Cautious Christmas 2017 Trading Season

Started December trading with much caution as it's the start of festive season for many. However, there were still much opportunities and with the limited liquidity, I was able to make some profit from the market.

I also manage to accumulated enough to make a withdrawal of $1,000 in mid of December without affecting the trading capital and continued to the end of the month and nett almost $1,000 including the $1,000 I had withdrew in mid month. 👍👍

As of December, I was trading between 100,000 to 150,000 and maintaining sanity is of utmost importance. Especially so when you gain for a few days and then suffer a lost that reduces your size. You will need to fight really hard to ensure that your size really reduced to the planned as most of the time you will want to continue at your last traded size so than regaining the capital is also much easier. Hence keeping you ego under control and having your greed under check are equally important.

Turning into full time Trading by chance

Even though with the perfect result in the month of October 2017, I knew I wasn't ready to make trading my full time job yet for a few reasons, firstly, not having the required capital amount to trade my desired lot size and also it's just one month and that could just be pure luck.

However, in early November 2017, I was laid off from my employment and looking at myself, I knew there wasn't anything else I could do but to fall back into trading full time. I graduated with Diploma in Mechatronics in 1997, but joined the Republic of Singapore Navy as a combat officer for almost 12 years before i left the service and joined this proprietary trading firm which grow and expand into a FinTech firm today for almost 8 years. Though I had learnt much in trading and gained valuable experience as well, there wasn't any black and white to certify that I have the necessary background in trading and training. I obviously can't use my diploma to apply for a engineering job for sure and also with my passion very much still in FX trading, I decided to trade full time and survive till such time that my capital grew to my objective.

And to get everything started, I deposited another $5,000 into my trading account so that I can grow my capital slightly faster. Make some profit in the first week of November and made a withdrawal of $800 to round up my total trading capital to $6,000 ($2,000-$200+$5,000-$800=$6,000).

Thereafter, I suffered much losses, seem like though I had been watched by the broker for withdrawing, of course that's not true. It's basically just your mind playing with you to find reason for your losses. Generally, looking at those days that I make losses were those days where I did not stop after I was stopped out and yet did not meet my daily target marginally or those were the days where I just got greedy and wanted to make more. There were just countless number of days where a good day (make and meet the daily profit target) become a bad day (continued to trade after meeting target and lose it all).

Nevertheless, I continued to push on on this journey that I had chosen as there is no turning back now.

Final Trading Plan & Strategy

After much trial and error, putting in all that I had learnt, I slowly developed my trade plan and make slight adjustment as I go along.

To me, a daily profit of 5-10 pips is very much doable and I built my plan based on that. A daily profit of 5 pips nett on brokerage fee would mean having a 100 pips nett profit in a month. Depending on the size of the trade, and that would determine the amount you earn per month. My objective was to be able to trade a size of 10 lots (1 million) every trade and that would mean $100 per pip, $500 a day and $10,000 a month!

To be able to trade the size of 10 lots using leverage of not more than 1:30, I would need to have a trading capital of at least $33,000, which is something I do not have at the moment and would have to build up slowly. I started off trading with varying size everyday as my capital grow, using a leverage of 1:30, one trade at a time.

Deposited $2,000 into my trading account in late August 2017 and started trading at 50,000 per trade, and on the first trading day I was lucky to have a runner and make quite a number of pips (~40 pips).

On the following day, again I got a runner and made quite a bit of profit as well (~40 pips) only to lose some back on the third day but I decided to make a withdrawal of $200 at the end of the month. Last day of the month, I did manage to make some profit too!

I was quite excited with the result and make a mental note to myself that I will have to continue to maintain my sanity and continue with my result, building the consistency that is very much required to survive.

Nevertheless, Hell came in September, making some but losing mostly throughout the month, netting a lost of $1,700+ 😓😓😓 It was also around this time, late in September 2017 that I came across this post in forex factory forum talking about a simple scalping strategy which I setup on my trading chart and started exploring and using it as my trade opportunity signal.

I also had this excel spreadsheet to help me calculate the size of trade at the start of each day and the targeted daily profit. Having lost $1,700+ the previous month, my trading size drop to 15,000 but I made a decision to continued trading on 50,000, that was a huge risk I am taking. Refining my mental model, I just waited for the signal to show up, take the trade and secure my profit (adjusting my stop loss) when I can, thereafter, see if it can run further and continue to adjust my stop loss. If it doesn't and even if I am below my daily profit target I stopped, taking only 1 trade a day. I was well rewards with a perfect month netting a total profit of $1,500+ for the month.

