ForexSpirit

Today is where the rubber really met the road. It’s all plain sailing with my scalping method when profit targets are quickly reached. It takes being off my game and having to stomach a couple of losses in a row to really see how the method holds up. Or to be more fair, how I hold up.

Today was about learning how important my first gut instincts are and how being every so slightly off kilter can compound into having to endure an unnecessary loss.

I’ve included two charts below to show more clearly my actions in both last night’s Asian session and today’s NY session.

I was just checking my charts last night when I noticed EUR/USD going on a tear towards 1.2500 on the back of the below expected Aussie GDP release.

I initially had a buy order placed at 1.25 as I saw the move come down. It did not get filled due to price slippage on presumably tons of stop loss orders getting hit at that level. If it had been filled then it would have taken a while but my 10 pip profit target would have been hit (admittedly it would have gone through a 46 pip drawdown and taken 3 hours).

After a bit of consolidation had taken place below 1.25 I placed a sell limit order at 1.2500. This would have worked out to be a perfect trade. Alas, I got impatient and moved the sell order down to 1.2490.

Once in this trade price made it within one pip of my target, but since this occurred after I had to retire to bed I was not up to manually move my stoploss to breakeven. Within one pip, and then I ended up being stopped out. This was the first of four trades during the day that I came within one pip of my target. And two of them resulted in me taking maximum damage.

Some days things seem to go for you; others they don’t. Today was definitely of the latter variety.

Going into this morning’s ADP employment data I felt that things would be euro bullish if the market broke above 1.2550.

After the woeful ADP number it seemed possible that worse than expected bad news would see some strength back in the dollar, which is why I went short at 1.2540.

After a very muted follow through I realised that this was not going to happen and I reverted back to my euro bullish stance which at least saw me recoup 29 pips from a trade entered long at 1.2561.

The trade I find most fault with today was the short I had at 1.2595. This was a counter trade that did not work out at all. Another slew of stop loss orders just above 1.2600 took away any viable chance of a quick bounce down from the 1.2600 area. I tried to get out at breakeven but this was the second loss trade that missed its target by one pip.

In retrospect I should have just taken a 5 pip loss at the 1.2600 level so that I could go long there, which would have been the intended trade action if I was not already tied to a short.

The lessons of the day are:
- trust my first gut instincts on where to place trades. It seems I have developed enough inate ability to be able to determine them pretty well now. If I override these initial decisions and look to get into the market now rather than waiting then I seem to get stuck in poorer trades.
- try not to get stuck in trades overnight. It probably makes more sense to exit at breakeven or even for a small loss than not being able to manage a trade while I sleep.
- if I seem to be off my game, if trades are continually just missing my profit targets, or if everything I do doesn’t seem to gel with what’s unfolding then I should probably just call it for the day. This was especialy difficult to do today as I was trying to claw back those early losses. It was probably even more important to do it today so as to not get deeper into the whole. I should have stopped trading at 11:00 EST after the two wins in a row.

The key going forward will be to not let it become three losing days in a row tomorrow. I need to get back to what was working so well for me last week and show a string of positive trades to eat away at this drawdown.

Part of my daily meditation mantra is about how losses are inevitable but that they’re also avoidable. Today was a great illustration of this. Both of today’s major losses could have been avoided by sticking to the basics. The first one by trusting my gut and not deviating from my original entry point; the second by following the prevailing trend instead of looking to counter it.

It’s by taking these lessons to heart and internalising them that I’m hoping to become a better trade.

4 March pips: (82)

Asian session chart:

New York session chart: