Feb 25, 2010

FOREX Trading Tips for Beginning Traders

A few months back, something sparked my interest on getting into spot (Foreign Exchange) trading and so I started practicing on demo accounts, enrolling on online courses, attending webinars until finally I openned a live account - a microlot account.

The real trading practice is significantly different from the demo and yes, as expected, I burned some good money away the instant I started placing my trade. It was disheartening at first but I surely got something more valuable to my future as a beginning trader than the money I lost at startup. I gained practical knowledge on the best practices on how to and how not to trade going forward.

For those newbies like me considering on getting into spot trading, here are some practical and no non-sense advice you would definitely find it handy:

1. Expect to lose. Even the most well thought out trading plan provides no guarantee of winning. Not even the most sophisticated tools, softwares and charting indicators can give a trader full protection against losses. Losing is very much a part of a daily life of a trader. What sets a good trader from the rest is how they manage risk which I will talk about later.

2. Always start with a clear plan before entering a trade. This is the most important step. Study the currency pair you wish to trade and lay-out a clear plan on entry and exits. Take time to take a longer look at the charts, make scribbles and use whatever tools or indicators that suits your fancy and draw-up a plan. A good starting point is to identify the trend where the market is heading and knowing where the support and resistance levels are.

3. Be patient. Patience is a common virtue among professional traders. One of the many mistakes I made as a beginning trader is to "chase-the-market" and hoping to get into the trend. Though there are times I made some profitable trades with it, but most often than not, I lost a good deal of money with such a strategy. Another mistake I made was to get into short-term trading like "scalping" thinking I could reap some profits quickly in just a matter of minutes - wrong again. While it might be true to intermediate and veteran traders, it's definitely not the case for beginners.

4. Do not panic. Yes. This is what happened to me when I had my first loss - I panicked like crazy! I remembered putting a one-lot, long entry order then a few short minutes later the maket started moving against my direction and dipping to 100 pips on the short direction! Thinking that it will go further down, I immediately closed my trade to prevent further losses until it went back up again 20 minutes later to what had amost been a profitable trade. Never be hasty to close any losing trades. There are strategies where you can regain them and one of them is hedging.

5. Keep your strategies as simple as possible. It's so easy to get lost and be overwhelmed with a host of tools, indicators, and trading strategies available but the best plan is ALWAYS the simplest ones. Technical indicators such as Fibonacci's, Elliot Wave, Bollinger Bands etc only help to improve the probability of winning but it's no guarantee. To keep my trade simple I only observe and use the following: a) Identify the trend b) know the support and resistance levels, and c) use Slow Stochastics. I am not saying to limit yourselves to that, however use a few tools and strategies that works best for you.

6. Know your risk and manage them well. Since the possibility of losing is inevitable, managing risk should part of every trading plan. A good risk-reward ratio should be 2:1. This simply mean that for every dollar that you risk, your profit placement should be atleast two dollars. Another way to manage risk is to put in only a maximum of five percent of your total equity into trading. Do not risk more than what you can actually sustain.

7. Journalize past trades and study them. This is something that many traders does not do - journalize their trades. Keep a record of all trades such as: your entry position, lot size, stop loss, limits, risk-reward ratio, currency pairs traded, strategies and so on and so forth. This will give you an idea where you traded wrong and what you can do in the future to correct them. There are available commercial software applications (in MS Excel format) to help you properly journalize your past trades and it's always a good habit to keep one.

8. Trade on mid to longer timeframes. I do not specially recommend 'scalping' or any trading strategies to that matter with very short timeframes. Short time frames ranges from minutes to a few hours. Although, that is where the market action is, shorter timeframes are usually very unpredicatable and no technical indicators will prove very useful in these scenarios. I advise trading on a timeframe from three(3) days to two(2) weeks for they provide more information and outcomes are significantly predicatable.

9. Do not open too many trades all at once. Sometimes, we get giddy and get ahead of ourselves thinking that every chart we see is an opportunity that we cannot just let it pass. So we open up too many trades all at the same time. Openning a trade requires an ample amount of equity to sustain it. Openning too many all at once will definitely require more money and, if it cannot be sustained, you might get a margin call. Openning fewer trades, on the other hand, gives you more focus on a given trade and frees-up more time for you to do other things like: taking out your wife for a dinner.

10. Never place stop losses too close to your entry level. Because I wanted to limit my losses, I always make a mistake on placing my stop losses very near my entry level - like 30 pips. Since stop losses are to 'shallow', I end up getting stomped-out by normal market oscillations. Until you are very sure that the market will move towards your expected direction, do not place stop losses until you've earned enough pips.

