big whipsaw... what was the right course of action?? | Forex Factory

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big whipsaw... what was the right course of action??

  • #1
  • First Post: Oct 12, 2007 4:22pm Oct 12, 2007 4:22pm
Hi there,

I've been visiting this forum for quite some time (best Forex site around!!!), but it's my first post here ... so hopefully it's not a dum question

Ok, here's the deal ... 2 weeks ago I entered a long position on the eur/usd. I entered way too high, but being sure that the trend was upwards, I started to scale-in ... had some big drawdowns, but eventually it went up again ... pretty good even!

Now I was a bit nervous this afternoon (morning for US people, I live in Belgium) with the numbers coming out ... so I figured out that I didn't want to go in negative territory again. I figured: I'll put my SL on my open (scale-in) positions on breakeven, and start a hedge if the EUR/USD goes down, so I don't loose my profits ...

As anticipated the news-releases meant down for me, so I opened up a hedge trade. But against my own plan I closed my open positions, meaning that I was now in the market only with my hedge position.

As you all know, the euro quickly reversed, and triggered my SL on my hedge position, but my original positions weren't in the market anymore ...

So a) I lost on not having my open positions open anymore, disabling any further profits and b) my hedge-position was closed out at SL ...

Now, I initially thought I did wrong, because I didn't stick to my original plan, but now afterwards it shows that the euro didn't rebound as powerfull as I thought.

Should I've stayed in the market, or did I do good?

I wrote down the whole story on my blog, for those interested ...

http://www.forexnation.net/forexblog.aspx

Tx for any comments!

Greetingz,
Koen<
  • #2
  • Oct 12, 2007 4:41pm Oct 12, 2007 4:41pm
Ask yourself if this 'worked' or 'did not work' for you. If you can honestly answer yourself you have your answer.
Quote
I didn't stick to my original plan
In trading, there is no bullshit. You either make money or you don't.
  • #3
  • Oct 12, 2007 5:00pm Oct 12, 2007 5:00pm
Well, I honestly don't know

As I'm still learning very much, the main question for me now is:

- Did I do wrong by not following my plan?
- Was my plan not good, and was I lucky I didn't follow it?

Basically ... I'd like to hear if my original plan was worth something If it was worth something, I can kick myself in the #ss ... if it wasn't ... I have to think hard about getting better plans

TX!

Greetingz,
Koen<
  • #4
  • Oct 12, 2007 5:04pm Oct 12, 2007 5:04pm
Hi,

Could you post when you entered and why, that could help.
  • #5
  • Edited 6:44pm Oct 12, 2007 5:20pm | Edited 6:44pm
The whole trade history:

(all EUR/USD)
2 oct: entered 0.2 lots long @ 1.4215 (SL 1.4118, TP 1.4265)
3 oct: entered 0.1 lots long @ 1.4165 (thought too early the correction was over) (SL 1.4118, TP 1.4265)
3 oct: entered 0.2 lots long @ 1.4115 (SL 1.4118, TP 1.4265)
5 oct: entered 0.1 lots long @ 1.4065 (SL 1.4118, TP 1.4265)
9 oct: entered 0.2 lots long @ 1.4015 (buying 0.2 on every 100 pips down) (SL 1.4118, TP 1.4265)
12 oct: entered 1 full lot short @ 1.4162 (SL 1.4190, TP @ 1.4103)
12 oct: closed all long positions at 1.4170
12 oct: the 1 lot short (the hedge position) was closed at SL of 1.4190

trade 1: -35 pips (0.2 lots)
trade 3: -5 pips (0.1 lots)
trade 2: +45 pips (0.2 lots)
trade 4: +105 pips (0.1 lots)
trade 5: +155 pips (0.2 lots)
trade 6: -28 pips (1 lot)

EDIT: looking back at my reports ... I see and remember that I did 2 more hedge-positions on oct 9th:
- sell 0.6 lots @1.4027 (SL 1.4066, TP 1.3930) -> lost 39 pips (-166.36 euro)
- sell 0.6 lots of GBP/USD @ 2.0328 (SL 2.0391, TP 2.0285) -> won 43 pips (+183.82 euro)

Net profit (in euros, including swaps): +96.11 euro (on a 3000 euro account): 134,86 profit, 38.75 swaps

So ... in the end, it was still positive ... but I'm not feeling good with it ...

TX in advance!

Greetingz,
Koen<
  • #6
  • Oct 12, 2007 5:24pm Oct 12, 2007 5:24pm
Why I entered?

First of all ... I usually trade 0.3 lots ... on oct 2nd, I thought, he's going to new highs ... I don't want to miss the train ... but it's a bit risky ... so I only entered 0.2 lots ... had the scale-in setup in mind when I started ... I've learned from simulations you shouldn't enter big with scale-ins ...

next I entered one more 0.1 lot 50 pips down as I thought the correction was over and with buying 0.1 more I had my "normal" amount again ...

But then prices kept on falling ... so I had to buy more each 100 pips down ...

The rest of the tale is to be read at my blog or see above (why I exited the way I did this afternoon).

TX in advance.

Greetingz,
Koen<
  • #7
  • Oct 12, 2007 5:39pm Oct 12, 2007 5:39pm
Thanks.

I am also just a beginner, but I would say, that you should have put a stop right below the last low on your first trade because the possibility it would fall further after going through the support was quite big.

Then it broke the trend, so it was clear, that it would continue falling, so the next trade was not a good idea either.
Next one on 5. was good, because price bounced of a Pivot, but you should have taken profit as soon as you saw price going against you too much.

Next one at 1,4015 was almost perfect as price bounced of again, afterwards broke the downtrend.

The short wasn't a bad idea, because of a Pivot point and a possible revearsal there, but as soon as it went back up through it you should have exited (which you did).

I would say you should make your stops tighter and look at trendlines and support and resistances more.

You were right with the underlying trend (up) but should enter at a retracement, best at trendlines or supports.

It's easier to write though than to do.
Hope it helps anyway

Edit: I personally don't like scaling in much anymore since I got burned really bad several times (overexposed)
  • #8
  • Oct 12, 2007 5:46pm Oct 12, 2007 5:46pm
sounds like u are over leveraging and risking too much for this acct size.

Quoting aspdeveloper
Why I entered?

First of all ... I usually trade 0.3 lots ... on oct 2nd, I thought, he's going to new highs ... I don't want to miss the train ... but it's a bit risky ... so I only entered 0.2 lots ... had the scale-in setup in mind when I started ... I've learned from simulations you shouldn't enter big with scale-ins ...

next I entered one more 0.1 lot 50 pips down as I thought the correction was over and with buying 0.1 more I had my "normal" amount again ...

But then prices kept on falling ... so I had to buy more each 100 pips down ...

The rest of the tale is to be read at my blog or see above (why I exited the way I did this afternoon).

TX in advance.

Greetingz,
Koen<
  • #9
  • Oct 12, 2007 5:47pm Oct 12, 2007 5:47pm
My ideas:

(1) The initial entry: Why did you enter at the 1.42 price? Just because you believed price was going higher or did you have an entry idea or system? ( Not saying that either is wrong but you need a plan when you speculate )

(2) Drawdown: I'm guessing your account was in quite a hole when you kept adding to the position. ( I'm not going to calculate but it must have been down by at least 700 Euro if by 0.1 Lots you mean 10,000 lots ). This is a very high percentage of your 3000 Euro account. Would you have been comfortable doing this with a 100,000 Euro account? If not then you should think about your approach because the way you trade should not be influenced by how large your account is.

(3) The hedge: If initially you believed price was coming up and it made it all the way back, why would you hedge now?

(4) The stop loss: The trade showed something about your attitude. You hoped for the trade to come back after being down by a large margin and then when it was slightly profitable you feared losing the little money you made. ( Letting losers run and cutting winners short )

My biggest issue with the whole adding to a loser to average in is the metal toll it takes on you to have a large drawdown. I think you answered the question already by yourself when you said I did not feel good about what happened.
  • #10
  • Oct 12, 2007 6:00pm Oct 12, 2007 6:00pm
Quoting Kurti
I would say you should make your stops tighter and look at trendlines and support and resistances more.

