Background -- Why this Blog  

What's a Pip?

If you don't know what a "pip" is then you must have got here by accident. So before you leave I will tell you what a pip is. If you already know what a pip is, skip ahead 4 paragraphs.

A pip is a single unit of measurement for trading in currency. For most currencies it is 1 basis point (.0001) of the base denomination of that currency. So the for the U.S Dollar 1 pip is 1/10,000 of a dollar. Currency is traded in pairs (US Dollar for the Euro Dollar or Swiss Franc for the Japanese Yen). The price of the exchange is expressed is one 10,000th of the base currency of the pair.

Currency is traded in lots of 100,000 units of the base currency. So a trade based in US Dollars is done on a lot of $100,000. So if I trade based on US Dollars, gaining 2oo pips is the equivalent of making $2,000 if I am trading a single lot (200 pips x .0001 x 100,000). Trading can be done with multiple lots or 1/10 of a lot ($10,000) or even 1/100 ($1,000) of a lot.

Now here is where the math gets interesting. If I have $1,000 to trade in the Forex (Foreign Exchange) market I can leverage that $1,000 to trade a full lot of $100,000. I am risking $1,000 at a 100 to 1 ratio. But because I am all in I have no room to lose even a single pip. Therefore I need to have more than $1,000 available. In fact I trade so that I am only risking 10% on a single trade. In this scenario, I would have $10,000 in my account in order to trade 1 full lot at $1,000. At 200 pips in one week I would gain $2,000. I would gain 20% for the week. Repeating that process my account would double every 4 weeks. Gaining 200 pips a week would meaning taking my $10,000 to over $1 Million in less than 6 months.

Purpose and Some History

The purpose of this blog is to chronicle in real time the growth of my small trading account of $400.00 growing at 200 pips per week. Any one following this blog will see my actual results and be able to follow my trading day by day. I will share my thoughts on trading in general and my particular trading system. This will be a no holds barred experience.

I first started in Forex in 2004. After about 3 months of trading on demo accounts I opened a live account. By the mid-2006 I had lost $30,000. Throw in an underfunded pizza shop and I lost another $80-100 thousand. By the end of 2006 I was broke and demoralized. The last $250 I had in my trading account was taken by monthly inactivity fees as I couldn't afford to fund more to make even the smallest allowed trade.

In fact, I did not even trade on a demo account or look at Forex for more than a year.

Then I started following the Forex markets again late 2007. By mid 2008 I was having spectacular results in my demo trading. Of course, spectacular results in demo trading is as common having a good drunk every Friday night.

I will leave the story there. The rest will follow.