How Can Forex Traders Avoid Losing Money?

trading optionForex is the world’s largest financial market, and the trading volume each day is in the trillions of dollars. Because it is so popular, and there is so much potential, it is a very attractive trading option for many. Those who are experienced can do quite well with Forex, as long as they take the time to learn what they are doing. Newer traders who want to trade are generally at more of a disadvantage because they don’t have much other trading experience to help them make the right decisions.

Why Do People Like Forex?

There is a lot of money in Forex, but that’s just part of the reason for the popularity. Traders like that they are able to trade around the clock, and that it is possible to gain leverage with these types of trades. In addition, it’s relatively cost effective.

Of course, you also have to think about the risks involved with Forex. It’s possible to lose money quickly if you are not careful. However, with the tips that follow, it will help you keep your losses to a minimum.

Practice and Learn First

You have to learn how Forex works, and you need to understand the various things that can cause foreign currencies rise and fall. What political and economic factors will affect the currency? Knowing these things will make it easier to predict what is going to happen in the market, thus making it easier for you to make smart moves in Forex.

Before you decide to risk real money in the market, you really need to know what you are doing. The best way to do that is to set up a practice account. These accounts will let you practice with fake money so you can get an idea of how your plan and strategy work.

Find a Good Broker

In order to facilitate your trades, you need to work with a broker. Make sure that you choose a broker who has a good reputation. There is less regulation in Forex than in other areas of trading, and that means that some of the so-called brokers out there do not really have your best interests in mind. You need to take the time to find the best.

Keep Records

Having records of your trades, your wins and losses, and the strategies you used can prove very handy down the line. You can review them to see what you did right and what you did wrong. This can help you when you are altering your plan so you do not make the same money losing mistakes in the future.

Think of It as a Business

Even if you are just trading part time, think of it as if it were a business. Understand that you need to look at the big picture for your business, and that you do not have to dwell on the short-term losses and gains.

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A tree fell on our house. 

No really a Giant tree crashed down on our house yesterday evening during a gnarly Seattle Storm. Check it…


  
Fudge.

Have a dozen or so holes in our roof and two busted skylights, but otherwise things seem to be in decent shape.

Now I get to go through the process of learning how a homeowners claim is handled.
Woof.

Hey I’m on Forbes Today…

So a Forbes journalist reached out to me a couple weeks back and we did a phone interview about my life and financials. The article is live on Forbes today and if you want to read it you can click here. I wouldn’t say everything in there is exactly how I would have portrayed our situation, but nonetheless, it’s a still a decent piece.

And if you want to get a real kick out of it, click over to the same article on Yahoo and read the comments. Man, some people are brutal 🙂

I’m not dead. I’m just really busy making da money.

I’ve always wanted to be the type of person that sets goals for themselves. Let me pat myself on the back as, today, I’ve reached a new goal.

LONGEST TIME BETWEEN BLOG POSTS IN THE 6 YEAR HISTORY OF THIS BLOG.

I know. I know. You’re so proud of me right?! Thanks for your encouragement.

For realsy though, I’m at a weird crossroad. This blog is literally titled Punch Debt In The Face, and as such, feel like the voice of the blog should be about debt, or at the very least, personal finance. That said, after 1,170 blog posts, I just don’t have much left to say about money. 

That’s not to say that I’ve stopped caring about money. My Roth IRA, 401k, and taxable investment accounts are still very much a part of my life and I love them dearly. But I just don’t have any interest in writing about them anymore. At least not often enough to warrant posting here.

I’ve flirted with the idea of selling off my blog for a couple thousand bucks. Letting some spammer take it over and blast you with a million posts about “10 ways to get out of debt” or “Best credit card offers”. I’d want to punch myself in the face for doing it, but money is money.

The other part of me wants to just let it lay dormant and post as desired (kind of like I am right now). Maybe sometimes I post a couple times a month. Maybe I go six months without any new content.

Part of me wants to just rename my blog Punch Life In The Face and just write about whatever the hell I want without feeling like I need to cater to a specific audience, but unfortunately, website SEO hates new domains.

And so here we are. Only problem is, I’m not quite sure where “here” is.

I can tell you that I’ve been continuing my latest money making hobby of flipping a ton of furniture on craigslist. Here are my most recent deals..

Original Z Chair. Paid $250. Sold for $850.


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Stanley Credenza. Paid $250. Sold for $600.

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Lane Credenza. Paid $50. Sold for $500.
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Arnt Sorheim Credenza. Paid $450. Sold for $1,050.

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Lane Credenza. Paid $250. Sold for $650.

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Norwegian Teak Credenza. Paid $500. Sold for $1,500.

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BoConcept Leather Chairs. Paid $1,000. Sold for $1,900.

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Walnut Credenza. Paid $350. Sold for $800.

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I know after my last post about flipping furniture I got a few emails from readers saying they gave it a shot and were able to make a quick profit. So far my furniture investing is absolutely destroying actual stock market investing. Can’t beat a 100% to 200% return on investment.

Go flip some furniture already. Unless you live in Seattle, then back off… I call dibs 🙂

Oh, and I’m 99% sure Girl Ninja and I are having a piece about us go up on Forbes this week. I’ll link to the post when I see it… assuming I’m happy with how it portrays us, haha.

Edit: the forbes article is up. Found here.

Sorry I’m on vacation

Probably won’t have new content up until next week since the fam and I are in San Diego for Spring Break. 

The first $100,000 is the hardest.

I’ve been feeling a little nostalgic as of late and have been rummaging through old files on my computer. That’s when I happened upon this gem of me back in my glory days….

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Look at those thunderous calves. Those luscious locks. Those chubby cheeks.

It’s no wonder Girl Ninja desperately wanted to bear my children.

After laughing at my baby pictures for a good 20 minutes, I started clicking through my old Excel spreadsheets.

These old spreadsheets taught me a very valuable lesson. A lesson that will be relevant for any of you who are in the early stages of getting your financial crap together. The lesson is this…

The first $100,000 is the hardest. 

I mean check out my net worth progression over the last seven years.

NW end of 2008: $18,617

NW end of 2009: $28,793

NW end of 2010: $63,714

NW end of 2011: $114,622 (first full year of dual income)

NW end of 2012: $168,878

NW end of 2013: $234,881

NW end of 2014: $288,180

As you can see it took me about four years to build up a net worth of $100,000. But then it only took two years to increase it another $100,000. And if my 2015 projections are close, these last two years will yield another $100,000 increase (which isn’t bad considering we gave up our dual income status).

The power of compounding is no joke. 

I mean think about it. If you have $10,000 invested for retirement and the market goes up 10% on the year, you’ve increased your net worth by $1,000.

Whoop-de-freakin-doo.

But if you have $100,000 invested, you see a $10,000 jump.

Or better yet, once you have a cool million invested, a 10% jump just means you earned yourself $100,000 without doing a darn thing.

The rich really do get richer… Because they let their money make money. And then they let the money, their money made, make money.

How confusing and awesome and wonderful and rad and bodacious is that!!!!

At 29 years old, I’m pumped I’ve gotten a taste of just how sweet building a nest egg can be.

Hopefully my story can motivate a few of you to keep on chugging, even if things seem like they are moving slower than you prefer, don’t give up. Your future you will thank you for it.

Cheers to your first (or next) $100,000!

It’s time for a calculated risk.

Here I am, seven years in to my personal finance journey, realizing my relatively disciplined approach to our finances has caused us financial harm.

Allow me to share with you one of the most recent examples of how “doing the right thing” came to bite us in the butt:

In 2010 Girl Ninja and I decided we wanted to buy a house one day. We knew said house would probably cost us around $400,000. We knew amassing a 20% down payment was the financially responsible thing to do.

So we did exactly that.

We spent three and a half years throwing tens of thousands of dollars in to our savings account (late 2010 to early 2014). In hindsight this was absolutely the wrong financial move for a few reasons.

1. Instead of banking nearly all of my discretionary income. I could have saved half and invested half. My savings account was only earning me 1%, meanwhile the stock market during this same time increased by 60%.

