ForexSpirit

Sometimes knowing myself too well can be bad (or at least exasperating). Monday’s comment that my bad days seem to come in pairs is a case in point. Well, here is Monday’s twin.

The loss is not pretty and was larger than normal today as I gave myself some extra wiggle room due to where S/R level were. While the equity balance change was bad I seemingly made a huge stride on the emotional and psychological sides. When I pulled the plug on today’s disastrous trading sequence I felt nothing. The anger and frustration I felt on Monday was absent today. I felt surprisingly calm. I felt confident that this was just a blip and I’d be able to make it back just like I did last month and the month before.

Later on in the morning, as I ate breakfast and got ready for work, thinking back on the calm state I’d been in, I felt good about the whole thing. And then I felt great about it. The mind is a funny thing!

Today’s loss was far closer to a ‘trend from the open’ style loss day than the mistake laden episode that occurred earlier this week. That maybe helped alleviate some of the mental anguish.

My analysis identified the euro as being still under pressure. 1.4090 was support, even with the spike low at 1.4075. Wary of more short attempts I still thought playing it long off 1.4100 would be a place to start.

Bias: long
Conviction: weak

My weak long bias went completely out the windows as I watched price plunge 35 pips in 10 seconds. I went into ‘short that sucker!’ mode. I completely failed to see where the spike bounced from: 1.4075 the previous spike low.

I placed the first short of the day as the price started to move back down after a bounce. The whole loss today revolves around this first trade and my view that the spike signalled that shorts were still pushing hard.

That very well might have been true but in hindsight the best place to jump on board with those shorts would have been if the spike low at 1.4070 was breached. Failing that I really should have just sat on my hands. I was late to the spike party and it’s now obvious that the market punished laggards like me.

After adding on an additional two legs it just became a waiting game to see if the market would bail me out. I was saving my last bullet if price did a false breakout above 1.4120.

My usual uncle point is when I’m down around 3%. Today, when I was geared 15:1 that 3% loss level was right on 1.4115. Since that was a decent resistance level I was loath to just cut and run when there was a chance the resistance level might hold. That’s why I gave myself some extra wiggle room today that ended up just contributing to a greater than normal loss. I knew that a stop and reverse option would not be worthwhile if price broke up so I was hanging on to try and salvage what I had.

The breakout above 1.4120 occurred just after 7:00 EDT and did turn into a false breakout, but not before my uncle point was reached. The false breakout was 10 pips, which is about double the size I normally witness. Not really all that surprising on a day like today where volatility is so high. Even the fact that price moved back down and eventually hit my BE level of 1.4093 at the tail end of the 7:00 EDT hour doesn’t take the shine off the mental fortitude I seemed to exhibit today.

If I can keep that up then I think I’ll be just fine. If anything, today felt like a watershed moment, just like the double loss at the end of March was.

The other lesson I can take from today is how to handle large spikes in future. Another reference point where a spike was my undoing was May 17. In many ways today was a re-run of that day, with a very similar chart outcome. Hopefully this lesson has been engraved in my brain so I don’t repeat it next month.