood was lurking a few places behind.

By 4am, I noticed that the EUR/USD price had retreated from last Friday's close of 1.5826 to 1.5672, a 154 pips move. It baffled me how it could have moved so much when the market was not even open for trading. Later, I learned that it was a joint communique by the G7 finance ministers that pushed the USD up. The other USD pairs had also moved substantially. When the market was open, the prices were already reversing. I went in long with the EUR/USD and short USD/JPY. By the time Trevor Immelman finished the 18th hole at Augusta and won the US Masters, the prices had moved to in my favour.

From there, they were on yo-yo rides. By 10am, I decided to close my USD/JPY pair for a 20 plus pip gain. Slightly after 11am, I closed half of my position in EUR/USD for the same gain. By4pm after I closed the remaining half of the EUR/USD, it advanced a further 73 pips. By 6.30pm, EUR/USD was at 1.5827. USD/JPY was at 100.82, almost 70 pips from my exit price. I could just kick myself.

In retrospect, my exits were hasty. Normally I would wait for the prices to cross either EMA 10 and/or EMA 20 before I close my position. I was a bit too quick on the trigger this morning. On the other hand, a total of 136 pips was not that bad to start the week.

STOP LOSS

I know that every trade must carry its stop loss. The problem with me was when the market moved in my direction, I adjusted the stop loss accordingly. The way I did it was to find the next level of support or resistance and place my stop loss there. Unfortunately I got whipsawed 3 times yesterday. The consolation was, I made some gains but could have been better if not for the stop losses.

May be I trailed my stop losses a bit too soon and too close.