I was long AUD/JPY at 91.20 and I put on an unusally large position. I was just miserable all day because of this!
I kept telling myself "The decline is too overblown. It will rebound to 95 at least. This is possibly just a correction anyway. We should be making new highs after this. This is going to be my best trade in a long time. And in the meantime, I can nicely collect the swap every day".
The market edged down and stayed at below the 91.00 level. I got a little more nervous. Then as NY closed, the market edged lower. At first, I figured that's a good thing. The market will shake out the weaker players and then rebound. But price action just didn't look right. A small rebound, and I decided to cut it loose. It wasn't an account destroying loss, but I was hurting pretty bad. I waited a bit and it dropped some more. This time, it stayed lower! Time to short!
Yes, it was time to short, but as a rule, I cut my position size after losses. So, I took on a small short. Worst case, I would lose 1% of my account. And then it just tanked. I added a bit more to my position and got out with a quick profit. Still didn't make up my losses for the day, but I'm satisfied. Had I not closed out my long, I would've lost all the profits I've made in the past month and then some more! If you were leveraged enough, you could've wiped out your account. So not worth it!
Lessons re-learnt -
1. Don't take on big positions, regardless of how sure you are. Start small and if the market behaves as you expect it to, then you can always add on to your position!
2. A large position is just not worth the extra stress that comes with it! And if it moves against you even a bit (in most cases, it will), you think to yourself "OK, I was wrong, I will get out at breakeven." And that breakeven usually never comes.
3. If you don't understand a move, you should probably stay out.
I kept telling myself "The decline is too overblown. It will rebound to 95 at least. This is possibly just a correction anyway. We should be making new highs after this. This is going to be my best trade in a long time. And in the meantime, I can nicely collect the swap every day".
The market edged down and stayed at below the 91.00 level. I got a little more nervous. Then as NY closed, the market edged lower. At first, I figured that's a good thing. The market will shake out the weaker players and then rebound. But price action just didn't look right. A small rebound, and I decided to cut it loose. It wasn't an account destroying loss, but I was hurting pretty bad. I waited a bit and it dropped some more. This time, it stayed lower! Time to short!
Yes, it was time to short, but as a rule, I cut my position size after losses. So, I took on a small short. Worst case, I would lose 1% of my account. And then it just tanked. I added a bit more to my position and got out with a quick profit. Still didn't make up my losses for the day, but I'm satisfied. Had I not closed out my long, I would've lost all the profits I've made in the past month and then some more! If you were leveraged enough, you could've wiped out your account. So not worth it!
Lessons re-learnt -
1. Don't take on big positions, regardless of how sure you are. Start small and if the market behaves as you expect it to, then you can always add on to your position!
2. A large position is just not worth the extra stress that comes with it! And if it moves against you even a bit (in most cases, it will), you think to yourself "OK, I was wrong, I will get out at breakeven." And that breakeven usually never comes.
3. If you don't understand a move, you should probably stay out.