For a while now, I have been planning a long-term “buy” on the USD/JPY. As it had been around a 15-year low, I expect that over time, it will rise significantly.
On Nov. 15, I noticed that it was already a bit higher than anticipated. Instead of sticking to my original game plan, I placed a couple of sell orders. As it had headed in the opposite direction, I find myself tremendously frustrated and unsure of what to do. I have 3 sell trades running from entry points of 82.71`, 82.81, and 83.1o As I type this message, it is rising extremely fast and has already reached 84.19. Yikes! I could have taken a small profit and gotten out of the trades on Nov. 23. Then, my plan would have been to open buy trades from then on in. I feel that within 6-12 months, we’ll see 90 or higher.
My questions: (1) Should I hang in there or take my losses and look only UP? My only concern is that that is when it will suddenly start dropping again! So, I am inclined to stand pat for awhile and rack up further losses since there’s a chance it will test the lows again. (2) Should I leave my stop losses settings at 86.00, or adjust?
I still have a plan and a vision but I got sidetracked and got away from my plan. I will feel quite comfortable entering a buy in the 83-84 range. But I would prefer an earlier entry point. Of course I would also prefer to erase some of my losses before embarking on my long-term plan of attack - to buy only.
If lows will likely be tested again, I have no desire to close my trades. However, if the future only looks like a continued climb, I would certainly be willing to cut my losses and start my plan of attack from this point.
I think you got yourself into a real bind. One thing I know about the markets is to avoid thinking of something as overpriced or underpriced because I have been proven wrong too often.
I don’t think the retail Forex market is a place where most traders can become position traders. What leverage are you using? Even 20:1 will get you into difficulty in a few weeks when the market goes in the wrong direction. That’s why most traders are scalpers or swing traders.
Just remember the old saying - “The market can remain irrational longer than you can remain liquid.”
Sorry to point out the obvious but your trading from the book of classic newbie errors, and now your new idea is to go for broke and hang on to a losing trade until your proven right. N° 1 bad idea.
Your asking questions that I’m sure you know the answer to, take the responsibility. You have no plan for the situation you find yourself in and your shorting a currency that you think you should buy…
… come on, sort it out, learn and move on to the next trade.
I have 3 trades going. 82.71 & 82.81, both @ 1.0. The other is @ 83.10 @ 0.5. I’m down $3,933.07. I want to wait and see what next week brings. Again, I got off my planned course of action stupidly and I have no doubt that I will still see big gains over time if I BUY before too long. The trades I have now are small trades considering I started with $100,000 and made around $775 in the 1st week.
The last thing I want to do is close the trade, see a quick reversal, and then get caught with my pants down again.
I appreciate the advice. Again, my long-term plan was to enter in the 80-81 range and let it rise for several months if necessary. The only concern (and it was a small one with limited risk in my mind) is that the pair would reach unthinkable lows (like low 70s). Otherwise, patience would be profitable.
Again, I got side-tracked and I think that cutting my losses and opening a BUY would be smart but waiting it out to see which direction it heads in the near future would be wise.
If only I would have waited another couple of days, I would have MADE some $$$ before closing those trades as the USD took a dive shortly after I closed out! Instead, I took ABOUT $4000 loss and started BUY trades on the USD/JPY and CAN/JPY looking long term. As I type, I have 10 trades open (6USD and 4CAN) and I’m up $1,755.61. I have been up about $3,000 and down about $1,500. While in hindsight I should have given it a little more time on my previous trades, at least I’m happy now because I’m going in the right direction and the sky’s the limit now!
Having said that, I am fully aware of the risks. Here’s where I could use a hand. I would like to know the best method to precisely calculate my potential gains and losses at various levels of these 2 currency pairs based on my trades. Are there any calculators / formulas out there or can someone recommend the best way. I want to be sure that a wild down swing will not bury my account and also how much I can earn at which levels if things continue to progress northbound.
I don’t think stop losses are necessary. You see, what I’m doing is far different from what most people do. I am willing to leave my trades running for several months. If the USD or CAN break unique barriers and fall below all-time lows against the yen, then I would consider huge losses and end some of the trades. On the other hand, the upside potential would be massive.
Last night I went from being up over $2000 to being down over $4000 in about 5 min.! The thing I may do to protect myself is add money the account. As long as I’m covered for unthinkable lows, I’m willing to wait it out for months to realize my gains eventually. My target is high 80s / 90s in both currency pairings. It will happen eventually. The problem I had before was that I was in the wrong direction based on my long-term plan.
The first mistake I made was opening those down trades and going against my original game plan. The second mistake I made was listening to a lot of people on this forum, cutting my losses, and moving on. Had I waited just 3-4 more days, I would have made a lot of money rather than lose $3000+.
