Chronicles of an Armature Trader: Part Three – I made it! I have been trading for 3 months & netted 100% + in profits!

 Sleepless nights; volatile mood swings; over 5 indicators on my charts; listening to every analysts on T.V and getting more from their social Media feeds; 2 books on trading already read and every page digested; Trading course on babypips finished at record speed and finally, thousands of hours worth of trading videos watched, what would prevent me from making my monster profits and daydreaming of Cruise Ship vacations?

It was towards the end of 2016, remember the $50 joke of an account I had opened? well, with insane Leverage and position size, I managed to make a quick clean $100! on a single trade! This inspired me and I pumped an extra $500 in my account looking forward to trade the American Election, which I did trade and made an extra $1000 during the Asian session when election results in favour of Donald Trump were streaming in. That day folks, I spent the night at my workplace, it was the only place I could get a reliable internet connection and it was worth it!

With all the Monies I had made in Two weeks’ time, I figured if I can do that with one single trade, I should open at least 5 more positions larger than the first one! Mmh the most I can make is $500 in a week and the least is $100, I thought. Wow! why didn’t I learn this in school? and most importantly, why didn’t they teach this in school?  I felt cheated by our Education System.

Just in case you are wondering if I ever came across Money Management, Leverage and position sizing in my studies, of course I did but who cares? I made over 100% profits so I definitely “understood” those concepts besides, they were usually the last Topics in the books I read and therefore not really important. Anyway, after a detailed and exhaustive analysis of my over 5 indicators (not price but indicators) coupled with my cockiness I placed my five trades on 15 minutes Time frames, having already calculated my expected reward and no stop loss at all. Stop losses are for suckers. The Market moved 20pips against 2 of my positions, 1 minute later, my phone rang….

EURUSD, WEEKLY

TECHNICAL ANALYSIS

Price is into a large weekly resistance. It looks like a better retest of the trendline support broken towards end of 2016 on 9th October but there are no signs of major reversal to the downside quite yet. 

More upside will be confirmed by close of weekly candle above the green trendline R resistance.

Reversal to downside/ confirmation of retest will be confirmed by weekly candle close below red trendline S support. 

This confirmation may lead price to fall into an immediate  strong support zone around 1.09098 marked by the black horizontal line T.

Ok, So what do we do as we wait for larger time frame confirmation? Answer: Keep the trading on the lower time frames like hourly or 4-hourly within the zone/channel created by the S and R trendlines.

EURJPY, WEEKLY CHART

TECHNICAL ANALYSIS

The price is back into the A zone as we had  in our 2015 article here. This is large resistance zone (highlighted zone) that could serve as a retest for continuation of down trend or as change from downtrend to uptrend ie shift in sentiment from sellers to buyers.

Price has been moving in downward channel shown in the chart below with several false breakouts. But these breakouts would move over 400 pips before price gets back to channel. The break outs are marked with golden arrows. So it was quite tricky channel to pick bounces off the channel support and resistance

Currently the price as at channel  resistance.Although the weekly candle break is not very convincing, the monthly candle break shows higher probability to test a higher resistance around 128.000 marked by the green horizontal line. A strong weekly bullish candle is required for confirmation or else price could fall back into the channel or congest longer.

Chronicles of an Armature Trader: Part Two – The Journey to becoming a Dollar Millionaire begins …

Before I proceed from where I left off on Sunday, first I would like to thank Gloriouschartpatterns for giving me this opportunity to document my journey as a beginner. The main goal of this column is to record all that I am experiencing in trading as a beginner to an amateur and eventually to a pro and by this, I mean actual experiences some unfolding at the present moment as I trade. Having read a bunch on trading and hearing lots of success stories, I am yet to come across any story that resonates with a beginner in a detailed manner by espousing the challenges that one goes through  when making countless mistakes every day . So, I shall endeavour to record my mistakes and successes. in fact, emphasis will be on the mistakes. This column has been inspired by a loss I suffered after having a good run following the discovery of my trading style. l made mistakes and reduced my account from $1,500 to a $495 in just two days! (and I still make mistakes hehe) I hope beginners can relate to my story. Hope you all enjoy. 

 So, I embarked on intensive research and reading. I have never read so much in my life, sometimes I am actually astonished by how much I read within that year (and how much I still continue to read up to today) and mind you I was still in Law school. After completing my first book on trading in a month (Anna Couling's Forex for Beginners ) I opened my first Demo account, a  Million Dollars here I come, ready to bank you! at first it was confusing but given my knack for Techy stuff I explored my MT4, learning how  it works  and deeply getting into more research, I started familiarizing myself with the economic Calendar and the key events ready to place a trade in anticipation of positive or negative news, I literally became a Financial News junky. Always scouring on www.bloomberg.com  and www.investing.com for information that can make me some quick cash. Making money never felt so easy!

