After experiencing a setback during Day 4 of the Tiny Trading Account Challenge it was important that I ended the trading day without making any major trading mistakes. This is much easier to do when taking one or two trades each day, week or month. It’s much more difficult to do with a high level of trading activity that spans multiple trading sessions. The more consecutive winning trades that a trader realizes the easier it is to become lackadaisical and assume that trades will continue to go your way. However, since I’d just encountered a big loss yesterday, capital preservation was at the forefront of my mind. Fortunately, I prevailed and recovered over 50% of what I’d lost yesterday, ending the day with a $72.61 gain and once again putting my Forex trading account balance above my initial balance.
Minimizing reactionary behavior is critical to my success in this challenge. My game plan going into the trading day was to focus on buying the Euro and selling the U.S. Dollar and Australian Dollar. Profits were realized from buying the EUR/USD, EUR/AUD, and selling the USD/CAD. I had one losing trading idea, which was selling the AUD/USD. Although the Australian Dollar was weaker than the Euro, it was stronger than the U.S. Dollar.
Almost an +8% profit in one day is nothing to sneeze at, and still yet I left a significant amount of profit on the table. The upper blue ticker mark reflects my profit target on the EUR/AUD. This is my favorite type of trade, where I buy or sell on a retracement. My trade entry was great and I had every intention of staying in the trade until my profit target was hit. However, the following two reasons played a factor in my decision to exit the trade early: 1) I didn’t want to give back my unrealized profits considering yesterday’s loss, and 2) the Friday New York session doesn’t usually result in a follow through to profit targets. I figured that a bird in the hand was better than two in the bush.
I ended the trading week with almost a 3% profit. This is a great return, but less than what I need in order to hit my goal of growing a tiny Forex trading account from $1,000 to $100,000 within a 1 year period of time. In order to get back on track I’m going to need to take on slightly more risk until I fully recover my Day 4 loss and get back to where my profits should be at this point in the challenge. Another day or two with profits similar to today’s gains will put me right where I need to be in this challenge.
Watch this video to learn more about the trades that resulted in nearly an 8% gain on Day 5 of the Tiny Trading Account Challenge.
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Don’t let your losers exceed your winners. It’s a cardinal rule that traders have heard many times and for good reason. Reasons like today when I allowed one good, but poorly executed trading idea wipe out all of my gains from Days 1-3.
On Day 3 of the Tiny Trading Account Challenge I was feeling really good about my progress as I’d already put myself ahead of my planned gains by approximately one day. However, my eagerness to build a cushion to help keep me on track during the inevitable choppy trading periods resulted in me taking on too much risk. I then closed out the trade at a loss at about the worst possible price and reversed directions compounding my overall loss. Fortunately, price consolidated for a number of hours allowing ample time for me to reassess and come to the conclusion that I should have stuck with my initial trading idea. I closed the short trade and reversed just in time to profit from a large bullish move, recovering approximately a quarter of what I’d lost.
Today’s loss is certainly a setback, but not one that’s insurmountable. My estimate is that it will take me until the middle of next week to climb out of the hole that I dug and put myself back on track towards my goal of growing a tiny trading account from $1,000 to $100,000 within a 1 year period of time.
What Contributed to My First Losing Trading Day
I bought into a bull trap
I took on too much risk
I placed too much certainty in price taking the path of least resistance
I second-guessed my analysis and closed my winning trading idea at a loss
I reacted to price by reversing my trade and not sticking to my game plan
In the following video I review the Forex trade that resulted in my first losing day of the Tiny Trading Account Challenge.
On Day 3 of the Tiny Trading Account Challenge I profited $40.98. This is more than double the profit that I needed to generate today towards my goal of growing a small trading account from $1,000 to $100,000 within a 1 year period of time. As mentioned in my Day 2 post, I am working on building a reserve to get me through the more challenging trading cycles and this is the type of day that I needed.
Similar to earlier in the week this was a day when trades that were opened during the New York session did not close until a subsequent session. It’s a known market cycle.
Watch this video to learn more about Day 3 of the Tiny Trading Account Challenge.
On the second day of the Tiny Trading Account Challenge I focused on building a cushion on my trading account. The Forex market continues to show a nice range of pip movement presenting an opportunity for me to gain some additional profits, so that when another choppy market cycle rolls around I can scale back on my trading activity.
Actions That Contributed to a Profitable Trading Day
I chose to take trades across all 3 Forex sessions. This worked out well, because sometimes the trade setups that form during the New York session don’t follow through to the next level of major support or resistance until the Tokyo, London or even the following New York trading session. Knowing this, I decided to enter some trades during the New York, Tokyo, and London trading sessions with the expectation of some of them being closed prior to the end of the upcoming New York trading session.
As expected, I realized profits on a number of trades before the start of the New York session. Icing on the cake was that I’d generated enough profit from those trades to hit my daily tiny trading account profit goal. At this point I could have stopped trading, but for reasons mentioned previously I decided to carry my trading activities into the New York session.
Although the opportunity was there for me to gain significantly more than a $22.51 profit, this is Forex that we’re talking about, which tends to be highly volatile and I’m trading on a 1:50 leverage account, which can work for or against me as a trader. I choose to use leverage to gain small incremental profits towards my $100,000 goal.
To see a review of some of the trades that I closed during Day 2 of the Tiny Trading Account Challenge watch the following video.
Over the past couple of years I’ve been hearing about tiny trading account challenges. This is when a professional trader starts out the year, month, etc. with a micro trading account and grows it to a significantly larger size within a specified period of time. The concept is along the same lines as trading contests, which have been around for forever, but instead of competing against other traders you’re competing against yourself.
The idea is to set a stretch goal — one that is attainable, but challenging to reach. In my case, my goal is to grow a tiny trading account from $1,000 to $100,000 within a one year period of time, starting January 8, 2018.
Trading challenges caught my attention, because for years I’ve been talking about the financial benefits gained through compound interest and consistency. And for us traders, it is compound interest and not excessive leverage that is the secret sauce when it comes to growing a trading account.
My first trading day had ideal trading conditions and is exactly what I needed for a great start. If we continue to see a wide range of pip movement in the coming days this should allow me to start building a reserve to get through the inevitable choppy trading periods.
I finished my first day with a $23.16 profit on my tiny account from one trade, which I reviewed in this video.