Wednesday 19 December 2007

Twice bitten, third time lucky?

After swearing off day trading forex (having lost $4,000 in a couple of months), I've now transferred another $1,000 into my CMC markets CFD trading account. This means I have "invested" a total of $5,000 into day trading forex (USD vs AUD) and will now be starting off with a balance around $1,200. During DS1's Chinese class last weekend DW happened to talk to a lady who works as a professional forex trader for a large investment company. After sharing a few laughs at how we'd lost money trading forex in a very hit-and-miss fashion (and leaving positions open overnight), a few comments that it was possible to make money trading forex (if you trade to a plan and used stop-loss orders) was all it took to rekindle DW's interest in trading forex. I'll also start trading forex again as it's more fun if you share a hobby, even an expensive one! This time we'll first read an introductory text like "Commodity Trading for Dummies", pay the extra monthly to enable automatic stop-loss orders in the CMC Markets trading platform, and watch the 8-hours worth of "free" training DVDs we got from CMC Markets when we opened DW's account. Worst case I'll lose another $1,000. If I'm lucky I'll have some fun trading next year and might even manage to get back to break even.

The addictive thing about day trading is that you always had second (and third) thoughts about every trade you make, so when you've lost money trading you can always think back and see where "if only" you'd made some different decisions you could have made a profit rather than a loss. I'm still pretty sure that there's a lot more luck than skill involved in trading forex. If I happen to get lucky and make some money trading forex the danger will be that I convince myself that I now know the "secret" of trading and continue trading until I eventually lose whatever profits I've made. I'll need discipline to not throw any more funds into trading forex if I lose this "final" $1,000...

Copyright Enough Wealth 2007

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