Live and Direct Into the Fire
Trading forex is like no other experience I have had before. I’ve said in previous posts that it has taught me a lot about myself and sometimes I don’t always like what I have seen. Last night was the first time I made a live trade in several months. The GBP/JPY basically broke my back once and for the last time a few months ago and since then I’ve spent a huge amount of time getting back to basics studying technicals. The idea is to get things to an automatic state so that emotion doesn’t come into play. I can pull the trigger and forget the ‘what if’s’ If I take a loss, it doesn’t matter because it is always supposed to be minimal. Finally, my profits will outweigh my losses by a vast amount. That is the plan. I have it in my head, but…
Evidently it wasn’t quite automatic. My first trade of the EUR/USD was insane. I think I was emotional from the start. I was scared, impatient, and didn’t want to admit I was wrong. I didn’t evaluate it, just jumped in and got burned. Basically, I went back to instinct, which is flawed. The loss itself wasn’t bad, but I know that I MUST follow the rules, or I’ll be like the majority of forex traders, losers. No offense to those who lose, not calling names, only saying what everyone already knows, that being successful in forex is not easy and most traders don’t make it. When it finally got down to it, I set my stop loss higher than I should have. At least I set it. Then I left the trade to the market to take care of. I knew I was wrong and should have closed it, but at least I didn’t leave it hanging out there. A few hours later the stop was hit and when I awoke this morning it was all over. Monetarily, it was not a big loss. I did at least take a baby step. By the afternoon I was profitable for the day and had recovered.
The point is this though; losses like that or at least ones that develop that way can easily wipe out all gains and more. If I could take out less than 10% of my losing trades from last year, I would have been extremely successful. Instead, I got wiped. Why? The answer is simple. Let a bad trade go! Set the stop from the beginning and let it go if it gets hit. If it got hit, I was wrong anyways. Let it go and start looking for the next good opportunity. If there is anger, take a break. There is ALWAYS another opportunity. If I’m not in a trade, the next best thing to profit is avoiding a loss. The best way to avoid a loss is to not be in a trade.
Well, no trading for me today. I need to make sure my head is in the right place and I’ve done my homework before the next time. Plus, I was up a few hours too late hoping that trade would turn for me last night so I’m tired. On top of that, somber personal anniversary of July 16th 2003. I won’t go into detail here, but it’s best I avoid stress for now. The bottom line is this, make sure your head is in the game or sit on the sidelines.
