Bona Fides

If you have read my “about” page, you know that I think technical analysis is pretty damn sexy. In fact, it was technical analysis that ignited my interest in the capital markets.

The gateway drug was personal finance books. During my junior year in college I realized I knew nothing about money (I was a psychology major) and had better rectify this injustice, as it was only a matter of time before I would be out of college and out of my parents’ pockets. My reading in personal finance, of course, led me to the “miracle of compound interest.” The miracle was often most convincing when the author assumed an annual interest rate of 10% (“The $100 you have today will be worth $1,750 in 30 years!”). But this 10% is pretty darn hard to find! Their solution? The stock market.

I naturally wanted to see my $100 turn into $1,750, so this meant I would have to wade into the esoteric world of equities. And day trading looked like the most attractive option.

How does one begin day trading? By studying the fancy charts on as many computer screens as possible! I loved seeing the pictures of a trader behind an arsenal of graphs, stoically fighting for his 10%. Seeing as I actually wanted to be successful, I stumbled upon the less glamorous skills- trader psychology and money management. As a psychology major, the trader psychology bit seemed exciting, and as a student of statistics, the money management part also made sense. But I also realized someone with no money wasn’t going to be able to jump the hurdles of transaction fees. Thus bringing to a screeching halt my ambitions to day trade.

But the finance bug had already bit!

So I decided to continue developing my skills, which inevitably led me to fundamental analysis and my ambitions to become a CFA charterholder.

The desire to get some skin in the game and begin developing emotional discipline has come back with a vengeance, and I think FOREX offers the perfect opportunity. With tiny bid-ask spreads and no transaction fees, my low-funded account won’t pose as many problems as it would if I were trading equities, and the small universe of currency pairs means I can spend time mastering a large section of the investible FOREX universe. And it means I can start putting my sexy technical analysis skills to the test, while also sharpening my fundamental skills through macro economic analysis.

What does this mean for the blog? Fundamental analysis is still my priority. I will continue to post spreadsheets and work towards deepening my knowledge of the equities market, but I also plan to explore FOREX on this blog as well. This means you might actually see some technical analysis from time to time, as well as my fundamental analysis of the currency markets.

I am completely new to FOREX and have a lot to learn, but what an exciting place to be!

bo·na fi·des 

Noun
  1. A person’s honesty and sincerity of intention.
  2. Documentary evidence showing a person’s legitimacy; credentials.

I am using “bona fides” in both senses of the word. One, to establish my intentions, and two, to document that I have no credentials what-so-ever in Forex. I am a complete Tyro, but find comfort in the words of shunryu suzuki: “In the beginner’s mind there are many possibilities…”

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