Featured BabyPips.com Forum Traders: September's Picks!

This September we’re launching our first ever newsletter! (Forum members automatically get it but if you want to see it again, check this link out: A Newsletter from BabyPips.com!)

We have this little section there called Trader Q&A Corner and of course, it is where we ask handpicked traders from our communities, questions that would help not only newbies but all traders alike. It’s a nice way to see how other traders really think!

This month we are pleased to present [B]Julie [/B](Sweet Pip), [B]Magnus[/B] (o990l6mh) and [B]Clint[/B]! Check out their well thought out answers!

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Magnus a.k.a o990l6mh

1. How long have you been trading and how did you get into forex trading?

My first contact ever with forex was, I think, back in 2006. At the time I felt left out since many of my friends played online poker and I simply couldn’t see the fun in it. During some aimless web surfing I stumbled across some trading platform and for some reason or other I registered for a demo account. I think it was MBTrading but I’m not sure and it doesn’t matter.

I had NO idea what I was doing. Literally, I remember I had no charts up, just the quotes and I sat there for maybe 10-15 minutes and just punted wildly at the buy and sell buttons. For a few minutes it worked but then price started ticking against my positions and the demo account kept shrinking. No fun, so I quit and continued surfing around.

That was my first ever contact with forex trading.

Two years later, in early 2008, I came into contact with forex trading for real. I had been looking at different ways to make my money work for me instead of just sitting in a bank account. I got close to entering the stock market but then I came across some retail forex websites and I started reading more and more. I was very attracted by the concept of leverage allowing a small retail trader to take positions that were anywhere from 10-200 times larger than one’s account size. Mind that this was before I understood anything about risk management and position sizing. I was, to say the least, very green in the spring of 2008.

In the fall of 2008 I started demo trading and since then I just never really quit. In May 2009 I went live.

2-3. What’s your most memorable trading experience? Was there ever a time when you suffered a huge drawdown and thought of giving up? How did you get through that phase?

My most memorable trading experience is without doubt one I never want to experience again. It’s difficult to describe a feeling and even harder as English isn’t my native language but I’ll try:

It happened shortly after I had loaded up my live account a bit for the first time and I thought I was invincible. Naturally I decided to scalp with huge positions… A few times it worked, sort of - I managed to collect a few measly pips or I got out at break even after experiencing nerve-wracking drawdowns. Of course that alone should have been enough to show me the folly of my behavior but no! Another trade and suddenly the drawdown just kept getting bigger and bigger and soon my stop loss would get hit for a big loss. I couldn’t accept that of course so I did the only wrong thing and removed my stop loss. The trade then merrily proceeded going against me. I ended up losing something like 60% of my account in that one trade.
While I was in the trade my heart rate and emotions were probably much the same as that of a mouse backed into a corner by a big cat. Helplessness, knowledge that I should cut my losses but freezing and just watching it happen, a real feeling of being sick to the stomach, I felt a lot of things.

Afterwards I just felt one thing - such disgust with myself that it’s hard to describe really. I had long debates with myself on how it could be possible for me to have been so stupid and to do the very thing that I had previously sneered at when others admitted to having been through that particular emotional hell.

Believe it or not but that was not just the most humbling experience of my forex trading to date, it was actually one of the most humbling experiences of my life. It’s an experience I never ever want to relive, but it’s also one I would not trade away for anything.

I did come very close to quitting but my pride stopped me. I’ve never been the type to give up and I simply could not look my wife in the eyes and admit that I had failed and given up. It was not an option. The money amount was nothing to worry about but my pride, that was another matter entirely. I slowly licked my wounds and stopped live trading for several months. I had no choice. I had to go back and deal with the reason that had made me behave so stupidly. That’s what I did. I read several trading books and I read thread after thread to learn more about trading. I also did something else which I believe was vital – I went to work on the mental components.

