DEAR CINDY...

I couldn't reply your email since it was being rejected a few times. So I guess there is no harm of putting it here... your question was...

Hello,

How many micro lots can i use for 2 risk for 500 account?Would you consider giving me a hand or at least some advice based on your experience? Any info much appreciated.Thank you for your help.

Kind Regards,
Cindy

My answers -> it depends on your stop loss location and your risk appetite level. At times I even risk 20% of my account (ie 100 dollars for a 500 dollars account) since to me as long as you get it right and the setup is very very inviting, it doesn't matter. Yes it is risky but, even if you risk 2% (10 dollars - say open a 2 micro lots with 50 stop loss) but then you keep in getting into a losing trade 10 times in a row, you would have lost 20% as well, or perhaps even more.

So focus on quality rather than quantity. Nowadays (unlike last time) I just trade one or 2 times a day only. At times, I don't even trade.

My advice, with 500 dollar account, your aim is to generate 5% daily (ie 25 dollars) so that you can double (5% x 20 days = 100%) your account each month safely base on calculated risk. This is how I do it...

I would target 50 pips a day with scalping method. I can scalp either 5 pips x 10 trades or 10 pips x 5 trades, or sometimes 50 pips in a single trade... it depends on market as long as I get my daily 50 pips. So, for you to get 25 dollars with 50 pips, you can risk 5 micro lots (50 cents per pips or 5k lot) and scalp carefully with each trade's stop loss at 30 to 50 pips as well... trust me, it's not worth to put your stop loss bigger than 50 pips... its too agonising.. better take the loss and come back for the next trade.

Your aim is to get the position's right every time you enter so if you see and feel that the market is not on your side, just retreat and come back. You don't have to wait for your Stop Loss to be hit. But be careful do not act too soon... at times it is best to stick with your decision as price swing of 20 to 30 pips is normal especially if you play GBP/USD and GBP/JPY pairs.

To me, scalping is much better if you have the patience since getting 100 pips daily from 5 to 10 trades is much easier than aiming for a 100 pips gain in a single trade... well it's up to you actually. I have tried to swing with one failure to another so I decided to scalp the market rather than swing. Easier, faster and much more profitable to me... well, it's up to you... trading is quite personal actually... as long as you're comfortable with your style, just stick with it k...

So, if I were you... the max risk is 5 microlots with 50 stop loss and 10 TP (or bigger depends on market) in each trade. If you time your entry well, you shouldn't even get the double digit on the minus side... (ie -10 and above).

Remember, focus on accuracy and quality. Over trade is among the No 1 killer, apart from poor money management. Just apply the same 5% rule on the following month and you should be comfortable with your trades. Try not to be greed as we humans are difficult to control ourselves...

I hope this helps... By the way, I have 2 questions.

1. Are you new to forex trading?
2. What system are you using in identifying a trade setup?

All the best to you.

Best Regards

TERSENTAK, SEDIH... DAN INSAF...

26 Julai 2009.. Ahad jam 9 pagi. Seorang rakan kerja yang amat aku senangi, Mohd Effendi Tajuddin, 44, telah kembali ke rahmatullah akibat dari kemalangan motosikal berkuasa tinggi di KM 139, berdekatan Tol Chenor, Pahang.

Beliau menghembuskan nafas yang terakhir di tempat kejadian.

Innalillah...

Aku sangat tidak menyangka dengan pemergian Arwah pada usia yang masih muda meninggalkan seorang balu dan 3 orang anak.

Aku terima berita ketika keluar membeli barang dapur di Jaya Jusco Ayer Keroh dan seketika aku mendapat SMS tentang musibah yang menimpa beliau, aku tidak berupaya menahan sebak dan tanpa ku sedari air mata berlinangan dengan sendirinya.

Kami tidaklah terlalu rapat tetapi kami pernah terbang & bersiar bersama di luar negeri ketika menghadiri sesi HAZOP di Reading pada bulan Februari 2007 untuk Projek yang masih dalam pembinaan ini. Tidak dinafikan, beliau merupakan seorang insan yang sangat peramah disamping kelengkapan kamera beliau yang sangat canggih. Kalau nak harapkan aku memang sekadar menggunakan kamera digital Olympus yang leper 2.0 megapixel sahaja ketika itu.

Aku tidak mampu untuk berkata apa, cuma sekadar hendak meluahkan rasa sedih dan simpati terhadap ahli keluarga beliau yang sememangnya berat mata memandang, berat lagi bahu memikul. Sabarlah dengan ujian ini jika ada diantara kamu yang membaca...

Fendi, walau pun kita tidak serapat mana, tetapi pemergianmu sangat sangat dirasai. Engkau adalah antara sebaik-baik insan yang pernah aku kenali...

Kami meratapi pemergianmu, tetapi kami redha. Kami insaf dan sedar tentang kejadian yang menimpa kamu adalah suatu peringatan kepada kami tentang betapa mudahnya jika Allah SWT hendak datang menjemput kita kembali... tiada daya dan upaya melainkan dengan izin Allah SWT semata-mata...

Ya Allah, aku insaf... dan aku berdoa semoga roh Arwah ditempatkan di kalangan para solehah & syuhada Mu...

Al-Fatihah...

http://www.youtube.com/watch?v=z1WXYpj_x8Q

FOREX AS A RECESSION PROOF INCOME...

Is it true that forex is a recession proof income?

The answer is yes as regardless of how the dollar, yen, sterling or euro performs in the market, there is always a bull market for at least one or two currency at a time. Say if the USD/JPY is diving down, it is bullish for the yen but bearish for the dollar and vice versa.

The discussion here is nevertheless, some people blatantly used this recession-proof income to the new comers and giving false impression that trading forex is easy.

In my honest view, trading forex is not diffcult but definitely it is not easy either.

Surely all you need is a few clicks of your mouse in order to execute the trade but to ensure profitability, it takes a whole lots of different approach and calculations.

So, how do we achive such level where we are among the top 10% of traders who consistently takes the money away from the market?

The real answer lies within you. Learn the forex basics, the technical as well as the fundamental analysis. Master them but on top of all these subjects, the most important subject to be mastered is no other than you. Why?

You are the one who makes the decision whether to trade or not to trade.

You are the one who decides whether to buy or to sell.

You are the one who decide whether to ride the profit or ride the losses.

You are the one who clicked the mouse button...

Who else? Nobody... The market is always like that and there is no single hand who could control the market forces, neither you nor I.

Look at this week roller coaster ride on the EUR/USD pair especially. I was caught several times and losses are inevitable. At one point, I almost lost my self-control.

And sad enough to say, one of my account (out of three) burst into flames even though I did all the ******* right things. You see that the market is cruel and have no mercy at all.

Yes we talk about trading with a winning system and risking not more than 3% at one time. But losing 3% each time you trade, say 3 times a day and you keep in getting it wrong, would throw away 9% a day and a total of 45% in a week. That's almost half of your account.

Hence if you had a bad week after another, wouldn't it be an armageddon for your account?

I personally feel that getting in and out at the right time is the No 1 key in profitable trading. Perhaps my no 1 fault is I did not apply my stratgey No 8 which is not to trade in this kind of market conditions. But how am I suppose to know exactly? It is easy to see after it happenned & since it is easy said than done, I must say it was tempting not to trade.

Anyway, am still good for my long term aprroach as all I am doing now is to stick with 5% daily approach and I shall be on my way towards my first million... we'll see...

MY FINAL TRADING STRATEGY... NO 8 : DO NOT TRADE

Yes you read it right... Do Not Trade... that is a defensive strategy and the final one, if not the most important.

Common traits of new traders : One way or another, we're all impulsive whether we realize it or not. Agree? Fine...

Let me further reiterate this point.

When it comes to making money, most of us (if not all) would get very excited and the moment our deposits appear in the trading account, we couldn't wait even a minute or two in order to execute our first trade and so on, looking forward to make our first buck from the forex market. Surely there's nothing wrong with that but...

The problem here is that we thought we knew everything since we already done it with the demo account. Yeah sure I myself have turned a million dollar (demo) account into 5 million within a week. Looks easy right? Coz it's not real money... We do not care even if we lose since we can always open another account without any fees.

So what's the point here. I must say this is very much related to self control and discipline which is very easy to say rather than done. By refraining yourself from trading, regardless of how the market behave, will train you to strengthen your self discipline and composures. Doing this repeatedly will make you cool in planning your trade properly and profitably.

But how can I make money if I don't trade?

Yes if you don't trade you won't make money, but surely you won't lose money either - 100% confirm. Entering the market will not guarantee you to make money too, but a sure way to lose money if you got it wrong. Right?

As stated above, the number one reason for you not to trade is to make sure that you won't lose your money. Trading blindly can sometimes bring money to your account but if you check the statistic carefully, you will realize that you actually lose more than you gain.

