An Example of Forex Trading
An example of winning trade in Forex.
When I first started to trade in foreign currency market, there was not much examples of actual trades on the internet. A lot of articles about how forex can make you rich or what means technical analysis, but hardly some examples of trades.
I believe it is very important to see how one is trading under different conditions. Not all trades are easy, not all are winning either.
I am not going to put many examples at once. Rather I prefer to put one example at a time, and discuss.
Here is the trade I want to discuss about:
Pair : EUR/JPY
Position : Short
Open at : 161.749 @ 8/25/2008 – 11:36:59 AM
Closed at : 161.422 @ 8/25/2008 – 12:41:46 PM
Profit : 27 pips (about 300$ for a standard lot)
Although this was a winning trade, it is not an ideal one.
I am not a full time trader. I have my own full time job and I trade whenever I have time. This was the problem of this trade. Nothing is ideal in the world.
Let’s see the chart for a second. This is 1h chart which includes the trade time and couple of hours more.
When I got on the computer, the pair has already started a big fall. After checking the trends on daily chart, I have decided that the move would go on. So I got in.
After a 35-40 pips fall, pair started to loose its speed. Now again, in a not so ideal world, where there are a lot of part time traders, I had to make a decision if I leave the trade open or not, before leaving the computer.
I have set the stop loss at +300$, and left the computer. When I came back, I saw that the stop loss was touched right after I left. The pair kept going down after it. But, you cannot always be in front of the screen to catch all.
There are many part time traders like myself, who cannot follow the charts for hours everyday. It is a part of the rules for us, to make decisions with what we have, sometimes to be satisfied with less profit than what we could have made.
This is my first article about my trades. Let me know if you find it useful, give me your comments about how to make it more useful.
2 Comments
Forex can be very risky if you don’t understand its chart, principle, and marketing strategies before investing your dolar. Unless, you’ve more time to spend on staying its screen plus you know the technique when to sell and when to buy, so that the loss can be lessen. Therefore, I don’t encourage newbie to invest here though I know you can earn some good money here!
I totally agree about the risks involved in forex trading. However, there are ways to control the risk level. You may see some information about it in my article at : http://www.bizcovering.com/Investing/Where-to-Put-the-Stop-Loss-in-Forex-Trading.269135