Hey fellow traders,
I want to share a lesson learned the hard way during my recent trading week, particularly my regretful decision to enter a trade at 3 AM. This experience has reinforced the importance of patience in trading.
I was trading EUR/USD during FOMC. I didn’t use a smaller size, which I should have. The trade went up and then reversed, and trying to find a place to enter a recovery trade didn’t work, so I took the loss. I then reversed my position but realized it was too late, and I was tired, so I canceled it quickly. So far, it’s all fairly okay.
The Hasty Entry
At 3 AM, I woke up and checked the charts, deciding to open a short position as EUR/USD had broken to the downside on the 4-hour chart. I sized way too heavy but quickly realized it and reduced the position by half. Trading at 3 AM, I was clearly not in the best state of mind and didn’t give myself the chance to analyze the situation. This was a significant mistake that I won’t make again. The trade went against me hard, and I was still too heavy in sizing if I wanted to scale in higher.
Rather than taking the loss, I waited for a decent pullback, but it didn’t come.
A Day of Recovery
After realizing my error, I spent the entire day trying to manage the position. Instead of calmly assessing my options, I found myself sizing down in an attempt to mitigate the damage. I entered a trade on EJ, took the profit, and used it to size out of my position. I considered using GU as a hedge and going long, but I wasn’t calm enough to stay the course and closed early. It would have worked quite well. This poor execution only added to my stress, and I ended up taking a few trades too quickly without a solid plan.
The Importance of Calmness
Looking back, I can see that if I had taken a step back and adhered to my strategies, I would have made better decisions. I was not calm, which led to a lack of focus. If I had trusted my ideas and not rushed to recover from my initial mistake, I could have navigated the situation more effectively. Instead, I gave back a good amount of my profit. Sure, I mitigated risk, but I could have done better.
Key Takeaways
- Banned from 3 AM Trading: I was in a poor state of mind and should never have touched the charts.
- Stick to Your Strategies: Formulate your strategy and stick to it rather than trying too many things while sleep-deprived.
- Size Down: If I really want to trade FOMC, I need much smaller sizing. I lack the experience trading it.
This experience has been a valuable reminder of the need for discipline and the dangers of trading in a rushed state. I’m committed to learning from this blunder and ensuring it doesn’t happen again.
On the upside, I did manage to stabilize myself the next day and started to make back some of what I lost.
Have any of you faced similar challenges in your trading? What are some of your biggest lessons learned from impulsive trading decisions? I’d love to hear your stories and how you managed them!
