Forex (FX) & Futures
So in other words buying market for me has become a means of accelerating a trend. As I mentioned though I always start small with my initial purchase until I see signs of others pushing in my direction. I learned quick in FX take your initial loss right away if you have to. If I lose $40 on a bad entry it’s not as bad as thinking it will turn and then losing $400 1 minute later. Take the loss if I was wrong with my initial entry there is a good chance it is moving in the other direction, if I can verify then buying into the trend with a 2 vol will make back $40 in 2 pips which if you invest in USD/MXN it has a tendency to get a little volatile and push 20-30 pips in a single move at times. Apparently Mexico doesn’t like Donald Trump huh? The USD lost like 2.5% value to MXN peso in 1 hour when Trump spoke. It was like clockwork, every time newswire posted a new statement from trump, the price dropped like 20 pips. Every time Hillary got posted, it had a slight reversal but ultimately Mexico hates Trump more then they like Hillary apparently. The only time I saw a strong reverse was when I hit twitter and told everyone Donald Trump is killing the dollar, buy pesos!
Also be warned that USD/MXN can turn faster than a Trump’s opinions (I apologize if anyone is a trump supporter, nothing against the guy I just like picking on him) So if you buy in, unless you have a really strong trend moving in your direction there is a very good chance initially you’re going to get whipsawed before it comes back which means you need to focus on a little longer term investment with USD/MXN and have extra reserves to weather the initial purchase/short. If you know you’re going to be in it for a while it is alright to buy at different price points trying to lower overall cost but if your scalping. Its best to try and buy up your necessary purchase right away to avoid multiple backlashes. If you don’t believe me and you have access to a LVL 2 screen I will show you what I mean next time I buy or sell USD/MXN. This currency is definitely higher risk but it is also much higher returns but is NOT for the faint of heart. Even a .01 volume (nano lot) or 10 cents a pip can cost you 5-10 bucks in a matter of 10-20 minutes. That’s a lot of movement.
Apparently a lot of people shorted at that point the price dropped but seconds later pushed back up hard. (Every action has almost an equal reaction in the market unless there is a fundamental or technical reason behind it)
When a stock is being shorted and people are selling down (this is my understanding anyways I could be wrong) Your prices and bid/ask will flash red, selling down which increases the momentum of the bears. The more the price and bid/ask flash red the stronger the trend is going to be. The faster the price changes up or down, the harder the momentum. So if you see your bars flashing green a lot that means the bulls are pushing upwards and buying. I don’t know why, perhaps coincidence but when I sell down to a red
you see a lot of prices all green down the screen and all green bids. Bulls are dominant so it’s a good move to be bullish. Do not short during this time ever. Once prices start turning red and bid/ask start turning red. Bears are striking down.
Always go with the flow of the screen based on the colors and the numbers and the momentum. You can follow any and every chart in the world but I have yet to find something as accurate and as powerful as a level 2 screen.
Last night When all lights were green I bought up when I felt it was at or near bottom. Watched it rise only buying more when it dipped 2 pips below my last purchase price adding to the support levels of the bulls not allowing it to dip to low below my original purchase and buying up additional volume as AAFX calls it but in more accurate terms buying up more USD and selling more JPY.
Then once I started seeing red flash faster and harder I sold off my shares on reds helping to initiate a more bearish trend. Then when I felt the price had reached its resistance levels I began shorting. As with the bottom prices this time I shorted my initial currency and then only shorted more when the price broke my original short price, always by 2 pips. If it came back and broke far and hard beyond that point I closed my trade and waited until I felt I was resynchronized with the trade before getting back in.
One mistake I made too many times is believing the bottom was near and buying up or shorting more thinking reversal was near only to be dead wrong. Now depending on how much I am investing I short or buy 1 initial volume of 1 which is 1 lot or 1 standard lot or in other words $100,000 of the currency. Nano lot is .01 or 1000, micro lot is .1 or 10,000 and a standard lot is 1 or 100,000. One I have my initial I wait to see how it affects the flow. If it seems to push hard in the wrong direction I am trying for and there seems to be a hard trend I purchase or short 1 more lot. If it pushes back and goes beyond my original price-point I wait to see how far it goes and see if it is a good time to scale up or back out.
