When the Market Go Agianst You...

Forex is a very vicious market place. If you have limited capital and without experience & proper strategies, chances to burn your account is very fast. Most of the participants come in to the market hoping making fast money and turn out losing money fast.
I heard many participants cannot survive more then 2 years, 2 months and even 2 weeks. You will feel comfortable and confidence once you make money. We are human with emotion attached on it. How about when u start losing money? Our emotions will turn opposite and our brain start malfunction. Even experience traders who survive long enough in the market will experience this kind of feeling.
When the market go against me, how do I face it? I have a philosophy when I accept clients and always ask what level of risk they are willing to take. Most of them will leave it to me, I judge their risk based on different type of variables.  Anyway, let get back to the topic. Most of the time, I will take a break and hedge the position until I feel comfortable to trade again. I will go out for a drink with my friends and have a cup of coffee or green tea. (Starbucks will be my first choice)
Just to share with you, the last 2 days was a terrible trading days when the big boys start taking profit. It shook the USD/JPY and EUR/USD without any sign of fundamental and TA. The market hit few strong supports. In the end of the day, I call up my buddy and have a chit chat and meet up with some investors and prospects. At the time of writing, the market recover nearly 60-70%.
Even you are the best trader, sometimes you cannot predict accurately when the market will move against you. The only way to avoid it is by applying hedging (for me) and cut losses for certain traders. Both will minimize loses and stabilize your emotions. Trust me, when emotion get rid of reality of your brain, You are finished. Always remember, trading FX is not only science but it is an art too. "What Is Scientifically Optimal Is Psychologically Impossible” -Read my previous articles. http://msfx.blogspot.com/2009/06/is-trading-forex-art-or-science.html

Dance with the Market.

The Forex market plays the music almost 24/7, except after New York market closed on every Friday until Monday morning before Sydney market open. The music play wild on certain currencies following the time frame. Since most of the major pairs rely on USD, the music play the wildest during the London-New York overlapping session.
To become a successful trader, you need to find the right time frame that suit you. I spend most of my time in Kuala Lumpur, Malaysia. Occasionally I travel around the world. I normally following the Tokyo-London-New York session which is from GMT 0000-GMT 1200. Yes, during this hours, the forex market is like a wild party, the pairs (music) jumping up and down. If you are an amateur trader and cannot catch up the tune during this session, chances for you to lose money is huge.
Forex is a very unique party and full of different participants with all kind of perception. Some participants dance a for 5 minutes and leave the party. Some participants tend to following the music whole sessions. While the big boys stand on the stage become the deejay.
Some readers still ask me who are the big boys? Let me explain again, they are institutional players, banks, hedge fund managers and people who can influence the market. Most of them will set up the strategy to earn money as much and quick as possible. They have good friends (politicians and policy makers) and information tend to flow to them before it release out to the market. They tend to play different type of music to attract participants to the dancing floor and will stop it once they think the time is right. They will provide all type of liquid and create the illusion to the participants. Emotion will run wild once you see the illusion. To beat them, impossible! The only way to make money in the market, is to join them, listen what type of music they are going to play and dance with the market!
*I am writing this article at Starbucks cafe, (a place to prevent me from fall into sleep while watching people dancing on the floor). 

Trading Forex In Different Enviroment

The wonderful thing about being a Forex Trader is I can trade Forex at anywhere as long as it has internet connection. I like travelling around the world to see different culture.
Most of the time, I execute my trade at my SOHO with 2 laptops on my table. If I have 8 hours in front of screen during London-New York session, I will trade aggressively by applying the so called "scalping" method. It is like playing computer games, chances to make money is there but you need programming your brain well. It is a very tiring too. Emotion sometimes can overtake reality.
While I am travelling, I will monitor the market once or twice a day. I will preset the entry and exit points. Of course this type of trade may go or against you. By applying hedging methods, I tend to like this type of trade. For the last 2 weeks, I was at Kuantan, Malaysia and Bali, Indonesia. I made good money.
Lastly, I do some trading at cafe while have meeting with my business partners. Frankly, it is hard to trade in this environment since the you need concentration if you applying scalping. It is too long for you to see the results if you go for swing method.
In the end of the day, if you want to trade forex effectively, you need to prepare your trading skill in different environment unless you like PC so much and willing to stick in front of the screen 24/7. No body like that, I think.

The confession of a Forex trader.

The October market is wild. All major currencies go up against USD. The market perception is Buy 'whatever' against USD. As mentioned earlier, FX is a game of leverage.If you are using 1:1 leveraging, chances for you to make money is big but the return is very small. Most investors will look else where to get a better return.
To make money in Forex, I apply K.I.S.S concept. "Keep in simple and silly". There are few types of traders which the system they use conflict each other, every systems is applicable in different environments.
To spot opportunities in Forex market, I also very emphasis on technical analysis but only use 1-2 indicators. Too many indicators will make your brain malfunction and thinking too much. I always ask my clients what level of risk they are willing to take. If they have small account only, I will using a very 'conservative' method to accumulate the fund. The negative side of the method is you will miss a 'big win'. The positive site is the account will grow slowly.
For a clients with big fund, I tend to use 2 accounts to leverage each other. One for a higher return  and the second one for a 'steady and smaller' return. Do I make mistakes? Yes, I make mistakes, no trader is perfect. Once I make major mistakes, I will stop trading for a while.
I like to use time frame to leverage my accounts once mistakes are made. It may works for or against me. If I notice it against me, I will cut loses. Most of my prospects surprise to see big loses I cut. In the end of the day, I will tell them "Judge me in every 3 months, not every 3 weeks, 3 days, 3 hours, 3 minutes or *3 seconds.
*If opportunities come, 3 seconds can make money for you in FX market, this type of players called "Big Momentum" speculators. It always works on the first Friday of each month, 830am EST.

Entry and Exit Points

I am delighted to have a reader from a well known forex advisor from USA. I like his fundamental points of views on US economy.
Some of my prospects asked me how to make money in Forex market, they want fast money and huge return. I told them that I am not a machine which can calculate the exact entry and exit points.
To make fast money and huge return, machine is computerized to create fear and greed to attract the victims.If you are a novice trader, you will be experiencing what I explain below.
Let me give you a scenario, you think EUR/USD will go up and buy EUR and target certain profit. Once the market start going up before reaching your exit point, your emotion start playing. You either want to enter more trade or take profit. The first explain greed and the second explain fear in you. Once you enter another trade, the market may work against or for you.
To estimate accurately the entry and exit point is almost impossible. There are always two forces pushing each other to drive the price up and down. If you at the wrong side of the forces, you will be making losses.
There are many types of traders; scalped, swing, momentum, long term traders. The big boys will use all types of methods to affect trader psychology. If you want fast and huge profits, I strongly suggest you don't trade forex, as it may turn out fast and huge losses.
*For forex market, Fast=1 day to 1 month.  Huge=10% per week to 100% per month.

When Fundamental Collide with Technical Analysis

In FX market, generally there are 2 types of traders; Fundamentalist and Chartists . To make money in FX, you can either be one of these or both. It all depends how much capital is in your hand. Keynes is right about human behavior, we have limited resources but want to maximize our return. This create a character conflict between fundamental and technical analysis(TA).

Most of the experienced large capital traders tend to trade based on both aspects to hedge each down fall. Both can generate profit if it has been implemented by following the right systems. Basically if you are a 'small boy' and not 'big boy', most of the time you trade based on TA. Big boys have the sources to get the first hand news and drive the market in split second.

To content with my views, I can show you some events recently cause the dollars sliding down heavily against other currencies. I know most of the readers heard about "the doom day of USD" in the news, and closed the eyes sell USD against other currencies. When you have limited fund, every single pip mean a lot. If you enter the wrong trade and sell USD, you will burn your fingers.

Let me go back to the events. Ausie long term trend is up backed up by strong economy recovery and demand of commodities. Every one will buy AUD/USD. Let say you buy AUD/USD before it pull back and push up again, you will burn your finger with limited fund. AUD/USD pull back 2000 pips created artificially by Big Boys to adsorb more AUD before it shoot up again. Once the announcement that Australia raise interest rate which has been never be predicted. Big Boys laugh all the way, it shoot up nearly 3000 pips.

Financial world is a cruel world, the rich getting richer no matter the economy slump or boom. Those with limited capital need to be extremely careful when they step in the jungle to find the treasure. The wild animals are always waiting their victims!