I am your stereotypically Midwestern girl: I was raised to work hard, serve my community and be self-sufficient, although not too self-sufficient because there’s something vaguely unseemly about a million dollars (to paraphrase Garrison Keillor, we’ll take 30 cans of tomato sauce and a bag of rice over a quarterly report any day). However, 30 cans of tomato sauce won’t get you very far into retirement, so I’ve decided to start experimenting with Forex trading.

I am an architect: I don’t have an MBA or a strong natural inclination toward trading, but I do have a boyfriend who works in finance and recently started experimenting with Forex trading. I read a few of the books he bought and became interested, so I thought I would play around myself and document it here. I hope that over the course of this blog I can develop some strategies for using Forex as an investment tool. By documenting my successes and failures, I also hope I can help some of you other non-finance types make the foray into Forex as well; or at least show you what not to do.

What is Forex?

Forex is the same concept as exchanging money when you travel. For example, let’s say you exchange $100 for a local currency. Now say you don’t spend that $100; you will then have to make another stop at the currency exchange on your way home. After you’ve gotten your dollars back, you most likely won’t end up with $100 in your pocket as the exchange rate will have changed. If you’re lucky, you may have made a tidy profit, otherwise your thriftiness will come back to haunt you and you’ll find you’ve lost a few dollars in the two transactions.

This is Forex in a nutshell: exchanging one currency for another (i.e. you buy one and sell the other) with the hope of making a profit when you reverse the trade. You are betting that a country’s economy will go up (or down) compared to the other during the time that you hold its currency.

There is a great website, called Baby Pips, which can give you a crash course in Forex.

Why Forex?

Because Forex is a more difficult and fast-paced trading environment than the stock market. Forex positions change direction quickly and with no apparent reason, making it very difficult to predict whether a given trade is a good bet. For this reason, I believe it is a great way to develop a strong set of universal life skills, such as dealing with uncertainty, handling losses and thinking statistically. For me personally, I see Forex more as a tool of self-development rather than a way to make money, although I do hope a can make some money too.

With Forex there’s no barrier to entry; you can start trading with $25 if you want to.

My Strategy

My trading strategy will follow trend trading rules (more on what that means to come). In other words I do not try and predict what is happening with a currency, I just bet that the current trend will continue and ride its coat-tails. I like this strategy because I don’t need to be an expert in money markets and I don’t need to spend that much time ruminating on what’s going on with each currency (I’d rather spend my time thinking about buildings and cats).

I am going to start with a practice account on Oanda. This practice account lets you play around with an imaginary $100,000 and see how you do. I have no intention of trading with any real money until I am able to consistently protect my practice account funds (if I am ever able to). I’ll continue to post here with updates on my trades as well as other tidbits on forex or other ideas for how to be financially stable while living on a public servant’s salary.

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