Some initial setbacks when I started trading Forex (AUD vs USD) using Contracts for Difference (CFDs) saw my CMC account balance drop from $4,000 down to $1,200. A period of more careful trading during August and September saw me slowly claw back to around $2,400 and I had some hope of getting back to break-even by the end of the year. Then a sudden spike in the USD while I had a short USD$100,000 position open overnight saw my account balance plunge back down to $1,400. I didn't trade for a couple of weeks until the volatility seemed to have reduced and a general uptrend in the AUD seemed to have re-establised itself. For a while going long the AUD provided some gains, and I'd got back to an account balance of $2,400 briefly on Thursday. Then, on friday night the AUD plunged again and this morning a further decline in the Aussie dollar saw my position closed out by CMC Markets. My account balance is now down to only $190, too small to even make any further trades (unless I tipped more funds into my account), so I've decided to call it quits with trading forex. While I enjoyed trading it was too expensive a hobby, and 'paper' trading is more boring than watching grass grow. I may use the CMC account to trade S&P index CFDs or even to short Australian stocks that I have long positions in if I what to protect gains without having to sell the stock and realise capital gains tax liabilities. Losing nearly $4,000 dabbling at currency trading was an expensive lesson, but at least I was a faster learner than Debt Kid!
Copyright Enough Wealth 2007