Wrong side of the trade!

Beginner Questions
1

I’ve been trading on the FXGame provided by Oanda for the past 2 weeks. I purposely lowered my account to $3,000 to mimic a live account more accurately. By doing this, I feel that if I could do well in the game then I’d perform similarly on a live account.

Anyway, starting with $3,000 I was able to earn about $1,700 in profits over the last few days, hitting $4,700 balance trading USD/JPY, EUR/JPY, GBP/JPY and even a little EUR/USD (basically, any pair with a low spread) during the tokyo/london session. However, this week I tried trading during the NY session and have lost $1,500 using the same strategy. Perhaps I just got lucky at first.

My typical positions are for 35 to 50K units per trade, and my strategy is loosely based on GMMA (using 8 EMA lines, 3,6,9,…29,41) and watching multiple timeframes for market trends. I do set “take profit” points somewhere between the support and resistance points I can see on the most recent portion of the chart. I also experimented using various “stop loss” points, and sometimes none.

Overall, my strategy seems to work fine during the tokyo and london market sessions, but during the new york trading session I can’t seem to nail a trade. All the pointers show a steady downtrend or uptrend, but when I enter a position, it almost always goes the other way!!!

Of course, I can leave the trade open and hope that it bounces back - it usually does - and I end up making money. But that style of trading doesn’t appeal to me, because it leaves too much to chance. I recently took a lost for $550 by leaving a trade open for AUD/USD.

One thing I noticed is that despite what I see on longer time frame charts (1D, 3H, 1H, 30M), the 10 and 5 second charts contradict the larger time frames. Even so, I do not want to base trades on 10 or 5 seconds because I realize that the market can fluctuate +/- 20 pips or more during a busy trade session.

I was hoping that someone with a bit more experience could help me figure out a better way to read trends so I can avoid jumping in on the wrong side of the trade.

Ideally, what I would like to accomplish, is to be able to jump in and make 10-15 pips per trade reliably. I don’t need to go for 100+ pip rides and I don’t want my trades to stay open much more than 20-30 mins.

2

I also did the demo account with Oanda but the “real” factor was missing. I then opened a real account with just $77 to see the response and to get a feel for it. Although this is money that I’m willing to loose I still get emotional. Its the biggest factor missing in the demo trades. Also the eagerness to get back the losses. Taking profit can also be emotional and you feel unstopable.
I made good gains then blew it all because I “knew” what was happening.

My aim now is to overcome the emotion of a loss or bad day and fight the greed for success.

3

Well, I’m not coming from a standard job background. I’ve been a business owner and manager for years and I am used to having to manage money and deal with “good times” and “slow times”. One of the things I like about the FX market is that I can approach it a lot like a business. Do I get carried away sometimes? Sure, I’d say even the best traders do - they’re only human and that’s what we do.

I agree with you on the point about greed, and trying to make back a loss too hastily. The thing is that the market has a different “feel” to it during the various trading sessions. From my recent experience, I’d say that the tokyo/london session has a good feel for me, at least for the past week.

I think I had a hard time gauging the flow of the market with the NY session going…because that is where I had my only losses for the week. Even though it is virtual, I don’t like losing…it still bothers me and I still respond the same as I would if it were a “live” account.

4

I think this is one of the most important parts of the psychology of forex trading. With a demo account, you may be a calm, cool forex trader, willing to watch your account drop $200 because you know you made a good choice and within a few hours you will be making money.

But if you treat demo trading like a game, when you switch over to live trading it will be a whole other ballgame. When your own money is on the line, you might start to get anxious, maybe you will even give in and close your trades at a loss because all of a sudden you lose all your confidence and don’t want to risk real money any more, even when you know what you are doing.

So that’s a big thing… run your demo account as if you had real money on the line, it will prepare you much better.

One thing I noticed is that despite what I see on longer time frame charts (1D, 3H, 1H, 30M), the 10 and 5 second charts contradict the larger time frames. Even so, I do not want to base trades on 10 or 5 seconds because I realize that the market can fluctuate +/- 20 pips or more during a busy trade session.

I wouldn’t look at 5-10 second charts. I wouldn’t look at anything less than 5 minutes. Even when I used 1 minute charts, it was still giving me false signals and screwing me up. Try looking at a short-term and a longer-term chart and only buying when they are both giving you the right trend. You have to find which one works best for you, but maybe use 5 minute and 1 hour charts together, 15 minutes and 4 hour, something like that.