So, only enter a trade when you have done all your prior analysis and homework. Even if you miss the train (especially a mega breakouts), there is always the next one as long as the forex market is there. Do not worry as currency will always be bought and sold without stop.

I do not say that you shouldn't trade at all since the point here is... we only trade when there is a clear chance for us to take advantage on the market movement.

If not sure, the best way is to stay out and stay there as long as it takes.

I believe you have heard somewhere that trading without a proper entry and exit strategy is like driving a car without a destination. Technically you may drive the car safely but without proper planning and maps on which direction you are driving, chances is you would end up running out of fuel (i.e. margin call) or driving it on the opposite direction of the road, that would surely crash you into another oncoming vehicles. (i.e. going against the market).

So remember. Do not trade if you're not fit and ready to trade. Treat this seriously and chances you will survive and prosper in this market.

Always bear in mind that trading is a zero sum game and the figure shows that only 10% of traders that make real money in the market.

So, let us be the 10% instead of the 90%. Without doubt, the world is unfair. So be it...

All the best...

MY TRADING STRATEGY... NO 7 : THE WAYS TO EMPHATIZE THE MARKET BY USING REVERSE PSYCHOLOGY

In this part, I am going to share the fundamental part of my strategy, in which I do believe that a good trader must have a perfect balance between the technical and fundamental department.

Technically speaking, considering you have a gun in your hand, anyone can say that you have to pull the trigger in order to kill your enemy but pulling the trigger itself will not guarantee you a good shot. You need to combine the shot with good fundamental skills in which aiming and timing play its important roles.

Ok, say you have all the best money management strategy and trading system that proves to be a winner 90% of the time from back testing. Will you have the guts to use it blindly in the real market? If you ask me, definitely the answer is NO.

Why? Because most of the time, what is proven to be profitable in the past would not guarantee you any future returns. Still, you have to face the market on your own with all the skills and experience that you have and emotional swings that could disturb your trading decision every now and then.

The point is, at times, you have to emphatize the market by looking at what is happening around you. The daily and weekly charts itself are telling you a million words about the crowd's main behavior. The news, the sentiments and the geo-political instability would add another potential emotional swing in the way the market would behave.

Just bear in mind that 60% of the time the market will range, 30% trending and 10% breaking outs. Our simple job as day trader is to analyse these movements and classify their behaviors accordingly. If we were to expect a breakout on daily basis, the results would be a continuous dissapointment as market do not breakout very often. Most of the time (60%) the price will normally stay within an established range. But when it happens, anything is possible. Remember on last 24th Oct 2008 when GBP/JPY moved over 2000 pips in a single day? Check it out...

Hence, the point of using reverse psychology here is especially useful when you already have an open position, regardless of real or demo account.

The technique is pretty simple. Whether you realize or not, most of the time, our emotional response to price movements are mainly due to whether

- it is moving in our favor, or

- it is moving against us...

I'm not sure about you, but I personally wouldn't care what happens in the market when I do not have any open position floating around.

So the key here, regardless of whether you are in profit or loss, apart from all the technical tools that you may have, you must stand back, looking at the plain candlesticks on your other demo accounts, and be franked with what you see is happening like a third party to the trading world.

- Is your Profit Limit realistic?

- Will the price go there?

- Is your Stop Loss too far or too close?

- From the current behavior, will it ever touch your stop loss?

- Are you going to leave things to chances?

- If I were the crowd (I am indeed), what would I do?

- Am I with them or clearly against them?

- Where are the pivot, supports, resistances and key fibonacci levels?

You need to ask all these to yourself and be franked with your answers. When most of the answers are seems going against your open position, the best is to close it and come back later. But if the answers are with you, you should take a chance by holding on to the position. Breaking even your stop loss would be the safest options to any winning positions that you intend to ride.

To me or any trader, we enter a trade because we believe we can make money. But then, when a position is seems wrong and going against us at fast rate, it definitely tells us a message that we shouldn't stay around.

But do not panic unnecessarily. Stay cool and realistic. Just reassess the market and make a a wise decision.

Sticking to your system mechanically and rigidly could be good. But the way I see it, you need to be flexible from times to times, not bending the rules especially when we talk about profit taking. The reason is there are just too many instances when it is less then 10 pips to your TP and the market reverse, as if it knows that your TP is there. So, say your TP is 100 and it is already 92 in profits and seems going no further, I would advise you to take it and stay out for a while.

It feels much better taking the +92 pips and later see the price jumps to +150 pips in your way (oh no! I should have stayed) rather than seeing it coming back to +20 pips or minus against you (sh**! I should have take it when I had the chance).

I've done it before and I feel more regret about not taking it rather than seeing it go beyond my profit limit levels.

Well, it is up to you actually. If you feel confident that the trade is in your favor, by all means do what you believe is correct. But don't forget that you can never make all your money in one trade, so there is no point on holding a winning or losing position too long. Just get out and come back, simple rules that always work.

The way I look at it is pretty simple. Regardless of what techniques that you are using, as long as you make money consistently, you are good. I don't believe Mr Soros is playing by the rules all the time... ;)

Ok then. Good luck in your trading this week...

MY TRADING STRATEGY... NO 6 : 1-2-4 ATTACKING METHOD

This is a fight & recovery mode that shall be used accordingly to your comfort level and risk appetite. The best way to make money and survive are always to play small and aim small, but consistently. Frankly speaking, my risk reward ratio is always 1 : 1 in which if I risk 50 dollars, my take profit target is also 50 dollars, but of course with some flexibility in which the ultimate aim is NOT TO LOSE your money.

So at times when I see (not feel) the trade is going nowhere with even 1 pip at profit, I would definitely close it and come back later. Ok fine...

In this money management strategy, as stated above, you always open the first position small relative to your account. My suggestion is always 1 - 2 - 4 increasingly relative to your initial account value.

So, let me give you an example. Considering I have a mini account with USD1000 as my equity, I will always start my first position with 0.10 lot (1 dollar per pip) with 50 pips or USD50 as my risk, which is 5% from my account level. Well, this is the smallest I can open with a mini, unless it is a micro account. I can also make it 3% (as advised by most trading gurus) by risking only 30 pips in each trade. It's up to you anyway...

With this kind of approach, normally I will stick to it and widen my position accordingly as my equity size increase, depending on my risk appetite and market conditions.

The reason behind this strategy is always to double your next position comfortably without taking uncalculated risk whenever you encounter your first loss with the initial position.

So say for example you are down by 50 dollars, with my your first trade, just take the loss and stay out for a while. Careful not to revenge trade immediatley as this is one of your silent enemy that you should handle seriously. Remember this --- REVENGE KILLS... just like the road accident mantra that told you SPEED KILLS... it's almost identical.

So, after settling down and wait for the next setup, you should be able to place your trade with double size (i.e 0.20) and profit target of 25 minimums in order to break even with your initial loss plus some potential profits, subjective to your own market evaluation. Remember, you should always trade with a clear mind with clear objective in hand. As long as you are aware of the potential risk that you are facing, you should be ok.

What if this position is lost as well? Now you are down with 50 dollars + 100 dollars (50 pips x USD2), leaving you with USD850 in your account.

Frankly speaking, if you have 2 loss in a row, you should already stop for the day, or perhaps you need to review back your system. But, as most traders knew that this is rather easy said than done, personally I will give myself another bullet with 0.40 position.

Considering this as your last ammo, you should wait.... wait.... and wait... for a good setup to appear. The best is NOT TO CHASE the market and stay away for a while. Take this as do or die situation. Remember, instead of the 1:1 RR ratio, this time we will use the 1:2 RR ratio so you have no choice but to get this right. (Stop Loss 25 pips and TP @ 50 pips)

Get the idea? With 50 pips x 4 dollars per pip, you could get USD200 back, covering your 150 loss plus 50 dollars profit. But if still you get this one wrong, you will be down by another 100 that bring to a total loss of 250 dollars, or 25% of your account. Divide this by 3, you are actually risking 8.3% in average fo your each trade. Yeah sounds big I suppose but that's what I do with my tiny account.

Come on guys... whether you like it or not, trading is indeed a game. You have no choice but to get it right at least 6 out 10 in order to win this game consistently. No matter how good your money management is, you still have to find a system that works well for you or otherwise you will always be the 90% mass crowd who lose money all the time.

This is my strategy and it serves me well. If you are comfortable with it, use it by all means. But if not, please do not blame me as I am not charging any fee on sharing this particular method that I am using.

There are 3 reasons behind this strategy:

1. Regardless of how big your account is, if you start big and lose, it is very hard to come back using the same or smaller size position. You will tend to kamikaze your account sooner than you realize. This is a BIG NO NO...

2. Start small position relative to your account so that you will be less pressured, relax and compose in making a good trading decision, making profit slowly but consistently with clear objectives.

3. You will trade with razor sharp accuracy (rather than blindly) as you know you can't afford to make 3 bad trades in a row.

Trust me, you got to treat this as a serious business and trade with clear objectives in mind (i.e what is your daily profit target & daily threshold limit or maximum loss). If you do this consistently, chances are better for you to take the money out of the market consistently, instead of you giving your hard-earned cash to the market...

All the best...

NEXT : My Ways to Emphatize the Market... Using Reverse Psychology

MY TRADING STRATEGY... NO 5 : KEEP YOUR DEMO ACCOUNT ALIVE

Ok... this is one of the safest and simplest technique that I always use.

Demo account is a demo account with virtual money. Live account is a real account with real money. Don't get confuse.

The strategy here that I would like to share is to make your demo account as your front liners or human shields in the trading battle.

Normally in my day to day trading, especially prior to London Open, I seldom have a clear idea on what the market momentum is for today, though sometimes the trend is clear. If you don't open any position, you can hardly appreciate any of the movement that the market make as it is not precisely reflected in your view.

So, the trick here is more on safety and I know some would disagree with me but hey, it works very well for me as you must remember that somehow trading is very much a game of psychology.

Ok. Unless you are really sure with your trade positioning, then by all means do it with your live account. But the point here, at times we couldn't resist to open a position but at the same time we are not really sure on whether to go either long or short. So how do we deal with this?

Open it in your demo account and see how it goes... simple. This is just to fulfill your trading desire that may not be profitable if you do it with your real account.

If the position (say you go long) seems giving you a message that your trading idea is good, then just duplicate the position in your live account. Otherwise, just wait and see. You will feel very much relief for not opening that position especially if it doesn't go in your favour. Yes you may miss a few pips ahead but it is worth it in order to reduce your actual risk.

The actual point here that I would like to share is most of the time, we do like to be in the market when the market is thin and slow moving. To do this with our real account is simply like gambling without really knowing on what the market will actually do today, especially prior to London open onwards.

Hence, in order to satisfy our trading hunger, the best way is to start with your demo account, especially if you have a robot that you may not trust 100% (like me). Seeing the performance of these open positions in the demo account will generally provide you with some ideas and feels on whether you should take the same position, do the reverse or simply wait. Hence rather than hoping, you will trade better with open eyes and clear thinking, by visualizing those open positions as your real positions.

Sounds like a mind game right? The fact is... it is...

It is like putting your ghosts in the market first, and come for real later... that gives you better edge over the others.

Trust me, by doing this... it saves me a lot of bucks. Especially when the planned trade did not go as I expected.

Have A Nice Weekend.

Next Topic : My 1-2-4-8 Attacking Strategy

MY TRADING STRATEGY... NO 4 : WATCH OUT THE FIBONACCI RETRACEMENT LEVELs

I must admit that Fibonacci is among the last thing that I take care about in my forex lessons, and yes, I do regret for not taking this subject seriously during the earlier stage of my trading career. But anyway...

In case you do not know what fibonacci is all about, please... I highly recommend you to visit babypips.com since deliberate explaination has been provided in detail there. Otherwise, just type fibonacci in google and I can guarantee you there are numerous free lessons on what fibonacci retracements is all about.

Ok, the trick here that you must understand is, plenty of big time speculators are watching these levels all over the world and they're probably placing either BIG buy or sell orders at these levels, so called 23.6, 38.2, 50 and of course 61.8.

Hence, these are the levels where you should expect some minor or strong resistance, especially when it approach the 50 and 61.8 levels. Don't ask me why. So say you get into a trend especially on strong retracements or reversal, you could hang on till any of these levels are approached, especially for an intraday trader.

The point that I am emphasizing here is to watch out & be extra careful at these levels. Surely during a strong bull or bear run, any walls could be broken. It's just that it is worth to pay extra attention during normal trading days as most traders inclusive the institutonal traders would do exactly the same thing. So if you take these levels for granted, I guess you are a bit handicapped.

The best thing is to stick with the 1hr time frame and take actions accordingly to the hourly price actions. A bit of discretionary trading decision would help you in making a profitable decision.

Where to locate these Fibonacci Retracement? Easy... Just look at one of the top icon in your MT4 and click the button with dotted line and small "F" letter. Try to play around with it at the 4hr, Daily, Weekly or even Monthly chart. Take a top of bottom of any price chart and drag the other end to the most prevalent or obvious top or bottom as well.

