Sigh...I was fully geared up this morning with two trades (USD/CHF and USD/JPY shorts at 1.2395 and 121.45, both with promising price targets). I assumed today to be a great technical day since there was no major new releases on the fundamental side. I purposely avoided the GBP/USD trade. However, I paid a heavy price for being OVER CAUTIOUS and slightly impatient with the choppy price action during the morning session. And I got a little nervous over some -10 pips drawdown. What was I thinking then? I misread the price action and at the end, I exited my USD/CHF short even for -10 pips loss before taking my lunch. The USD/CHF started to weaken during my lunch break, I was there but not determined enough to pull the short trigger again. The outcome could be very different for today if I had settled my mind and went for the killer move.
At least, I still received a consolation prize for holding on to the USD/JPY short, which yielded a +39 pips profit. Most importantly, I learnt a great lesson today. In order to be successful and at the top of this game, not only you need to become technically sound in chart analysis, you also need to acquire/maintain a right mental attitude. I need to practise stronger belief and confidence in the system and myself too.
I think it's done for the day, +29 pips.
2 comments:
Friday, February 23, 2007
What to Trade / How to Trade?
Based on short and medium term history, JPY is where we want to be, specifically the GJ and EJ pairs. The carry trade / interest rate differentials cannot be ignored. GJ daily range is day in and day out far above the rest and has been relentlessly moving up for months. This week, BOJ laid the foundation for a continued move up. Unless there is a drastic reduction by BOE the differential will remain in place. The current interest rate on GJ buy is 8 points above its nearest competitor, ergo we have a built in hedge on the buy side, dumping $24/contract every day into your account. At 200:1 this buys another contract every month. Talk about "Compounding!" Is there another financial instrument on the planet providing these kind of results?
This does not mean he's impervious to corrections/retracements as pre-BOJ demonstrated. So, can we have our cake and eat it too? I would set-up two(2) accounts: 1-Interest Account, which is to have and to hold - buy more on the dips - collect the interest. 2-Trading account, to buy and sell as the market swings. Use lot sizing to fully hedge the interest account on the retrace and/or profit from the down moves
About Me
Name:LLoyd
Location:UK
"After many trials and errors, I am currently practising a simple discretionary trading approach. Forex trading could be my key to financial freedom if I could consistently make forex pips and in the same time realising the power of compounding.
Good coverage on the Yen's story. I'll be following.
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