I am coming off the most frustrating 24 hours in my trading career as the BoJ sent the Yen tumbling nearly 400 pips off recent highs against the USD. No sooner than had I publicly predicted a broader pullback did the BoJ send JPY surging downward. The money figures aren't important. My loss that I ended up booking six hours before the rally was underway was modest. The frustration is that I literally had the worst timing possible. I bought at the high and sold at the low.
As I examine what went wrong, I believe that it can be attributed to two factors. First, I attempted to time the market, something that can be very profitable but is so difficult it usually bears no fruits. Alas, the possibility also exists that EUR is now off its lows and I should have just aligned myself with the longterm upward trend last week instead of insisting on finding the exact low point.
A related factor was failure to implement my original trade objective and purpose. I bought USD/JPY a few weeks ago at 96.66 on the theory that the longterm trend was higher, even though a pullback may be in the cards. I initiated a very small position, and planned to buy into weakness. However, as my EUR/CHF also started under-performing, I panicked and felt like I had to close some positions to stop paper losses from causing me to fall to far below earlier high water marks. This is emotional trading. Mathematically, the chance of a margin call was extremely remote, and so there is no excuse for allowing psychological discomfort to alter underlying convictions.
The past twenty four hours have been a valuable lesson that thankfully have cost me very little. Such is life as a trader. Its hard to move on, but I must. With US non Farm Payrolls twelve hours away, its a big day tomorrow.
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