You will be amazed seeing that certain major reversals and patterns can be clearly seen happened at these fibonacci levels. Surprised?

Now you will appreciate why prices turned around at certain level, very sharply at times. Surely there are other factors as well (like double zero, or triple zero which could be coincident) but that levels are the one the majority of market participants took some major decisions to either buy or sell.

Remember, the keys here is not what you & I believe. It is what the market believe that matters. So if most market participants think and believe that the price will reverse at that level, yes, for sure it will reverse there by their buying or selling actions.

Majority would surely win and it is our job to read and analyse what the majorities are doing. That is why somehow these levels are worth to be paid extra attention.

Ok Guys... take care.

Next I would like to talk about the importance of keeping a demo account along side your real trading account...

MY TRADING STRATEGY... NO 3 : TRADING SYSTEM

Hi there...

In this post I will write about my simple and profitable strategy that I have been using for quite sometimes with great success. Of course you may heard it somewhere or you may think that this is not workable, but trust me, these are what i did everytime money pours into my trading and bank account.


Let's start.


1. First thing first, I am using a Kuasa Forex (KF) system as my main market trend analyser. I'm not selling anything here but if you're curious what it is, you can visit kuasaforex.com for further details or you may click the banner located on the right column of this blog... my apology in advance as the website is written in Malay. I have zero relation with the web owner who is a millionaire already.

2. Why KF? Simple... I love the ready made lines showing the daily pivot, resistance and supports that change accordingly after New York close. Other than that, I discovered that using its 5 minutes & 15 minutes time frames proves to be powerful enough with my scalping and mini-swinger strategy.


3. Another indicators are RSI and Stochastic that are used together with 4hrs time frame. Together with this time frame, I include in the 6 & 12 SMA as when these crosses each other, it's a good sign to enter long or short.


4. Last but not least, I am using a 10 EMA located on my daily chart. If the price is above the 10 EMA, you should consider to go long and vice versa. Simple.

Yes, that's all. I had use and tried several systems (free and bought online) but those mentioned above seems the one that I am comfortable with.

Surely it's not 100% but it's fair enough for me to consider whether I should take that particular trade or otherwise. The best time to trade with a system is when there is no major news release, when price actions are purely base on market's technical movement. News hours should be traded with cautions or perhaps to be avoided at once unless you love the actions.

Adios.

MY TRADING STRATEGY... NO 2 : MONEY MANAGEMENT SYSTEM

Well, as promised, I am going to share with my kind readers one of my most effective money management system that I have been using successfully and robustly whenever I am having a good week or months with scalping techniques. There are a few sets that I invent on my own but this is among the most effective one, proven with good profit records.

It is up to you whether to use it or not as you have to remember that trading is somehow personal. Something that works for me may not necessarily works for you and vice versa.

Anyway, let's begin.

As most trading and forex gurus would tell you, money management is vital in order to ensure your long term survival in this market. But sad to say, most of these gurus hardly shared their specific strategy but instead always tell you not to risk more than... you name it... 1%, 3%, 5% etc of your trading capital.

It is indeed true. But when I first put my feet into this forex world, I am somehow confused with the statement of this percentage of your account until I later discovered it on my own from the pain of losing my account several times. Luckily the amount wasn't that big since otherwise I wouldn't be around writing this post.

Ok, let's cut the crap and straight to the points. But before that, let me share with you one of my best live account experience that you may not want to repeat.

1. From my observation and real account experience (I have several accounts with different brokers), it is always best to start with a micro or mini account with deposits not more than USD1000. My best optimum start is always between USD500 to USD1000 only. You may ask why... the reason is...

2. If you don't have a proper money strategy on how should you approach the market with the margin that you have as your buying/selling power, I tell you... anybody can even destroy a 1 million dollar account in one single day of trading. So, the point is...

3. There is no point of putting, say USD5000 and later lose USD4500 (if not all) and have to start back with that 500, cause it's very painful and tedious. Why not put in USD500 and turn it into a USD5000 instead. In case all your trades go bad, you got only 500 to lose instead of 5000. This is said base on my real experience. It is do-able cause I have done it before and many many times. Believe it or not, I had once turn USD16 into USD7100 in 3 weeks in March this year with my real account. I swear this is NO BS, I can show the record if anyone ever demand. How did I do it... well...