11. Never put in too many lots on a single trade (over leveraging). This is one of the result of being impatient. Over leveraging, as they say, is a double edged sword. It may give us more profits only when the market is moving toward the expected direction but, it may not if it isn't. For beginners on a microlots like me, stick to 1 to 2 lots even if we feels we are very sure.

12. Focus on the pips, not on the profits. This advice was taken from a book somewhere. It changed my mindset on how I look into trading. It simply means that our success and failures should be measured on the number of pips we gained or lost instead of seeing it in the financial point of view. This is helpful for a couple of reasons: 1) we focus more on strategies and learning from them, and 2) we do not over-leverage our trades for a quick fix.

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Feb 6, 2010

Trading Log: CHF/JPY on 02/06/2010

Currency Pair : CHF/JPY
Time Frame : Daily
Strategy : Range Trade
Support Level : 84.17
Resistance Level : 91.052
Entry : Buy @ 84.217
Limit : 87.863 (646 pips)

Notes: Conservatively lowering my entry limit @ 87.863 to close and planning to go LONG on the same entry limit up to to resistance level @ 91.052. The total pips when it reaches the limit level is 646.

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Nov 21, 2009

I Struck Gold!

There's an old proverb that always ring a bell everytime I think of investing - "Do not put all one's eggs in a single basket". As my income grows almost on a regular basis, finding a safe place to hide and nurture my 'eggs' can be time consuming at times. Factors such as risks, stability and interest rates are just some of things that need careful consideration before putting my money in.

Very recently, I looked at gold as an investment and I must admit I am very convinced why everyone has to have some of it. Since Gold prices are steadily going up from the time it was traded, I considered buying some for my own however, a few things must always be considered like where to keep it and if it can easily be sold to current market prices.

I stumbled on this website (www.bullionvault.com) where you can easily buy gold and trade them anytime when cash is needed. I listed some commentaries regarding this service as I tried my hands on them:


1. You don't need huge cash deposits to buy gold. A regular middle income dad like me can start saving by buying gold with a minimum of $US36 (that's P1,660+ pesos) deposit. That is the price of 1 gram of gold at the time of this writing and you already have an account which you can deposit on any of the three bank locations (New York, London or Zurich) available and at any of the three donominations - US dollar, Euro or Swiss Francs.

2. Real Gold: The gold that you will buy is a real physical gold, kept in an allocated storage with your name. The gold is kept and secured in your behalf by ViaMat - a BullionVault partner of some sort. Likewise the money earned from trading gold is kept in an international bank and on any of the three currencies of your choice.

3. Real-time monitoring: Depending on the market trends of gold, you can actually see the up-to-the-minute changes in valuation of your gold investment on the Account Balance Page. When the value of gold in the market goes up, the valuation of the amount of gold you keep in BullionVault goes up as well. You can actually see how much your investment grows even over a period a few days.

Buy gold online - quickly, safely and at low prices

4. More control: Control is important most specially when your hard earned money is at stake. Should you want to maximize profits by trading gold, you can easily do it in BullionVault's easy to understand trading platform. Since the value of gold remains steadily up over the years, you may not need to trade at all - just keep on buying. If (just if) the value of gold dips to record lows, you can then sell it to other BullionVault members which may be programmed to do it automatically for you. All one has to do is determine the tolerance level of price 'dips' one can take.

5. Easily converted to cash: In times where cash is badly needed, your gold investment may be sold to a much higher price from the original price you bought it - ofcourse. For gold, fortunately, your money invested will definitely yield a much higher return than putting it in a time deposit.

6. Easy to understand. The user interface of BullionVault is very easy to understand and operate on that even a highschool student can start trading with basic knowledge - I think.


1. You cannot use your credit/debit card if you're thinking of buying a few grams of gold. You have to Bill Pay or wire 

transfer your payment in cases you wish to buy gold. These things take time and it's more convenient for me to use my credit/debit card instead.

2. Member page keeps on logging-out. I know it's for security purposes but I hope they will have an option where the user decides to keep logged-in the entire day.

3. Some video tutorials for beginners who wanted to go into gold trading at BullionVault.

Over all I would recommend BullionVault as part of your savings and investment portfolio. The key advantages that made me 

go into this is: Control, stability and profit.

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Aug 4, 2009

Optimizing PostgreSQL for Production ...

Optimizing PostgreSQL for Production Use.

This is a reference list of things that need to be changed to PostgreSql Server prior to production use. This material is a collection from other resources but outlined in a while to simplify configuration settings for regular database administrators like me.

