While I was thinking of what to write for my previous post, 3 Ways to Upsize Your Investments, I was fretting over how to increase my income as I foresee that more expenditures are coming when I set a family of my own. While staying with parents, the good thing is, most of the home-related expenses are paid for. However, when we have our own home, we will have to bear these expenses.
Looking at my current budgeting, after paying myself for savings, investments, holiday and etc, I realised I do not have much left if home-related expenses were to come into picture. To cater for these home-related expenses, I have only two choices.
- To cut/reduce one or more of the budgeted portion for the new expenses, or
- To increase my income.
As I would not want to exercise choice 1, I have decided to look into how to increase my income and that also resulted in the previous post.
What I had decided to do in the end is to look at trading Forex to increase my income.
I had previously traded Forex before I changed to trading stocks and finally ended up investing in stocks. It was a tough journey and although I had lost quite a fair bit trading Forex, increasing my income through Forex investing is likely to be the best options that I have.
What Went Wrong Previously?
I was trying to trade at a short time frames (15 min, 30 min, 1 hour), and every time when the price action had executed, I will blindly follow worrying that I will miss earning the 5-10 pips. Minutes later, the price starts falling below my entry and I would stop myself out worrying that it will fall further. Most of the times, stopping out the trade proves a wrong move and I would feel shitty over it. Other times, if I decide that I should hold on, the price will continue sliding and eventually hit my stop loss.
How Would I Be Trading?
Within a short paragraph above, I had learnt valuable lessons and would be applying to my trading when I am doing Forex trading again.
- Trade on a daily timeframe. Trading Forex while having a full-time job is not easy. Having to read the charts under watchful eyes of colleagues in an open office concept is very stressful and prone to error. Will be starting to trade on the daily timeframe so that I will only need to read the chart once a day.
- Setting stop/limit entry orders. One of the problems that caused my “downfall” the previous time when I was trading Forex is that I enter the market through market order and most of the times, if not all, are entered reactively. Market order entries are most likely to be reactive entries and with reactive entries, the likelihood of a detailed analysis of the chart is not done thus when the market moves against these trades, we will start to wonder if entering is the right choice. For this round, I will park my entries using stop and limit entry orders. This will prevent myself from missing trades and force myself to do a detailed analysis before I place the order.
- Trading at the right time. Forex is a 24 hours market. The statement is not wrong, but it is not entirely correct either. Although Forex can be traded 24 hours from 5pm EST on Sunday till 5pm EST on Saturday, it is not at every hour that there are people trading. Without the trading volume, any price actions may be not accurate. The “best” times to trade Forex are during the overlapping of market opening/closing times. Will have to look at the timings and decide what is the best time for me to set my stop/limit entry orders.
The Bottom Line
Forex trading is not a sure-win investment. Although I may lose all the money invested again, I am willing to take the risk and with the lessons learnt from the previous trading experience, I believe this time round, I would be able to succeed in trading Forex and increase my income so that the profits can be channeled to my investments.