Readers, you should by now realised that in trading, no matter how much perfection you have in your trading skills, you will still eventually lose money if you do not have a strong and correct mindset. Set your objective and break it into smaller and more deliverable daily/weekly target then you will not feel stressed to be aggressive when you shouldn't be, at least this work for me to control my mind.

Exploring Trading Plan & Strategy

After spending 6 months in Shanghai, China, I continued to be involved heavily in training the FX dealers/trainee, especially after the company setup an office equipped with a dealing room in the financial district. Of course, most of the Chinese students I had spent 6 months training were also selected and employed to be our FX dealers. However, I was eventually pulled out of Shanghai, China after the company decided to expand more aggressively in India. Although the plan in India did not really worked out, I continued to lead the trading session daily in Singapore and training of FX dealers when they were deployed to Singapore for a month stay.

All this training and leading had nurtured me to be more confidence in my trading, but the only thing I lacked of was consistency in my result (P&L). Hence I started to explore more on how to get consistent result, via trading plan, trading strategy as well as money/risk management.

Firstly, I came up with a trading plan for myself, since I am more comfortable with scalping, I decided on small but consistent win. Taking into consideration of brokerage commission, I need to take at least 8-10 profitable trades daily if I were to get out with a profit target of 1-1.5 pip per trade. Tried out the trade plan but still did not get any outstanding result. I also soon came to realise that the downfall of a trader was over trading. Hence I need to cut down the numbers of trades taken.

Next, I also have to manage my money/risk management, so that I do not lose too much or risk too much. With the most simplicity method, I came up with a daily stop loss limit of 15 pips, however I soon realised that at most times, I may need to risk more than 15 pips on a single trade. Still, I need to study more into this money/risk management.

Last but not least, the strategy that I should use for my trading. Since I had been practising price action trading for the longest time, I should evolve my strategy around price action trading. Which I had been doing so but without consistency, there seem to be a missing piece to the puzzle.

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The beauty of things was that I am now based in Singapore and much training activities had toned down drastically. Hence I had a lot of time on hand to explore and trial. I also started participating in forex factory forum more actively. Most of the previous forum I used to participate in had either shutdown or had changed so much that not many were active. Forex factory continued to be the one with the highest participation rate.

In the past, when I trade there was no objective or target, and that cause me to just keep trading resulting in over trading which eventually burn you out and take your profit away. So I came up with a daily target and work towards achieving this daily target which leads to my final objective in trading.

Also through the participation in forum, I came upon a trading strategy involving Bollinger Band (BB) and Smoothed Moving Average (SMMA). This strategy is for scalping and target 8-10 pips per trade, which suit my plan and trading plan. This strategy basically provided me with the signal of an opportunity and through my analysis and resistance & support, I decide whether I want to take the trade.

Onwards with more training opportunity as a FX Trainer

It was almost 6 months after my first training opportunity in Mumbai, India and the team was getting ready for a session in Shanghai, China. There was a briefing session conducted to invited the Chinese university students to register for the 2 weeks training program. After this 2 weeks session, those interested students can continue for the 6 months program.

This time round, I wasn't really involved as another colleague who used to work in Shanghai was identified to be their trainer, but I was told to join in for the first 2 weeks. We flew in to Shanghai, China and settled into the university exchange students dormitory which was like a hotel. The accommodation was situated within the university compound.

During the first day of their 2 weeks session, the Chief Trainer covers the topic on mindset of a trader with a translator. On the second day onward, the students have to go through elearning modules together, module by module, and the trainer were suppose to go through each module asking questions along the way and explaining complicated topics. My colleague was quite quiet and wasn't confident enough to speak up in the presentation and again I did what I thought was the only right thing to do. Hence, I stood in front of the class and went through the modules presenting in mandarin.

It was during one such session while I was explaining in mandarin on the topic we were covering that the Chief trainer came by with his partner for a visit. Having saw me speaking up in mandarin fluently and engaging the students, he decided to let me that over the rest of the training program in Shanghai and that started my next opportunity in training.

Over the next 6 months, I flew in and out of Shanghai, China, with each stay lasting about 2.5 to 3 months as the first year visa can only be extended to 90 days. Nevertheless, we planned my trip coming back to Singapore during the Chinese holidays to prevent disruption to the program.

It was also during this training trip that I took up the opportunity to lead trading via webinar. Wherever I was, I would lead the trading and broadcast via webinar back to Singapore and to anyone anywhere who was given the link to the daily webinar.

