Weekly Review #12

March 25, 2019

Table of Contents

Forex Trading Review – Week 12

This week was frustrating. The market really tested my resolve.

I took a bunch of losses in a row, but worst of all, I did not make the best decisions under the circumstances. I ended the week basically break-even.

This is a week I need to study seriously so that I can develop effective ideas and processes to help make better decisions under pressure.

18th March – 22nd March

Trade #33

I fucked up this trade big time.

Pardon my french, but there’s no better way to put it. This was my EUR/USD long trade from last Wednesday. As you can see, I was stopped out for close to 3:1R, which sounds good until you see what happened next.

This was an unacceptable mistake and I feel pretty shitty about it. Trades like this really test my patience and emotional control as a trader.

I was having a good trading week last week, and as you can see from the second screenshot price was going in my favor on this open trade. But then this week I made the genius decision of rolling my stop-loss tight after a weak breakout.

This is not in my plan. My plan says that for trend-continuation trades I must trail my stop-loss below structure lows. However, I got nervous that price was going to retrace back to my entry and I didn’t want to surrender my profits.

So I decided to move my stop-loss beneath previous resistance on a whim.

Then look what happened:

Unbelievable.

Not only did I get stopped out for a micro profit compared to what unfolded, but I was just barely stopped out by the spread. It could not have been any closer to being a huge winner.

Instead I came away with a pathetic 3:1R on this monster trade. Terrible decision! This is a fantastic example of what it looks like to shoot yourself in the foot as a trader.

All I had to do was sit on my hands and let the market play out, but yet again I felt the need to micromanage this trade and “lock in” my open profits.

Then, to top it off, immediately after being stopped out I had a valid re-entry opportunity to get long again before this move occurred. But I did not take it. The reason I didn’t take it was because I thought EUR/USD was looking pretty bearish on the 4HR and Daily.

I was nervous about an impending retracement and I didn’t want to take a loss immediately after screwing up my trailing stop.

But the 1-Hour was in a clear up-trend, and as I am a developing trader, my trading plan is very simple and does not account for discretion like that. In other words, I had no excuse for not taking that setup. I talked myself out of it out of fear.

This week’s experiences with EUR/USD really stung. I am very disappointed with how I managed this trade and allowed this rare opportunity for a quick and easy big win to slip past.

If I could give you one piece of advice and have you follow it, it would be this: whatever you think the market is going to do, you’re wrong.

You have no idea. So stick to your damn trading plan, and don’t even think about bending your rules for any reason whatsoever. Trust your plan. If I had more trust in my plan, then this month would have been phenomenal.

Instead, I spoiled an opportunity to significantly grow my account and my grind towards new equity highs continues. This is a cautionary tale of a trade.

Don’t do what I did here, and you’ll do well.

Breakdown

What I Did Wrong:
Trailed stop-loss too tight, broke my rules, failed to take a valid trade.

Why I Did It:
I thought I knew that price was going to retrace and I didn’t want to lose open profits. Then I didn’t want to re-enter and take a loss.

Potential Solutions:
– Do more self-checks and self-talk when making decisions like this.
– Visualize this scenario happening again, practice making the right move.
– Review my back-testing results regularly, study my biggest winners.
– Meditate on mental blockages and why I acted against my best interest.
– Print out the chart and put it up on my wall for a few weeks.
– Study it, learn from it and move on. Do better on the next trade.

Trade #38

This was a good trade, but it didn’t pan out. Textbook pullback setup that meets my rules.

Not much to say about this one. I couldn’t have done anything differently.

When you trade trend-continuation and momentum setups you are inevitably going to get caught in a reversal or consolidation period sometimes.

Trade #39

Another trade that met my rules completely, so not much to talk about here either.

The only thing I would note is that this was a weak breakout. It is probably worth my time to keep track of how these types of trades perform.

I would be better off not taking setups that look ugly immediately after a weak breakout like this. But as my trading plan currently stands, this was a good trade.

Later in the year I will address these concerns and re-test my strategy with new rules. But for now I must stick to the plan as it is.

