ForexSpirit

I had to laugh when I read an email received from Tom Yeomans last night. I’m signed up to his Accustrength mailing list. Here’s what made me chuckle:

As Forex traders we are all in this for the same thing. Money. Trading is a way to sit in your bathrobe and make more money than your doctor.

Specifically the reference to trading in your bathrobe. Since I do that every day now. When I get up in the morning, first thing I’ll do is thrown on my dressing gown (I’ve always called it this but it’s the same as a bathrobe), head down to the basement, fire up the computer and get to it. The main reason I put it on is that the basement is cold that early in the morning!

It also brings to mind Arthur Dent (from Hitchhiker’s Guide to the Galaxy). I’m going to conquer the world in my dressing gown!

My trading today was eerily similar to yesterday. I jumped in a bit too early and spent most of my time nursing a position.

Yesterday’s NY and Tokyo sessions had euro on the ropes again, but there was the beginnings of a comeback in the 4:00 EDT hour, with a strong push from 1.4060 to 1.4130. To me, this meant it was worth trading against the up move and I was looking for shorts.

Bias: short
Conviction: strong

Looking at my entries in hindsight I can still justify the first entry in the green sequence as we were breaking down from a second touch of the 1.4130 high. I was tempted to enter at 1.4130 within the first minute of trading but I decided to stick to my rule of not diving in straight away within the first five minutes.

The second green entry was one of two sub-par decisions today. I should have waited for a proper break of the 1.4121 support (i.e. wait for a break and retest of the break level and then enter when it continues to fall). Instead of entering a new short at that time I should have instead moved the SL on my first entry to BE. There was always still the chance that price would push back up and retest the high at 1.4130. Ideally I should be waiting for a false breakout of the high and thus the entry I had on was trying to pre-empt a substantial move down. The bears were not out in force yet. I should be playing it relatively safe until I see more hints that the bulls have given up.

In the end I was in a 10:1 short position. As the breakout north unfolded I waited patiently for signs that it was going to be a false one. I entered hard at 6:37 EDT. If price had continued to go against me the plan was to bail on that additional 10:1 entry at around 1.4137 and look for another opportunity to play it short.

Price came back down. I held to see if the minor support at 1.4125 would be breached. When it seemed to hold I got out at with the slimmest of gains.

When the 1.4125 level did fall I was back in short with the blue entry.

My second poor decision of the day was how I handled the exit of this trade. I decided that I wouldn’t average down on this trade so close to the end of my trading window. The mistake was not moving my SL to BE as the second attempt to push below 1.4122 was taking place (at 6:56 EDT).

Overall, I’m generally able to be patient. What I need to be more cognisant of is the opportunity afforded by waiting for a false breakout. If price is close to a recent high or low then I should probably hold off and see if the false breakout occurs and play it back into the range. If I had done that today my first trade would probably been the third entry in the green sequence I took today. Which would have resulted in a nice easy pip gain with far less trade management needed. A little more patience can potentially go a long way to making me a better trader.

Now where’s that Babel fish?