Archive | September, 2013

Piece for Peace

BeeFavicon_blueOne day a watchmaker asks to a watch, that he is working on, “hi watch, could you tick at least 31,536,000 times in a year? “.

“WHAT???” the watch freaks out, “31,536,000 times? How is it possible for me to tick that many? I’m going to broke into pieces in no time”.

“Okey, how about 86,400 ticks in a day?” asks the watchmaker.
“86,400 times with this tiny hour hands and parts?!” the watch replies.
“Could you do 3,600 ticks in an hour then?” asks the watchmaker patiently.
“3,600 in an hour? Still kind a lot for a small piece like me” answers the watch.
“If I ask you to do 1 tick for every second, could you do that?” the watchmaker asks again.
“One tick for every second? That’s easy” answers the watch.

After the watchmaker finished the tiny watch, it starts ticking every second. From that point, the tiny watch does 3,600 ticks in an hour, and does 86,400 ticks in a day, and makes 31,536,000 ticks in a year….. EASILY.

Sometimes we set an irrational target that looks so huge and places us under stress. For example, I have to make $5,000 in a week or I need to grow my investment 10% in a month. It burdens us psychologically , even before we start trading. It is not a good starting point. Rather then set a ‘huge’ target, it is better to set a rational target. Rational target is different for every person. Chop your target into smaller piece to reduce your stress level.
This is how I set my target. How much I need to support my daily lifestyle, chop it into smaller piece. Then, I work on how I set up my next trade and how big the risk I can carry. Trading is business, so I have to prepare for the worst. However, I also want to get the most out of it too. With good plan, I can prepare my trade without being stress out. Below is an example, please adjust to your own comfortable conditions.
Let’s say my wage is $9/hour. That is equal to $1440/month. Then, $1440 divided by 20 days (open market) in a month, it will give $72/day. I, then, look for good setups and trade 3 or 4 pairs per day. With standard account (1 pip = $1) and starting lots size of 0.1, I need to gain 72 pips a day. It means per pair, I aim for 20 pips, which is a reasonable range for a pair to move in a day. I can increase the potential income by placing higher lots size or increasing the trading frequency. By breaking down my target into smaller pieces, my goal seems achievable and realistic and it gives peace in my mind.
Start trading with a good plan, enjoy it (no matter profit or loss), learn from mistakes, watch market behavior, and repeat the same steps each and every day. That is how I enjoy my trading days. Happy trading.

Get piece for your peace.BeeFavicon_green

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Spread is one of the trading costs in the Currency Market. A trader needs to take spread into consideration in order to make profit. Most of people forget to include this factor in their trading plan because they are too focus on the trading strategy and analysis.

Spread is defined as the difference between Selling-price (Bid price) and Buying-price (Ask price). The bid is the price at which forex broker is willing to buy the base currency in exchange for the counter currency. The ask price is the price at which the forex broker is willing to sell the base currency in exchange for the counter currency. Forex broker or dealing desk make their living from spread on each trade position that being place through their network.


The Selling-price (Bid price) always lower then the Buying-price (Ask price). It may cause a trader to lose money, if the trader open and close his position at the almost the same time, with the same exchange rate.

Generally currency pairs with high volatility has tighter spread, while currency pairs with low volatility has wider spread. Apart from wide spread, currency pairs with low volatility usually have a lot of gap in price and is more difficult to identify the trend. For example, USDMXN.

Different dealing desk have different spread for each currency pair. Certain dealing desks write off spread but charge commission for each trade position. Then, there are dealing desks that apply spread and charge commission for each trade position.  Some dealing desk offers fixed spread, but usually the spread is wider than variable spread. The advantage of fixed spread is straightforward profit and stop loss calculation during high volatility. The disadvantage is more costly during normal volatility.  

However, lowest spread does not necessary mean that one dealing desk is a good dealing desk. To choose a good dealing desk or forex broker, one need to consider several factors like : does the company list on certain regulator agency, does the company have a good customer service, does the company have good reviews from their client, where are the offices, etc. How to choose a good dealing desk will be discussed in later article.

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