Trade #40

The market really likes to kick you when you’re down sometimes.

After taking a couple of losses in a row and screwing up my trailing stop on the EUR/USD trade, I finally got involved with a setup that looked like it might win.

But no dice. Price got within a pip of my take-profit and then reversed to stop me out for break-even and rolled over to the downside. This is why it’s important not to get your hopes up too much when you take a trade.

There’s no way around this. Some traders might move their take-profit a pip closer on the next trade, but there is no guarantee that it won’t just happen again even with a tighter target.

And according to my back-testing, leaving my stop-loss where it was would have resulted in a much higher chance of losing.

So there’s nothing I could have done differently here. Just another good trade that failed to play out in my favor.

Trade #41

This was a sub-optimal setup, which means I failed to achieve my goal for the week.

After failing to hit my target on the previous USD/CAD 15M trade, I then got a signal on the 1-Hour chart. This signal was pretty weak though. I should not have taken it.

In hindsight price was not trending to the upside and the reversal was not yet confirmed. This was still a bearish market. But I was too attached to my original thesis on the 15M trade and so I traded what I wanted to see here instead of what I was getting.

I wrote this up in my journal as a bad trade. After taking two losses in a row and screwing up the EUR/USD trade, I should have been waiting for an A-quality setup.

This was a rubbish trade. I need to eliminate these from my trading.

Trade #42

This was a B-grade setup according to my rules but it still has a half-decent chance of success, so I went for it.

Price was heavily bearish and had come close to a major support level but had not tested it properly yet, so I was hoping that price would roll over below 126.000 for a re-test of that zone.

Unfortunately price did eventually blow right through that zone the next day, but not before stopping me out and consolidating first.

Trade #43

This was a great trade to end the week on.

I took this early on Friday morning after beginning my analysis and being surprised to see that USD/CAD had reversed its down-trend on the lower timeframes.

I had a valid setup that had occurred earlier that morning with a flag pattern beginning to form, wedging into a key previous resistance level that price had managed to blow through.

Anticipating that previous resistance might act as support, I took the trade. The flag pattern eventually broke out to the upside but with extremely weak momentum.

It wasn’t until much later in the day that this trade hit my profit target, and I was actually surprised that it won. When price got back below the 50-EMA I began to worry.

But I knew I had to step my game up after taking a few bad trades this week, so I ignored my charts and let the trade play out. Fortunately the markets gave me a break after 4 losses in a row.

Trade #44

This was a good trade that I was happy to take risk on.

Price was technically in consolidation, but we had just broken and held below a key support level for this timeframe, indicating that price might want to head lower.

Combined with the fact that the S&P 500 was in correction mode (which typically means “risk-off” for the forex markets, and “risk-off” usually translates into “sell anything that isn’t the USD, and buy JPY”).

Unfortunately the market bounced around a bit before rolling over completely and so I only managed to come away with a 1:1 target on this trade.

My second position was stopped out for break-even, ending my week on a positive but fairly unimpressive note.

Reflection

This was not my best week, but I managed to at least keep my cool and continue to execute despite wavering in my performance.

I am only human, so mistakes and setbacks are to be expected. And to be honest I have had a number of distractions in other areas of my life this week that I feel threw me off my game a little bit.

That is no excuse however, and I must make sure I put in the work to ensure that during times of high pressure I can still make the best decisions possible.

This means having a plan and a process for dealing with situations like the ones I encountered this week.

You can’t plan for everything, but for the things you can’t plan for, you can at least have a process in place for dealing with it.

That could be as simple as taking a few days off trading, lowering your position size or just doing what you can to limit the damage and then studying the event after the fact to improve your future response.

Trading is a focus sport. We are professional mind athletes, and even professional athletes have slumps. It’s what they do about those slumps that makes them professionals.

You can’t be on your A-game every week, and those weeks that you aren’t at your best can be treated as learning experiences which will propel you to the next level of self-awareness, and therefore, ability.

Good luck out there, and happy trading.