23. Don’t forget to take notes
Mar.25. To the right are the type of notes I jot on a sheet of paper while I’m trading forex. $667.87 is the amount of money I had in my trading account at the start of today’s trading. $6.68 is 1% of that amount. $720 is 108% of my trading account. It’s good risk management to stop trading for the day if you have increased your account 8%. $634 is 95% of the account. It’s also good risk management to stop trading for the day if you have decreased your account 5%.
All of my trades are for 1% of my account.
Trading the same forex twice in a row
As you can see as I continued marking up my trading notes, I called USDJPY twice. That is because Cash Trap declared this to be a six point trade. Note that I won when USDJPY was worth 109.107. (That means that one USD dollar will buy 109.107 Japanese yen.)
I try to have 2 one-hour forex trading sessions every Monday, Tuesday & Wednesday. Those days seem to have the least volatility. My trading times are during these 2 time frames: 9 am – noon and 6 pm – 9 pm Pacific. Those are the times because:
- That is when one market has been open for several hours and,
- Because of time zone differences, the next major forex trading market (Tokyo, London or New York) will not be open yet.
Losing a trade, part of forex
In my next notes, you will see that I lost with EURCAD. That’s part of the forex experience. Nobody wins all of the time. What you are learning from this IM Academy course is how to minimize number of losses.
Also see that my account size increased. To take proper advantage of compound interest, I must increase the amount of money invested. (Here it increased by one penny. After a few months, this could easily be $100 if I continue using a proper compound interest strategy.)
Here I won a put with EURUSD. Cash Trap said I could win at 908. I was able to open a trade at 915.
Note that the next time after this I will be able to trade $6.73. Instead of being one cent above the previous amount it is four cents. Believe me, compound interest will keep increasing that amount as you are increasing your account just about every day.
One day I won 4 trades and lost none. As a result, my brokerage account increased by 3%.
I keep learning more about minimizing my forex trading risks every day. My goal is to increase my account by 3% every trading day. I trade twice a day, 3 days a week. If I do that consistently every day for a year, that will be 156 days of trading and increasing my account by 3%.
At this point I want to say a few things about compound interest. With every trade I make, I want to trade exactly 1% of my account. If my account increases by $10 after a trade, I will invest 10 more cents in my next trade. By having a number of these trades in a day with a successful rate of 70%, I hope to increase my account by 3% for every trading day. To understand compound interest better, go to this YouTube video.
At first things do not grow very fast. Note that at the half year point I would have increased by account from $645 to $6281. However, in the next half year that will increase 10 fold to $63,000. And this is by increasing my account by only 3% each day.