Help - how do you get out of this!

Beginner Questions
41

Thank you for that response - it is appreciated.

You are right about everything.

Put it this way - I know that the position that I have landed myself in right now is not the right way to trade (although I have just closed all of my losing positions now at either break even or a slight profit. I only have one problem child left which is sitting at a $2.75 loss right now).

I just got into a situation at the beginning (or should I say second time round i.e. since last Friday) and panicked because I did not want to lose money again - especially since I was now trying to analyse things, read news, see the impact of news on the prices, look at indicators and market commentaries and what they meant and their impact on price etc. etc. and I was prepared to do anything not to lose more money and destroy whatever confidence I had left in this thing so I decided to hedge positions (although I know that that is not really what I was doing but sort of has the same effect) just to stay in the game - to buy me time to see what the next step was going to be and it has apparantely paid off.

Put it this way - with the amount of margin I have just given myself - I can get out of this situation with a nice profit now - but the last thing I want to do when I’m out is to say ‘well see - everyone else was talking nonsense - I came out fine. I’m the man’ simply because that is not the case. Once I’ve got rid of all of these positions I will then sit down and analyse where I went wrong, why I reacted the way that I did, and go from there.

My biggest problem - which has become very apparent to me - is my exit strategy. Basically - I don’t have one. I don’t like using ‘Stops’ because as I said before in a previous post my dealer rapes me when there is a ‘Stop’ or a ‘Trailing Stop’ in place although - in all fairness to GCI - this only happened on my beloved USD/ZAR pair - I have never tried to use ‘Stops’ while trading this pair (USD/JPY).

However - I don’t believe you can even think of using stops on a $500 account. I mean to say you don’t have to make very many consecutive bad calls in the wrong direction to wipe out your $500 because remember it is the spread that you are losing as well.

Maybe once I have closed all these positions I will have a look at using ‘Stops’ because I will now at least have a margin that can handle a couple of wrong moves and still stay in the game.

The thing that I battle with personally is losing money on a trade.

Let me put it this way - this should explain why I am like I am - and why I need to make a personal adjustment:

In sixteen years of business I never ever wrote anything off, passed a credit note, or anything like that - it was a principle that I learned from an old Jewish client of mine while I was doing my articles (I was to be become an auditor). This man sort of ‘took me under his wing’ as it were and taught me some valuable lessons that I have carried with me through life and I will never forget one lesson in particular:

One day he said he wanted to teach me something and took me to the gents toilet, took out a R10.00 note (ZAR) and threw it in the toilet. I looked at him as if he was going nuts - and he said to me ‘that is what happens when you pass a credit note or write off a debt’. I have never forgotten this - probably to my detrement in a few cases i.e. I know that in some cases it has cost me more to recover the amount outstanding than it would have cost by just writing the thing off. It was just a principle that I had. This principle I feel has to be re-evaluated now. I need to be able to say to myself ‘it is OK to make a small loss now - there will be profits to cover that loss soon’. I know that I have landed in this situation because I held on to losses not being able to bring myself to cut them loose and wait.

I also know that I have a long way to go to be able to say that I have now made a REAL profit - but on the other hand I think I have managed to learn a hell of a lot in a very short space of time and I also know that if it were not for responses like yours I would still be in the ****.

By the way - as we speak - I have managed to get rid of my problem child - no loss. Now - I just sit and wait for the 118 (hey that rhymes).

Have a nice day - wish me luck - happy trading!!!

Regards,

Dale.

42

So what positions are you sitting on at the moment? Do you think it will continue to drop or bounce back up again?

Also, how much profit/loss did you end up with after all those hedged trades were closed?

And as a bit of advice, maybe instead of weathering out the drop so that you can catch the bounce (i think this is what you are trying to do), you could find an indicator(s) that help predict the bounce. I say this because that is exactly what the system I’m working on does (or tries to do haha).

43

Good morning,

At the moment I am sitting with 23 (now I forget again whether it is short or long positions - sorry) ‘Buy’ positions that range in price from 118.42 to 117.31 with a Net P/L of $1 314.84.

