When the volatility slows in the funded forex like it has this week, I will usually get emails from LEGENDAFX clients who have taken one of our FX Power Courses asking me what they should do. They opened a trade and watched the market move sideways for a few days and to them, this is like watching paint dry. Sure it can be boring as everyone likes to have their trade move in their direction immediately without a reversal of any kind. But we don’t always get what we want and when we don’t, we find out what kind of traders we really are.
Most of these students were either long the EUR/USD or short the USD/CHF because we teach them to trade with the trend. Many of them also exited the market near their entry point because they lost patience in the trade as the market was not really moving up or down. Those who exited also watched as the market broke out of the range last night enough to give most of them the profit they were originally looking for in their trade. But since they lost their patience, they did not profit.
This brings us to one of the rules of trading we talk about in our FX Power Courses: Never get out of the market just because you have lost patience or get into the market just because you are anxious. Easy …right? Actually it may be one of the most difficult aspects of trading. Having the patience and discipline to let the market determine when to enter or exit takes practice and confidence. Those who have it profited last night, while those who didn’t ended up just watching the market movement. In order to move up to the next level of trading, you have to have the patience to let the trade play out. Your profitability depends on it.
Last week, I entered a couple of profitable trades (but that could have been even more profitable had i not exited my positions too quickly).
On October 31st, I shorted the USDJPY. I had read one of Jamie’s technical analysis articles on DailyFx and he anticipated a strong downmove in the Yen. I entered at 115.403 and exited 9 days later at 110.61. At the time he wrote the article, Jamie advised aiming below 111.59. On the morning of November 9th, when I saw that the target price had been reached and even passed, I exited the trade, fearing that the pair would reverse and trade back up. Looking back at my exit strategy I realize that I exited the trade way too hastily, fearing to loose the money I had just made. There was no signal to buy back and in fact the pair traded down to about 108.50. I could have made some extra money by just holding on to my trade a little bit longer as I really didn’t have a “valid” reason to buy back.
The second profitable trade I entered was buying the USDCAD. Again, one of Jamie’s technical analysis articles suggested that the USD was about about to shoot up. The target price wasw .9750. I bought one lot at .9406 on November 9th and set a limit price of .9720 (right below the target price – once again by fear that the pair would suddenly reverse and that I would loose all my profits). My limit price was hit on November 12th, and I made a 344 pip profit. On November 11th, I decided to add another lot to my position and bought the USDCAD at .9466 ( I did not put a limit price on the 2nd lot) and sold it for .9627 in a pullback (3 hours after selling my first lot). The fact that I sold the lot in a pullback is really a weakness because a couple hours later USDCAD traded back up and within a couple days broke through .98 (as I write it is trading at .9850).
Basically, I saw a minor pull pullback and “freaked out”, sold my position and within a couple hours the pair was back to its original levels. In total, I made (161+344) a 505 pip profit on the USDCAD but once, again, had I held on longer to both of my trade I could have added at least another 200 pips.
I’m happy to have finally made some profitable trades, but now that I look back I can see which aspects of my trading I need to work on and improve.
For now, I haven’t identified what my next trade will be. It seems that most currency pairs have been trading in a tight range for the past few days.