Training the Chinese students allow me to sink in deeply those mindsets and I had to practice whatever I preached hence complementing my price action trading. Leading trading via webinar allows me to become more vocal with my thoughts and thought me the all important patience that was very much required in trading. Wait for it to happen and not assume that it will happen. All in all, the time I spent in training and leading allows me to move in yet another step closer toward being a trader.

More training opportunity to become a FX trader

Breakthrough in my trading came about when I was given the opportunity to train. How it all started? I still remember...  It was sometime near the Chinese New Year in 2014 and I was notified that I may be deployed to Mumbai to oversees their training sessions. Being unprepared and not having any financial educational background, I wasn't really sure whether I was up to this task in a foreign land all by myself, especially when most of those that I am going to meet are graduates or undergraduates in finances.

However, I took up the challenge and flew nearly 4,000 km to Mumbai, India. After reaching and clearing the custom at the Mumbai International Airport, I have to find my own way to my accommodation, which was near the university that I was to be at to oversees their training. After settling in to the accommodation and had a good night rest, I reported to the university in the morning the following day and started setting up the training package on the computers in their computer lab with the help of their technicians.

I was to ensure that the training modules that the students who had taken interest in our training are available to them and that any technical issues that arises are handle by me as well as to answer any basic questions that the students may have. Everything pretty much went well with little or no questions asked, since the training package were really very basic and logical.

The following week, after the first week of theoretical lessons, the students start their hand-on on the trading platform and then listen into the trading webinar to start their trading. I went through with the students on how to use the trading platform before their trading session commence. However, due to the internet capacity the university was using, it became apparent that the bandwidth was limited when streaming the webinar and it was quite disruptive.

Having noticed that many students start to become impatience as they find it difficult to listen to the disruptive webinar, I did what I thought was the only right thing to do. I stopped the webinar and put up the trading platform and did the analysis and read the price action development. Explaining along the way, what I would have done as the price action develop and I eventually put in a trade entry into the trading platform and presto, the trade was executed and hit the take profit (TP) in less that 30 seconds, bringing amazement and excitement to the students, which also very much surprised myself.

I continued the session explaining the price action and eventually took another trade which again took profit in less than 30 seconds. This really boosted my confidence as well as the university facilitator, who at this moment walked out of the computer lab and announced to the students that they are in good hand. These sessions went on for the rest of the week and the students also started asking more questions on trading as well as experience trading on the trading platform.

However, due to some admin follow up, the training sessions ended at the end of the second week and I return to Singapore. My take away from this opportunity was really a boost in my trading confidence and that I am able to trade following on those price action development that I had shared in my previous post, Internalizing the mindsets of a trader.

Internalizing the mindsets of a trader

Trade, trade, trade and more trade is the only way to internalise the mindsets and gain valuable experience, this is what we call "Training is in the trading itself".

Initially, at the end of each trading session, we have to review all our trades and complete our trade journal.  The journal is a simple diary of the trade you had taken, stating the reason why the trade was taken and after the trade is done, what is the outcome and what was your thought. In the beginning, not much effort was usually put into the journal, especially when a trade goes wrong and I have to find reason to explain why I did the trade. However as time goes by, I realised that many things are learnt and pick up from the journal. Hence, when I have a winner, I would goes into detail on how I had identified the trade, what were the price action I saw that allows me to decide and took the trade. On a loser, what had I assumed that resulted in me taking the trade as well as where were the trade taken in respect to the support and resistance.

Over a period of time, doing the journal diligently and religiously, I realized that I had a better understanding of the price action as well as what are the price action development that allow me to make a winner trade. The journal also, in a way, allows me to track the type of trade that I take which usually turn out to be winner. With that, my statistic is formed and it allows me to take into consideration of the type of trade that I should generally take with higher confidence then the others.

Below are trade that I generally will take without much hesitation when the price action develop as what I had planned.

The formation of two higher lows, and a move for the break of the previous high to form the third higher low.

Flag breakout indicating the continuation of the bull move. First, the price action break out of the channel, buildup and remain above the channel.

Market tested the bottom twice, forming a double bottom, and manage to buildup near/at the neckline before it breakout.

After the price reach a high and retraces, it buildup with a series of higher lows and test towards the previous high again.

Looking at higher time frame also helps to determine whether there are support or resistance ahead, this will give the potential of the trade. Generally, there should be a space of at least 1:3 ratio before the trade can be taken with ease. For example, targeting for a profit of 1 pip, there should be a potential space for the market to move 3 pips before the trade can be taken with ease.