Rookie mistake, or breaks-of-the-game

Beginner Questions
1

This morning I sat on EUR/USD at 1.2770, with a sell, waiting. And waiting. And waiting. I finally found out it was a US Holiday, so, to be a good “needless risk-avoider”, I deceided to wait until tomorrow and closed at even. A few hours later I turned the PC on, and in a few minutes watched EUR/USD plunge 100 pips to 1.2670, all in about 30 seconds! My timing on turning on the PC was amazing! No, I had not jumped back in.

Once again I had pulled off to the side, only to watch my train come in and blow by without me. Ya, I had a 40 pip stop setup earlier at 1.2812, so had it gone bad earlier while I was away it would not have been a total disaster. But still, 40 pips is 40 pips. So, I got out to do battle again another day.

Did I pull another of my many “chicken-sh*t” premature bailouts, or was I finally using some decent risk-management skills? You folks tell me.

Potaire

2

Can’t really understand what you’re saying, buddy. You lost, let a good trade opportunity went by, or what?

If the way you trade is as unstructured as your post, then I can tell you these:

Rookie mistake—that’s for sure.
Chicken whatever—I don’t know what’s that poultry in motion got to do with your trading
Money management—which one? I don’t even know whether you lost or not.

One thing for sure, trading is much like scripting movies:
First you setup the conditions which propel the story onward—The condition which tells you that a trade opportunity is imminent. Judging from the way you tell the hours which went by while you wait, this condition doesn’t occur prior to your opening position.

Then you throw in the trigger scene—where somebody shot the protagonist with an RPG for example—and you have your trigger signal: price breaks support/resistance, moving average crosses another, RSI stabs 80% level, whatever.

The next scene after scene glued the audience to their seats with its twist-and-turn—and you’re glued to your seat by price twist-and-turn.

The climax came, the protagonist finally face to face with the antagonist, somewhere in the middle of nowhere, and manage to subdued, kill, whichever you like—You see a condition which tells you that your trade is about to end: moving average makes a reverse crossing, price breaks another support/resistance, whichever, and your trade ended.

Aftermath: protagonist win and kiss his girl, carrying her to the sunset—you check your account and see if you have win or loss, sit still and rethink your trade: why you did what you have done, if there’s a mistake why in the world did you done it? Have you did exactly as you intented in the beginning or not. It’s time for evaluation, not licking wound.

Postmortem: after some time, if you still trading, then you’re on your way to make it. If not, well, you’re not the only one.

3

Perhaps I tried to be too dramatic in my writting style. Let me try again.

I had opened a position this morning—Sell EUR/USD. My position was at 1.2772, with a stop-loss at 1.2812. That would be a 40 pip loss if EUR/USD rose up and stopped me out.

After several hours of watching, the stinking price hadn’t moved more than a few pips in either direction. It was then I found out today was President’s Day–no US market. So, I thought the smart thing to do was to wait until tomorrow, and remove all risk until then. So, I closed the position at the same 1.2772 I opened it at–no gain no loss. I went about my day.

A few hours later I was at home, and brought up my platform to see what was going on–if anything. A few minutes later I watched EUR/USD plunge from the 1.2772 it was [B]STILL[/B] at, all the way down to 1.2672. 100 pips!! Of course, I was no longer in the position–I had closed it back at work to wait for a more active day tomorrow. So, nothing for me from the move I had waited hours for earlier this morning.

I was trying to be smart about avoiding risk when I had closed the position earlier. I thought I’d take the chips off of the table and wait for a “more reliable” day. But after my chips were off, the move I had [B]hoped[/B] for actually did happen. Bummer.

My question is thus: Did I make a mistake closing my position when I did, and waiting for a “better” day?? Was that a dumb move driven by fear (chicken-sh*t)? Or, was my move a decent one, and sometimes crap like that just happens—poor timing??

Is this easier to understand?

Potaire

4

Pretend the 100 pip drop was only a 10 pip drop.

Would you have made a thread talking about it?

If you have a solid trading plan and you entered into a trade, you should know why you did and you should know when you get out. You will always leave pips on the table. That’s just the way it is.

