ForexSpirit

Tuesday was good and bad.

Good in that I had 11 positive trades for the day. Bad in that I had three losing trades.

I mentioned the first of these losing trades on Monday as it occurred just after the close of the NY session (which I use as my daily boundary for demarcating trades). Technical frustrations had plagued me for most of the day and I was not in the right frame of mind to be managing a trade. I thus closed it out for a 47 pip loss to clear the decks and allow me some time to regain the proper perspective.

The subsequent two losing trades on Tuesday were due to repeating a mistake I had previously made a few weeks back. Both trades had their entry points in the middle of a narrow trading range. Instead of placing the entries at the boundaries of the range which is prime scalping territory I instead placed them in No Man’s Land.

This lack of proper trade selection elevates this from a simple mistake to a Mistake. Capital M. In effect, I broke a trading rule that was there to prevent me from placing stupid trades.

Let’s look at the GBP/USD Mistake which was entered long just after noon at 1.5020. This was pretty much smack bang in the middle of the trading range encompassing 1.4980 to 1.5040. The much higher probability scalping trade would have been to place the limit entry at 1.4980, which would have seen the expected bounce at support and reaped the 10 pip target that I normally look for.

Pretty much the exact same comments apply to the EUR/JPY long trade which was entered at 122.50 just after 13:00 EST. This level was right in the middle of the 122.20 to 122.80 range which had formed over the course of the morning. It would have been much more astute to place the limit order for the bottom of the range at 122.20. This again would have turned out to be a profitable trade.

Instead I swallowed the bitter pill and closed out these two Mistakes for a loss of 184 pips. It is interesting to note that if I had held on then I would have been able to close out both of these woe begotten trades in the black.

EUR/JPY was the first to recover and rebounded past the 122.50 entry point in the last hour of the NY session. It took GBP/USD a lot longer to get there, well into the following day’s London session.

This shows that it can make sense to hold onto a losing trade if it is the right trade. These two trades were not right at all; there had been faulty reasoning involved in their entry points. If I had held onto them and been rewarded for doing so then I would have just been positively reinforcing a bad habit. Instead of seeking to eradicate a Mistake I’d be promoting it.

Trade 1
Long EUR/JPY
Entry: 122.20
Exit: 121.725
Pips: -47.5

Trade 2
Long EUR/JPY
Entry: 121.53
Exit: 121.63
Pips: +3

Trade 3
Short GBP/USD
Entry: 1.5040
Exit: 1.5030
Pips: +10

Trade 4
Short EUR/USD
Entry: 1.2655
Exit: 1.2645
Pips: +10

Trade 5
Short EUR/JPY
Entry: 121.98
Exit: 121.88
Pips: +10

Trade 6
Short EUR/JPY
Entry: 122.95
Exit: 122.841
Pips: +9.9

Trade 7
Long GBP/USD
Entry: 1.5002
Exit: 1.5012
Pips: +10

Trade 8
Long GBP/USD
Entry: 1.5020
Exit: 1.4920
Pips: -100

Trade 9
Long EUR/USD
Entry: 122.50
Exit: 121.664
Pips: -83.6

Trade 10
Short EUR/JPY
Entry: 122.021
Exit: 121.903
Pips: +11.8

Trade 11
Short EUR/JPY
Entry: 121.647
Exit: 121.56
Pips: +8.7

Trade 12
Short EUR/USD
Entry: 1.2598
Exit: 1.2588
Pips: +10

Trade 13
Short EUR/JPY
Entry: 121.728
Exit: 121.61
Pips: +11.8

Trade 14
Short EUR/USD
Entry: 1.2628
Exit: 1.2618
Pips: +10

Total daily pips: -125.9