4. You got to come up with a specific plan for sure base on your equity size. When my margin was USD16 (from USD500 deposit down to USD16 actually), I could only play with micro lots with a USD2.50 as margin (for 1:400 leverage with FXCM Micro) and USD13.50 as free margin (or 135 pips as max stop loss). Of course, I feel like nothing to lose since I lost almost all already, but... it took patience since even if you got 100 pips, it only brought in 10 dollars. But when you got it right all the time, as happened to me (perhaps got lucky or I was a little bit clever in reading the market), I brought that 16 to 500 in the 1st week (awesome), and later turned that 500 to 1800 in the 2nd week (superb), and 1800 to 7100 in the 3rd week (wow!).

5. Yes, there were times that I over leveraged my account with even 25% risk, but what the heck, when you got it right, it doesn't matter. But...

6. I later discovered that this is a very bad habit that would not survive me in the long run. Because you know why, in the 4th week, I destroyed that USD7100 account... you may think that I am kidding, but that is the most expensive lesson that I ever learned and surely, I remember everything by heart. (I do not wish to have any other expensive lessons after this but I guess this is just part of the game. I heard others even lost millions, just couldn't imagine how they took such losses)

7. Please do not repeat the same mistake that I did... The main culprit was : GREED !

8. It was a few days before the closing of the month and I was still in the running for the 25k Trading Competition by FXCM Micro. Without I realized, I was so obsessed to become the champion, I try to double up that 7100 within that 3 remaining days and I became very very careless, unlike when I was trading with USD1800 and below.

9. I forgot all my plans, I forgot to protect my profit, I forgot almost everything. I went against GU and I had 3 std lots buying position when the GU fell down to 1.4111. I was trying to averaging my positions but I was meant to doom in that 4th week.

10. By the closing of the month, I was back to USD500 with my original deposit. The actual flow of my equity level in March was 500 - 710 - 16 - 500 - 1800 - 7100 - 500. See?

11. If you don't plan your money properly, anything can happen to your account.

So the Money Management Strategy that I am using right now is as follows:

A. I always deposit (between 500 to 1000) and withdraw on monthly basis (still a part time trader). At the moment, I do not hold a big account intentionally since I'd rather love the challenge of turning a tiny account into a mini-monster. For example last month, I managed to turned a USD1000 account into USD6000 and withdraw 5k by the end of the month. That was a total of 500% profit for the month. Profit varies accordingly to market condition but I'm doing quite well at the moment (but still striving to improve my skills and weaknesses).

B. Say I have 500 with my FXDD mini account (1:200 Leverage), my trading plan is like this.
- Initial position (1st time entry) is always at 0.1 lot with USD1 per pip.
- My Stopp Loss is fixed at maximum 50 pips. I don't set it at 100 anymore.
- I am very much particular with my entry timing. Accuracy is important so trade only when you believe the market setup is in your favor.
- My target is to score 100 pips = 100 dollars per day within the same week.
- Doing it consistently enough, it is actually an easy target to double this 500 within the 1st week. (USD100 x 5 days)
- Yes you are right, I am actually risking 10% of my account. I couldn't risk smaller with this kind of margin.
- In simple mathematics after considering your position's margin, you can't have a losing trade more than 3x in a row or you're out. Simple.
- This strategy is pretty robust but effective and best of all... you risk small...
- Making 10 trades with 10 pips profit per trade is something easy to get base on my experience.
- This is especially true during major news release.
- All you have to do is to scalp carefully and 100 pips per day base on 10 pips x 10 trades is pretty easy. Try it... If you can't make it 10 pips, try 5 pips x 20 trades ect etc. It can be done.
- Just be extra careful with your entry timing and analysis. When you feel wrong, be objective, get out and stay out for a while. Come back after 1 hour or so... minimum. Remember if you don't trade, for sure you won't lose your money.
- If market breakouts, take more than 10 pips as you shouldn't be too rigid with your system.
- I always enter at the 1 hr interval, if I got it right and see a major reversal or continuation of the price movement, I normally hold it up to 30 or 45 minutes, before the next hour approach.
- Ok? Got it?... Next...