I have managed to get rid of all of my ‘Sell’ positions that I have been carrying for the last couple of days with no loss (some even at a profit).

So far the only amount I have had to write off was $57.75 due to a margin call when I started closing off the ‘Sell’ positions yesterday.

Anyway - I have got clever (I hope) - I have no more ‘hedged’ positions - and I have made damn sure that I have enough margin to take the load even if we go down to about 116.50 or so. The strategy - if we get to 116.50 I’ll have to start ‘hedging’ to avoid margin calls and the like but I don’t think this will happen (at least I really hope not). Although - even if it does - and I manage to stay within the swing - remember that somewhere between those top and bottom limits I’m still making some money. I have not done the math yet but I’m pretty sure that I have at least made about 50% on my initial $500 - so it would appear that although this is real stressful - I must be doing something right - although I have promised myself not to get in to this situation again.

I have been reading some of the commentaries from the ‘experts’ and from what I gather from their articles and my indicators we should be going up again i.e. to 118.00 and beyond.

What indicators would you use to check for the ‘bounce’?

Basically - everything I have done has been based on MACD and Parabolic SAR with default settings. I have also put up Stochastics (slow) and these also all point in the same direction EXCEPT on the 1 minute.

We also seem to be jumping between 117.38 and 117.28 for now so I am just buying and selling and taking small profits either way (normally about $4 or 5$ per trade) until I see the thing to start trending in the 118 direction. Then I’ll be ‘Buying’ heavy so that I don’t have to get to 118.50 or something ridiculous like that to close with a Net P/L of i.e. break even. I’ll have to see how it goes though - you never know - somewhere I read that 119.00 at some point is not out of the question (although somewhere else I read that 122.00 is also not out of the question. I suppose it depends where you are sitting).

As we speak it certainly looks like we are starting to move in the 118 and beyond direction (I can tell you that I’m holding thumbs though).

I don’t know if this is a rule of thumb but I have noticed since trading this pair (since last Friday) - early in the morning here when Tokyo opens - the JPY strengthens - and then later on in the after when the US opens - the USD strengthens. This has been a pattern since Friday (I get up at 03:00 this morning to check). Do you think that there is anything in this or just coeincidence???

The other thing that I have noticed about this pair (for the last while anyway) - you would be real safe opening a ‘Buy’ and ‘Sell’ position (I had better go and find your message again) at the same time at around 118.00 i.e. a hedge in the true sense of the word. If you have a look at it’s history for the last couple of weeks you would catch it both ways every single time - just as long as you have the margin to take the load.

One thing is for sure - by the looks of things I going to cream some more out of this because it looks like my beloved ZAR is starting to weaken real nice against the USD so I’ll score when I bring back my earnings.

Let me know about the indicators that you feel will maybe predict the bounce.

Thanks for the message.

Dale.

PS - As I type this message I see that I have already wiped out just under $300 of my current loss - and getter better - pip by pip.

44

Just and update.

I had a look at my trading report since starting afresh on Friday and I have made $497.06.

I not sure if I can say that that was on a $533.75 investment because I have propped up my account substantially to avoid margin calls and leave loads of headroom.

Have I reached my goal of doubling my money (initial investment) by this Friday - it would appear so (almost there anyway).

I also cannot honestly say that had this been a $5 000 account to begin with I would have made $4 970.60 for the simple reason that I probably would have lost a pile on margin calls.

Bottom line: big margin, small trades.

Actually - I saw on one of the other threads that someone had made $37 000.00 last night - well done. That my friends is the equivalent of about R259 000 ZAR!!!

Now I’ll bet you if you ask that person there is a HUGE margin available.

As a matter of fact - I’m going to ask myself!!!

Regards,

Dale.

45

Another, but amusing, update.

I forgot that I had to take someone to the airport this afternoon so I won’t be able to sit and watch these things and close positions when they are making a profit.

And, of course, I’ve called it wrong so far - the USD is weakening (or is the JPY strengthening - I’m not sure) but suffice to say we are now somewhere at 117.23 and falling.

And, needless to say, I am sitting with 23 open positions, all going the wrong way again - Net P/L is sitting at -$1 530.86 - fully expected to be at 118+ by now - and that from my charts and indicators.

