Last night after midnight EST, I was watching USD/JPY on the 5min. The pair was pretty dead, then a little momentum started. A bit later the pair moves down like hundreds of pips in a matter of minutes, and continues the trend over the next few candlesticks.

With such a large and unpredictable move, I start looking for a bottom. I know looking for bottoms is bad, but in this case it’s almost inevitable that good momentum one way usually returns decent momentum on the opposite swing. So I find a candlestick thats turning around and jump in. Indeed it travels up quite far in my direction, then comes right back down and puts me in negative. I did this twice and at one point I was -250 pips.

Now I’ve done this before, but this time I mapped out some s/r zones and created some targets. I added a t/p stop to my current positions and added one more buy position with a distant t/p at another line that I felt was significant. I went to bed without a care, confident the whole time price would reach my targets by morning.

I wake up this morning and check my trades: sure enough, I’m in profit and all trades are closed. I know searching for a bottom is bad, but I was comfortable confident for a change in what I was doing. Over the past week or so I’ve been making 80% winning trades (10-25 pips), but a small percentage of them dip real low.

Is the confidence a sign that I’m learning more and learning how my favorite pair behaves, or is this a false confidence and disaster is right around the corner? I would like to take credit for growing my account 7% more in a few hours.