ForexSpirit

There is one word that sums up my final two weeks of trading in March: whipsaw. I was shaken out of just about every position I entered during that time period.

My trading head just wasn’t screwed on right during this time. Trading was well down on my list of priorities. Top of the list was a crazy crunch period at work to meet a milestone deadline. If you’ve ever worked in the video games industry you’ll be intimately aware of the joy that is crunch mode. Next on the priority list was a ton of legwork related to house hunting, as well as a lot of work to declutter, fix up and prepare our current residence for sale.

Needless to say after all that there wasn’t much time left to properly dedicate myself to trading. It’s not just the time element in and of itself that was the issue. I generally don’t need all that much time to actively keep up to date and manage my trades. It was more that my energy level was severely depleted by the time I was able to focus on making trading decisions.

I think my trading results are a pretty good mirror of my trading ability since my last post.

While my equity was up around 8% by the middle of the month, I ended March down 17.68%.

With 58 trades closed out during the month, I think it is pretty clear that I overtraded as this number of positions is significantly higher than my usual amount.

The worst of my sins was being overleveraged on some whipsaw moves.

The first of these were entered on the Sunday evening after the Bear Stearns news had broken. USD-CHF had just surged past parity all the way down to 0.9650, while USD-JPY had broken through 100, falling to just under 96. I entered both short after a bounce back looking for a test of the new lows before the Fed meeting on the upcoming Tuesday.

I had been looking for some US dollar strength to materialise around that time. When it didn’t come from the ECB rate meeting the previous week, I was looking to see if the Fed meeting might be a catalyst. For this reason I wasn’t looking to go long EUR-USD on the Bears news. I felt Yen and Swissy would be better plays and would continue or at least hold their runs in the face of any dollar strength.

I was wrong. When the Fed ‘only’ cut by 75bps, both JPY and CHF got hit hard, with yen seeing its weakest day in many years against the dollar.

I switched to a dollar long viewpoint, and was rather stupidly geared 6:1 short on EUR-USD at the start of last week when the Euro made a strong comeback. The worst decision I made was probably on Monday evening, when there was a strong euro surge during the Asian session. Instead of closing out and reversing my positions, just like I had done earlier in the month, I pushed back my stops to give my trades more room to breath. Which obviously just ended up costing me more money when the stop loss positions were eventually hit.

I feel despondent that I let myself make such bad trading decisions. I am my own worst enemy far too often it seems.

I’ve even had some whimsical thoughts that I should maybe just chuck the whole trading thing in. I don’t even think that thought ever really crossed my mind in a serious way last December, when I had a much worse month.

It’s probably born from frustration. For every two steps forward I take I’m staggering back two steps at the moment. While the markets have been clearly all over the place, with no clearly defined trends evident during the month, my trading decisions were equally haphazard.

I think a key element is recognising when not to trade. When I’m tired or too busy with other things I shouldn’t be trading. The majority of times I can actually recognise these signs. The problem is that I never act on it. I’m probably in the middle of managing some open trades, or trying to jump back in the market to chase back a loss that has just been incurred. Bad, bad, bad. I always put it off until tomorrow, or the day after, or next week.

The result is that my trading decisions suffer and I end up losing money. There’s a lesson to be learnt here once again. Will I learn it this time?

Last week I had entered using the Anti-Hedge method to get back into my JPY and CHF trades that got closed out the after the Fed meeting. While both meandered in and out of profitability over the few days, neither currency made a sustained move towards the previous lows and after seeing this morning’s US dollar strength I closed out both before they hit their stop losses. Throw in another EUR-USD 1:1 long entered at 1.5772 that I closed out in the red this morning, and my month is already off to a not so terrific drop of 13% (those initial CHF and JPY were rather too highly leveraged, and thus so were the resulting AH entries).

There is a small ray of light in a short GBP-USD position I have open which should recoup part of those losses, but after that I think I’ll be taking a trading break for a week or so.

I have to fly over to Ireland to attend my sister’s wedding this weekend, which means I won’t be able to follow the markets on Thursday or Friday. Seems like a no brainer that I should step back and get refreshed and recharged. If I don’t I have the funny feeling that every new trade I place is an attempt to recover as quickly as possible the losses I’ve just taken. Instead of being able to look at each trade in isolation I find myself comparing what profit target needs to be hit to make up for my last loss.

I need to break the cycle. Eliminate the temptation. Rest.