Now, I have roughly 30 trades going, about 10.7 lots total on the USD/JPY and the CAD/JPY. My USD/JPY range is from 83.69-81.00. My CAD/JPY range is from 82.70-81.30. I was up over $20,000 at one time today, now just over $11,000.
My plan / goal is to wait until both pairs hit at least 90, which will net me about $100,000. Greater patience and 100 will get me about $250,000. If either pair really tanks, I’ll open more trades down lower, and if necessary, add more $$$ to my account (right now I got $174,000 in there).
As the USD tanked a bit tonight, I managed to get out of a couple trades with small profits and I have already opened one at a lower level when my limit order went into effect.
Now, do you think I’m on the right track? I still believe that patience (and willingness to avoid taking decent profits along the way) will make my goal happen within a few months. I don’t need the $ now and I’m willing to wait.
I neglected to mention in my last post that I chose to open several small trades and staggered them, rather than a small number of large trades. I have about 7.0 lots of USD/JPY and my largest trade is 0.50. I have several 0.25 and in between. Same with my CAD/JPY (where I have less than 4.0 total). I have one 0.80 and the rest are 0.50 or smaller.
Once again, my belief is that both the USD and CAD will gain a lot against the JPY as it has in previous months / years. Could drop and be stagnant for a while but it will likely rise as it always has in the past.
Those two statements are rather contradictory in nature.
As for whether or not you are on the right track, downsizing your lot sizes has my vote as the smartest thing you’ve done.
This is not a sprint, it’s a marathon.
Small gains THAT ARE BANKED are the backbone of any growing account.
ALWAYS be taking profit when it’s given, You might wait two more years for the dollar to come back against the yen. Are you going to hold a trade that entire time hoping? Or are you going to let go of a bit of stubbornness to prove yourself right, and take what the market gives EITHER DIRECTION?
Point being, don’t get stuck in a mindset of thinking something will happen, that may not happen for a while. No sense tying up your capital like that. When an instrument trends, you can still make money either way, and actually make more than just a long term one way trip.
And when it starts up, you’ll still be footloose enough to hop on, and take the ride without incurring a constant drawdown on swap fees.
Point well made about the contradiction. I was in a bind and I took the advice out of frustration rather than sitting back and relaxing for a bit first. That relax time may have allowed me to save myself on those trades. Anyway, I think the type of money and the type of trades I am doing this time are far different from the ones most people discuss on this forum. Not too many people go into a trade thinking in such long terms as I am with these trades. If they did, they wouldn’t be spending so much time discussing them I suppose.
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ALWAYS be taking profit when it’s given, You might wait two more years for the dollar to come back against the yen. Are you going to hold a trade that entire time hoping? Or are you going to let go of a bit of stubbornness to prove yourself right, and take what the market gives EITHER DIRECTION?[/I]
I disagree with that statement in this particular situation. The USD in particular recently hit its lowest level against the Yen since 1995 (and it still hasn’t broken 80 this time yet, as it did in 1995). If you look at the charts, and if you study the movement of the USD/YEN pair over the past few month and years, I think you’d be hardpressed to find a very long period, especially a 2-year period where you didn’t see some major movement. I’m not saying it’s impossible, but very unlikely that the USD will drop below the high 70s and not return for a couple to several years. In recent years, the pair has spent an awful lot more of its time in the 90+ zone than lower. As for the CAD/YEN pairing, it has potential to drop much lower than the USD has against the yen. On the other hand, the Canadian economy is more stable and seems to be going in the opposite direction from Japan’s economy. I have lived in Japan for years and I am a Canadian (who has also lived in the U.S., not that that really means too much in this FX game but it at least has given me a feel for things in all the countries concerned).
With the trades I have in place now, USD/JPY (7.0 lots) and CAD/JPY (3.85 lots), I am bound to see some serious $$ swings. I was up over $20,000 yesterday but closed the week just under $12,000. It’s easy to close trades and take profits. It’s much harder to sit and watch your profits disappear. As I said before, I see the US and Can. dollars reaching 90+ territory in the coming months and I see no reason to pull out in the mid-high 80s before I reach my targets. If I do that, I may have to wait a long long time before I ever have the confidence to enter new trades with those pairings.
I believe that there’s a better chance we’ll see the USD and CAD hit 100 or 110+ against the JPY before it ever drops to 78 or lower. If I’m wrong, a drop in those pairs would put me in a waiting game. If I’m right, it would put me in a great situation financially.
I also have the benefit of having trades with 2 pairings that have been running quite parallel to one another. I have the option of pulling completely out of one pair or taking some profits and leaving other trades longer.
I appreciate your feedback / discussion as always…