2. Because we were adamant on waiting to buy a house until we reached the $100,000 savings threshold, we missed the bottom of the real estate market. Had we bought 1.5 years earlier, when we had about $60,000 in the bank, we still could have put down 15%, but saved probably $30,000 on the purchase price of our home.

3. And just like we missed the bottom of the housing market as we tried to hoard cash, we also missed the bottom in regards to mortgage interest rates. We locked at 4.125%. Had we bought a year earlier, our rate would probably be about 3.4%, saving us $120/month… every month …for thirty years.

 

Ouch!

 

So yeah, I thought I was smart by waiting to have $100,000 banked to buy a home, but that clearly wasn’t in my best financial interest.

Now I know you might be thinking to yourself “Ninja, hindsight is always 20/20.” 

You’re right.

 

But my foresight was also 20/20. 

In 2010 I was saying the crappy market didn’t scare me because I knew over the long run it goes up.

Pretty much everyone knew by 2012 the real estate market had probably bottomed and was on its way up. Here’s a blurb from one of my late 2011 articles

The housing market bubble burst in 2007/2008. It dropped hard and fast for a long, long time. Over the last 12 months, however, it’s remained pretty steady  and in my opinion is probably pretty close to a bottom (if not already there).

We knew that a 3.4% interest rate was the lowest in history.

I mean it’s like the real estate gods had aligned the stars perfectly telling anyone with a stable career and a decent income “BUY A FREAKIN’ HOUSE NOW!!!!”

I wish I listened.

 

Never again friends. Never again.

It’s time I start taking calculated risks in an effort to further improve my financial situation.

In the next week or so Girl Ninja and I plan to head to a local credit union and apply for a Home Equity Line of Credit (HELOC).

“BUT NINJA YOU ARE SUPPOSED TO HATE DEBT! Why would you consider taking out a line of credit” – You guys.

Diversification my friends.

I’m sick of my cash earning 1% in our savings account. The time has come to seek higher returns.

 

Our new plan is as follows:

…Keep no more than $10,000 in our savings account (this is about 3 months of expenses at current spending levels).

…Move all remaining savings in to my taxable investment account where I will increase my market exposure.

…Open up a HELOC as a secondary emergency fund. Gaining access to about $50,000 if needed.

…Profit.

You might be wondering why I’ve decided to use the HELOC as a back-up emergency fund instead of my Roth IRA, or even a 401K loan.

 

Again, the answer is diversification.

Let’s pretend I have a $20,000 emergency. My roof caves in. Or maybe that Unicorn I’ve always wanted to buy comes up for sale. Or maybe Girl Ninja is kidnapped by some Canadians and a $20,000 ransom is requested.

I can cover half of this emergency by liquidating my $10,000 e-fund. I could pull another $10,000 from my Roth IRA, or taxable investment account, without penalty. Or I could borrow $10,000 from my 401k at 2.25% interest.

But what if the stock market has been having a really crappy go at it? Say the Dow is down 25% on the year like it has been in the past.

You think I’m going to want to sell these stocks and lock in a 25% loss?

HECK NO!!!!

This is where my HELOC could actually be a blessing. It allows me to mitigate potential crashes in the stock market. I’d simply transfer $10,000 from my HELOC to my checking account. I’d rather pay 4% on this loan, over 25% in market losses any day.

 

“But Ninja, what if the markets are up 25% like they were in 2013.” – You guys.

Well then I borrow the remaining $10,000 from my taxable investment account and lock in that sexy appreciation.

 

Duh.

 

Just because we will be opening a line of credit doesn’t mean I have to use it. Just like you don’t have to use that credit card sitting in your wallet.

Opening up a HELOC, and diversifying my cash flow options, seems like a no brainer. I’m super pumped to finally be at a place where Girl Ninja and I can decrease our cash reserves, and ramp up our investment portfolio.

Now quit wasting time and go get yourself a HELOC. <—joking

 

What do you think of my plan? (bring it on haters)

What do you think about HELOC’s in general?

Have you reached a point, like me, where you’ve realized that your conservative nature has cost you big bucks?