I have about $100k that I can use for trading, which is currently sitting in cash earning no interest. I feel can use this money to take some calculated risks in the market as my retirement, kids education etc. is taken care of via other accounts, and I am not counting on this $100k for immediate or future needs. I made my small stake old fashioned way - work and savings. I am still climbing corporate ladder, and probably 10 - 15 years away from peak earnings, so I feel somewhat financially secured. As I work in corporate treasury, I have been watching FX, interest rates and commodities markets for some time as a hedger, with majority of my time spent tracking G7 FX due to the nature of the risk profile of the company I am working for. As I watched FX markets long enough, I started seeing things - structure of trends, patterns, etc. In other words I think I am seeing something resembling an order in the foreign exchange markets. As such, I want to test my theories with real money. As I am not eager to blow $100k on the untested theories that may be just an optical illusion, I will start an experiment with very small amount - $500. The thesis is that if I cannot make money with $500, I will not be able to make it with $100k. If I lose $500, it is not a big deal - a small price for a lesson. My plan for a year is as follows: Open an account with one of the retail brokers. I like Oanda, the spreads are low and interface looks easy Start trading with approximately 30:1 leverage ratio to begin with. Adjust leverage ratio as I ago along to find my "comfort zone" Publish my thoughts on the markets daily, and trading statistics weekly in this journal Trade only in G7s, mostly in EUR, JPY and CAD Evaluate my results on Dec 31, 2012 and decide if it is worth risking $100k starting in 2013 on currency trading ... or stop trading if account balance gets below $100, then close the account and donate residual to charity
Due to the main job related demands, I had to put my trading endeavor on hold for some time. Now that things have settled down, I am ready to start. I am making the following modifications to the post above: I took $20k out of $100k account and opened an account with Interactive Brokers As $80k is still sitting in government money market fund, I effectively put 20% stop loss on the whole portfolio. When (if) $20k is gone, I am done with trading I will be trading EUR futures only using maximum margin to equity ratio of 75% - for $20k account this equates to 3 EUR.USD contracts at the start The account was opened two weeks ago, and since then, I made $600, while getting acquainted with IBâs platform. Now I am ready to go.