STEP 1 [Configurations]: Go to PostgreSql config at: file /etc/postgresql/8.*/main/postgresql.conf to change the settings.

STEP 2 [Available Memory]: Know how much memory you need to allocate for your database. If your server is solely dedicated for database use, then your physical memory shall be your available memory. If it is shared with other services such as Apache2 Web Server then, leave an ample memory for others. Generally, allocate a very liberal amount of memory for PostgreSql since databases are naturally resource hogs. My rule of thumb for this is: 

75% of Physical Memory (RAM) = 'Available Memory'
Example: .75 * 2G RAM = [1.5 G RAM]

STEP 3 [Change th config file]

DescriptionSets the number of shared memory buffers used by the database server. Settings significantly higher than the minimum are usually needed for good performance. 
Recommended.25 * [Available Memory]
Special NoteYou need to change the kernel parameter [SHMMAX] to twice the amount of memory allocated for shared_buffers.

DescriptionSpecifies the amount of memory to be used by internal sort operations and hash tables before switching to temporary disk files.
Unitskb     Default: 1024kb
Recommended[Available Memory/max_connections] / 2

DescriptionSpecifies the maximum amount of memory to be used in maintenance operations, such as VACUUMCREATE INDEX, and ALTER TABLE ADD FOREIGN KEY. The value is specified in kilobytes, and defaults to 16384 kilobytes (16 MB). 
Recommended[Available Memory] / 8

DescriptionNumber of disk-page buffers allocated in shared memory for Write-Ahead Log (WAL) data.

DescriptionMaximum distance between automatic WAL checkpoints, in log file segments (each segment is normally 16 megabytes). 
Recommended(([Disk Space Allocation for WAL] / 8) -1 ) / 2
Special Notemust be between 16 to 128 depending on how much disk space are you willing to allocate for WAL.

DescriptionSets the planner's assumption about the effective size of the disk cache that is available to a single index scan.
Recommended[Available Memory] * .75

CPU Operation Costs:

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Jul 23, 2009

Life Insurance: Permanent vs. Term

The whole idea of getting a life insurance is purely for protection however, there are now a wide variety of life insurances, bundled with some form investments,promising better returns (cash value) and boasts wider coverage. But, before you pull your wallet and get excited please ALWAYS take time to know what you want, how much you can spare, and for how long you wish to keep the policy. Carefully selecting the right life insurance can spare you from disappoitments and save you huge sums of money in the future.

After careful deliberation, you'll surely be faced with the million dollar question - should you buy a permanent life insurance or term insurance? Here are some useful facts and tips you should consider first before buying.

1. Buy Life Insurance for Protection ONLY
Life insurance is NOT an investment vehicle and should never be considered as such. Many life insurance policies nowadays are bundled with some form of investment component that primarily makes your premium very expensive. To give you an idea, Term Life Insurance will only cost you around 10% of the actual cost you'll get from Permanent Life Insurance having the same coverage. Also, another reason worth mentioning is that investment component in permanent life insurance policies generally yields very low returns because it does not earn cash value in the first two years from your policy application.

2. Term Life: More value for less
If your young or a middle-aged dad like me, getting a term life insurance policy make alot more sense. A term life coverage at a younger age makes your premium very affordable and the likelihood of you cancelling your policy is less because it's cheap and sustainable. Fact is, many permanent life insurance policies are cancelled in the first 10 years for the very same reason.

3. Keep it lean and simple.
Do not buy some additional riders you wouldn't really need and most probably will not use. Insurance riders contain a lot of exclusions that is usually written in fine prints for very obvious reasons - they don't want you to know. Riders also drive your premium payments up and put more money into your agents pockets. The rule of thumb when getting a policy is, keep it simple and lean. The only exclusion to this rule, in my opinion, is the Waiver of Premium Rider (WoPR). This rider suspends premium payment but keeps your policy active when you become disabled.

4. Buy only from reliable source.
Always do your homework by knowing the financial standing of the insurance company you're buying a policy from. Don't be deceived by nice looking brochures or verbal promises made by your agent. Know their financial standing and get opinions from others. You have to know and make sure the company will still be there when you need them.

5. Select a professional insurance agent.
Surely, the first people who will approach you to buy their insurance are either some very close friends of yours or your relatives. My brother bought his from his mother-in-law which he eventually cancelled. My advice is stay away from them and get someone not related to you that can equally be trusted. This will make it easier for you to say no on offers you don't need or not be ashamed should you want to settle for a low-premium policy. This is one good reason why I find it difficult to cancel my policy which I bought from a close friend.

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