Choosing Your Forex Path
by Myra Druce
A Girl’s Forex Journey- Another Little Step along the Road
After deviating off route into risk aversion in the last post, let me navigate back to recounting the steps I’ve taken along my journey to becoming a foreign currency trader. I’ll pick up from telling you about finding the lady on the internet that had a ‘foolproof’ system I could use to trade the foreign currency markets from my home computer. So here goes….. another little step along the road to becoming a currency trader.
Trading Systems: Foolproof, Fantastic, or Foolish?
The eagerly awaited manual covering the Trading System had arrived and I settled down to begin to learn everything I needed to know in order to trade the currency markets. Now remember folks, at this stage I knew absolutely nothing about trading, let alone what to expect from a written manual explaining a specific trading system. Would I comprehend the information presented? Would it be written in an easy to understand manner? These were a couple of questions I’d been turning over in my mind whilst waiting for the manual to arrive.
Well I need not have worried, the compact little manual I received was well presented; nothing fancy, but nicely bound and well laid out. The information was put across in a very straightforward and easy to understand manner and, importantly, progressed logically and simply from one step to the next. Written with the complete ‘fledgling’ trader in mind it did not assume that the reader knew anything at all about currency trading, but also did not bamboozle one with information that would go straight over a newcomer’s head.
In short the manual briefly (very briefly) covered the very basics of beginning to trade forex. Items such as contact information for a couple of companies to get started with was provided (screen shots and instructions included). The history of foreign exchange, some forex ‘jargon,’ candlestick charts and support and resistance were explained and the importance of money and risk management, together with recommending ‘paper’ or demo trading until you were really comfortable with the system and consistently achieving gains was strongly driven home.
Okay so far then. But now you want to know what this foolproof system was? This is where the Foolproof, Fantastic, or Foolish question comes into the equation. Here goes… I’ll explain the system and after give you my thoughts against each of the three statement words. I wonder if any of your conclusions will concur with mine.
System Parameters:
- Spot trade a forex spread betting account (Spread betting is Tax free in the UK)
- Simultaneously trade only two currency pairs: Sterling/US Dollar and the Euro/US Dollar.
- At the outset of trading the system, decided which pair you will always sell and which pair you will always buy
- Once the buy/sell decision is taken do not, at any time, reverse the trade direction for future trades
- Trade Economic News Announcements – yep, you did hear that right, News Announcements
- Use a 3 minute chart for trade entries
- Place trades 3 minutes before the time of the news announcement
- Decide your exit level (profit) before placing the trade
- Decide your stop loss (risk) before placing the trade
- Never place a trade without placing a limit order and a stop order
- If one currency pair trade triggers, immediately close the other trade
And my Foolproof, Fantastic, or Foolish conclusions:
Foolproof?
- If there is a foolproof system would someone please e-mail it to me straight away, I want to live a life of luxury in the Bahamas!!! Of course the system’s not foolproof, human nature is not foolproof, so how can a system devised and operated by humans be foolproof either? I’m sure you already know there is no ‘Holy Grail’ of trading.
Fantastic?
- When the system works it feels fantastic (or is that greed/emotion I hear talking?)
- When it doesn’t work it feels anything but fantastic and can quickly drain confidence.
Foolish?
- Maybe, maybe not:
- There are many experienced traders who ‘Trade the News’ successfully. It’s not for me though, I’m averse to white knuckle rides!
- If you don’t know precisely what you’re doing, then you’ll get burnt. If you do have the knowledge and experience to ‘Trade the News’ it can be profitable.
- Personally, I would never now place a trade close to any major news announcement and certainly never ever just 3 minutes before.
Did I trade the system? Yes, I did. After all, I was taking my first step into the currency trading world; I’d paid for this information, so unless I tried the system how was I to know what the outcome might be? I did follow the demo/paper trade advice though – I’m not foolhardy! The results were very hit and miss and it did not take me long at all to decide the system was definitely not for me… and probably not for many other people either, truth be told! I found it a complete rollercoaster ride and profitable trades were a matter of luck, not skill; more like gambling than trading.
So did I waste my money paying for this system? Not in my view, because:
- It got me started on the journey to becoming a currency trader and it cost me less than £50.00!
- It stressed the importance of knowing and being comfortable with a trading system before placing any trades.
- It engrained money management and risk calculation in my mind right from the start
- It gave me hands-on, real-time experience of slippage, gapping, whipsaws, volatility and fear!
- And… laugh out loud; it did all that in the space of a few minutes.
It explained a few very basic things very simply and acted as a catalyst to learn more
Without that little manual I would not be writing this post.
Where’s the trading analogy this time then?
I can’t find a link to shoes this time, but I can liken it to a sport I participate in. I ride fast thoroughbred horses and because riding is a high risk sport, I make sure I participate under the correct conditions, taking all the necessary precautions. It’s taken me years and years of learning, practicing, asking questions and practicing some more, to become confident in my riding skills. Riding demands that you understand your current capabilities and do not exceed them, for you can put the horse, yourself and other people at risk of serious injury if you do not understand your own skill level.
The same goes for trading: First you must learn, then practice, ask questions, practice some more, build up your confidence and learn to understand your current capabilities. Then, just like riding, you keep practicing, keep asking questions, keep learning… build your skill level and don’t take unnecessary risks. That way you will hopefully not put your trading account at serious risk.
About the Author - Myra Druce
Myra has always been fascinated with the different currencies of the world, particularly what makes them ebb and flow. When the opportunity presented itself for her to give up her day job in Internal Corporate Communications to learn about the forex market she jumped at the chance. Little did she know that the currency market would become an all-consuming interest for her and she would become a full time forex trader.
She still retains a passion for communication and has started her own blog, www.forexforgirls.blogspot.com to record her progress and hopefully encourage any ‘girl’ traders out there who may come across it.
Outside of the forex world, she has two lovely and talented grown up daughters and lives in a beautiful part of the English countryside. Her hobbies include horse riding and hill walking, music, literature and the psychology of trading’.
