Don't try to be a hero

Especially true when you analyse a trade within 5 minutes of opening your eyes after a really short (think 4 hours of sleep) night.

Why?

Because, chances are, you are not thinking clearly yet.

I had my laptop beside me when I fell asleep last night - it was, surprisingly, still there when I woke up. :) So, of course, I looked at the USD/JPY trade I'd taken last night.
Damn. Still in the trade, but negative by about 6 points - it had actually been profitable for a while, then had risen again to above where I got into the trade!

But wait, what do I see?

Aha! Says the sleep-fogged brain - I see the 3 ema cross up over the 5 and the 13. BUY NOW!!!

So, sleep-numbed fingers go: okay. I proceed to close out the overnight trade (locking in the 6 pip loss) and take a new trade: buy 10 micromini lots at 1.1587 with a stop at 1.1540 (below the 61.8% fibonacci line) and a limit at 116.30 (just below the 78.6% fibonacci line).

As soon as the trade is placed, the mists of sleep retreat a little.

You moron!!! says the rapidly awakening brain. You were supposed to manage the trade on the hourly timeframe - what timeframe is this? Umm, the 15-minute! Oops.

So, let's check the hourly. It probably says the same thing as this 15-minute chart. I'm pretty sure it does. Really.

So maybe my trade analysis skills are getting way better than when I started. But I am nowhere near good enough to trade in less than an hour after waking up. On the hourly chart, it still looks more like a short-sale opportunity than a chance to go long.

Whatever. I'm now looking to support my theory - I want to be a hero here. So I go back and look at the 15-minute timeframe again:
Weeeeeeeeeell. Double-click on the image and you'll see that it's actually trending down again! Whoooops.

Hmm, it's now gone from being a matter of heroism to an ego issue. I'm staying in this trade - let's see how it plays out. I can't keep second-guessing myself, I really need to stick to my trade plan, fuzzy as it may be (remember, I've already manually closed a trade that I'd analysed last night, no matter how bad that initial analysis was).

Off to work now. I've set up alerts on the trade so, even though I can't actually trade while at work, I'll at least know when I either get stopped out or luck out and have the limit executed instead.

Lesson not quite learned yet: Don't try to be a hero. Do your analysis. Confirm your trades. Wait for a better opportunity if the one you're looking at seems a little iffy.

Mini-lesson I just absorbed while glancing at the monitor: focus. You can't look at the timestamp on Metastock (5:50) and assume that you just made a profit of $5.50. You really need to make sure you're looking at the status bar on your trading platform before you leap to any conclusions. :) Some days, it really pays to have to whack yourself upside of the head before breakfast.




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Okay, I am officially not doing any more trades when I've just woken up, or just because I want them to succeed.
It's almost 2 hours since I placed that trade, and it lost me 25 pips before I smartened up and pulled out of it just now. :)

Lesson learned: don't do that, then. :)