To avoid disaster I have placed ‘Stop Orders’ to ‘Sell’ at 116.60. This will effectively hedge the 23 open positions AGAIN.

Why the 116.60 - well it is halfway between the key support level of 116.85 and 116.35 (see GFT Daily Forex Market Commentary) - I really do not want to buy more YEN!!! Anyway - it will still leave me with quite a bit of margin to ‘scalp’ with if it happens.

Anyway - if it gets to 116.60 I’ll be in again at the bottom and hopefully I’ll be back in time to rake the profits at 116.35 or better yet 115.50.

I cannot use stops because what if we actually get to 116.60, all 23 orders get executed, and then we go up to 118.00+ and all my ‘Buy’ positions get sold off at different stages on the way up. Depending on how much further we go the 23 lots bought at 116.60 could very well end up in margin calls again depending on how high we go.

So much for my chart analysis skills!!!

This will now have totally messed up my Ascending Triangle that I was so proud of finding on the USD/JPY Daily.

There is a fundamental question that I would like an answer to if possible:

What is the good of charting if it appears that the currencies react much stronger to news. In other words - charts cannot take news into acount - and this appears to be what happened here - I am assuming that the USD is going where it is right now because of the weaker consumer confidence figures or sentiment that I read about.

What I don’t understand is how come MACD on all the charts is telling me that we should be moving in the direction of 118.00 very soon and not the other way. Slow Stochastics is conflicting on all time periods - go figure. What does this mean.

Anyway - it is 13:15pm here - and the NYSE opens at 15:00pm my time so I just hope that we don’t get to 116.60 before open because I still believe that I’ll get to my required 118’s and above to close all of these positions BUT this will only start happening after 15:00pm.

Cheers.

Dale.

46

Hey, Dale. Are you still in this trade? Holy Cow!!! You are a trooper…

Charting question: IMHO, you can learn much about the indicators you’re using by seeing how they apply to less volatile instruments (something other than FX). Event or news risk is present in every market. No indicator can account for such. Perhaps a different configuration or timeframe would be helpful. Best of luck…

47

Hey there, USD/JPY is dropping like its hot. How is your account holding up Dale?? Hope everything’s okay. Did you add more to your account? You said you were down over 1500, that seems more than what you originally put in…

48

Hi folks,

Back from the airport - and just like I expected - my ‘Stop Orders’ were at 116.50 and they got executed at 116.43. Now you know why I don’t like anything that I can’t control myself.

Anyway - pursuant to that - I now have 23 Long Positions and 23 Short Positions open at opposite ends of the range (probably not using the right terms but at this point it does not really matter as they are cancelling each other out) - just like before.

To answer your question - yes I have been propping this thing up - and will continue to do so until something breaks. Unfortuanately I had to ‘hedge’ (you know what I mean) as I would not have made it to the bank to deposit money into the card that I use for this until tomorrow and refused to get a margin call. After all this - I still have not yet written off a cent would you believe. So other than the margin call that I got yesterday and commission (cost of carry) at least my own trades are intact for what it’s worth!!!

Anyway - I obviously have a problem reading and understanding English.

Please could someone tell me what these quotes are saying. I mean I read them as saying that the JPY will possibly go to 115.50 or thereabouts. Or are these people saying that at the beginning of March this is where it was at and what we are seeing is a continuation of that rally or what?

I also saw details of support levels - always three one way - and then three another way in these quotes. Would I be correct in saying that the JPY defied all of these support levels (or rather broke through these levels) and should head on down to the next one or what i.e. according to these quotes should the JPY be going in the 115 direction or the 118 direction.

I mean - I read all of these things this morning - assumed I understood them (or at least had my interpretation of what I think they mean); I checked every single graph and indicator that my software provides me with; and I’m still sitting in a position where I have made a profit but cannot get out of the trades without writing off the profit as well as margin unless I prop things up again. I suppose the point is - how far can this go in all probability.

