Q&A: How To Get Started in Forex Trading

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Today is rest day for me. And as I wait for a few hours before I go to my jujitsu class, I would like to answer some questions from a reader of this blog.

Message:
Hi!!!

Just like to ask where did you learn about forex?? can you recommend books or seminars?? i’m going through the babypips site right now.. and i got a pdf of market wizards that you recommended.. it’s the 22 page book by jack schwagger right? also what’s your background?? just say your college course if your really private… i’m an engineer by
the way who wants to change careers. thanks.

-Tots

Tot’s thank you for you question and I think these are the questions for every new trader in forex in order to get started. I got my first encounter in forex with a google search for the best business. The one that fits me, flexible time, flexible workplace, no customer support, no inventory, no employees. The search comes to an end when I discovered forex. Then I started learning and reading all I can to learn about it. My first stop is BABYPIPS.com.

When I finished all of their articles. I picked a system that fits my personality. I personally liked contrarian trading, swing trading and loved the indicators, simple moving averages and ichimoku. Those are my tools of the trade.

Then I started buying books about the topics that interested me most about forex. Jack Schwagger’s market wizards 1 and 2 are a classic. Probably the best book purchase I ever made. Then books about money management, and psychology. I still buy books about the subject and I’m not sure as to what level you are now or interests that my recommendation would not be good for you. As for now, market wizards books and babypips will be a good start.

My background is engineering as well. I’m a computer engineer. Loves programming and challenges, maybe that’s why I got hooked at forex trading. I hope these answers helped.

Week 27: Euro Temporary Rebound Forex Trading

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Managed to close my trade for week 26 with a 48% gain in my capital. I think the Euro is on a slight rebound, probably profit taking. But the main reason I closed the trade is because of this chart:

EUR/CHF

I wanted to have enough funds to place a sizeable position on this pair. I do think its cooking to go up, with a lot of dojis and a respectable support (green line) with the red lines as resistance.

EUR/USD

I’m still bearish on the EUR/USD though and a sizable upswing can be advantages for me to get more positions on the short side. The target is 1.2800.

Week 26: The Forex Enlightenment

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3 Winning Positions = 47.36% Gain. Hourly Chart of EUR/USD

I’m currently up by +47.36% this week. This is because of the rules that I applied in forex trading. I learned to think, decide and make sure that I won’t lose the house when I make a mistake but make sure I make a killing when I win. I begin to think of odds and take only trades that have the highest possibility of winning and betting all that I can, to maximize my returns.

I do not concern myself with the temporary gyration of the market. I want to be always invested in the market to cover whatever major movement it wants to give me. I’ll be the first one to say sell, when people are still shouting buy. But only making sure that all of them have used up and hyped up all the buyers until there are no more.

I realized that there are people who will hype you into taking their side. That is because they are on the losing side and they want out. I have seen these people proclaiming to be gurus, but only out there to take your money. For the lone trader, these people are your prey. They are the noisy kids who talk a lot but have nothing to show for it. They know how to make drawings out of charts, and tell all those buzz words, but at the end of the day, they make money out of hyping the newbies.

Be one that waits in the shadow. Waiting and waiting until the right time to strike. Be an assassin, a sniper if you will, who spends more time waiting than actually killing. You don’t want to be seen, you don’t want to brag, you want to take action before anyone knew what hit them. This is the real, best way to trade. To wait patiently until the right time comes, then betting all that you have for the only, one strike that you’ll ever need.

Diversification is only good for people who does not know what they’re doing. You only need 1 pair, 1 trade to make a difference. You play at a situation in which you are an expert. You don’t try to trade ranges if you don’t even know what range means. If you’re good at trend following then stick with it, be patient and wait for the first sign of a trend. That’s where you’ll make your money.

Why the rush to be rich? Everybody will probably be richer than you and probably be a lot younger than you. It doesn’t make you any less human to take it slowly. Be patient and wait. It takes discipline to be rich. There’s a reason why most billionaires are old men. They’ve spent a lot of hard work and patience to get to where they are now.

Week 24: Avoid the News in Forex Trading

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I learned something. This is the thing I learned while learning stock investing. And I think it goes very well with trading in forex. I used to hear a lot of people saying this and I have never really understand the deeper meaning in it. Its about trading when there’s news.

A lot of traders have been saying that to never trade the news. And I have been a victim of greed over the past week. I try to anticipate news releases and have been wrong many times in doing so. I may have been right a couple of times, but results from news doesn’t last long enough to earn substantial profits.

I realized I was chasing something that I won’t be able to reach. And decided to trade only currency pairs that are not in the risk of news. I’ll let the news pass then I’ll return. Because of me, chasing the news, I realized I missed some great opportunities like in the currency pair NZD/USD. I was so caught up with EUR/USD, I missed the trend. It might not actually be a late time to enter but you get my point. Never trade the news. Go to currency pairs where there are no risk of news affecting it. Or in the words of stock investors, invest in obscure companies that are being ignored by professionals and traders.

I made money trading the USD/JPY on its way up. And got back to break even from the losses of EUR/USD hunting for the news. I’m still in good condition and still on my way to realizing my goal.

USD/JPY on Daily

USD/JPY could probably retrace now. Keep in mind though, if you’re going to take the short side, Bank of Japan have expressed their eagerness to intervene should the pair goes further down. Keep your stop losses tight. On a weekly note for this pair, its more of a sign to go long. I’ll try to catch the bottom of the retracement for the daily to enter. That position is less risky because you have BoJ on your side. The only problem now is the USD’s news affecting the currency.

Happy trading.