Chinocop's Forex Fiasco

When I first started, I stumbled across several trading systems. I thought, "Holy shit!", these are incredibly easy systems. All I have to do is follow the indicators, and I'm set. After not having any immediate success with a system, you begin to think "Shit, I'm not banking any pips, I need to find another holy grail".

I had a small suspicion that this was going to be harder that I thought; however, I was still naive in thinking that I'm just a system away from making it big. One day, I stumbled across Ken Lee's thread. I started reading everything I could in that thread. The funny thing is, when you're reading a thread and looking back at a chart, you think that trading is simple and all you have to do is look for the right pattern or candle stick formation. So then I discovered pdf's that he had published on EO Hater's trading method. I read through all of the documents and believed that I had finally arrived. So in February, 2010, I became a full-time trader. When I initially started trading, I had the preconception that I wanted to trade the 15 minute chart as I wanted to catch every move, up or down, and scalp my way to financial freedom. I was glued to my charts waking up at 5:30 in the morning and staring all throughout the day trying to catch the big move. So I would demo trade every setup advocated in the system.

I think every newbie trader realizes that there are always exceptions to every setup, and that there are no absolutes in trading. Just because you think you have the right setup doesn't mean that you're going to grab 100 pips. That happened to me. I began to find out that some of the scenarios just didn't work the way I thought they would. Eventually, I would just discard them completely thinking that this just doesn't work so it must be wrong. I would win some but lose even more. This would go on for several months. There were times when I would get so frustrated I started revenge trading. I wanted to see if I could blow up my account because I was so pissed. But you know what, it was really difficult to make money losing trades sometimes because I would just take random trades, and those would end up doing pretty well. Luckily, I was demoing so it was only psychological damage. There are pros and cons with demo trading. one of them is that you can always start all over . Whenever I would get down $500 to $1000, I would just reset my account. My rationale was that this time I'm going to take this seriously. I also told myself that if I can make 5k on a 10k account then I could start live trading with big bucks.

Trading is definitely an emotional rollercoaster. As I was wading my way through my first few months of trading, I was definitely experiencing the lows and highs of each trade. I would beat myself up and become insufferable for an entire day for reversing out of trade only to have it go the direction you had originally intended to take. You have to go through these things in order to get to where you want. I am definitely glad I did all this while demo trading as these are the intial steps that I had to go through in order to know who I was.

I had read posts by other experienced traders stating that it easier mentally and more profitable to trade the higher time frames. Of course, I'm very stubborn, and I was determined to make it big trading the 15 minute charts and ignoring all else. That's because I knew what was best for me, and what did those other guys know seriously. I have always been a contrarian and traded that way. I was always looking for retraces and reversals because I wanted to catch a corner and grab that 100 pip runner. So I started using candle stick patterns and fibonacci's to determine when a reversal was going to happen. Most of the time I was right, but the problem was when to take a profit. I was always stuck with the idea that I'm going to ride this out for a huge profit. The thing I noticed most on the charts was that after a decent sized move there was generally a moment of consolidation and the 38.2 normally capped it. So me being the genius that I was became fixated on trading 38.2 retraces. My problem was that once I found something that worked for me once or twice I would look for that exclusively. Well, we know how that turned out !

I then started to jump around from system to system, but still sticking to my original premise that I was going to trade price action on the 15 minute chart. I remember putting keltner channels on my charts and looking for the right doji to buy or sell into etc.. Just to cast that aside and try something else. By the time July had rolled around, I was winning some and losing some .... basically breaking even. So I decided to put my money where my mouth was and open a small mini account because I needed to experience trading with real money. So I plunked down $1000 and opened an account with Oanda.

The first few weeks I did ok with live trading. I was using 5x leverage on my positions and was doing ok catching tops and bottoms as well as 38.2 retraces. I thought that I was the shit. I would take 20 pip profits on half of my position and let the rest ride. By the 4th week of live trading I was up 3%, and I was going to burn the candle at both ends by trading the EU open and NY open. So I decided to add another tool to my arsenal. I had come up with the ingenious notion that I was going to enter a position based on the 23.6 or 38.2 of the previous candle basically before the current candle had even closed. My plan was that whenever I was 10 pips in profit I would move my stop to breakeven + 1. Well, one thing I forgot to mention was that my disciplined sucked. I would always break my rules because I didn't want to get stopped out after being green so I would lie to myself saying that things are going my direction so I'm not going to get stopped out on a stop run. So I tried this during the EU session with disastrous results. I would be up then down and cursing myself. My measly 10 to 12 pips stops were getting taken out left and right. 10 to 12 pips doesn't seem like much unless you're using leverage which as a newbie you have no business using. So in about 5 weeks, I had blown my gains and had lost 6% of my account. This isn't much but the emotional toll of constantly losing and losing real money made me realize that I needed to start all over.