OK, so I was really wired about the free news trading EA that Henry Liu puts out. I liked it better than Forex News Expert, which I paid for. After demoing it for a week or two and profiting handsomely. I figured it was time to go live with some real cash.
I was not satisfied with the 10% monthly gains I was getting from my money managers. I saw the huge price spikes on news events and I wanted a piece of this action myself. I didnt see any point in paying henry liu $250 a month to be in his live trading room, even though he has documented 2000 pip gains. I have not finished reading babypips.com either. But I was ready to strike it rich.
So I put $1000 into a profiforex account and let ‘er rip.
The first thing that happened was I noticed a plummet in the price 15 minutes before the news event. So I decided to move the time to start the straddle to 20 minutes before the news event. By default, the software places a straddle on the relevant pair 60 seconds before the annoucement. I definitely prefer to straddle 20 minutes out, because the deep pockets know the news before the public anyway.
I lost the first news trade. The price dipped down a bit more after the strong downward move 15 minutes prior to the event. It dipped just enough to trigger my sell stop but not enough to take profits or have a trailing stop. But anyway, that was $75 lost. No biggie. I was trading 0.50 lots and it lost 15 pips.
However, I still fool around with Binary Options and my guru signal provider made a call for a binary signal. So I decided to trade it forex style. I shorted 1 lot of GBPJPY on a $1000 account – that is 100 times too large. when the trade started to lose, I placed ANOTHER short for 1 lot instead of a long order. So now I had twice the loss and the price was just climbing and climbing.
Eventually I cut the short that was further out of the money for $300 loss.
The next morning, I was only $100 down on the other short. A news event was coming up (the NFP and a UK news event). I was all ready to clock some profits when this happened:
you see that large price spike? Well that open short order that I had quickly blew the remaining equity in the acocunt:
If I had not had this open trade, my straddle would’ve caught this news event and I would’ve pulled in some good profit. Actually, I would not have. If you notice the BUY STOP is on the GBPUSD, which actually went South on this trade while the GBPJPY went north and drained my account.
I think one of the issues with Henry’s software is that it tries to be correct about the direct on the correlated pairs instead of taking profit when the price jumps in either direction.
There are many good article on forex psychology. But I will try to summarize what I learned from this:
- Have a game plan for both entering and exiting
- Dont take extra random advice. Stick to your game plan
- Dont be greedy – exercise proper money management
- Be patient
More important than any of these is LEAVE IT TO THE PROS. Professional money managers, the ones I have thousands of dollars with, have to prove themselves for several months with good drawdowns and good monthly gains. I spent 1 week with play money before I leaped in with real money.
So i will close this article with a snapshot of what is left of the $1000 trading account:
and the song that is playing over and over in my head: