Mike's journal

[babymonkey]

Hi guys,
My name is Mike, I am 30 year old programmer, married with three wonderful kids. I work on website development as a freelancer. My lifestyle affords me lots of free time at my pc, and I want to start putting that time to good use.

In the trading business I am a complete newbie, and the purpose of this journal is to create a record of my learning curve. I have been lurking around this forum for a while, and this is my first thread. I am proud to be in your august company.

Please feel free to let me know what you think of my methods, and my progress good or bad. I am an active member of several online communities, and I enjoy meeting and talking to like minded people from all over the globe.

The Plan.

Build a small amount of capital, $10,000.00, into a much larger chunk. Trade stocks in large amounts for small gains. Buy low, sell high. You know the drill.

 

[babymonkey]

Day 1- Broker search.

Setting out on my quest for a good broker, I turned naturally to the internet. After reading about all the different types of brokers, I decided that I needed to work with a direct access broker. I want to be able to buy and sell on a chart with one click. Speed of order execution and chart ordering are my main concerns.

After much research, I have decided that Interactive Brokers (IB, IBKR) is my preferred choice. They seem to have one of the largest customer bases of the direct access brokers. Though I have heard criticism of their software, I have enjoyed working with the demo of Trader Work Station (TWS).

After learning that they require a minimum of $10,000 (my whole chunk) I realized that to follow my plan, I would need to start smaller than that. I only plan on risking half of my savings at any given time. And by "risking" I mean placing it in the hands of a broker....

Another of IB's requirements is that you be an experienced trader. Their website states that you must have performed a minimum of 100 trades before applying for an account. I understand that, they want to limit themselves to professionals. No problem, I'll start out small, and make some trades to gain experience.

So grudgingly, I have opened an account at Scottrade. My initial deposit was $3,000. My first stock purchase was:
50 JPM 32.68 1:37PM DEC 2 2011

 

[babymonkey]

Day 2- My first sale.

Well the plan is in place, and I have completed my first round trip.

I sold:
50 JPM 33.00 8:24 AM DEC 5 20111

Total account balance: $3,001.96

Not much, but not bad. Still 98 trades left to go.

 

[neil]

Why don't you demo trade before risking real cash ?

 

[babymonkey]

Great suggetion neil, I guess I left out that part. I have been using IB's simulator ever since I found it. So far my simple "system" works there regularly. So I am actively training myself as much as possible.

But I feel that reading in books and online can only get me so far. I thought that I knew it all, had read enough and tested my strategies sufficiently to proceed with cash. I'm trying to be super cautious, but I'm also wanting to build up my experience and resolve. Plus there is the 100 trades requirement to be with my broker of choice.

Just on a side note, real life just taught me how inexperienced I am. I only just now learned about freeriding when the scottrade system warned me. More proof that IB's policies are good, I might have gone in there and seriously broke the law.

Anyway, thank you for the comment and the advice.

Here is a video of my demo trading, I seem to get these results consistently.

 

[Splitlink]

Day 2- My first sale.

Well the plan is in place, and I have completed my first round trip.

I sold:
50 JPM 33.00 8:24 AM DEC 5 20111

Total account balance: $3,001.96

Not much, but not bad. Still 98 trades left to go.

A profit is a profit, without doubt.

Where was your stop loss and how much would you have lost if it had been triggered? Where you put it can be tricky and each instrument that you trade is different. Too close will result in many losses but what you win must be calculated against your losses over a certain number of trades. Don't be too generous with the the amount that you can lose. especially if you have had a good winning streak and feel confident. The amount that you lose is the only part of the trade that you can calculate for certain.

Plenty of people on here know more than I do, for sure. I'm trying to keep you solvent until they come along.

Good luck.

 

[babymonkey]

Thank you Splitlink! I appreciate your wisdom.

My stop loss was nonexistent. O_O I know that is pretty scary and newb-like. One of my concepts with this is that a stop loss only guarantees one thing: a loss. Despite bad news recently, I felt very confident due to JPM's past performance that I would be happy to hold the stock had things gone awry.

Technical analysis is the basis of my day trading strategy, but I am also using a good dose of the fundamentals. Several individuals in my family have done well just blindly holding on to things over the years. So I am following their advice about which companies to trade. I am not going to sell something low just to get out. I won't trade it at all if I don't believe it is undervalued in the first place.

I say these things so confidently, and like I know what I am talking about. But I am in this for either short or long term gains. And I am very patient. Now I will wait as you guys run a bus over me with examples of this not working...

 

[babymonkey]

Here is a question for all of you reading this journal:

Why does this work? (See attached)

This seems way too good to be true, but I achieve these results daily with IB's simulator. You can see where I entered and exited, and my current Position of 0...and the P&L. What am I not understanding? Is this possible IRL?

 

[Splitlink]

I don't think that many people are going to understand the video.

I'm going to refer you to November 30th and the instrument was Footsie. Many traders were taken aback by the spike that occurred-- 90 points within 5 mins. I lost 12 points because I had a stop loss on the trade but if anybody was open without a stoploss, then I am very sorry for him, but it was his own fault.

One of my concepts with this is that a stop loss only guarantees one thing: a loss. Despite bad news recently, I felt very confident due to JPM's past performance that I would be happy to hold the stock had things gone awry.

It does not guarantee a loss. It guarantees the most you can lose. Nothing is certain with a trade, otherwise no one would use a stoploss, at all.

I would like to know how much you were prepared to lose on that trade.

 

[babymonkey]

Don't get me wrong, I think that everyone should use a stop loss if they are buying stock that they don't want to get stuck with. My personal strategy is to not sell anything at a loss. But that only works if you are patient and willing to wait. Trading for profit is definitely what I want, and I am only looking for stocks that will afford me an opportunity for a quick trade.

But if the market turns the other way, I'm prepared to sit things out. Probably sounds dumb but it is my simple strategy. So to answer your question, I was prepared to lose about $1600.00. The investors I know purchased JPM in the late 80's, and they are still holding it. When I see an old man with that kind of faith and track record, I follow.

But we are digressing.

 

[babymonkey]

Wow. Things can change so much in one day when you are digesting information at the rate I have been. The stock market looks very bleak to me right now. All the excitement I had built up, after playing simulators and studying charts, it all depended upon being able to trade freely.

Now that I fully understand the concept of "settled funds" I realize that to play the game I had in mind one would need to be a millionaire already. Tsk, Tsk, little drummer boy, your strategies do not work in the real world.

So today, I join the ranks of many traders that have gone before me, and start to explore the upside down crazy world that you guys call "Forex".

 

[Jerry Westerby]

Dear Babymonkey,

sorry, but, if you trade with this $10,000 you are almost certain to lose it. The best thing to do with this money is to pay for tuition for your children in order that they get offered / awarded a place in a magnificent school.

I am sorry to be blunt.

 

[babymonkey]

Jerry,

I appreciate your input. Thankfully my kids are enrolled in the best private school in my city. Not the most expensive one, but the best. They have all been there since kindergarten, and they are very close in age, so they rule the school.

Thank you for your candor. I have been practicing trading as much as possible in between my coding jobs. Currently I am practicing on forex.com and yesterday's profit was $29.00.

I am extremely cautious, and just make small moves when things look safe. I think if I can hone my discipline with fake money and establish a good track record then I will be ready to risk real money.

I am thankful that you posted this, now I have a date and time to look back on. I have been warned. If I lose the money I have no one to blame but myself. I could have quit right now.

Practice Forex DEC 6 2011 $29.00

 

[babymonkey]

Realized P & L
12/7/2011 3:59 Sell EUR/USD -100000 1.34417
12/7/2011 4:01 Buy EUR/USD 100000 1.34401
12/7/2011 4:01 Total: 16.00
12/7/2011 4:14 Sell EUR/USD -100000 1.34233
12/7/2011 4:15 Buy EUR/USD 100000 1.34225
12/7/2011 4:15 Total: 8.00
12/7/2011 4:16 Sell EUR/USD -100000 1.34255
12/7/2011 4:17 Buy EUR/USD 100000 1.34243
12/7/2011 4:17 Total: 12.00
12/7/2011 5:12 Sell EUR/USD -100000 1.34099
12/7/2011 5:12 Buy EUR/USD 100000 1.34093
12/7/2011 5:12 Total: 6.00
12/7/2011 6:33 Buy EUR/USD 100000 1.33847
12/7/2011 6:35 Sell EUR/USD -100000 1.33818
12/7/2011 6:35 Total: -29.00
12/7/2011 6:35 Sell EUR/USD -100000 1.33799
12/7/2011 6:39 Sell EUR/USD -100000 1.33811
12/7/2011 6:40 Sell EUR/USD -100000 1.33837
12/7/2011 6:49 Buy EUR/USD 300000 1.33803
12/7/2011 6:49 Total: 38.00
12/7/2011 7:30 Sell EUR/USD -100000 1.33813
12/7/2011 7:30 Sell EUR/USD -100000 1.33847
12/7/2011 7:44 Buy EUR/USD 200000 1.33801
12/7/2011 7:44 Total: 58.00
12/7/2011 8:38 Sell EUR/USD -100000 1.33882
12/7/2011 8:38 Buy EUR/USD 100000 1.33832
12/7/2011 8:38 Total: 50.00
12/7/2011 8:46 Buy EUR/USD 100000 1.33682
12/7/2011 8:47 Sell EUR/USD -100000 1.33693
12/7/2011 8:47 Total: 11.00
12/7/2011 9:50 Sell EUR/USD -100000 1.33666
12/7/2011 9:51 Sell EUR/USD -100000 1.33707
12/7/2011 9:52 Sell EUR/USD -100000 1.33722
12/7/2011 9:53 Sell EUR/USD -100000 1.33739
12/7/2011 9:56 Buy EUR/USD 400000 1.33699
12/7/2011 9:56 Total: 38.00
12/7/2011 9:58 Sell EUR/USD -100000 1.33744
12/7/2011 9:58 Sell EUR/USD -100000 1.33777
12/7/2011 9:59 Sell EUR/USD -100000 1.33819
12/7/2011 9:59 Sell EUR/USD -100000 1.33823
12/7/2011 10:02 Buy EUR/USD 400000 1.33781
12/7/2011 10:02 Total: 39.00

FOREX PRACTICE DEC 7 2011 MORNING $247.00

I am fairly happy with my current strategy. Make small moves when you think the direction is right, always with the trend. If in general we are going down based on a study of the 5 minute chart, then place sell orders on the suspected peaks of the 1 minute chart. If the market goes against you follow it in 1 minute increments or as needed by placing additional sell orders. When you reach your max set a limit just under your position.

So far this strategy has done very well, just one loss today. My explanation for this loss is my inexperience with the interface otherwise known as "I hit the wrong button".

 

[babymonkey]

12/7/2011 11:04 Sell EUR/USD -100000 1.33913
12/7/2011 11:05 Buy EUR/USD 100000 1.33908
12/7/2011 11:05 Total: 5.00
12/7/2011 11:05 Sell EUR/USD -100000 1.33924
12/7/2011 11:06 Buy EUR/USD 100000 1.33915
12/7/2011 11:06 Total: 9.00
12/7/2011 11:05 Sell EUR/USD -100000 1.33932
12/7/2011 11:06 Buy EUR/USD 100000 1.33914
12/7/2011 11:06 Total: 18.00
12/7/2011 12:29 Sell EUR/USD -100000 1.34156
12/7/2011 12:29 Buy EUR/USD 100000 1.34125
12/7/2011 12:29 Total: 31.00
12/7/2011 12:29 Sell EUR/USD -100000 1.34147
12/7/2011 12:29 Buy EUR/USD 100000 1.34119
12/7/2011 12:29 Total: 28.00
12/7/2011 12:28 Sell EUR/JPY -100000 104.117
12/7/2011 12:31 Buy EUR/JPY 100000 104.133
12/7/2011 12:31 Total: -20.60
12/7/2011 12:28 Sell EUR/JPY -100000 104.114
12/7/2011 12:31 Buy EUR/JPY 100000 104.129
12/7/2011 12:31 Total: -19.31
12/7/2011 14:11 Buy EUR/USD 100000 1.34044
12/7/2011 14:13 Sell EUR/USD -100000 1.34045
12/7/2011 14:13 Total: 1.00
12/7/2011 14:27 Sell EUR/USD -100000 1.34099
12/7/2011 14:28 Buy EUR/USD 100000 1.34097
12/7/2011 14:28 Total: 2.00
12/7/2011 14:31 Sell EUR/USD -100000 1.34092
12/7/2011 14:31 Buy EUR/USD 100000 1.34085
12/7/2011 14:31 Total: 7.00
12/7/2011 14:34 Sell EUR/USD -100000 1.34056
12/7/2011 14:40 Buy EUR/USD 100000 1.34064
12/7/2011 14:40 Total: -8.00
12/7/2011 14:35 Sell EUR/USD -100000 1.34059
12/7/2011 14:40 Buy EUR/USD 100000 1.34064
12/7/2011 14:40 Total: -5.00
12/7/2011 14:35 Sell EUR/USD -100000 1.34077
12/7/2011 14:40 Buy EUR/USD 100000 1.34064
12/7/2011 14:40 Total: 13.00
12/7/2011 14:37 Sell EUR/USD -100000 1.34089
12/7/2011 14:41 Buy EUR/USD 100000 1.34057
12/7/2011 14:41 Total: 32.00
12/7/2011 14:39 Sell EUR/USD -100000 1.34096
12/7/2011 14:41 Buy EUR/USD 100000 1.34054
12/7/2011 14:41 Total: 42.00

