Landfall
Landfall is imminent. So my first solo ocean crossing is soon to end and the exploration of a whole new continent lies ahead. If I have my dead reckoning right, the coast line should appear ahead in a week or so. Hopefully, I haven't drifted too far south on the crossing, as this could make me miss landfall. I could sail right past Cape Hope, the southernmost tip of the continent of Forexania and on into the Clueless Sea, where, so they say, there be dragons and all sorts of unpleasantness, like reality tv shows.
I've been studying the pilot books diligently the last few weeks and hopefully, we'll have plenty of recognizable landmarks to establish where we actually are.
I've been pretty busy the last few weeks with trading related research and planning my moves.
CMC vs IGMarkets
Attended a CMC introductory seminar. One of the participants asked them how to handle a data feed problem he had experienced with their demo. The presenter didn't seem well prepared for that question and couldn't handle it in a convincing manner. imo, this revealed the presenter as not being a trader or particularly experienced in their product. Apart from that, the usual upsell of "advanced" seminars that customers could sign up for. Couldn't see anything that wasn't already generally available for free here, and other places. But, then I suppose that it's targeted at people who aren't doing their homework.
I've been using a CMC demo account. Prior to that I was using a IG Market demo. I had signed up for a couple of other demos but, ultimately decided to focus on one tool at a time, rather than try and cover everything.
Huge plus point for CMC is that their software is stable. IGMarkets' web based tool sucks big time in the stability department. And this is not me with a flaky system. I develop software and I regularly reinstall a clean base setup. Most recently reset was immediately before trying the IGMarkets and CMC products.
IGMarkets displays the problems I have seen with other java based web clients. Crashes, incomplete loading of the applets or the configuration. There may be another explanation for an order form that allows you to enter lot size and price but refuses to let you select whether it's a buy or a sell. Reloading the page usually solved this problem, but is this the tool you want when you're trying to focus on trading? I think not. The tool should be like good design, something you don't even notice.
CMC downside for me was the klutzy order screen. IG Markets lets you set up Stop, Limit and entry all in one step. With CMC getting a stop setup requires a secondary step. Also unnice about CMC is that their system aggregates all trades for an instrument while IGM allows both an aggregated and separated view of orders for an instrument. I suppose this is a subjective thing, as in the end both views are valid. I prefer to be able to have both and preferred the IGM way. I wonder whether the klutzy CMC order form is deliberate, for some reason they want you to take 30 seconds instead of 10 seconds to setup a trade, together with the risk that you carry while your order is exposed without a stop.
The IGM product would crash many times a day. I noticed that the stability of the software improved once I was familiar with how to use it. But it never improved to the point that I had confidence it would not crash or misbehave. Did someone test this program? Because it really doesn't look like it was tested when it runs here.
I've decided to go with CMC only because of the lack of stability of the IGMarkets product. Long term I think I will end up elsewhere, but CMC looks good for now.
IMA
I also had the chance to look in at the IMA in Düsseldorf a couple of weeks ago. Nice to see everybody under the same roof. Hectic, but ultimately a waste of time for me at this stage. The companies that I wanted to see weren't there. Amazing how many people want to help you make money.
I was interested in the Vectortrade product presentation. However there's a lot of propietary detail that is hidden from view, which is understandable, but also begs a couple of questions. They had some really neat software features that I liked. Ultimately however, I don't think I ready for something like this yet, maybe in a year or two...
Initial thoughts on FOREX trading
I've decided to take the plunge. I'm setting up a small account. If trading play money is light years removed from the real thing I'll be wasting my time with a demo account. I need to see how I trade with real money on the line.
My initial plan is to start with 1000€ and keep it. Simple objective.
Trading will be forex, initially 1 10k lot in EURJPY, the smallest lot size that CMC handles. This works out to about 0.62€ per pip. Given the small position size, I have chosen an R of 3%. This is larger than the 1% it should be, but I have been using this with reasonable success with the demo account, and I would like to be able to make a direct comparison between live and demo trading. Once I can compare, I may reduce it. I will not increase it.
Trading will initially be based on the 1 hour tick. This may change, as I will be experimenting with longer and shorter tick settings.
What trading style I have at the moment is something between day trading and swing trading, shortest duration could be an hour or two, the longest 2 days, possibly even longer.
Entry Signal :
Setup consists of a local peak, a retrenchment and then a peak that breaks through the previous level.
Entry:
Discretionary decision - this is then determined by how well the trend is defined. This is where I expect to learn the most trading with real money. The manual backtesting I've done is suspect because, no matter how careful I am, there is always the possibility of unconcious bias because you may have had a glimpse of the whole chart. Also, it's just not the real thing, is it.
Stop:
30 pips away from the entry. This assumes that the retrenchment was not a huge one that would have blown the stop. A huge retrenchment (~20+ pips) cancels the signal.
Exit:
Exit is determined by a similar pattern. Alternatively, If a sufficient gain is achieved in the run, we'll be happy. Sufficient will be directly related to losses accumulated.
Target:
There is no pip target at the moment. I want to break even or have a small profit.
If things go well, I will build up to 3 active positions, which should tie up about a third of the account. Once
Realistically - this strategy allows 50 consecutive bad trades before funds run out. If I'm still trading after a 100 trades I will consider this exercise to have been worthwhile. If I can reach 400 trades I will consider myself to have done extremely well.
Comments welcome...
