Are you still worrying that forex trading may not be suitable for women? Here is what female traders from around the world have been saying about their experience with forex.
MAIKO, FOREX TRADER FROM JAPAN
Q: When did you start trading?
A: In 2007, when the carry trade was at a peak.
Q: Why did you start forex trading?
A: My friends were trading, so I started.
Q: What is your educational background in college or high school?
A: I graduated from a university in the United States with a bachelor of science.
Q: How did you learn about forex trading?
A: Online, by trial and error.
Q: What percent of your expendable money do you invest in forex?
A: Approximately 10 to 15 percent. I also do not plan to invest more than 15 percent in the future because I have learned that I should not trade (invest) more than I can risk.
Q: What is the most that you have earned trading forex?
A: My total gross profit was once close to 1 million JPY.
Q: What is the most you have lost trading forex?
A: I lost 0.5 million JPY in one night. When I woke up in the morning, my account had been liquidated and all of my positions were automatically closed. I think I was way too overleveraged at that time.
Q: Does being a forex trader boost your self-confidence among your friends? How about at home?
A: I feel that I am always up-to-date with news and economic events because I am a forex trader. That is something that I can be positive about!
Q: Do you ever trade with your female friends? How about with your husband or boyfriend?
A: I trade alone because I want to stand by my own trading rule and strategy. Trading is an individual responsibility. I mean that I should be solely responsible for the outcome. It can get nasty if I lose a trade or enter or exit a market too soon or too early by listening to others. I do not want to get feisty with friends or a partner!
Q: How do you spend the money you earn from forex trading?
A: I cannot recall a specific luxury item that I purchased with money earned from forex. But when I win a trade, I buy fancy desserts or drinks!
Let me introduce you to one of the giants of the forex industry, who despite her young age has already published four books on this topic. Yes, I said “her.” This is a she. Now, I’m not expecting you to write books on this topic or make appearances on Bloomberg TV and CNBC all the time, like she does. I just want to set her as an example of a successful female forex trader. Yes, ladies, we can!
So without further ado, I bring to you an original Forex Diva, Kathy Lien.
Kiana: When did you first become interested in forex trading?
Kathy: Trading in general, I started when I was in college. There were a lot of different investment training programs when I went to NYU. So I started to become interested in the markets at that time, and during my college career, I actually participated in the Market Technicians Association. My mentor and the person who gave me my first internship when I was in college was a technical trader, so he got me kind of tuned into how the stock market worked and how to look at charts and made me much more aware of technical analysis. That’s how my interest in trading started to grow. But I didn’t really become interested in forex trading until I graduated from college. When I was in college, we had the “dot-com” boom, and day trading of stocks was extremely popular. When I graduated, I joined J.P. Morgan, and it placed me in the foreign exchange trading group. I knew very early on that I wanted to be in a trading program in an investment banking program. So J.P. Morgan placed me in the foreign exchange group, and that is where my career in foreign exchange started, because I joined the desk, I met the traders, and I got the insiders’ view of how the market works. I spent a couple of years there and learned how to trade not only FX but also the derivatives of FX, like FX options and interest-rate derivatives, which all kind of relate to the same thing because they are all based on the same story about whether the central banks are going to raise or cut the interest rate and how the economies are doing. So we basically traded many products. To sum it up, trading came from my first internship in college and forex trading came from my first job out of college.
Kiana: You first learned about technical analysis at the Market Technicians Association?
Kathy: I was an intern for one of the directors and the director took me to a lot of the meetings, so I learned a lot through that. On a day-to-day basis, he would teach us how to look at the markets from a technical basis.
Kiana: Now that you trade every day, what is your trading style?
Kathy: I have two styles of trading. But they are both in the center of what I call medium-term trading. Usually I look at whole positions for a couple of hours or couple of days. I have search strategies that I use on a shorter term, and I have search strategies that are more positional. Usually during the daytime, between about 6:30 and noon, I’m looking more for shorter-term trades. And then in the afternoon, usually 3:30 to 5:30, I look at my positional trades that I hold overnight.
Kiana: How do you come up with your trading strategies?
