Bad Assed Trader: My special thanks to one of my followers, Poobah, for advising that when I'm on holiday I should try holidaying. Rather than trading. I think I will take this advice now and resume trading properly after the first week of January when things are getting back into normality.
But before I restart my holiday I should share my latest trading escapades. They are not major catastrophes, but nor are they stunning victories. This trading lark seems to be about plodding forward relentlessly, trying to gain a sense of the analysis (objective assessment of price action), along with a measured approach to managing the trade (not jumping out too quickly and missing the real profit action nor hanging in there too long and seeing profits disappear).
Most importantly for me it is now about spotting myself angling for a trade and trying to make one where the odds are against success, or when once in the trade catching myself trying to make the trade go a particular way because that's what I want rather than what is actually happening.
This "willing" of the trade seems to be a common error amongst traders - we can blind ourselves to what is really going on and this really does not help because try as hard as we can we simply cannot control the way that the price of the currency pairs moves. Apparently it takes a billion quid to get the price of the British pound to move a couple of pips (which I think is a few hundredth of a pence) so me sitting at the desk in my room in Phuket urging the little bars up and down is unlikely to have much impact. Particularly when I don't have more than about a hundred quid on any of my trades.
This may sound bleedin obvious but when you get drawn into a trade it is easy to find yourself believing you know what will happen next, when of course you don't. You may guess correctly, you may have probability on your side in your predictions, but you never actually know and we have to keep reminding ourselves of that.
So, what have I been up to?
Well, as usual, I've had some excitement and a win, along with a couple of errors. But hey, I'm still a learner rather than an earner so I'm not too hard on myself. I'm reflecting in order to improve, that's the main thing.
I spotted that the Japanese yen was ready to bounce up yesterday late morning so I put a long (buy) trade on. I had a good set of evidence in my favour as it was bouncing on a few different lines on 3 different time frames and the price action on the hourly time frame showed price was repeatedly testing lows but bouncing back up.
It took a while before the trade really took off but when it did - and I was watching it at the time having come back from a tailors shop in Patong getting fitted for a couple of new dresses and a jacket - it really went for it. Within an hour or so I had hit my 1% return but I had put my target higher and so was trailing my stop loss up behind price action so that I would lock in profit but not take the trade off prematurely.
I watched price action peak and start to turn and I did think to myself (this was at about 1.2% profit) "hmm, shall I take the profit now or keep trailing the stop loss?". Well, readers, I will not make the same mistake again as I have now agreed with myself my future plan in this scenario. The thing was, I was then going out to dinner so had to decide to either take the profit or leave the stop loss and target on and let the trade take itself out. I did the latter. Price then dropped to my stop loss and I made £85 instead of £140. Next time I will take the profit when I see price turning for any intraday trade that I can't keep watching and trailing up the stop loss.
That was the good news. The bad news is that I jumped in a little prematurely to a EURGBP trade...twice. I had been studying the pair and made a note in my book that price was likely to come up to 0.8400 to 0.8420 before dropping again. I saw price had come up to just below 0.8400 and that there was a resistance pivot level at 0.8412 which acts as a bit of a ceiling...usually. So I entered the trade at 0.8394 as it was dropping and put my stop loss at 0.8418 thinking this was well clear of where price was likely to go.
Of course it wanted to peak one more time didn't it - up it went to 0.8417, just below my stop loss but the spread (difference between buying and selling from the broker) meant that it took out my trade.
When I came back from dinner I checked and saw this had happened and thought "Oh well, sometimes price action does peak one more time before dropping, the same parameters are in place so I'll place the same trade again - this time one of the indicators, MACD, looks even better in my favour". So on went the trade and off I went to bed.
When I checked this morning of course the price had decided it still wanted another peak - this time right up at 0.8439, well over my stop loss, so out I went again for the full 1% loss.
Having re-analysed the trade I think this was one I was "willing" to work rather than really objectively analysing. Live and learn, live and learn.
So I'm off now to sit by the pool in the far eastern warmth and relax. No worries.
Faceless Bureaucrat has asked for a quick look in but I'm beating her back down. She wants to update you on the job/redundancy front, but I've told her she'll have to wait for now as the pool beckons.
So Faceless Bureaucrat will be checking in again soon....
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