Diary of a Novice Forex Trader

After getting a hang of trading, I was feeling pretty confident to trade. In fact, I became over confident. After closing my initial trade and made some profits, I saw EURUSD kept climbing up, and without really thinking, I said, “This guy must be coming back down soon … “

So, I went on short, against the uptrend thinking I could be making a quick profit.

I was wrong. It kept going up, almost vertically, breaching the 1.2780 mark. I lost all the profits I made this morning. Instead of holding on to the trade, and wait for it to eventually come down to recover my position, I lost them again to the stop loss I set up.

The price did eventually come down, over 6 hours later, to be as low as 1.2720. I could have made some profits had I hold on to my sold position, but …

So, all in all, I’ve lost USD47 for the day, bringing my equity down to USD453.

Some lessons I learned, the hard way that is:

1) Never jump into a trade without analyzing the situation. Have some discipline to plan out your moves and have a clear justification why you trade in a certain direction.

2) Never go against the trend in the hope for a quick profit. Prices can move very quickly in either directions, but at the end of the day, the longer trend would stamp its mark.

3) Never put the stop loss less than 50 pips from your position. Prices can spike against you pretty bad. In fact you don't need a stop loss unless you are leaving your trading station with open positions.

4) For a short-term trading, hold on to your position as long as you could. Prices go up and down in a big way, and you could eventually gain back your investments.

5) Trust your long term indicators. What the heck have you got them graphs set up for if you ain't gonna follow them?

6) And relax, will ya? Always have confidence that everything is working out. And don't forget to feel grateful, always! :)