You came out breakeven. Pat yourself on the back. I’m sure there was some guy out there on the losing side of that drop. I bet he’s posting on another forum wondering if he should have just been wise enough to not trade on a holiday.

5

You advice is well taken, Gunner. However, it is not the number of pips I care about–yes, I would have asked even had it been 10 pips. My question is was my strategy flawed thinking I should wait for another day? Or, should I have thought I went short for a reason, so I’ll stay in it until proven wrong?

My whole thought on getting out was to avoid risk of something crazy happening on a very uncrazy and abnormal day. Sounds like you two think I should have stayed in???

I have no regrets—this lesson didn’t cost me a single cent!!! :):slight_smile:

Potaire

(You must admit–the story would not have been as good with a 10 pip drop! :smiley: )

6

I say you should have stayed in only on the basis that you entered the trade to begin with. There was a reason that you entered the trade I would assume. Would that reason have made a difference whether it was a holiday or not?

If the answer is no, then you should have stayed in. If the answer was yes, then you were correct in pulling out without a loss and waiting another day.

7

Now we are getting somewhere! I must truthfully say that whether it was a holiday or not had absolutely no bearing on why I origanally thought to short this pair. Hell, I didn’t even know it [B]was[/B] a holiday at the time, and can’t say I would have thought a holiday would’ve changed my reason for taking the trade.

So, Gunner, you have taught me that my reasons were still my reasons, and a holiday, or not a holiday, had no influence on my reasons. Therefore, I should have stayed in the trade. Correct???

Seems to make good, solid sense to me. Icewater in the veins!!

Thanks for the insight, Gunner, and your help too IDR.

Potaire

8

hi,

I thought you must had make a sell based on your strategy or perception.
As you see not much movement and you suspect its holiday that causes it to had not much movement. Therefore, you closed your trade.

If the trade would had gone up. Then you would think that the holiday is the reasons to had hit your stoploss. Now that it gone your way, then you think it is a mistakes to had it closed early.

I would say it is a rookie mistakes. You did not had a good plan on entry and exit. You enter and then found something not right which shouldnt happen in the first place.

reg
vin

9

Ya, Vince, I see your point. After thinking about this, and your guy’s opinions, I can now see what my thought was upon closing. Something like this…“Heyyy, it’s quiet in here. [B]WAY, WAY[/B] too quiet! Something is wrong! I’m outta here!” Kinda like the movie/novel IDR was stuck on! :smiley:
OK IDR, I now see the plot you had. Problem was, there was nothing I actually [B]SAW[/B] that said something was wrong. Therefore, I shoulda just sat tight. And, it turned out nothing [B]WAS[/B] wrong–I let the quiet freak me into bailing out. Is this about the way you guys see it? Rookie nerves?

Potaire

10

Yes. And that’s really primarily defined by your questioning of it. Overtime you’ll realize you’ll always miss huge moves. You’ll always get in too early and pull out too late. And that’s just fine. It’s not your job to capture the entire move. It’s your job to just catch a piece of the move. Do that enough times and you’ll be drowning in pips.

11

What I do not understand was your S/L and what triggered your S/L to be at 812. I have a feeling that you probably picked 40 pips from your entry and called it a day. Based on my faulty memory of yesterdays exact levels, the next major resistance would have been the S1 at 1.2825. Personally, I would have used this + 5-8 pips.

To me it sounds like you are letting MM manage your trade instead of letting your trade manage your MM. IMO, you should have decided on your T/P and S/L levels, sized your trade to fit within your MM strategy and then pulled the trigger.

Whether or not your signals are correct is a different story.

12

You might misunderstand what happened, Husky. I was [B]already[/B] in, with stops set. But, it was [B]soooo[/B] quiet during that time (price only moved 1-2 pips each way in 3 hours) that my nerves got to me, and I no longer wished to risk 40 pips—or even 4 pips, for that matter. lol So I chickened out and closed it. Then the big move came later, and I missed it. No gain-no loss-free experience. I reckon that’s the only way to look at it.

Potaire

13

Ah, sorry about that, I thought you got stopped out, just to see the trade go your way.

14

Definitely NOPE!!