Kathy: My trading strategies are all based on a combination of fundamental and technical analysis. But some of the core trading strategies that I have come from back-testing. The trades that I take are centered around a technical strategy, and I demo trade it, I live trade it, and then I usually take the trades that have a fundamental catalyst. And that is how I combine my fundamentals and my technicals.
Kiana: What are the steps that you take before entering a position?
Kathy: In terms of my positional trades, I first watch the markets throughout the day. So the most important thing is to understand the momentum of the markets—whether we are in an environment where there is a consolidation or whether we are in a trending environment, and whether the market is closing strong or closing weak. That is the first criterion that I move on for trading.
My second criterion is looking at the event risk calendar. I see if there is a piece of economic data that is going to push the trade in my direction. For example, let’s say I want to do an AUD/USD trade. What I’ll do is look for whether or not there is a piece of Australian data coming out, like the Australian GDP. If there is a piece of Australian data coming out, I’ll look at my general fundamental studies to help me determine whether I think the data are going to be strong or weak. If my belief is that the data are weak, we have a negative momentum in the markets, and I have a technical setup that I’m looking for that is also negative, I have three stars lined up: I have the general sense of the market in my direction, I have a possible data catalyst that might push it further in my direction, and then I have a general technical picture in which I use double Bollinger Bands to see whether the trend is in that direction. When these three things are lined up, that is when I decide whether or not to take a trade.
Kiana: Do you believe in intuition in your determination?
Kathy: I think intuition always plays a role. It is basically always a guess: the right guess versus the wrong guess. You are hoping that the reason you are taking this trade is that there are enough factors that have lined up to support the guess that you are making. I think intuition definitely plays a role because you have to have a good feel for a possible trade and have enough confidence that there is room for that trade to move in your direction.
Kiana: How exactly do you manage risk?
Kathy: I have clearly defined stops and limits, and I stick to them. I don’t deviate from the stops and limits that I have originally set. There is a lot of blood, sweat, and tears put into the entry and exit of all of my strategies. A lot of back-testing has been done on the exit strategy and on the entry strategy. So given that all that work has been done already, now I just follow these strategies and stick to the risk and reward parameters that I have laid down before the trade. I never adjust my stops at all. It’s always a flat stop and that’s it. I think that is the biggest mistake that traders make: once the position starts to move against them, they adjust their stops. The only thing that I may do is to use trailing stops once I’m in profit, but I never adjust my stops to give a trade more room.
I think it’s fear that causes people to move their stops. Let’s say the stop is at 50 pips. When they are down 40 pips, they think, maybe I should move this to 60 pips or 70 pips just to give it a little bit of room. I would never do that.
Kiana: What are your thoughts on leverage?
Kathy: Leverage is a double-edged sword. I actually trade on less leverage. 10:1 is probably the maximum leverage that I use in terms of my overall account size.
Kiana: Have you ever traded at a higher leverage?
Kathy: I have, of course. Especially when I was starting out. The 50:1 leverage was extremely attractive. But I think as time passes, you become more disciplined. My approach to FX has changed as well, and I realized that in order to survive in this market for a long period of time, it is important that you approach it no differently from the way you approach stock trading. This is not a get-rich-quick type of market. Because if you think like that, you are going to get poor very quickly as well. I think it’s important not to be greedy and to be satisfied with double-digit return rates, which is already really good. Some people can’t even get single-digit returns.
Kiana: How do you react when you realize that you have made a mistake in your position or analysis?
Kathy: There are only one or two things that I would do. I always stick to the stop, but sometimes, when the trade is not working out as I would like, I may take profits early. I won’t necessarily adjust myself if I don’t feel comfortable with the position and it’s not really moving the way that it should be. I trade momentum, so in a set period of time, if it’s not really moving in my direction, I may choose to exit early.
Kiana: What is the indicator that you use when you say that you trade momentum?
Kathy: It is not so much an indicator. You obviously could use indicators to gauge momentum, but for me, it is more the prevalent sentiment in the market, and that really comes from watching the market and the prices.
Kiana: How do you decide which currency to trade?
