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In the last two months of 2011, I took on a personal adventure to take on a new Investment Tool – Forex Trading. I started out with a US$100 mini-account from the start and at the end of the two months stint, I ended with only $4 and decided that it should be the end of my Forex Trading journey till the date I mastered what’s necessary to really make the money work harder with this tool…
But meanwhile, if you do have intentions to take on this Investment Tool and you are also starting off like a Beginner… maybe I can personally share my experience and what you can expect (if you are going serious on this)…
Can You Make Money With Forex Trading
The answer is definitely yes! And if you are really experienced with it, you can make money during the Good Times and Bad Times regardless on the economic conditions – though this still play a part in influencing the movement of a particular currency.
Despite the fact that you can really make money with it, the other side (= losing money) will still apply to anybody if you are not careful and when you trade without any considerations.
And as compared to other investment tools like Investing with Stocks or Property, you can see Profits (and even) Losses in a matter of hours or even minutes (of which I have seen traders making a quick 100% profit gain in 2 minutes – and this is the effect of doing their homework and timing the market well).
What You Need To Take Note When You Are Trading As A Beginner (From My Point Of View)
1. Read The News And Understand The Market. In Forex Trading, understanding the news will help you to become a Better Trader. And if you can take a piece of news and decipher what it means to a particular currency, for e.g. the news you just hear is sort of negative for a particular currency and thus will people think that it’ more profitable to exchange that currency to hold onto others, etc. If you can relate this well, I believe you are off to a good start being a Forex Trader.
If you are into investing with shares, you would have came across or learned about the above three phrases:
– Buy And Hold
– Buy And Sell
– Sell And Take Loss
I am not a Professional Stock Investor and I have not really made Thousands out from my investments. But I am starting to understand the significance of the above three phrases through my personal in a negative manner and I wish to share what I know about them with this post.
If you are just starting to go into shares, you may wish to take note of them and I hope this can be useful to you!
1. Sell And Take Loss
You can have a good laugh at this. When I first got into shares in 2008, all I knew was Demand vs Supply and the impact of Inflation that will drive up the share prices. These are the two schools of knowledge that I apply to buying of my shares.
So I bought into a Stock that’s around $0.25 for 10 lots (10,000 shares). That’s a total of $2,500 not inclusive of the charges. The economy did not turn well for this company and the shares started to go downhill. And there’s no sign of it going up again.
When the share prices dropped by the 10 – 15% range. My friends recommended me to sell them and take loss. Being a sore loser by then, I did not give in and told them off that with time and Inflation, the share price will naturally go up!
Long story short, that company’s overall business did not improve. Shares dropped to the current range of $0.025. My current loss is at $2,000+ range. I am still holding onto it, because I do not need the money (which I may still be silly) and really hoping that the situation will have a turnaround (another silly thinking) and I can sell them off to minimize the loss.
Lessons To Learn From This:
- There’s no winning stocks every time. Shares go up and down depending mostly on the economy and the management behind the company and not just because of demand and supply and inflation.
- If your stock buy is experiencing a loss and there’s no sign of it going up again because of many factors like the annual reports have been bad – learn to sell and take loss. It’s painful but you can take this money and invest in other shares that will give you better returns and cover your initial loss.
- Set a benchmark for your stop losses. Some people recommend a loss of 10% to the maximum of 20%. Once you have this, follow through and apply to your investments.