4. What’s the most challenging part of trading for you?

For me the most challenging part of trading has been keeping out all the noise that is all around you. So many ”experts” of all sorts wanting to share and teach. It easily can make your head spin. One piece of fundamental data says this and a trendline or something says the opposite.

I guess it’s often called analysis paralysis and it’s something I’ve had to battle. As you find your own path it gets easier.

5. When would you say a trader is “successful”?

This question is quite difficult. There are many different ways to answer it.

For me, a successful trader is one who has a track record of at least three consistently profitable years with a total of at least 100 trades using the same approach.

6. Do you think anyone can become a successful trader? Why or why not?

My view is that most (not all!) people could become reasonably skilled traders with the right training . However, and this is the BIG caveat – retail traders do not generally have access to that sort of training that professional traders in banks, hedge funds, etc receive through their companies.

Without that it’s a whole other ball game. It’s my belief that relatively few people are able to teach themselves to become successful traders. The reason is two-fold: difficulty in finding the good information and, more importantly, a lack of mental stamina, aka stubbornness.

7. How does your personality match your trading style?

I work a full time day job which means I nor can or wish to watch the charts all the time. As a result I’ve had to make my trading fit into my life and not the other way around. I work only with limit orders, aka set and forget, and I only have to check the charts every four hours or so. Personality-wise I’m more of planner than impulsive, so this sort of approach works the best for me.

8. If you could give just one piece of advice to newbie traders, what would it be?

I have several pieces of fairly good advice, but if I can choose only one this would be it: Learning to trade is not a sprint, it’s a multi-year marathon. Don’t give up.

9. Describe your typical day as a forex trader.

A typical day for me starts in the evening, around 2100-2300, when I look through the charts and pick out potential interesting pairs that go on my watchlist for the next day. I also manage open positions and, if warranted place limit orders.

The next day I check the charts in the morning before work and then around late 10AM, in the afternoon and after I come home. If I see a valid setup I place a limit order that may or may not trigger. That’s all there is to it really.

10. Who’s your favorite FX-Men?

Out of all the FX-MEN there’s a special place in my heart for the honorary FX-MAN Tymen. I had the good fortune of coming across his thread at a point in time when I needed to find a base to build from. He provided that for me and since then I’ve come to respect him greatly and I’ve also continued to learn from him. I may not agree with all of his views and I may not trade exactly like him, but I have enormous respect for him and the honesty he represents.

From the Babypips “staff” I enjoy reading Big Pippin’s, Pipcrawler’s and Jack the Pipper’s blogs. The first two for their sound approach to trading and the latter for his interesting views on different topics.


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Julie a.k.a Sweet Pip

1. How long have you been trading and how did you get into forex trading?

I will have been trading for 3 years in November. When checking my emails one day, amongst all the spam emails was one about forex. The word caught my eye probably due to my working in a finance department where one of my duties it to reconcile the bank accounts, and we often get US cash which the bank makes an adjustment for on our statement.

After googling the subject, cause I never jump on a spam email’s offer, I came across Babypips School, and also found out that technology had advanced so far as to allow online trading. Then the stars aligned…the high school introduction to trading stocks, my parents success in their stock market endeavors, and passing the school of pipsology…I figured I had all the prerequisites and was hooked…little did I know.

2. What’s your most memorable trading experience?

My most memorable trading experience would be when I traded a $1k demo account and turned it into $5k in just over a month. That led me to believe I was ready for to trade real money.

3. Was there ever a time when you suffered a huge drawdown and thought of giving up? How did you get through that phase?

Right when my new live trading account was in the process of getting setup, a trade on my nice new fat $5k demo account went horribly wrong and almost wiped it out. That was due to not using a stop loss …which I rarely used. I didn’t place much importance on how that would affect my trading until I started trading with real money.

Although I didn’t suffer any huge drawdowns with real money, I kept panicking and closing trades when they got into a little bit of drawdown thinking it was going to go into huge drawdown.

