can share some of the mistakes and learning points in your years experience?
for discussion so we can all improve and huat
Sure. My mistake is basically all that has been covered online but I guess knowing a personal account is much better.
1) Leverage as a double-edged sword - After demo trading for a while, I started a $200 account with a 1:50 leverage. That means I can trade up to $200 x 50 = $10,000, I could trade micro-lots from about 0.05 to 0.08 on EUR or AUD. What I did back then was to put everything in right away because my mentality was "$200 is not a lot, plus I could easily earn $0.90 per pip movement. On a good day, I could easily flip $10 to $40 on a single trade.".
Wrong, no matter what, the pain of losing is there and you will be tempted to put in more money to save your position since your position is relatively small and no one likes losing. Which is true, I did make money for a while and I got greedy and put in more money.
2) Not understanding the market and getting married to positions - When I first started, I wanted to make a quick buck and focused on the 5min and 15min chart but those were always time wasting. I switched to looking almost exclusively to daily and 4H charts and 1H for entry. I slowly learnt to look at price action and use divergence trading as a strategy. It worked for a while, I was averaging a return of 10% weekly in a trending market. But again, refer to point 1, I got greedy and over-leverage and got married to my position and got margin-called a few times.
3) Risk management - Just from 2 points, you can tell that I'm not a very good day trader, I'm the typical wanna get rich fast person. The promise of fast cash is very tempting that anyone with principles will be very enticed to just heck his RM strategy and pump all his money in. Trust me, I have tried hard many times to maintain good money management but greed overcomes me every time. It's very tempting to hold on to positions whether its doing good or bad because you'll always thinking "What if it recovers when I close" or "What if it earns me even more money"
That's all I can think of right now, look at forexfactory for more success/failure stories to get a better cents but that basically sums up my thoughts.
I ran off with $1000 last week and quickly cashed out because I know the market will eventually take it back again, it's hard to manage your risk. It's good to have a 1:2 risk-reward methodology but the tempt to over-trade and over-leverage is always there since its so cheap to trade, each transaction only cost about 1 pip for EURUSD pair while its about 1.8 for AUDUSD. Forex is definitely a speculative market, no one invests in it anymore because interest rates are so shitty, your money will do better in long term investment products like ETFs or REITs. Plus no one really knows how to react to the market and whether its priced in although there are very seasoned traders who are always able to somehow cherrypick numbers to a 3pip +/- error which is extremely good.