ForexSpirit

Maybe I became slightly rusty after my two week trading hiatus or maybe I’m just trying to make as many silly mistakes as possible in one week but my first trade on October 30th was sloppy and badly managed.

Wednesday night’s Asian session saw price in EUR/USD zoom up to 1.33 before retreating slightly to hold at 1.32 into the London market. From there it came back down bouncing off 1.28 just before noon in the NY session.

Was this downward move a return of the prior strong US bull move or just a minor correction in the retracement that the euro had staged on Wednesday?

I wasn’t really sure and didn’t want to commit myself to too many trades until I formed a stronger opinion one way or the other.

For my first trade of the day I went long EUR/USD as price inched back up towards 1.30. In hindsight my first problem with this trade is that I entered the trade using the wrong mindset. I entered using a trend follower approach instead of a how a scalper would act. A scalper would have entered a short near 1.30 to take advantage of all the people who were having their stop losses taken out at the round number. My trend follower approach was looking for other euro bulls to jump onboard to test the 1.30 level and maybe a subsequent breakout of that level.

After having been in the trade for a while and pondering if it had really been a good trade to enter I mismanaged it in two ways. Firstly, with doubts in mind I should have moved my profit target back to the entry point so that I could at least be taken out for no loss if possible. This could have occurred anytime in the two hours after the entry and I would have recovered. Secondly, at the end of the NY session I should have taken the option of closing out the trade, which would have resulted in about a 100 pip loss.

Instead I dithered, clinging to my earlier indecision about which way the market was going. It hadn’t shown any real conviction up or down in the NY session. Maybe it would go back my way. Far too much hope involved here. I should have just made the hard choice and manually closed it out.

This trade has also made me realise how much importance there is on the first trade of the day. If I get off on the right foot then the rest of the day seems to go well. If I mess up with the first trade then it seems to make things twice as hard for the remainder of the day.

Trade 1
Long EUR/USD
Entry: 1.2989
Exit: 1.2747
Pips: -242

Trade 2
Long EUR/JPY
Entry: 127.492
Exit: 127.60
Pips: +10.8

Trade 3
Long EUR/USD
Entry: 1.2802
Exit: 1.2818
Pips: +16

Trade 4
Short EUR/JPY
Entry: 126.05
Exit: 125.946
Pips: +10.4

Trade 5
Short GBP/USD
Entry: 1.6350
Exit: 1.6339
Pips: +11

Total daily pips: -193.8

Going into Thursday’s Asian session it was looking more and more likely that it was time to go long USD and JPY again.