C. So, what if your trades goes wrong...
- You have another bullet... by opening a double 0.2 position with 20% to risk this time, taking 50 pips SL into consideration.
- Say you are going long on GU and it doesn't seem going to that simple 10 pips target.
- When it stays within less than -20 pips range, you should hold as this is a normal swing. Do not panic.
- But if it breaks that -20 pips range, you should look back at the volatility and immediate consideration on taking a short position instead, before your 50 pips SL is hit.
- This is solely base on your jurisdiction and perhaps one of the hardest part to master.
- DO NOT JUMP. Analyse first as you can only do this ONCE.
- I did this numerous times with success statistically so I believe this is a pretty good method. For sure it's not 100% but it works well for me.
- So say you close that -20 pips position with USD20 loss and open a reverse position with 0.2 lot, all you need to take is 10 pips to cover your recent loss or perhaps take the extra miles by going for 20 pips or more instead.
- In this way, you are not going against the market and perhaps you could even ride the position as long as you want.
- If the market fools you again this time, close your position and stay out for the day.
- Who says trading is easy? ;)

In conclusion, I would rather emphasize the importance to start with a small position and increase it accordingly once you feel the market is moving in your favor. In this way, in case you're wrong, you lose small and you can immediately double up your position size comfortably in order to recover.

Your equity is like your ammo and you should carefully use your ammos or bullets according to your enemy size. You sure don't want to shoot a monkey with a bazooka right? So... save the best for last...

In case you need further explaination, you can always email me as indicated on the right side of this blog.

Have A Nice Weekend...

p/s: Pretty long post this time... sorry this is the shortest I could write about this subject...

MY TRADING STRATEGY... NO 1 : PSYCHOLOGY PREPARATION

After months of putting and sharing generic tips that I apply in this blog, I plan to be more specific in sharing my methods starting this month onwards. The intention as usual, apart from sharing, is to ensure that I will remember every single thing that I do so that it will become a second nature while executing my trades.

Reason is, just like driving a car, I strongly believe that something that you do repetitive enough in a systematic way will be stored permanently under your subconcious mind, and hence will indirectly turn you into a discipline trader who trades base on informed and analytical decision, not gamble.

As a start, perhaps the best topic to start with is Psychology preparation prior to putting in any trade. This is what I do daily:

1. I always ask this first: Am I fit to trade today? Yes or No. If the answer is YES, then...

2. What time can I trade today and for how many hours? Normally I trade the US Session onwards until London close, that is 8pm till 12am local time here, around 4 to 5 hours daily since I am mainly a scalper.

3. Later I decide upfront on how much am I willing to risk in case all my trades go bad, and where to locate my stop loss on each pair that I plan to trade. Normally the best place is always around the pivot, resistance or support area. Another way is to place it on the previous high or low of the daily and hourly price movement.

4. I check the upcoming news for the day from FX Street. Trust me, this is a MUST. You don't want to be caught up in a sudden jerks of price due to your unawareness of the news release. At the same time, always check the bloomberg breaking news from time to time as there are news that are not in the calendar that could cause a major breakouts or spike in the price movement. Easy said, just watch out on what's going on around the world.

5. I decide on which pair to concentrate today. Normally I only trade EUR/USD, GBP/USD and USD/JPY. I do not plan to trade any other pair at the moment yet. Later I will concentrate on a pair that has the highest possibility to move according to my analysis.

6. I read various analysis' from Action Forex, FX Street as well as the one provided by FXCM (Trade Signals, Technical Analyser and SSI). Just don't read too much since you may get mix up in generating your own trading idea. I read their analysis just to get the general idea since later I will trade logically using my own analysis and believe.

7. Final preparation; no matter what I did or read above, I look at the current price movement and analyse the strength base on the daily range. This is vital too since though you may clearly seen that the trend is bullish (for example), it is worth to wait and be a little bit more patience in getting in at the best possible price. The best way to do this is to enter at the 1 hour interval since I realize that major continuation or reversal always happen during the hourly interval. The way to do this will be shared further in my upcoming posts.

8. After doing all the above and feel satisfied with my own analysis, all I do next is just wait and do nothing until the market calls me to come in. Sometimes, when I am 50/50, I just place my trades on my demo account and see how it goes. Trust me, after doing this fx trading for some times now, I develop certain feel for the market in which though inexplicable, you just know whether your open position is good or otherwise. One more thing, I just realize that trading for the sake of trading will not do any good to my account so the ability to hold oneself from trading proves to be more important than anything else.

Well, I guess that's all for now. One more thing, I just spent almost USD500 shopping some of the so-called top notch EA's or robots available in the market (to name a few - FapTurbo, EA Sharks Ultimate 5.0 & Megadroid).

I ran these robots for 3 weeks already on my various demo accounts and you know what, I am not saying they are not good, but I still prefer to trade manually since trading manually will give me maximum control and satisfaction, provided I can control myself... hehe.

Next Topic : My Own Money Management System