From scalping I was able to make a pretty decent profit last night. One thing I realized though is after about 1-2 hours of scalping if you don't change your routine, the flow of the trade will change to counter your moves. It only takes 1 bad trade to level you out in any market but in FX it only takes 1 bad trade to devastate you. Only takes 1 good trade to make a year’s salary though. I try to stay away from the buy then turn around and flip routine due to the fact that a lot of times I don’t gauge the trend fully and it still has life after my exit. So the immediate reversal usually eats my profits. Instead I buy in then sell out wait 3-5 minutes then either buy in or short depending. That 3-5 minutes is crucial to re-valuate where the price is moving. I know I have said it but never fully practiced until now. PATIENCE is the number 1 discipline one must have in order to be successful in the stock market. Unless you buy hold and forget for 20 years and hope those shares of FACEBOOK that you bought at $2 will someday be your retirement. Also give yourself at least 10-20 minutes if need be before deciding to exit your trade. Unless of course it spikes in your favor and you take quick profits or vice versa to save losses. Typically after your entry from my own observation and this also depends on how big of a splash you made. 100 shares, 1000 shares 10000 shares or 1,000,000 shares obvious each has a strong impact. If you buy into a stock hoping for it to rise only to see it drop immediately after purchase don’t get discouraged. Wait it will take at least 3-5 minutes usually before that stock comes back to breakeven. If it continues to decline made quick analysis of the trend and make sure you didn’t make a mistake with your timing. Without strong fundamental or technical causes a stock for the most part will bounce back and forth from price point to price point. Never to the same exact amounts but you will see say TWTR up .38% net change .22 then TWTR down -.11% net change -.03. With nothing really pushing it, it is likely the prices will continue to fluctuate within these points. FX is very typical of this until the news comes out and all the sudden your resistance level isn’t even considered a support level anymore or your support levels could have been considered a resistance level like 3 years ago. (Basically 1 event can drive a currency pair astronomically but without an event or a technical indicator, they kinda flop back and forth usually not even enough to pay for the initial spread.) With that said if it is bouncing up and down and never seems to hit your breakeven or profit points just wait. The one thing I have done and am 50/50 is opportunity cost. Is it better to take a loss so I can make strong profits elsewhere or wait and minimize the loss and lose the opportunities? Either can work just make sure your decision has strength behind it. Make sure you know that your next move if it is to go for opportunity is that the opportunity is going to follow through and make up for the loss.
I always want to dive right back in and start trading that trade immediately thinking I caught it at the end and now it’s time to reverse it. Giving yourself at least 3-5 minutes to monitor the movement and then redefine your next move is critical and is the difference between profits and losses. I read somewhere that if your right but you are too early or too late, your still wrong. So very true. You might see that reversal a mile a way but if your timing is off and you catch the rally you can get knocked out prior to the reversal ever starting. Then once you’re knocked out and watching your prediction come true is just adding salt to a wound…. Kind of like when you sell 2M shares of SGBY at .0037 or when you bought $20,000 worth of STEM (I think it was stem) @ .67 and sold it at .74 only to see it go to 2.74 in the same day. I made 900 bucks could have been almost $60,000 but hey why drive a BMW when I can fill my Toyota’s gas tank? ?
I do suggest FX trading for anyone interested if you have $100 or $200 you can just throw to the wind and not worry about its more than enough to get started. My favorite FX broker is AAFX, aafxtrading.com . Very friendly staff, and you have options of FX, Futures such as silver (blah) gold (blah) oil (double blah) Wheat, corn, Natural Gas (the spread is enormous so make sure you are on the right end of the trend, although even with the huge spread it can easily turn to quick profits considering the volatility of natural gas). Cocoa, Coffee, Soybeans, and Rice for futures. I will leave oil to Pleeb01.
You can also invest in a few stock options most of which are heavy volume stocks like GPRO, TWTR, AMZN, GOOG, MSFT, EBAY, GM, F, NKE, XOM, TSLA, BAC, SBUX and a few others. The leverage on FX is 2000:1, futures depends but with $250 you can buy 10 contracts of oil which is $10 a tick. Tick size is $0.01 so every penny up or down is $10 or in other words $1 per contract per tick. If you have $2500 you can buy 100 contracts which is $100 a tick. Oil jumped up $3 this week had I caught it on the right side instead of the wrong side that’s 300 cents or $300 per every contract, buying 10 contracts for $250 would have been a $3000 profit. Unless you are me of course and got in at all the wrong times.
With stocks you get a 10:1 margin ratio so if you went all out thinking say GPRO is going to breakout today and bought up everything you could (also no extended hours trading) and it went up 10% you doubled your investment. If it goes south and drops 10% you lost your investment. When GPRO was $15.25 I was able to buy almost 900 shares with $1350. which is $9 for every cent it moves up or down. With 10:1 a $15.25 stock is $1.525 a share. Not bad considering even with Portfolio Margin on a high end trading account with TD I would only be able to buy about half that.