Here are the quotes:

UsdJpy looks negative as the range of 118.50 to 118.98 blocks the way up. While this zone holds, the outlook remains bearish with the focus on 115.76 and the 115.55 supports. A break would clear the way for a run at the 115.15 trend low from early March.

and this person:

USDJPY � The break below 117.39 as well as short term channel support favors our initial bearish outlook that treats the rally from 115.76 as corrective. We are now looking for the rally from 115.76 to be completely retraced but initial support is at 116.70/80 (potential triangle support). Former intraday support from last night is now resistance at 117.65 and bears are firmly in control as long as price remains below 118.01.

and this person:

The dollar/yen traded sideways in an inside range and closed little changed on Tuesday, but then fell in Asia. This means the outlook remains mixed.
Immediate support is seen at 117.05. The key support level is at 116.85 from a 50-point pivot, which targets 116.35 and 117.35. Distant support I sat 115.50.
Initial resistance is at 117.75. Strong resistance is at 118.25 from a 50-point pivot that targets 117.75 and 118.75. Distant resistance follows 119.25 and then at 119.65.
Oscillators are mixed.

NEAR-TERM: Slightly bearish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bullish

49

To help you with your quotes, here’s what I’m getting out of them. It seems that all 3 of your quotes are attempting to pick out support levels. I mean its obvious that the pair is into some heavy selling, and thus the only analysis pertinent in the near term IS to pick the support levels.

The outcome of picking these areas could be either to end a short position, or create a long position. Now if you are asking who is right…that’s impossible, they all have technical indications for the areas that they picked, but the tools they use aren’t always accurate, or even near accurate. I get the impression that you strongly overestimate the tools at your disposal and the fundamental reality that none of these indicators can predict the market direction, only aid in your analysis of previous market patterns, helping to quantify and visualize them.

But anyway, you said your short positions got stopped out, yet you have 23 Lots in your short position. So did you Short more? This seems contradictory to your vision of USD/JPY recovering and rising above 118.00, correct?

50

Good morning,

I see babypips.com had a problem last night - I was beside myself with worry - it was just as bad as when your TV breaks!!!

Anyway akeakamai:

Yes - I had to hedge again so as not to run out of margin again.

Now I’m sitting in the worst of all position.

I have 23 Short Lots with a net loss of $1 556.31
I have 23 Long Lots with a net loss of $1 461.21

If I at least knew where this thing was going i.e. to 115 or to 118 I could make a decision and write one of them off - but which one???

The only other thing I can do is prop it up again - wait and see where it goes - and then buy in the other direction when at either end of the spectrum to at least cut one of these losses by about half.

At least I know what not to do from now on.

Regards,

Dale.

51

Dale,

You really need to read, and re-read all the money management information on this site, and maybe some other sites as well. Really understand why it’s important, and how it can really be just as important as figuring out the indicators and such.

As for the hedging/margin calls, you shouldn’t ever be in the situation where you are that close to losing all your money, you should have a stop loss way way before that point. I understand you have a large stash of money somewhere that you are willing to “sacrifice” but you aren’t here to lose money are you? And if you say you can only learn on a live account, why the need to take out such a large number of lots? Why not just 2 or 3, instead of 23. It’s the same lesson at 1/10th the risk, right?

To be blunt, I don’t forsee you lasting much longer on the Forex if you don’t make some drastic changes to your strategies and money management philosophies! I say this out of respect for all the time and money you have already invested here. G’day (G’night for me)

52

Can you visit the Babypips Chatroom at market open? FXSniper1 will be there. I will look at your situation at market open and offer my honest advice. Then regardless of the outcome of this mistake, I would ask that you visit the chat room more often.
I will teach you to trade without depending on the indicators.
Right now, you are not trading the price action. What you are trading is indicators and that needs to change if your situation is to change.
Good luck

53

What a generous offer to a 5 year old problem. How long did you scour the forum here to find a post you could put that “savior” offer on?

Pardon my rather skeptical nature, but you’re like 103,474th in line for gurus that have been here to “help”. Usually it winds up badly. Especially when the sales pitch comes out…

Just when you thought you’d seen them all, a sniper shows up to shoot that thought out of the clouds…

This ought to be entertaining.

54

too little, too late my friend.