After losing 50% of my deposit I went back to demo to try to regroup and figure out what went wrong. I felt I really didn’t know my strategy and that my success was just a fluke…how depressing. A year later, I’m still on demo but now I’m finally getting my demo account to increase again, this time using a stoploss. I keep in mind that it takes a few years to really learn something, even a “regular” job, and trading is no different so just keep trying.

4. What’s the most challenging part of trading for you?

The most challenging part of trading is finding a system to use, and then sticking to it. There are so many methods and systems out there that when the system you are currently using is going through a rough streak, it’s hard not to jump ship when you see another system that seems easier or someone else is having good success with. There’s a difference in the beginning when you are figuring out what style of trading suits you, but after awhile, one really needs to settle on something, whether their own or someone else’s.

5. When would you say a trader is “successful”?

I would say a trader is successful once they master the discipline of following their plan into profitability. How long that takes depends on each individual and is difficult if not impossible to determine until it happens.

6. Do you think anyone can become a successful trader? Why or why not?

Yes I think anyone can become successful, but it depends on many things like their desire and patience to take the time to really learn how. If they don’t have that, then trading is just not for them. If they do have a desire to try, then they must understand that it could take several years…just like any regular job…to really start understanding how it works, and then possibly become successful at it.

7. How does your personality match your trading style?

I am a little bit impatient and like short but frequent thrills. The style of trading I enjoy most is a couple of quick scalps per day, using the power of compounding to increase my trading account. Even though I still need the patience and discipline to follow my trading plan, I don’t have to wait long for a setup to manifest. This then creates a balance in both worlds.

8. If you could give just one piece of advice to newbie traders, what would it be?

Just one piece of advice?..lol! Learn about volume spread analysis - VSA. It teaches you a lot about price action, support & resistance, and lends itself to many strategies & disciplines.

9. Describe your typical day as a forex trader.

My typical day would be to check various timeframes of a few select pairs…ones with he lowest spreads…to see what has been happening. Since I have a full time job and live on the Pacific coast, this would be during the Asian session and volatility is usually very low. Then I wait until midnight EST (or 9pm PST) to calculate my pivot points.

My charts are automatically marked up with various support & resistance levels coming from swing points on the hourly to the monthly charts, as well as pivots and fibs. I check the calendar for when any news releases are going to come out. If I don’t get any good setups to jump into with the trend before I go to bed, then I look for levels that look like good reversal areas and set pending orders there, and then go to bed which is during the London session.

10. Who’s your favorite FX-Men?

I can’t pick a favorite FX-Men…they are all so knowledgable, helpful & friendly.


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Clint

1. How long have you been trading and how did you get into forex trading?

Years ago (in a previous life), when I worked for a large engineering company, a co-worker introduced me to commodity futures trading. I was hooked from the start. We became best friends, and traded together. Initially, we traded a variety of ag futures. I subsequently branched out into financial futures, and then began to specialize in silver futures on the Comex exchange.

Later I became interested in stock index options, and began trading OEX options almost exclusively.

In 2005, I looked into the forex market for the first time, and was immediately intrigued. Initially, I was all over the lot, trading ten or twelve different pairs, and jumping from one trading style to another, and from one trading strategy to another.

Eventually, I narrowed my trading to just one pair: first it was the GBP/USD, then the GBP/JPY, then the EUR/USD, and finally back to the GBP/USD. For the past year, I’ve traded only the GBP/USD, mostly very short day-trades (or very long scalps, depending on how you want to look at it), during the wee hours of the morning, here on the U.S. east coast.

2. What’s your most memorable trading experience?

In July 2005, when I had been trading forex for only a couple of months, I happened to be watching the GBP/USD when the floor seemed to fall out from under it. I had no idea what was driving the move, but I jumped on it, shorting it again and again as it fell, eventually pyramiding a rather large position.

