Currency Trading – How Not To Do It

I wasn’t really planning on getting deep into this – this soon but as the name suggests – I do trade currencies, and I do trade currencies well. You can’t just pick a currency pair, pull up a chart and plan to trade it –  as if it was a common equity. The volatility inherent to currency markets, coupled with the massive leverage offered by brokers is a sure-fire recipe for account liquidation – and the lack of good, solid “tradable” information available on the net ( in my view) is slim to none.

The currency market is designed (like no other if you ask me) to very quickly part the newcomer from his hard-earned dollars  – with the promise of massive gains, and very little start-up capital. This could not be further from the truth. Anyone even considering opening a currency trading account with the piddly “get started now with 2K and a free 50k trading account!” – will be left with zero – likely before close of their first day trading. It takes extremely disciplined trading, and razor-sharp money management rules to successfully navigate the currency world.That, paired with extensive fundamental knowledge of the underlying, and a current bead on daily news flows globally – minimum.

Each individual currency pair exhibits it own unique characteristics that cannot be discounted or disrespected.Volatility in currency trading can wreak havoc on an account, and the leverage offered is so tempting to newcomers that in combination – accounts are likely wiped out daily. I wonder if the brokerages expect anyone to even make it through the first week – building their business models solely on the “minimum required deposit” to open the account – and in turn striping you of it.

In any case…we will certainly peel the onion here over the coming weeks – but as it stands my suggestion to you would be:  Do Not Trade Currency – Until You Know How To Trade Currency.

A question….would you climb into a formula one race car, and hit the track against an armada of seasoned veterans – without first considering where the gas pedals and brakes are?…..I didn’t think so.

21 Responses

  1. hf November 13, 2012 / 2:44 pm

    have added more GDX 55 march calls @ 1.75
    so avg cost is 2 even

  2. hf November 13, 2012 / 2:51 pm

    sold IDU for scratch.
    one less position to think on for now…

    • Forex Kong November 13, 2012 / 3:06 pm

      You are staying nimble hf…..fantastic in my eyes. Every day this thing continues to “grind” smaller players and frustrate the masses – more and more likely the trade will pay off in spades. I’ve just started my positions currency wise – with same underlaying principal in play – the dollar is on its last legs here.

      Nice trading Hf – great work.

  3. Ben November 13, 2012 / 3:13 pm

    Holding pat here as well. GDX Jan $50s, GLD Feb $164s, and a sour bite of AAPL I’m hoping to spit out at some point.

    • Forex Kong November 13, 2012 / 3:20 pm

      Nice Ben…..I wondered about you today…as gold and related stocks “wiggled”. Good for you man…..It will only take a single “up” day to get u well past profit etc..and let this trade work.

      Nothin wrong with banking profits either guys…do it if you see ’em…….just be ready to either re enter – or struggle to jump back on a moving train…….Im targeting mid January for exit on my gold trade.

  4. kreks November 13, 2012 / 5:12 pm

    Loving the AUD relative strength the past week… you can just “feel” it wants to pop as soon as the ‘risk on’ trade returns! I’m long and looking to add, but want to see some across-the-board strength first. (Lots of economic reports the next couple of days should prove interesting).

    • Forex Kong November 13, 2012 / 5:18 pm

      Good eye man……and you’ve got it.

      As the ultimate “risk on” currency – a keen eye to AUD movements is often telling. Personally I think its got a pile of upside potencial here as the dollar devaluation, and global “printing/easing” propel markets upward – regardless of fundamentals.

      • schmederling November 13, 2012 / 7:05 pm

        kong – looking to start trading currency… have taken your advise and will work on a SIM account for 90 days… just playing the squeeze play…. it’s dummy proof…. should only need a few days with this play… any recommendations…. just looking to add tools to the box…. I use this for stocks and works like a charm…. it never misses…

        • Forex Kong November 13, 2012 / 7:11 pm

          Rock n roll then Schmed.

          Take the time to track / watch individual pairs…and take note of their characteristics………pull GBP/JPY or EUR/AUD to get an idea of how you can get your head ripped off.

          Something that never misses?—-wow.. Id love to have some of that!

  5. schmederling November 13, 2012 / 7:17 pm

    What is your email… I’ll send you vid…. never misses…. not large gain but good for an in and out to take some needed capital…

    • Forex Kong November 13, 2012 / 7:23 pm

      I can’t really post an email here publicly…. at risk of getting crammed.

      Can you post it somewhere? Or what else can we do?

    • Forex Kong November 13, 2012 / 7:37 pm

      You kill me man….as I’ve just gone long NZD/JPY as of a couple hours ago.

      Something of interest though….for others reading….Schmed and I can “BOTH BE RIGHT” – depending on what time frames we are trading.

      For example….Ive gone long NZD/JPY with thought in mind that several days from now….we will see Yen selling…and Commods buying, and my trade well in profit. Schmed may see something far shorter term – where the price may dip sufficiently for him to make a profit ( even 50 -70 pips ) and BAM! – Schmed banks on the trade…as does Kong.

      Time frames are crucial…and the understanding of your profit expectations.

  6. schmederling November 13, 2012 / 7:34 pm

    Short AUDCHF 8:30pm….. Long EURAUD 8:35

    • Forex Kong November 13, 2012 / 7:39 pm

      I will politely ” wish you well” on that one my friend…..IM not a player of GBP/ NZD.

    • Forex Kong November 13, 2012 / 7:46 pm

      Ill wrap up here before heading for the kitchen – Schmed – you’ve got som balls, and I assume a very short term / scalp type trategy there – and if it works….sure man…it works!

      Those are some super volatile pairs….and in a broad sense I see you trading against the trend – BUT as suggested earlier – still can make cash without question – so go man go….I will look to follow your results.

    • schmederling November 13, 2012 / 8:02 pm

      AUDJPY sold 9:pm Green ( Small ) currency is a different beast…. diff more time needed… Cheers

  7. schmederling November 13, 2012 / 8:22 pm

    ok – last one…. don’t want to bog down the Site…. and yes these are short-term/scalp – Squeeze play…
    Long USDHKD – waiting for the Bbands to burst from the KH
    Long EURCAD – 21:25pm
    Long NZDCAD – 21:25pm

  8. schmederling November 13, 2012 / 8:56 pm

    Kong – ping me at my email address and I’ll send you the link – or we can do skype… whatever works best for you… cheers…
    Again currency trading is a completely different beast… move & acts different…

  9. schmederling November 14, 2012 / 12:33 am

    EURCAD Short -800,000 1.27364 1.27294 1.27294 1.27317 $375.57
    Closed 1:32am

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