This has been a great week for most forex traders. If the Forex Challenge account hadn't gotten stopped out so early on the initial whipsaws of the week, there would have been great profits when the market straightened out and got going again.
My private accounts did great, up almost 9% in the past day and a half. I even used Dean Saunder's M5 Trading Method (Blade Strategies) to take 53 pips out of the USD/CHF this morning. It works well in a market that rambles in one direction for a couple hours.
We are very close on some of the OneNightStand trades, so it won't be unusual for us to get elected into a few of them. The dollar is taking a serious slide. You can really tell how severe it is when the previously weak currency of the last 5 years is kicking its butt, the Japanese Yen.
I got some correspondence about my last entry in the blog, showing concern about the trader's I mentioned.
Mistakes are always made in trading. The most crucial ones are about risk to your existence as a trader. If you lose your capital due to an oversight or an incomplete understanding of the risks you are taking, you shouldn't have been trading until you covered those bases. Too many traders operate their business with an understanding of what a bunch of runs on a computer say is the “worst case scenario” for their method.
The computer only knows what you tell it. It can't know what YOU don't know. There likely is a “Black Swan” tailored just for you, but you may not know it.
You must know what can happen in the markets you trade and REALLY be prepared. It only takes one small oversight that you consistently overlook for decades-- not realizing that you are juggling a time bomb. In days you can lose all you have earned in 20 years, and the next 30 that you will have to work for someone else to pay back the brokerage.
There is no going bankrupt to the market.
We'll recap tomorrow!
Joel Rensink
www.infiniteyield.com
PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent.
PPS: Please do not use AOL or Yahoo addresses. Nothing personal, but they've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!
Thursday, March 13, 2008
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