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randomnessBroadly speaking, what it's taught me is that I am terrible at market timing*. The foreign exchange markets are an excellent place to learn that. Even better is when you're learning that lesson with play money.
I managed to lose about a quarter of my fictional balance in less than a year, even without leverage. I'm sure one could manage to lose that kind of money a lot faster using leverage!
It wasn't even that I was losing money by trading too often. I think during the period I was trading I made fewer than one trade a month. However, I was quite good at guessing wrong. You could have guessed more wrong if you'd tried, but it would have taken effort. Most of my positions ended up being losing ones.
Speaking of which, I also realized that while the graphs are pretty and the quasi-real-time quote board can be mesmerizing, I just couldn't summon up the focus necessary to stay on top of the markets.
A bit of self-knowledge and humility bought at the price of a small amount of time, and no money at all. I'd call that a win.
*As the article says, "Whether market timing is ever a viable investment strategy is controversial."
I managed to lose about a quarter of my fictional balance in less than a year, even without leverage. I'm sure one could manage to lose that kind of money a lot faster using leverage!
It wasn't even that I was losing money by trading too often. I think during the period I was trading I made fewer than one trade a month. However, I was quite good at guessing wrong. You could have guessed more wrong if you'd tried, but it would have taken effort. Most of my positions ended up being losing ones.
Speaking of which, I also realized that while the graphs are pretty and the quasi-real-time quote board can be mesmerizing, I just couldn't summon up the focus necessary to stay on top of the markets.
A bit of self-knowledge and humility bought at the price of a small amount of time, and no money at all. I'd call that a win.
*As the article says, "Whether market timing is ever a viable investment strategy is controversial."
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Date: 2012-10-15 12:35 am (UTC)Hah! I seem to remember it being done, though I can't find the link offhand.
Also, do you trade with stops? I mean, maybe your picks are fine but the suck whenever you look at it?
So, while it's true I failed to trade with stops, my picks also sucked. :) For one thing, I was one of many thousands of traders who really got screwed by the Swiss National Bank. On the other hand, stops would quite likely have been helpful when I shorted EUR/USD, because I really had something going into late summer which turned around quite nastily later.
By that point I had kind of given up on the game and was on the road anyway. If I'd been trading with real money, I imagine I would have been a lot more proactive about closing positions before leaving reliable access to net.