The following article may contain slightly too much self recrimination…
It’s worth knowing a little bit of background prior to Thursday to fully appreciate the lessons learnt which I’ll get to following quite a large amount of self-criticism 😉
Ok, so met up with a friend of mine and we discussed a number of trading related ideas on Wednesday evening – to be honest he’s managed to do extremely well and I picked up a couple of ideas… So, keen to implement said ‘new ideas’ as soon as possible – mainly around exit strategies about which I have little clue.
So I wake up minty fresh and full of enthusiasm Thursday morning and immediately make a number of random, un-forced errors… Of which there will be >5 during the next 5hr period… Joy! ;(
Trade number 1
Before opening I place a FTSE long trade. There’s significant mistake number one right there. This is essentially a total punt. Who the F£$k knows what way the market will go in the first 15 minutes on open?
Broken rule number 1: Do not place orders to open before the market direction is clear.
Trade number 2
Immediately place another long trade when the market retraces back to open. What I’d blatantly failed to do here is pay attention to the trend for the last 4 days. DOWN… What direction has the market been moving in? Repeat after me… DOWN. Don’t even remember considering shorts so completely don’t recognise this obvious play. Stopped out again.
Broken rule number 2: Not having the flexibility of mind to consider the potential for the trade to go the other way from what I’m foolishly looking for…
Enter long on HTG by correctly observing rule number 1, however this is not really following a ‘plan’ as such just my belief that ‘it’s fallen far enough already’ when there’s no significant signal that the general down trend has ended. Bashes straight through support and keeps dropping during Friday.
Broken rule number 3: No entry signal
Trade number 4
Actually I’m happy about this trade (EURUSD I think) which bounced off support – I went long and got up to +30 points. I moved my stop to just above entry and I’m now patiently waiting for a +70/80 point move to make another stop move and lock in some profit… In point of fact this was just ahead of the point where the whole market tanked so I was actually quite fortunate here. I’m happy with my execution of this trade as it did use the exit strategy I’d discussed with my mate but I essentially got stopped out.
Trade number 5
Similar to the one above EURGBP I think. Again made it to +20 or so points. If I’d have managed to get the platform to behave properly I should have closed all these off for a neutral exit. Happy with this one too. Can’t blame anything/anyone else for the following.
So essentially, errors in trades 1-3 and my failure to close out 4/5 in profit meant I’m now 3% down and frankly I’m pissed off with the whole thing… Here my tail of woe really begins.
Over the last few weeks I’ve also been looking at Daily Light Crude US which has awesome potential for huge gains… If you can trade it right… and I basically jump in twice trying to call the bottom of a falling market. (Yes, totally moronic) In the process loosing £30-£50 per hit because even with £2K account this is not even close to be able to handling the stop loss requirements for something where a 100 point movement in 15 minutes is just noise… Erk!
What’s more I’m trying to call the bottom of an 8%+ fall when the entire commodities sector is completely losing the plot. Just as something can keep rising like a rocket it can also keep falling like as brick…
The biggest issue here though is that I broke Golden Rule number 4: DO NOT chase your losses in an emotional state of mind. Trades 6/7 cost me another -4% approx…
Main reason for this last error is thinking of the potential gains with absolutely no real considerations about the potential risks. Of course what I should have done is completely take it on the chin, relax and re-group before taking an objective look at what was happening.
So at this point I’m essentially at work in a terrible state of mind – nice!
However, with every cloud comes a silver lining… or learning – lol
Just re-read this in December 2011 (6 months later) and am absolutely horrified! Who is this person?! PLEASE people. Don’t do this – get some proper training first! Start here if you’re looking at FX