About a year ago, a fellow student at university drew my attention to Forex Trading.
For a 26-year-old student from Frankfurt, the opportunity to earn money on the stock exchange is of course quite interesting. So I started to record the matter under the pseudonym “Hedgehog” with demo accounts. As far as the terms like short, long, margin, equity, etc. are concerned, these were understood and grasped relatively quickly. The margin call was also quickly explained using a practical example. Lesson 1 was quickly learned. Putting everything on one card is less wise on the stock market.

Since they were only demo accounts, this was less tragic at first, as new play money was available again with just a few clicks. So it went on and the first “I’ve got it on” feelings came up quickly, after within two days from 100,000€ in the twinkling of an eye times quickly 500,000€ became. That was then followed mostly fast by “Or also not”, when the Margin Call accomplished further demonstrations of his own.

After about two months I decided that demo accounts were too boring and went over to real money. My investments were limited with 100€ starting capital, but for me as a student this was enough risk. Lesson 3 only took a few days and so I learned that demo accounts are not equal to real money accounts. Not only the stoploss is no longer executed to the exact point, you also immediately take on a different risk ratio. While in demo accounts trades are simply run without a net and double bottom, with real money you start to get emotional quite quickly when the position is in minus with about 20% of the account.

In my opinion, demo accounts only make sense if they are exclusively used to get a feeling for proportions or generally to get familiar with software, terms and conditions. If you don’t treat a demo account like a real money account from a psychological point of view, it is even counterproductive to practice with it.
I had to find out relatively fast that positions without a stoploss very quickly destroy a lot of capital, especially if the assessment of the current trend was also wrong.

A few hundred euros in tuition money later, I decided to leave the stock exchange casino behind me and went in search of strategies. If you search a little on the Internet, you quickly come across several seminars, books and websites that deal with the subject of Forex. Most of the time it is about chart analysis and aims to identify patterns, support and resistance and to draw conclusions for the future price development. Due to a savings offer I decided to attend a webinar, which took place for four weeks on two to three evenings each.

In addition to the basics of terms and position sizes, the insights that I had gained myself before were conveyed here:

• Why is the path from demo account king to margin call so short
• Why money management is almost the most important thing about trading
• self-discipline, self-discipline, self-discipline

Basically, the strategy you follow is not so important. Everybody finds his way to trade at some point. Much more important than finding your way in and out is your own discipline.
How many positions can I have open at the same time, which position sizes do I use and where do I place my stops?
What percentage of my account am I willing to risk per trade and what is the loss in the worstcase if all trades are stopped?
At what price do I want to close the trade and how realistic is this rate in the foreseeable future?
While stoploss and takeprofit are rather part of the strategy, the remaining points can be summarized relatively well under money management and self-discipline.

For my part, I have now set my trading rules and act strictly according to them. One is money management. A maximum of 2% of my trading capital is risked per trade. All open positions together may cost me a maximum of 10%.
I also log all trades in Excel and evaluate them. Currency pairs that on average generate more loss than profit will eventually be expelled from the portfolio.

Meanwhile, I take a closer look at the charts before I open a position and study the economic calendar every morning. It’s not uncommon for prices to start bouncing around when a FOMC member speaks in the US or when the ECB President announces the latest rescue measures to the public.
So when I see such a speech on the economic news agenda for that day, I either hedge my trades early or close the positions.

In the course of my trading career I have experienced several days where the stock market has gone crazy. Besides the sanctions for Russia and similar political actions, the main factors for such days are mostly interest rate changes and changes in banks. Probably the best known and most recent example of this will have been the decision of the Swiss National Bank. On 15 January it was announced that the Swiss would abandon their peg to the euro. This was responsible for the fact that the EURCHF exchange rate could not fall below 1.20. The Swiss National Bank has not been able to prevent the EURCHF exchange rate from falling below 1.20.
On the more volatile days of the stock market, I would speak of a lot of movement if a price jumped by one to three cents on a trading day. In such a case, a lot of money is involved.
When the Swiss National Bank gave up the coupling on that day, a price adjustment followed relatively quickly. Within two minutes the EURCHF fell from 1.20 to 1.05, followed by further steps to the new low of about 0.965.

Such a leap can be illustrated much more easily with a calculation example. Let’s assume an account with leverage 1 : 300 and 50.000€ capital. Under the assumption that the complete account would be used, about 150 lots could have been traded. The entire movement would have resulted in a profit of around €3.5 million.

Of course, this is only a theory game, but 150 lots come together very quickly if you manage several customers as a broker. In addition, a stoploss is no guarantee for an exit, but only an instruction to the broker to exit immediately at the best possible price when a price is reached. However, if the price falls by 15% within 60 seconds, you won’t find a counterparty to liquidate the position.
Since many brokers bear the losses of the customers, who go beyond their deposits, it was then not surprising to read in the following days of the insolvency of some brokers and hedge funds.

In conclusion, I can say that I have learned some valuable lessons over time. I did not become a millionaire by trading, but meanwhile I can preserve my capital and increase it in small steps. In my opinion this is the main thing, you can’t always win, but you can win more than you lose.

Experience report written by “Hedgehog”, 26 years old, living in Frankfurt.