Say Hello to My Little Friend

December 11th, 2008 RaVPup | Bookmark

Short entry this time. I’ve been trading spot the last few months. Zed got me on to it with his incessant talk of currency pairs on #tribes. At first I didn’t really understand the system. That lasted about five seconds until I had the epiphany that it was exactly like stock which I had been trading a few years back.

The great thing about spot is that it’s a 24 hour market and that the data is delivered straight to your war desk, streaming, live and without the intervention of a dealing desk. The spot market started out a while ago and is held between various banks. This is quite disadvantageous at times because certain banks tend to have a really high spread. This is especially true during the Asian market hours, with lower liquidity and less volume, the spreads tend to widen considerably, sometimes to eight pips. I have had it mentioned by a notable broking house that pips have been as high as 100 in high volatility pairs, although I shudder to think anyone would trade with such a handicap.

I have developed my own particular style of trading, and judging by my performance I’m well on my way to being in the top 5%. I traded with simulated money for a month with relatively high risk, weakly thought out and untrained strategies and winded up with a profit of about $1000USD at the end of the day.

Trading with live money is a little different as the emotion comes into it. I have been trading with live money since October and needless to say, developing the discipline to be a good trader takes a lot of time and effort. I made a $200 profit with my first trade and then blew it all trying to snipe pips using technical analysis based on indicators that I had no in-depth knowledge of. After getting an education from a broker, I learned the ins and outs of the matter and I’m proud to say that I’m a much better trader.

Forex is like anything though, constant practice is required to perfect the skills you develop through training so that you can apply them to the market in a disciplined and profitable way. I hate using the word profit because Forex is not just about profit, it’s about keeping up with the times and knowing where the dollars are before they make it to your pocket. I do use a little bit of fundamental analysis and a little bit of technical analysis mixed into the fray. There’s no clear cut line between fundamental analysis and technical analysis with me, I don’t swing one way more than I do the other. I find to be successful at pulling in the pips I have to be abreast of a lot of information at the same time.

I’m at the stage where I am developing a trading book and talking to people to let me play with their money. These are hard times and there isn’t a lot of spare cash around, more so for the Australian market where venture capital is hard to find. Needless to say, my trading book is flawless at this stage. I haven’t blown a single trade, although the risk appetite for my official book and the risk that I take with the book where I pull in $1500USD a day is very different. I can guarantee consistent returns while sacrificing top end figures or I can aim for big top end figures with a massive risk to reward deficit. Either way, there are a number of strategies that I’ve developed that let me trade the funds to suit my investors.

On a parting note, I entered into the ING ‘My Dream is…’ competition and I couldn’t think of anything catchy to spend my money on, so I put up a silly picture and captioned it “Trade spot and become a millionaire!” The URL is http://mydreamis.ingdirect.com.au/?id=4995 and I hope you’ll vote for me, seeing as it’s three days to go before the end of the competition. Trading spot beats a plasma TV any day, and the look on my face is worth at least one million dollars!

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