Trading Update (December 2015)

Second month into my Forex trading. Things did not go well and I had lost a huge chunk of my trading investments. Although it is going to be tough, I will continue to press on. Looking at what went wrong, learn the lessons and move on.

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.

What Happened?

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.

Lesson Learnt

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.

Portfolio Update (December 2015)

The year 2015 ended when the market closed on December 31. The end of a year marks the start of a new year and in 2016, I had to make some adjustments to my portfolio as the brokerage firm that I was using decided to discontinue its brokerage services in Singapore. A look at how my investment portfolio wrap up in the last month of the year.

2015 just ended marking the start of a new year, 2016. A brand new start for my portfolio as well. My broker, E*TRADE, had just announced the discontinuing of brokerage services in Singapore, leaving me to change my brokerage firm.

E*TRADE discontinuing brokerage service notice | Investor Monkey

After careful considerations and reviewing of available brokerage firms in Singapore, I had decided to move my investments to TD Ameritrade Asia.

The transfer of brokerage firm was quick and simple. Filling up the account transfer form and the transfer of the shares along with the account balances was moved to my new account. The only drawback was that the partial shares had to be liquidated as cash before the transfer. It does not affect me much since I had only just started the DRIP investing and there was not much partial shares.

As part of my investment plans, I will be putting aside approximately $500 a month for purchasing of new shares. For the past six months, I had put aside $3,000 and since the shares are doing a small pullback in price in mid-December, I see a small opportunity to purchase more shares for my portfolio at a small discount. After my ThinkOrSwim account is up and ready, I quickly transferred the $3,000 investment to the account and purchased more shares, on December 22, in the companies I am already invested in. Just in time to purchase the shares for the Christmas rally.

Number of shares and price that I had purchased with the $3,000 investments.

Stock Symbol Shares Price
Home Depot, Inc. HD 4.00 $131.37
Johnson & Johnson JNJ 4.00 $101.71
Automatic Data Processing, Inc. ADP 5.00 $84.76
Clorox Co CLX 4.00 $127.93
PepsiCo, Inc. PEP 5.00 $98.91
Abbott Laboratories ABT 11.00 $44.25

Dividends

Johnson & Johnson (NYSE: JNJ) paid dividends amounting to $3.77, before tax, on December 8.

Home Depot, Inc. (NYSE: HD) paid dividends amounting to $2.37, before tax, on December 17.

Because the dividends are paid to my E*TRADE account, these dividends were kept as account balances and later transferred to my ThinkOrSwim account.

Stock Symbol YTD Dividends
Home Depot, Inc. HD $4.73 0.98%
Johnson & Johnson JNJ $7.52 1.48%
Automatic Data Processing, Inc. ADP $2.94 0.62%
Clorox Co CLX $3.08 0.67%
PepsiCo, Inc. PEP $0.00 0.00%
Abbott Laboratories ABT $2.64 0.53%
Total Dividends $20.91 0.72%

Total year-to-date dividends paid till end-December is $20.91 or 0.72% of my total portfolio size, before I add on more shares to the portfolio.

Stock Holdings

Stock holdings as of December 31, 2015. Cost basis is the total invested amount, including dividends that were reinvested and the commissions and taxes paid. This cost will be used in the percentage calculations for YTD dividends, and profit and loss.

Stock Symbol Shares Cost Basis
Home Depot, Inc. HD 8.00 $1,008.67
Johnson & Johnson JNJ 9.00 $917.68
Automatic Data Processing, Inc. ADP 11.00 $901.98
Clorox Co CLX 8.00 $973.51
PepsiCo, Inc. PEP 10.00 $971.29
Abbott Laboratories ABT 22.00 $983.32
Total Investment Amount $5,756.45

Profit & Loss

My investment portfolio ended positive 2.78%, after including the newly purchased shares. Although the profits does not look great, it did better than the Dow Jones Industrial Average which closed lower at -1.02% for the year.

Stock Symbol Profit/Loss
Home Depot, Inc. HD $59.33 4.89%
Johnson & Johnson JNJ $6.80 0.74%
Automatic Data Processing, Inc. ADP $29.94 3.32%
Clorox Co CLX $41.13 4.22%
PepsiCo, Inc. PEP $27.91 2.87%
Abbott Laboratories ABT $4.70 0.48%
Total Profit/Loss $159.89 2.78%

The 3 Best Resources for Forex Trading

Forex trading is a huge market with many resources, both free and paid, made available to the Forex traders. With so many resources to choose from, what is the best resources that other Forex traders are using?

There are many resources like forums, charting software, books and financial calendar blooming up online, each trying to outshine one another to attract more users to use their resource. While some of these resources are not useful, there are a handful of these resources that are well-liked by many traders.

The following resources are what I am using in my Forex trading and I think they are worth recommending.

BabyPips.com

BabyPips.com logoBabyPips.com is a wonderful place for Forex trading beginners. It has become the premium destination for learning how to trade the Forex market. Offering daily articles on trading news, strategies and market analysis on important Forex topics and events.

As the foundation of the website, the School of Pipsology offers the first and most comprehensive collection of lessons, starting with the basics like Forex brokers, fundamental and technical analysis, and many more.

I had personally learnt about forex trading through BabyPips.com and the lessons learnt are all important. Other important features of BabyPips.com is the helpful community within its forum and the blog section where the authors who are seasoned Forex traders will share their views on the market.

Forex Factory

Forex Factory logo | Investor MonkeyDesigned as a website to provide traders, beginners to professionals, with detailed and high-quality information in their pursue to profiting from the Forex market. Forex Factory has got various features that can help the traders of all experience to make a well-informed decision on which currency pairs and direction to trade.

Forex Factory is the most-viewed Forex-related website and the Forex Factory calendar literally changed the way that financial calendars are made. Prior to the launch of Forex Factory’s calendar in September 2005, financial calendars do not have impact rating, adjustable time zones and many other features.

One of the two important features that I personally liked about their calendar is the impact rating. Not all events or news have the same impact on the individual currency. Having an impact rating allows us, as traders, to have a feel on how much price movement can be expected from the event or news. The higher the impact of the event or news, the expected price movement can be higher.

The other important feature of the calendar is the adjustable time zones. The Forex market is a 24 hours market. Events or news occurs at different times of the day and depending on individual websites, the time of the event or news may be reported using a different time zone. Although converting the reported time zone to the reader’s time zone is easy, without the adjustable time zones in Forex Factory, the time may be converted wrongly especially when there is daylight savings or worse still, we do not know the time zone that the author is referring to.