After reading more, I have discovered that to trade, I must have a system.
Duh~~! That much I know.
But the useful thing about setting up a system is this... it can be done in six simple steps.

1) Define a time frame that you want to trade in.
2) Decide on the indicators that you want to use to identify the entry points.
3) Decide on the indicators that you want to use to confirm those trends that you want to enter.
4) Define your risk appetite.
5) Define the entry point and the exit points.
6) Write it all down and stick to it!

Sounds simple right?
Well, I am starting a new month with a new demo account. No harm giving this a go.
Coupled with my experience from my last demo account, I am going to write down my trading system for this month and see if it is working.

1) Define a time frame that you want to trade in.
Well, this should be simple. Given my small trade fund account, I am going to stick to the 1 min, 5 min and 30 min time frame.

2) Decide on the indicators that you want to use to identify the entry points.
I have been pretty successful using the indicators the last time I traded.
So I will stick to it. The indicators I am using are: EMA and Bollinger Bands

3) Decide on the indicators that you want to use to confirm those trends that you want to enter.
Previously, I was using Stochastics as the confirming indicator for the trends I spotted.
There are a few other indicators that the gurus are using.
I am going to try using the following as well to see if they will be helpful to me or not: MACD and RSI

4) Define your risk appetite.
This time, I am going to ensure EVERY trade uses a Stop Loss (SL). I am setting my SL at 20 pips.

5) Define the entry point and the exit points.
My entry will be at the close of the current candle.
Too many times I have spotted a trend. And in my eagerness to enter a trade, I enter mid-way to a formation of a candle. Most of the time, my trade ended the way I wanted. There are a few times that happened such that by the end of the formation of the candle, the trade did a total reversal on me!
So this time, the entries will all be at the close of a candle to ensure my trend spotting is correct!

My Exit would be as follows:
a) All trades will have a stop loss of 20 pips.
b) As I am using a MT4 platform, I can do a Trailing Stop as well. The Trailing Stop will be 20 pips as well.

6) Write it all down and stick to it!
There it is, I have written it all down. Now, to test it out on the demo account!

I have been studying my journal entries in the trading platform that I was practicing with. And this is the analysis that I made of my own performance.

Mistake number 1

Each trade set up I made, I only put in the Take Profit (TP).
This is because every time I put in a stop loss, the fluctuations in the prices of the currency pair is triggered way before my TP could be realized.
Frustrated by that, I never really put a Stop Loss (SL) for most of the trades that I opened.

I have been fairly successful in my first three weeks of trading using this method. This is mainly because the price movement kept within a 2 dollars range.
So even when I left the trade open with no stop losses, the trade eventually closed in profit. This is because I have more than enough equity and margin to allow for the price to fluctuate without a margin call.
Managed to even double my funds within this period too! And I was so happy. I finally understand FOREX and the different entry points when they present themselves.
At least, that is what I thought!~

The above strategy I used was a double edge knife that cut me bad during the last week of May, and the one thing that caused my downfall in the demo account.
Nearing the end of the third week, the general trend was still a "Sell" when looking at the charts.
So I put in a trade to "Sell" at the beginning of Friday (of the Third week of May) and went to work. When I came back and checked on my trade, it was still 10 pips short of my TP, so I held on and left the trade open over the week end.

That, on hind sight, was a mistake. A big mistake that I am regretting right now.
During the last week of May, when the markets opened, the price of the USD/JPY did a total reversal.
The price of the USD/JPY pair went up an amazing 200++ pips to end at its peak of 97.10 ++.
That was way more than the equity or margin that I have. As such, the system did a margin call and closed my opened trades, leaving my account with a miserable USD 1.40!!

Mistake number 2

It was a painful lesson. Even though it was just a demo account, I felt defeated.
Reviewing my trade journal, I became cocky when I started making money during the first three weeks of my entry into the market. And I let that get into my head.
A "sin" that I committed. One that was constantly drummed in the various books and forums that I read not to commit. And I DID!

Remedy number 1

The other thing that I feel I need more practice in, is to recognize the different candle stick patterns better. So far, using the few indicators like Alligator and Bollinger bands, I have been able to catch the different trends to earn some good pips. But this is with constant help from referring to books when these indicator patterns present themselves.
And when they do, referring back and forth between the books and the screen, I wasted opportunities to enter the market at a better time to catch the trends.
So more practice is required on this front.

Remedy number 2

I am going to start to put a SL for EVERY trade I make.
Regardless of whether the SL is triggered on not during the fluctuations of the currency pair, I will have to accept the results. If I gain pips, it is a bonus. If I lose pips, I will have to re-evaluate my entry position to make a better trade the next time.

Remedy number 3

I am going to have to control my emotions more. Do not let a few successful trades get to my head that I forget the rules of the game.
Methods that are taught in the books and the various forums do not lie. They are tested time and time again. So stick to the rules and not let a few successful trades get to my head!

Today, I am starting another demo account. And put into practice the things I mentioned above.
I am planning to at least keep a week journal of my progress here in my blog. And hopefully, be able to make it to and active trading account before the end of the year.

Previously I wrote about looking at Forex as a earning vehicle that I could ride towards my quest to financial freedom.

So I did, and started reading up. Learning as much as I could about Forex as I could.
And I started flexing my Forex muscles by opening a demo account to try and apply what I learned.

There is just so many things one could learn about Forex. And so many more one could learn! It is never enough to read just one source.
So I got me more books and tried to be active in as many forums that discusses Forex as much as possible. Found me two pretty good forums that I learned a lot from.

All went well for the first three weeks of my "trading". Managed to double my "trading capital" by the end of 3 weeks. And I was elated. If only this was real, I would have made a handsome amount!
Then I did something wrong. Within a day, my account was wiped out as the market went the other direction so fast, I am still spinning from its effects while writing this entry.

This week, I am gonna concentrate on reviewing my trades and understand what went wrong. And hopefully, be able to recognize the problem and devise a better strategy to counter it the next time I attempt at trading again.

Will detail my analysis once I am done with it.
Wish me luck!

Well, due to the long hours spent reading and applying my knowledge to my demo trade account, I have been... heh heh... neglecting mylot recently.
Here are the few posts I managed to squeeze in since my last update:
Movie Review: Seven Pounds
Why Can't I?
How come that id10t's rich and I am not?
Another case of Call Center Stupidity!
If some one were to approach you to try and sell you something....
"I can't" ... or is it "How can I?"
Forex... EA... fapturbo
The Africa story...
Forex... Investor sentiments....

I have been busy of late.
From the huge task list at work, to the different commitments I have at home.

So, here I am, today, posting an update of what I have been up to of late.

Ever since the last paid-to program have bitten the dust, I have been looking at some more paid-to sites to add to my list to grow my online earnings.
But the earnings are taking a long time to show.

So I sat down and started thinking, is paid-to programs the way to go?
There must be other forms of income I can tap on to grow my money.
So I started reading up lots of books.

One message that kept ringing in my mind when I was going through the books is this:
If you do not have the talent, learn a skill!

Among the many books I read, Forex investing is one of them.
Eureka! A good, simple platform where I could learn a skill and make money in the comforts of my home all at the same time!
So I am on a quest to learn more about Forex.
Hopefully, in time to come, I will be able to sit in the comfort of my home, and be come financially free with this new skill I am about to master!

The few discussions I started to spur me on on my learning quest!
Forex... indicators...
Making money... Options vs Forex... which one?
Forex... Analysis...
FOREX... what is a Pip?
Forex brokers... anyone using eToro?
Will you FOREX to make extra money?