Hey guys,
I just want to put myself out there and get some feedback/advice from both newbies and experienced traders alike. I’ve recently decided to try investing as a way to earn some extra money, and began in the stock market with a Zecco account. That’s been doing okay - lost some and gained some, but for the most part I’ve been paper trading with mixed results. After analyzing some of the Forex charts over the past couple of days, I’m really liking the idea of trading Forex instead of stocks. Here’s why:
- I like that the timeframe is 24/7 with the exception of the weekends.
- The market seems much more fluid. The charts are easier to read than stocks, which are much spottier.
- There is a limit to what you can trade. The stock market has thousands of stocks to choose from, and I find the process simply overwhelming and stressful. With Forex, there are a limited number of currency pairs, and it’s much easier to browse through them for technical analysis.
- There seems to be better opportunities to swing trade currency. For instance, if you got in on a trend and it continued for several days or a couple of weeks, you could gain $1,000-3,000 on one lot in a standard account if you rode it out. Imagine if you traded more than one lot - seems to be a better setup than what many stocks offer.
What I want to get out of FX trading is to swing trade those trends over several days. Almost every chart I looked at (some moved more sideways than others) seems to have those big trends, and it would seem that they are much more predictable than stock trends, for instance. The only thing to keep in mind is that within those larger trends are smaller bounces that may temporarily set you back until it breaks in the trend’s direction again. You’d need to make sure your unused margin had sufficient breathing room to cover those bounces.
What about it, guys? Is this a reasonable way to trade or am I being completely naive and too optimistic? Currently, I’m using a Zecco FX paper account to try out this swing method. Last night I got in on a AUD/USD trade that was trending down. It looked as if it would continue for a couple of days, and I was up around $400 by the time I went to bed. I’m primarily using a 15 day 4 hour chart to spot major trends, and figured when I got up in the morning, the trend would simply be continuing. Well, turns out that the trend was broken on an upside move, and reversed. Didn’t see it coming, and there was no indication that it would do so. Needless to say, my bubble was burst immediately, and now I’m second-guessing my thoughts on swinging these trends. However, the charts don’t lie, and it’s clear that it can be done…but I just don’t have any experience to back this idea up.
Thoughts, suggestions?