Sunday, March 30, 2008

$296 Why I trade forex

I have a trading account with igmarkets, initially I put S$10000 in it, to trade stock CFD, at beginning it goes well to S$12000, then the bear markets comes, I have received a margin call on my Cosco and china sky, I made the first mistake to answer the margin cal with S$2000, then it also gone, then later with a few other mistake it finally drop to S$400 only.

the lesson learned here is that,
1st. you should never answer a margin call,
2nd, if you got a margin call, close your losing trade, then open a opposite trade. you will win back all your money and even more.

With only S$400, about USD 285.

and I don't want to put in any more money in it, so the only thing I can trade is forex, let's see how the things goes.

the first 2 trade are loser , it went down to about S$200.

Then I created a few trading set up which was good in the back test.

the GBP/USD daily 48 pip
and EUR/JPY daily 31 pip.

my account go up to S$530 after a few days, then I increase my position, unfortunately, the trade is a loser, my account today is S$296.

The reason to increase the position size, is about the money management and kelly formula.

If you want to reach the highest return , you will have to take the higest risk , in this case the max draw down could be 75% as per last month's data.

Why the trade fail, when I check, maybe because on the day the GBPUSD already moved 150 pip, in this case I can not take the trade.

GBPUSD 2 lot breakup and break down, all fail so -140USD
EURJPY 1 lot breakup and down all win, +6200JPY.

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