As my experiments went on, it had a toll on my other part of life. I was a Legal Intern and this suddenly seemed boring and dull because I realized that I liked the Law but I did not have a passion for it and I hated the bureaucracy involved in practicing the law. I loved Justice, still do, but the court processes involved in seeking it and worst of all the delays in getting Justice made my stomach turn and to add more salt to the injury, delayed justice didn’t mean that an Advocate’s payday got delayed! Delayed justice is indeed painful. And to top up to the delays, in order for the wheels of Court bureaucracy to turn in your favour one had to line someone’s pocket at some point. To me, it is still amazing why such a dysfunctional system is tolerated and everyone just goes with the flow!  My moral beliefs on fairness slowly became aligned with trading but not legal practice (discussion for another day)

 Moving on, I came across  www.babypips.com and this is when I began familiarizing myself with technical analysis and the fact that I didn’t have to wait for a News release, finger on the mouse button ready to pull the trigger and place a trade. I further started reading blog posts from traders and trading coaches and watching hundreds of hours of trading videos  and by mid-2016 I had accumulated so much knowledge (I naively believed so ) and I was already trading on a $30 live trading account (what a Joke!) the money was “free money” from an online broker who was enticing potential clients ( www.xm.com ) I funded the Account with an extra $50 and got a leverage of 500:1!! Plus the broker offered a wide variety of tradable assets.

 I naively believed that given the information I had accumulated, I can be able to turn around the $50 to $500 within a short period of time. This is how brokers draw you in folks. By the time you learn about money management and you become consistently profitable the broker has made a handsome amount from commissions and spreads they charge you as you continue to fund and trade that tiny account.

Things didn’t go bad for me and did I make my killing as I had anticipated? Well, you’ll find out from part Three. 

AUDUSD,H4

TECHNICAL ANALYSIS

The price is running with strong downward momentum after reaction off a large resistance R. There is a probability for it to get to trendline support T to complete the swing. 

Close below T may lead price into daily a support zone around 0.75194 marked A. Daily candle close below A may lead price to fall to lower support zone around  0.74742 marked B. 

Close above R disqualifies the setup.

GOLD DAILY

TECHNICAL ANALYSIS

Gold has been giving nice swing trades since the start of the Feb 2017 as it ran into a channel. The price is now being held in a channel marked with blue trendlines A and B.

The momentum in channel is comparable in both up and down swings forming clear cut V patterns. This means that there is a high probability that price will fall back and retest the lower part of the channel support B since it has comparable momentum after reaction off resistance zone A

V patterns usually indicate equal strength between buyers and sellers ie indecision. Hence keep the trading now in the channel until a convincing breakout either way happens to confirm the long term direction.

Chronicles of an Armature Trader: Part one - In the Beginning …

I have always been interested in the Global Financial markets ever since I was in campus thanks to watching Bloomberg on satellite T.V. But I really didn’t have an idea of how people traded I always thought, well, you buy the Shares of a good company and later sell them when they appreciate say after 2years or 5years. I began learning about trading/market speculation in early 2016. A friend invited me to a seminar held by one of the popular trading gurus out there who claimed that he was a successful currency trader and a ‘Wealth Coach’  

His speech was quite alluring to those who the get rich quick motivational speakers charm easily. I am a sceptic, got it from my Dad, and sometimes a severe pessimist. Besides I have read a couple of Autobiographies about folks the World considers as wealthy and none of them talk about joining a program conducted by a ‘wealth coach’. Anyway, He talked about Trading currencies and the WONDERFUL thing about it is that you can make profits if a currency appreciates or depreciates and this is what caught my attention since common knowledge dictates that u can’t benefit from something that depreciates, it is simply impossible.  

 At the end of the seminar, on the count of three he promised that the first 50 people to sign up with his organization will be mentored and get to ride on the get rich quick train. He had placed assistants at the back of the Hall, pen and paper in hand ready to take down names. 3,2,1…. the rush to the back of the hall was unbelievable my good friend and a chunk of the audience was already intoxicated by his talk (I could notice this during his presentation especially when the speaker commanded the entire audience to repeatedly say out loud those success adages with vigour like a warrior repeating a War chant-those of us who didn’t participate in the charade, were assumed to ‘not be ready’ for success). My good friend almost knocked me off my chair and mind you, my friend is quite tiny compared to me.

Buuut…after scrambling up to where the ticket man who would give them a ‘free ticket to board the get rich quick train, the speaker told them that they would first have to part with a deposit of $2,500! Which was part of an $8000 fee for the entire mentorship program. Faces sunk, some laughed embarrassingly at their actions, and some scratched their heads. Most of these guys are jobless college graduates, are you asking them to pay for College again? I wondered. Astonishingly enough, the fella did not even talk about how the Global Financial Markets Work! he just went straight ahead to how he can show you his ‘secrets’ to effortlessly grab thousands of dollars in a span of minutes from the Markets, as long as you follow him and His Brokerage Trading Platform (of course with your widely open wallet and probably part of your savings if you were employed).

 Anyway, we went back home discussing about that evening’s event and the ridiculous amount (given the fact that we live in a Third World country that amount was ridiculous). But this did not discourage me from wanting to learn about trading given the fact that I knew one can literally learn a skill via the internet (I learned a lot about hacking Wi-Fi networks and yet I didn’t have a computer programming background). So, I decided to research about trading currencies and trading in general. I scoured the internet and found out that some of the most successful traders were college dropouts or didn’t go to college and that a large majority of them including graduates did not have a background in Finance. This encouraged my pursuit of learning how to trade besides, it would be a way of starting a business and I had always wanted to start a business, be my own Boss I just didn’t know what kind and trading FX offered an opportunity… (to be continued)