Ross Millard’s Weblog

I’ve been back from my travels around Central and South America, and my 8 months diving in Utila, Bay Islands for 10 days now. I decided to keep myself busy by getting back into the forex trading that I was doing before I left.

I wanted to be cautious in my first week back so I have been trading very small amounts in comparison to before; this got me thinking about what it would be like to start out with a small trading bank again, so I started off with just £100. I also wanted to give trading the FTSE a try and have found it is better suited to my trading style so far; I will continue trading the FTSE Futures market next week and see if it pans out well.

This does pose a problem with my trading rules though as I would normally only risk 3% of my bank on any one trade so that I could, in theory, have 33 losing trades in a row before losing everything. The FTSE Futures has a minimum £2 per point bet on my spread betting platform, and with a 20 pt stop, that is around 40% of my bank!

Consequently I have also been trading the cable market (GBP/USD currency pair) in order to be able to place lower £/point bets, although have still used £0.50 as my minimum (10% of my bank). This is acceptable to me whilst showing what can be done as I still have a sizable ‘bank’ in my savings account should I need to stump up some extra cash to cover losses.

I have had some winners and some losers in the past week as all traders do, however am way up on where I started. I will talk about points made rather than amounts of money because it’s a matter of choosing the right trades rather than the amount you make (you can simply multiply up your stake by the points to get cash sums). Having said that the emotions are somewhat different when you put £0.50 or £2 a point on a trade rather than £25!

Monday 21 January 2008
Today saw me solely trade on the cable market (GBP/USD currency pair) and monitor the FTSE Futures market to see if I could identify trading opportunities. I was busy in the morning and only traded the afternoon, from about 2pm.

I took on this trade rather foolishly, but hopefully it will help you understand mistakes that can be made! I guess I was looking for a trade that wasn’t there after having the morning off.

I was looking at a 1 minute chart which I don’t normally do, but because the market was in a slight downward trend I was looking for a quick scalp trade.

I entered a short trade at 19454.50 (on the long red candle) with a 10 point stop loss and was looking for a 10 point scalp. What I hadn’t double checked was the situation on the 15 minute chart to see whether this was a good trade or not ….

The market was ranging by 20 points each way, and therefore it was little surprise that I got stopped out at 19464.50! However, the market was trending downwards, and if I had a greater stop loss I could have made money on this trade IF I’d done my homework. A lesson to be learned there.