More trades from this afternoon and mid-morning. I made the funniest newbie mistake around 12:30 pm. I got all organized and switched my layout around to better suit my needs. Well I reordered my Buy Sell instant order boxes. Then when my girlfriend was downstairs visiting with me, I saw this massive spike and went against it, trying to show off my counter move style.

Except I was using the wrong box. I was buying EUR/JPY while looking at the EUR/USD chart.....come on, you know you've done it.

Besides my glaring mistake, everything went pretty well. The couple lossess near the bottom were due to some laddering I had to perform to maintain my position. Things got really tight for a moment there. I was glad to have the $50,000.00 account for leverage.

FOREX PRACTICE DEC 7 2011 AFTERNOON $389.00

 

[babymonkey]

12/8/2011 8:28 91649941 Sell EUR/USD -100000 1.34225
12/8/2011 8:28 91649957 Buy EUR/USD 100000 1.34217
12/8/2011 8:28 Total: 8.00
12/8/2011 8:28 91649966 Sell EUR/USD -100000 1.34205
12/8/2011 8:31 91650189 Buy EUR/USD 100000 1.34228
12/8/2011 8:31 Total: -23.00
12/8/2011 8:30 91650073 Sell EUR/USD -100000 1.34238
12/8/2011 8:31 91650192 Buy EUR/USD 100000 1.34227
12/8/2011 8:31 Total: 11.00
12/8/2011 8:30 91650097 Sell EUR/USD -100000 1.34254
12/8/2011 8:31 91650204 Buy EUR/USD 100000 1.34251
12/8/2011 8:31 Total: 3.00
12/8/2011 8:32 91650336 Buy EUR/USD 100000 1.34168
12/8/2011 8:32 91650365 Sell EUR/USD -100000 1.34212
12/8/2011 8:32 Total: 44.00
12/8/2011 8:32 91650727 Sell EUR/USD -100000 1.34447
12/8/2011 8:33 91650766 Buy EUR/USD 100000 1.34379
12/8/2011 8:33 Total: 68.00
12/8/2011 8:33 91650913 Sell EUR/USD -100000 1.34424
12/8/2011 8:34 91651132 Buy EUR/USD 100000 1.34438
12/8/2011 8:34 Total: -14.00
12/8/2011 8:34 91651211 Sell EUR/USD -100000 1.34424
12/8/2011 8:34 91651234 Buy EUR/USD 100000 1.34402
12/8/2011 8:34 Total: 22.00
12/8/2011 10:17 91662288 Sell EUR/USD -100000 1.33246
12/8/2011 10:18 91662314 Buy EUR/USD 100000 1.33272
12/8/2011 10:18 Total: -26.00
12/8/2011 10:19 91662361 Buy EUR/USD 100000 1.33253
12/8/2011 10:19 91662375 Buy EUR/USD 100000 1.33236
12/8/2011 10:19 91662424 Buy EUR/USD 100000 1.33183
12/8/2011 10:20 91662493 Buy EUR/USD 100000 1.3318
12/8/2011 10:20 91662534 Buy EUR/USD 100000 1.3314
12/8/2011 10:21 91662623 Buy EUR/USD 100000 1.33107
12/8/2011 10:21 91662636 Buy EUR/USD 100000 1.33097
12/8/2011 10:36 91663761 Sell EUR/USD -700000 1.33185
12/8/2011 10:36 Total: 99.00
12/8/2011 12:02 91668937 Sell EUR/USD -100000 1.33251
12/8/2011 12:03 91669012 Buy EUR/USD 100000 1.33252
12/8/2011 12:03 Total: -1.00
12/8/2011 12:03 91668992 Sell EUR/USD -100000 1.33273
12/8/2011 12:03 91669016 Buy EUR/USD 100000 1.33242
12/8/2011 12:03 Total: 31.00
12/8/2011 14:07 91673918 Sell EUR/USD -100000 1.33312
12/8/2011 14:07 91673934 Sell EUR/USD -100000 1.33339
12/8/2011 14:08 91674025 Sell EUR/USD -100000 1.33343
12/8/2011 14:09 91674034 Sell EUR/USD -100000 1.33344
12/8/2011 14:10 91674088 Sell EUR/USD -100000 1.33354
