Interesting lessons from Thurs/Friday

My results overall this week were rescued by me being short EUR/CHF on Friday at the point that US non-farm payrolls came out in the USA and the subsequent 60 point fall essentially saved my arse. Prior to that I’d again made a couple of ridiculous trading decisions like entering the Dow long before it opened – this seems to be a recurring mistake of mine. Having blogged this mistake three times now I’m really hoping to not repeat it anytime soon! Note to self… Do not enter indices bets while they’re not actually open!!

So yes, mistake number one – entering the Dow long at about 7am in the mistaken belief that I had suddenly gained godlike powers, well enough powers to influence the world opinion about the US economy. I did (I think) have the opportunity to close this slightly up before the inevitable slap for my incurable arrogance happened but I got distracted and got stopped out at -45 points of so…

Also made similar mistakes with Silver early on – have committed to stay out of this lunacy for the time being and this was rounded off by an attempt to recover my losses by going long GBP/USD in the afternoon…

So somewhere in the horizontal line I went long – this is on a 15 minute chart and the grey section is the part which came later… Now, with amazing hindsight powers, it’s clear this trade was a total punt.

  1. I’m right in the middle between support at 16,306 and resistance at 16,418 so there’s no way I should be even considering this trade.
  2. There’s no confirmation or entry signal whatsoever.

So, all things considered I take full responsibility for not managing my emotional state (trying to recover losses from previous dumbass decision) and taking this trade in the vain hope it’ll go my way. Doh!

Now, it’s an important point that previously (i.e. in the preceeding weeks) I’ve lost and then walked away from the markets in some sort of hissy fit to recover and essentially steel myself for another stab at trading. In the process of 2-3 days absence I’ll have missed some blinding opportunities and only serve to get pissed off at myself further in the process. Nice!

So with some trepidation I resolved on the following day (Friday) to keep an eye on what was happening. Looking at EUR/CHF I could see the worlds longest multi-day down trend as well as the price attempting to rally back to the trend line. Time to go short!

From the chart this still isn’t the best trade setup as I’m still somewhere between the blue and red horizontal lines 😉 but at least my entry (first horizontal line) short came off a previous lower low, the stop wasn’t too far away and I stayed in because it didn’t really have a lot of strength bouncing off support – not enough to take out my stop anyway. Then, as the NFP data came out, BANG!

I was suddenly 50 points ahead and moved my stop down to capture most of this. It could have kept going but I was happy and eventually got taken out by the reversal. (everything in dark grey happened after I was out of the position)

All in all I didn’t manage my exit too badly I think.

Now, this led me to look around at other instruments in the following hours and this is something I’ll be keeping a close eye on this time next month…

For the FTSE100, GBP/USD, Dow and EUR/USD there was a proper setup with a confirmation on the hourly bars following the news release.

So,  with any sudden drop if the daily chart is trending up and if there’s a reversal which is confirmed by an hourly bar (in the chart it’s got a low test before I’ve marked an entry point) then I’d suggest this is a pretty good and low risk trade.

Pity I missed 4 of them but hey, at least I’ll know for next time 😉
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4 thoughts on “Interesting lessons from Thurs/Friday

  1. pb8856

    Robert – Another great post. Really enjoying following your blog, ive been through some of it (and still am) but im far too illiterate to write so well about. Being in a trade when the NFP is announced can be a hell of a ride but a bit of a gamble (unless you have inside info). Looking forward to reading some more.

    Reply
    1. robertsweetman Post author

      Thanks pb – and yes, there will be more! I’m treating this as a two year project to go from zero (currently) to hero so seemed worthwhile and interesting to document the lows and highs. I’m surprised by how much I enjoy the whole blogging thing and really appreciate everyone’s input.

      Friday was lucky given my suicidal tendencies earlier in the week but I guess, as always, the trick is to learn the lesson and apply it. Next time I see this happening I’ll be looking for the pull back with a 1hour bar as confirmation not the pot luck approach 🙂 It’s way too stressy!

      Reply
    1. robertsweetman Post author

      Thanks pb

      That’s actually a very good article indeed – with probably a better explanation of a good entry point than what I was proposing. Very impressed with the time stop/trailing stop idea which has been included to cover the all important exit strategy. Awesome 🙂

      Reply

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