It was only after I had covered all my shorts at an average profit somewhere north of 80 pips, that I learned about the terrorist bombings that had just occurred in London. Initially, I felt uneasy about profiting from someone else’s disaster. But, after a lot of thought and soul-searching, I realized that, as a speculator, I was simply participating in the price-discovery mechanism of the market — which is precisely the purpose of markets.

3. Was there ever a time when you suffered a huge drawdown and thought of giving up? How did you get through that phase?

Yes. I won’t recount all the gory details, but I will say that for a long while I was mad that “the market took my money”. So, I stopped trading live, and traded only on demo, until I got my head straight.

4. What’s the most challenging part of trading for you?

The most challenging part of trading for me is setting aside the idea of “being right”. It’s in my nature to want to be right — in my analysis of trade set-ups, in my trade management, etc. But, “being right”, like everything else in this market, is a matter of probabilities: you’re “right” only as often as your win-ratio says you are.

The problem with thinking that you’re right is that it easily leads to trading too big. Then when the market rudely shows you that you’re wrong, you can end up taking unacceptably large losses.

5. When would you say a trader is “successful”?

A trader is successful when he or she can keep doing the same thing over and over again, getting the same results, and those results are good. That’s a long-winded way of saying that consistent profitability is the measure of success.

6. Do you think anyone can become a successful trader? Why or why not?

No. Some people are just not temperamentally suited to be successful traders.

Anyone can learn the facts about this market, and anyone can learn the mechanics of trading. But, I think that some people lack the psychological make-up necessary to take decisive action in a market environment where outcomes are uncertain, and where everything is determined by probabilities. Those people who tend to be “control freaks” seem to struggle terribly with the uncertainties associated with trading.

7. How does your personality match your trading style?

I’m a night-owl, so it suits me to trade the Frankfurt opening at 2am my time, and the London opening at 3am my time.

And, I like to actively monitor and manage my trades, so it suits me to hold positions for up to 4 hours. Beyond 4 hours, I start to lose my focus.

Also, I don’t handle true scalping very well (to me, it’s sort of like forex whac-a-mole); so, I don’t intentionally take trades that are going to last only a few minutes.

8. If you could give just one piece of advice to newbie traders, what would it be?

I would urge newbies to learn the power of COMPOUNDING modest, but consistent, daily profits — and, then, letting those profits grow exponentially to build wealth.

There are three elements here:

modest profits — don’t take huge risks swinging for the fences;

consistent profits — this means accurately following a trading method which has a high win-ratio; and

compound profits — let your profits accumulate in your account; and, as your account grows, increase the size of your trades in proportion to the size of your account.

If you can consistently AVERAGE a net profit of just 20 pips each day, you can earn an average 1% increase in the value of your account each day, while trading with no more than 5:1 actual leverage, and limiting your risk to less than 2% on each trade.

A steady 1% increase per day
= a little more than 5% per week (compounded over 5 trading days per week)

= a little more than 24% per month (22 trading days per month)

= almost 1,000% per year (240 trading days per year, allowing for vacations and holidays).
Where else can you legally make 1,000% per year on your initial capital, without taking extraordinary risks?

9. Describe your typical day as a forex trader.

I start about midnight (New York time) studying current price action, and updating charts (I use 9 different GBP/USD charts, displaying various things that I watch).

Between 1:30am and 3:30am, I look for a single high-probability trade. If I find what I’m looking for, I will babysit my trade until it hits my profit target, or I close it manually.

I try to exit the market before dawn, so that I can get a few hours of sleep. If I can get to bed by 6am, I’ll sleep til noon.

Afternoons and evenings are for things other than trading.

10. Who’s your favorite FX-Men?

I have great respect for Phil838, not only for his trading skill, but for his decency as a person. In a business fueled by testosterone, where some of us tend to be impatient and combative, Phil is always polite and considerate. He’s a true gentleman.

We don’t hear much from Phil these days, as he’s gone back to school for another graduate degree; but, I know that he keeps an eye on this forum. Phil is, in every sense, a gentleman and a scholar.


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