12/8/2011 14:37 91675184 Buy EUR/USD 500000 1.33358
12/8/2011 14:37 Total: -98.00
12/8/2011 14:12 91674176 Sell EUR/USD -100000 1.33387
12/8/2011 14:37 91675202 Buy EUR/USD 100000 1.33354
12/8/2011 14:37 Total: 33.00
12/8/2011 14:12 91674182 Sell EUR/USD -100000 1.33383
12/8/2011 14:37 91675206 Buy EUR/USD 100000 1.33353
12/8/2011 14:37 Total: 30.00
12/8/2011 14:13 91674206 Sell EUR/USD -100000 1.33399
12/8/2011 14:38 91675208 Buy EUR/USD 100000 1.33353
12/8/2011 14:38 Total: 46.00
12/8/2011 14:14 91674240 Sell EUR/USD -100000 1.33394
12/8/2011 14:38 91675210 Buy EUR/USD 100000 1.33353
12/8/2011 14:38 Total: 41.00
12/8/2011 14:17 91674392 Sell EUR/USD -100000 1.33404
12/8/2011 14:38 91675223 Buy EUR/USD 100000 1.33354
12/8/2011 14:38 Total: 50.00
12/8/2011 15:49 91678377 Buy EUR/USD 100000 1.33388
12/8/2011 15:49 91678419 Sell EUR/USD -100000 1.33392
12/8/2011 15:49 Total: 4.00
12/8/2011 15:50 91678454 Buy EUR/USD 100000 1.33386
12/8/2011 15:59 91678870 Sell EUR/USD -100000 1.33368
12/8/2011 15:59 Total: -18.00
12/8/2011 15:56 91678745 Buy EUR/USD 100000 1.33334
12/8/2011 15:59 91678872 Sell EUR/USD -100000 1.33376
12/8/2011 15:59 Total: 42.00
12/8/2011 16:00 91678934 Sell EUR/USD -100000 1.33427
12/8/2011 16:14 91679439 Buy EUR/USD 100000 1.33459
12/8/2011 16:14 Total: -32.00
12/8/2011 16:04 91679135 Sell EUR/USD -100000 1.33496
12/8/2011 16:14 91679440 Buy EUR/USD 100000 1.33455
12/8/2011 16:14 Total: 41.00

Todays practice results. Everyday, I realize how much I have to learn, and how risky this business is. I rode my biggest wave ever, up to almost $25,000.00 in margin. My strategy is definitely not going to work with just 10 grand. Of course there are always mini accounts....

FOREX PRACTICE DEC 7 2011 AFTERNOON $361.00
Total Earnings to date: $772.00

 

[babymonkey]

I think I'm going to test out a new broker. I'm really interested in the safety of my money more than leverage or spread. I'm headed to checkout the FXCM demo.

I think I need to confine myself to practicing in amounts that i can actually afford. FXCM allows Micro Lots, and I am hoping that the demo will allow me to play with them.

 

[babymonkey]

Wow. I'm pretty excited. I like FXCM a lot. Sure they are cushioning the real market, sure their spreads are sky high, but the micro lots are extremely appealing. After feeling the stress of riding out waves at $100k, $1k feels like child's play.

This is definitely the realm of a newbie like myself. A safe little sandbox for me to play in.

 

[babymonkey]

Okay. I feel like I am on top of the world. Forex has expanded my mind to a previously unachieved height.

We may see this wonderful feeling fall flat on it's face. I present it here for the benefit of all. Yahuah will decide.

I have committed $500.00 to FXCM. I plan on trading micro lots for micro pips. We'll see. Thanks for not flaming me guys.

-Mike

 

[babymonkey]

I ahve revised my stratefy here is it: Buvy Louow. S$eel Haigh. We'll shee what happenz.