You did make a mistake, but IT IS NOT QUITTING TOO EARLY! It’s lack of planning.

Mind you, forex trading is a strategy game in which you’re foot-soldier up to general all by yourself. As such, the strategy itself is not, and must not be, confined to simply entry and exit criteria alone. And most of the time, you have passed the nerve phase when you decide to plung yourself into this game.

Bear with me a while since this gonna be a long and boring lecture for you:

You quit too early because you don’t really know neither the pair you trade nor the entry-exit system you use. If you really knew both, than you know how likely your chosen pair will behave under your entry-exit system during certain conditions (not 100% accurate, but at least close). This is just a simple slippage easily remedied with enough backtest. (But backtesting won’t be that simple, really.)

Too put salt into the injury, you think that because forex trading involve numbers and numbers, imagination has no place in this field. Instead of daydreaming what would you do if x or y happens, what’s the best step to take if suddenly a terrorist blow out the nearest utility provider thus cut your Internet connection, etc. etc. you’re daydreaming about what you will do when you get rich (err, or is it me who used to daydreaming the last part?:confused:). You open your platform, see what you want to see, and put a trade…then when price doesn’t move even close to your expectation, you think something’s wrong and jump overboard.

That’s called fragmented-strategy, unfinished-tactic, or whatever you like. And it’s got nothing to do with your nerve.

… sh*t! I’m finished already, not as long as I wanted to. :p. Oh, well…Good luck.

15

I wouldn’t be too hard on yourself. I watched my 100 pip profit evaporate into thin air in a matter of seconds after the CPI data was released in the UK. Ho-hum, at least I didn’t lose any money.

:rolleyes:

16

the hardest thing to overcome for one without a lot of experience in the market is to TRUST your original ideas, assuming one HAS original ideas.

obviously you (and a heck of a lot of other peeps including myself) were correct in taking a short position NO MATTER WHO WAS ON HOLIDAY !

you failed to notice that the TREND of the day was DOWN, and that the trend was following EVERY single rule of trend trading, albeit VERY SLOWLY !

years ago i learned how easily i could get BORED with what was happening in a slow market ---- I also learned just how STUPID i could be by letting my attention drift. While I could never say that the bank traders were “intentionally” boring retail traders to death, while waiting with that HUGE KABOOM they would spring, IT ALWAYS, ALWAYS HAPPENED and so i learned to FIGHT my boredom, set alerts and HOLD to whatever i believed would happen (which is how my “no sl policy” developed)

now we know that the banks dont sit there plotting against you, we do know they can FAKE like the true pros they are, and no matter WHAT the market momentum, you owe it to yourself to remain TRUE to your original ideas, hold them close and continue your trade, no matter WHAT hand they are showing you !

you know its the one thing i work with newbs to try to eliminate in their trading ---- to HOLD what they believe, after learning, what WILL HAPPEN !

you simply FAKED yourself out of a good trade, and may you REMEMBER what happened forever because this is one of the GREATEST lessons ever created and should be tacked above your monitor forever !

enjoy and trade well

mp

17

Outstanding advice from everyone–each with a slightly different twist. IDR, your last post has me thinking–I need to define more clearly to myself exactly [B]WHAT[/B] my plan is, and [B]WHY[/B] I think it will work. Then I need to trust my plan, as mp says. That is harder than it sounds–my first trades were made simply cuz something was already moving and I wanted to tag along.

I have no regrets in the slightest bit about missing the pips. I reckon more trains will come. The whole thread was meant only to ask if I did the right thing or not. I see now that I did [B]NOT[/B]–I shoulda stuck with my idea & trusted it.

Somewhere I read (maybe here) that if the trade is not doing what you want, and you no longer feel confident, get out immediately. In this scenerio, I no longer felt confident, but you folks have shown me I had [B]NO [/B][B]REASON[/B] to no longer feel confident–nothing bad had happened to change the scene. Other than the time on the wall clock, the whole thing was identical to when I entered. If it was good enough then to enter, it was still good enough to stay in.

Many, many thanx to each one of you–each of you provided a spoon-full of icewater for my veins.:cool:

Potaire