- Personal Finance
How I Blew $30,000 In My Forex Trading Account In Just One Night
First of all, let me emphasize that I am no longer a fan of forex trading after blowing a whooping sum of $30,000 in a third world country. If you have $30,000 in the country where I live, you are already a millionaire once you exchange to the local currency.
It all started in 2007 during my internship with one of the biggest banks in Nigeria. I became obsessed with the hype of forex trading flying around everywhere. I told myself to give it a shot after reading so many stories of people constantly making money from trading on a daily basis. What finally made it to get all my attention was a tip from a friend that someone he knows was recently arrested by EFCC in Nigeria on an alleged accusation that he was into internet scam. It was said that when the guy got to their office, he explained to them about what he does which was basically trading forex. It was also said that he made $10,000 in one of his trades even right there at the EFCC’s office. He was applauded and released with apologies for their ignorance about forex trading.
I began to wrestle between my banking job and my potential forex career. I read all the articles I could see online knowing fully well that there were very few people I could turn to for further information as it was then very new in Nigeria. I got online, opened a demo practice account, and then I funded it with about $50,000 demo money. I immediately registered on a forex training website called babypips and printed out all the training modules from start to finish. I read those training material religiously.
I began to perfect my skills in trading by using tactics I have learnt in the training plus live fundamental analysis I usually get from some websites. I would combine my technical analysis indicators in order to predict the market direction but will soon find out that fundamental analysis is the chief mover of all markets and will make market to go its way no matter what the indicators say. After several practice with my demo accounts, I decided to go live with real money. I was still scared to invest hugely into the trading because of the volatility which could wipe any account overnight, so I decided to test the water a little further by opening an account with Marketiva who gave me $5 real money to trade and earn real profits. Surprisingly I turned the $5 to $10 within a week. I quickly said to myself this was it. I am now a master in trading.
I applied to a fund management company that pools investors’ funds into various investment opportunities. The fact that forex was their major focus attracted me and I did not waste time to display my achievements and knowledge in forex trading during my application. Not so surprising, I was called for an interview and was offered to resume the next week. I rushed to the bank where I was working and told my boss I would be leaving as I got a better offer. I was questioned by colleagues why I would not be able to finish my internship in the bank knowing fully well that I had been shortlisted to be retained after the internship, but my answer was that I got a better place that would expose me to greater things. I was careful not to mention forex as I knew they would be quick to judge it as a scam. My resignation letter was finally approved and I left.
I resumed at my new office and was immediately given a client account of about $5000 to trade with. I quickly became a master in scalping as I used to be a great follower of Ben Bernanke, the former Governor of Bank of America. Many a times, technical analysis failed so I honed my skills in the way of pure fundamental analysis. After 1 month of trading full of losses and profits, I finally closed the account in profits making a total balance of $12,000. The company was proud of me and I also became proud of myself. ‘I finally unraveled the secret of forex trading’, I said to myself.
Do You Or Know Someone Who Currently Makes A Living From Forex Trading?
Without further delay, the company gave me a $30,000 account to trade with a target of possibly making $25,000 profit by the end of the month. I said to myself, ‘I would make $10,000 on this account in just one day by taking higher risk’. I decided to trade Non-Farm payroll news. This is one of the news events that has high impact on currency fluctuation and could either make or break an account within a twinkle of an eye. This was in 2008. 5 minutes before the release of the actual Non-payroll figures, I entered a trade buying about 20lots on a leverage of 1:100 using a trading account of $30,000.
This was one of the greatest risks I ever took in my life. At the release of the actual non-farm figures, the market went in a spike going more than 100pips in my favour, but since I was waiting to earn $10,000 in that single trade plus the fact that ‘actual’ far exceeded the forecast making it good news, I was expecting an overwhelming ‘buy’ everywhere. Alas, after up about $6,800 in my account, the market took a sharp u-turn and I was suddenly at -$3,200. This cannot be happening now as I was feeling dead sure the market was going to come back and go my way. The fear of not wanting to lose money prevented me from using a stop loss. I closed my laptop and headed home.
On getting home after about 2hrs in transit, I opened my laptop to follow up on the trade, now the US open is quiet and no big move was in sight for the day. I was at -$10,400. The trade was getting so messy that I had to place another dumb trade to hedge the market. Since I already bought 20standard lots, I added another 20lots to hedge against it but now selling it. This means no loss no gain. For every gain my ‘buy’ trade is making, the ‘sell’ trade will be losing, vice-versa. If this works well, this will ensure I do not lose more than what I have lost while waiting for favourable price to exit both trades. However, for some reasons that I was not sure of, maybe due to swap; my losses were still increasing. I closed the laptop and proceeded to have a shivering sleep. By the time I woke up in the morning, the inevitable has happened, a call no trader wants to receive. An account of $30,000 just had a ‘margin call’.
Since it was a managed account, my manager had also seen it from his end and called to ask if what he was seeing was actually real or he logged into a demo account. I got to the office the next day to finally confirm I blew the account and to possibly face the music but only for me to find out that everyone already blew their trading accounts and was waiting on the last account I traded to be in profit in order to make up for losses on other clients’ accounts. The company officially folded up few weeks after that time.
Forex could be an alternative stream of income but there are too many factors you simply cannot control making this investment a very risky one. I aslo must admit that I traded the market with lack of discipline and greed, but I have also lost money even in those times I had discipline. The market will always go where it will go, no matter your trading psychology. If you are ever going to trade forex, never trade with someone else’s money. Trade with your own money and only trade with what you can afford to lose.