Trading did not go well for my Forex. I have lost a huge chunk of my initial investment. The amount that I have left in my account is currently at 1,257.76. Lost a total of $3,742.24 or 74.84% of the initial investment. Not a very good way to start off my trading journey.
One important step to do in investing and trading is to review the trades, whether they are successful ones or those that we lost. Review of trades is overlooked by many investors and traders as many feel that we should quickly move on especially for the ones we lost. However, the importance of trade review allows us to understand what did we do wrong, why did the trade moved against us and finally how we can do better.
The first month I started trading Forex again, I closed the month down by around $1,500. That left my account with around $3,500.
In December, during the period when Fed was announcing the interest rate hikes, there were opportunities to enter new positions and very soon, I had opened up 5 new positions totalling up to 20 lots. With each lot at 0.5 mini, I had unknowingly opened up 10 mini-sized ($100,000) positions.
With Oanda’s margin requirements 2%, the total margin that I will require for the 10 mini-sized positions will be $2,000. Because of the volatility during December, very quickly the positions started going negative and all my positions were soon liquidated due to margin call.
One important lesson, and a very basic one, that I had learnt from December’s Forex trading. Never over-trade.
Wanting to earn from Forex trading fast enough requires opening of minimally mini-size positions. Being a double-edged sword, price movement can move very fast with or against you. If it goes against you, very soon you will be facing a margin call and lose a huge portion of your account.
Always understand what is the kind of positions that your account size allows you to take. It would be better to earn slower than to over-trade and risk getting margin calls.
What is Next?
I will not be putting more money into the account (until I think I am ready to increase my position size). I will be carrying on with the $1,200 account size, opening nano-size positions to polish up my trading and building up my account size from there.