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. :)

Flat trading days - who'da thunk it?

Interesting lessons we learn ... I'd been watching the various currency pairs for the past three weeks and happily assuming that it was entirely representative of market activity. Boy, was I ever wrong! I have now spent the last 5 days watching the currency pairs, almost without exception - dither!

Look at the hourly charts with me:

EUR/JPY:


Here, it's only today that things have shown any sign of activity. I've probably missed the boat on that downtrend, though.

And the EUR/USD while it's showing some signs of activity, has also decided to hover in a 10-pip range between 1.355 and 1.365 since it hit intermediate support on August 28th (of course, I could be reading that wrong and it's actually a 100 pip Move):


I think I've spotted a sweet trade on the USD/JPY: On the hourly chart, it looks as though we're in for a nice little downswing to 115.45 or so.



Confirming on the 15-minute, we see that the trend is bearish and the parabolic SAR is above the candles, indicating that it should continue to head downward for a while ...

I got into this trade just now, selling 10 micro-mini lots at 115.82, with the stop at 116.10 and the stop at 115.50.

Of course, it's now 1 a.m. on the 5th, so maybe it's just tiredness that makes this look like a valid trade: I've already managed to lose 7 pips ... it's now a $6.04 loss so far on this trade ... I wonder if it will ever go back down to my target 115.5-ish range!

I'll look at it in the morning once I get a few hours of sleep. :)

Cheers,
Maya