Also getting in and out of stocks with AAFX is a lot different than with TD or in my opinion other brokers. When you buy the shares the value is automatically placed at the ask price so when you close it your value is already predetermined there anticipating you’re going to close at market. So if you bought GPRO and your profit bar says $100 or whatever and you want to take profits. Just click the x button or right click and close trade and you’re out in less than a second with full profits.
With FX $100 can buy you a 1 standard lot in most currency pairs which on a strong uptrend can go up 10-20 pips in a matter of seconds which is $100 per every 10 pips. I suggest starting with .01 just to get a feel for the movements. That’s 10 cents per pip so even if you are on the wrong side of the currency pair like last night with USD/JPY (for once I was on the right side!) it spiked up about 50 pips for no known reason. 50 pips with .01 is $5 so if you took the loss no biggie. If you gained well you just bought a Starbucks coffee. If you do .1 that’s a micro which is $1 per pip which now that spike is 50% of your capital in either direction.
After being comfortable and doubling up from $100 to $200 I would suggest if you feel confident moving from .01 to either .05 (50 cent pips) or .1 ($1 pips). Pleeb01 has been paper trading FX lately, not sure how he has done.
Like I said there is huge profits in futures and FX but it is also very risky especially starting out. If you do decide you want to try it out, start with a very small amount that you could lose and think nothing of. $100 will go a long way in either market if you use AAFX. There are other brokers but AAFX is my favorite, FX Glory is okay but the spreads are double and they are stingy with their bonus.
AAFX you get a 30% welcome bonus if you deposit I believe $1000. After that every redeposit of $500 or more you get a 25% bonus. You are able to keep this bonus and trade it until there is nothing left. FX Glory if you drop below your principal. They pretty much close you out and take back the bonus. Also AAFX has a great no negative balance policy in case anyone was wondering.
I actually hit -$350 one day on a really bad reversal and they leveled it out and then added my new deposit and full bonus like the account never went negative. You will never be charged for a negative balance. But be warned they have a very advanced system which automatically liquidates at 25%. It will liquidate one trade at a time keeping you above 25% until your account is drained. Also with the bonus you can withdraw the bonus after meeting certain volume requirements. I believe it is one maximum volume lot which is 8 (max is really 1000 but 8 is as high as their default bar goes) After that if you still have the bonus in your account. The funds are now yours so if you got say $300 bonus and met the volume requirement that $300 is now yours. If not it at the least is a nice trading cushion.
The biggest detriment to futures and FX is over extending yourself, feeling superior to the trade. Golden rule, never risk more than 2% capital at a time. A 2% investment can still be very profitable but if you do not have enough funds to weather the storm when things go south. The worse thing is having a trade turn and being over extended and having to close them out with big losses only to see it reverse and go into a profitable state right after you closed. I have experienced this one more than once. You truly feel there is a VODOO curse on you when you take a huge loss and then within 5 minutes you could have made thousands had you not over extended yourself and been a little better on timing. Speaking of timing no one is perfect and no one is ever 100% accurate all the time meaning your timing can will and guaranteed to be off at times which backs up my have a strong reserve pool handy.
Anyways sorry for the huge note. I have been absent for like 2 weeks. I hope SGBY goes up to $10 for you guys. I hope oil goes up to $75 a barrel for Ol' Pleeb01. If it does you will find me at Exxon, just look for the guy in the jump suit with the name tag 'bill' I'll be the one asking if you want regular or premium :).
If anyone is interested in FX or Futures or whatnot I know about watching the LVL 2 screen let me know. I wanted to keep this note short but apparently that didn't happen. I have a lot more info that might be useful for any of those topics.
Also AAFX offers a referral bonus.
So yes I do have some incentive to offer it but they are really awesome. For me I get $20 bucks on every $100 my referral deposits, then I think $40 or so. You if you sign up with them get $50 bonus for deposits between $100 - $501, then I believe its $100 for $501- $1000 and the $200 etc. I believe it goes up to $500 or so. You can find out more about it on their referral page. Even if all you deposit is $100 the $50 is a 50% bonus and is a nice cushion to get started with. Not sure if bonuses overlap but at $1000 you get the 30% welcome bonus or $300 which also should be $100 referall bonus if you mention my name (Michael Beaton).
Anyways the biggest reason I like AAFX is their available trading options and friendliness. Some day’s currencies are just blah and I want to go over to commodities so I can give all my oil money to Pleeb01. Some days I curse the oil gods and want to invest in indices (indexes) I made good money on Nikkei225 or on MT4 JPY225. It has a large initial margin so be ready for that.
Also setting up an account with AAFX is easy. All they need is scanned copy of driver’s license, and or passport, a utility bill that shows proof of address, and if you use a credit card or debit card to fund the account they just need a scanned copy of both front and back. You only need to show the last 4 digits of the card I believe. Takes seconds.
