MacroPreneur - Macro approach to economy, investment and management : Where it all began - MacroPreneur - Macro approach to economy, investment and management

Hello MacroPreneur community,

I have been working within the MacroPreneur community, and its very nice to see how this project is coming together. I hope to contribute little bit more with sharing my experience, some analyses, and comments on mostly the forex, stock and commodities markets.

So...

Part 1: Intro to Forex and Financial Markets

My story regarding the financial markets goes back to year 2005, first quarter. I believe it was during spring break that I visited two of my friends in Charlottesville, VA. As usual, the week was full of soccer, PlayStation, music, Football Manager (the SiGames franchise). AND forex. It was the first time I have seen actual forex trading. As we discussed the huge profits we can make in a matter of hours was so enticing. Imagine depositing just $500 and walking out with $1000, even $2000 in a day? WOW. No, it wasn't that of a big WOW. I'll just show you why it wasn't a big WOW in a second.

The day after I went back to New York, NY, to my studies toward the BSc. in Computer Engineering degree, I went online to research bunch of forex brokers, and opened accounts at FXCM in April '05, and later in Refco in October '05, just before it collapsed. No, don't worry, didn't make any money by that date to go after.


The first ever trading day... Friday, April 1, '05, Non-Farm Payroll release

What a day to begin with Very volatile. But, as you would have guessed, volatility is a double-edged sword. I believe I deposited $300 on March 31, and the funds were available to trade just before the NFP release. I knew about the charts and some indicators before as I had tried with various time-frames, and every single indicator available on the CMS platform, looking to find the magical indicator out there, , in search for which one would lead me to prosperity.

I decided to focus solely on EUR/USD for the first day. I guess it was trading around 1.36 (yes, its been 5 years now, and same quote, eh) I waited for the news to come out. As the clock hit 08:30 AM EST, the news was out. The dollar had a sudden lift, pushing the pair lower, and I scrambled to SELL SELL SELL. I managed to sell couple of mini lots as the pair drifted lower, and my equity was in more than $100 profit in just a matter of minutes

After the initial news was digested, the market stopped and reversed course, to the upside. I had set a rule that I would wait until the high of the US open was breached until I exit my position, so I waited and waited until I saw all the profit go away. As the pair shot above the US open, I closed the previous position and opened couple of long positions, now in around $100-$150 loss. Thinking that this reversal and my long position should get me back to square one, I was fairly confident. As the market proved me right the first minutes, I watched my equity come back to where it started, to $300. It even got into positive territory for a few minutes. So, this was it, at least what I thought.

In about an hour, the market reversed lower again, taking the lows of the day, and my equity with it... Thats how I gave my $300 away to the financial markets during my first trading session.

What was the take? Do not get in the market with $300, maximize the allowed positions, and hope to make $2000 in a day. It is possible that you could do it, if the market goes in the fast lane, in a single direction. But I can guarantee you it will lose it all the next time you try to. Your odds is lower than that of playing a slot machine in Vegas.

Part 2 will follow soon.