Kathy: It’s based on my trading strategies. The setups are there. I use double Bollinger Bands a lot. Let’s say I want to trade the Australian dollar and I want to short Aussies, then I would look to see which Aussie pair has my technical setup. I have the strategy that I use, which I have established and have been using for years. Then I look at the calendar to see if there is a piece of economic data coming out. I may have a strong opinion on the GDP numbers coming out every week. And if I have a strong opinion on the GDP numbers, I may be looking to short Aussies. Then I’ll have my indicator—double Bollinger Bands—set up on my charts, then I will look to see which pairs are giving me a solid signal. It may be AUD/USD, AUD/JPY, AUD/CAD, and so on.
Kiana: Do you recommend that people start trading together the way you did with Boris at GFT?
Kathy: I actually think it helps a lot. If you have a trading buddy, it makes a very big difference, because being able to bounce ideas off someone else is basically a quality check. It is a very crucial part of my trading success.
Kiana: What is your advice to new traders?
Kathy: Always test before you try. There are a lot of great ideas out there, but you’ll never know if an idea is really good until you actually put it into live testing. It could be on a demo account or a small real account. But when you come up with a strategy, you need to build confidence around it. I think you can’t just pull the trigger and start trading immediately just because someone has told you that. It’s important that you do some visual back-testing by looking at the charts and actually trying to trade the strategy in real life. Because why waste your money and trade your entire portfolio using it when you can work it out in a way that lets you understand the strategy through demo accounts or smaller live accounts?
Kiana: Do you think that women with no financial background can trade forex?
Kathy: Absolutely. I think many people with no financial background trade currencies. Most people approach it from a technical analysis perspective. There is nothing wrong with that. Technical analysis is not too hard to learn. It’s hard to make money, and it’s hard to come up with a trading strategy, but it’s not as complicated as learning economics or monetary policy, for example. I think that if you start from something simple that you can understand, practice it, and try your own enhancements to it, meaning coming up with a trading strategy, there is a path toward succeeding in this market.
ELIZABETH JEANNE LE ROUX
Now I would like to introduce you to Elizabeth Jeanne le Roux. She is no economist, mathematician, or financier. She is, in fact, an international actress (yes, you can find her on YouTube), and she trades in her free time:
Kiana: Elizabeth, can you tell us a little about yourself? Where are you from?
Elizabeth: I’m from Johannesburg, South Africa. I was born in a city known as Pretoria.
Kiana: Can you tell me about your relationship status? Are you single or married?
Elizabeth: I’m single and exploring the universe at this current stage. I do have time for love.
Kiana: Besides your acting career, how do you take care of yourself? Traveling around the world must be expensive, right?
Elizabeth: There are a couple of investments that I’m currently taking care of. I have three real estate properties in South Africa. On top of that, I’m a consultant for an advertising agency. I operate globally, so wherever I am, I can access these things through the Internet. My third investment is forex. I invest in currencies. Because I travel so much, I like to purchase different currencies and sell them at different exchange rates, either over the counter or on a trading platform.
Kiana: What are your thoughts on forex trading?
Elizabeth: As you know, forex is a macroeconomic global market, so you don’t necessarily need to have a background [in finance] in order to know what forex is all about. The news is published as publicly known information to anybody, so it’s very easy to earn money with the different fluctuations in the currencies that we deal with. But I must be honest with you: you need to keep an eye out. Sometimes the fluctuations can drop without your being notified if you are not trading on a platform where you can set stops and limits.
Kiana: So I understand that you are a beautiful, independent woman and you make more than 50 percent of your income through investing. How do you feel about investing as a woman?
Elizabeth: I think it is stimulating for me to play Monopoly in my private life as well as my professional business life. It’s almost like a hobby where you invest in yourself, and you can even have fun with it!
Kiana: It is funny that you said, “invest in yourself.” I believe that is a very powerful quote. You invest and enrich your lifestyle, because not only are you making money out of it, but also you have this lifestyle of independence; you become more aware of what is going on in the world, and, as you said, it can even be a hobby, whether or not you make a lot of money out of it. I understand that with forex trading, you are not taking on a lot of leverage and are not investing too much capital, right?
Elizabeth: Correct. Forex trading is more of a short-term investment for me, while real estate is more of a long-term plan. With any kind of investment, I enjoy watching the markets going up and down, and I definitely get excited when I see my capital grow.
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