You were right with the underlying trend (up) but should enter at a retracement, best at trendlines or supports.
Well, you're all right about that! That's also what I learned the past 2 weeks ... with my scale-in, I used fixed numbers. The coming weeks I'll learn more on trendlines and supports through a rather weird method ... see my article about kayaking and trading ... the 2nd article in my blog list The idea is to compare the market with a river. And where the rivers set blocks and eddies (restplaces). Rivers I've been doing for more than 20 years and evaluating rivers are kind of built into me ... the analogy works very well so far ... I've been able to draw S & R's quite accurately the last few days!

Quoting Kurti
Edit: I personally don't like scaling in much anymore since I got burned really bad several times (overexposed)
Well ... in the past year I've been doing simulations on scaling in on the GBP/USD, using a MetaTrader EA I developed myself ... the results were 80% good, 20% disastreous ... 10 months of 10% profit per month ... 2 month my accounts were completely crashed ...

So, personally I think this might be a good rescue strategy ... but only if the conditions are right ... and even then ... make sure you have a SL (in my simulations I never used SL's). And if your SL gets hit anyway, you'll feel the dark force

Tx for your comments!

Greetingz,
Koen<
  • #11
  • Oct 12, 2007 6:07pm Oct 12, 2007 6:07pm
There are two indicators for metatrader which helped me a lot:

Fibonacci Pivots and Pivot Points Multitimeframe.

Maybe you can use them also
Attached File(s)
File Type: mq4 Fibonacci Pivots.mq4   5 KB | 453 downloads
File Type: mq4 Pivot Points Multitimeframe.mq4   45 KB | 444 downloads
  • #12
  • Oct 12, 2007 6:13pm Oct 12, 2007 6:13pm
Quoting tango112
My biggest issue with the whole adding to a loser to average in is the metal toll it takes on you to have a large drawdown. I think you answered the question already by yourself when you said I did not feel good about what happened.
Well, actually that was the part I felt not bad at all ... in my earlier reply to Kurti I explained that I've doing quite some simulations on that. I was feeling confident that it would go up again.

However, this afternoon, I thought ... if the news-releases are dollar-positive, we could 've formed some kind of double-top and then my scale-in would be in a very bad position ... so I wanted to get out and secure my profits.

You understand what I had in mind? Set up scale-in ... let it recover and make profits (which I had), but then the outlook changed, and then I still wanted to get my forecasted profits by closing out my scale-in and catch the lost profits by setting up the hedge ...

It turned out else

Greetingz,
Koen<
  • #13
  • Oct 12, 2007 6:58pm Oct 12, 2007 6:58pm
Sounds fair enough, but then why didn't you close out the trade with the profit it had if the outlook changed? And then you started chasing the market with the hedge?

To me it looks like you risked quite a large amount of money to make a very little return. If one of these goes against you the entire account might blow.
  • #14
  • Last Post: Oct 12, 2007 8:33pm Oct 12, 2007 8:33pm
If you ask me, you did not do the right thing... if you had done the right thing, you would not have lost...

To me, the first thing you yourself said you did wrong was get into the market too late or when Eur was already too high... Then when you are lsoing, you got scared... you closed out your positions...

Were all your positions going to be wrecked because of today's news events ??? Doesn't sound right....

News releases are almost always just a bump in the road or a little glitch... and so often just a big fake out... then right back to where you were before the news came out...

I an not critisizing you... I am surely worse than you...

But I say change your way of trading to a way where news will not be a problem... like higher time frames...???

If nothing else... why did you not close out your positions with profit before the news???

Alas....


Quoting aspdeveloper
Hi there,

I've been visiting this forum for quite some time (best Forex site around!!!), but it's my first post here ... so hopefully it's not a dum question

Ok, here's the deal ... 2 weeks ago I entered a long position on the eur/usd. I entered way too high, but being sure that the trend was upwards, I started to scale-in ... had some big drawdowns, but eventually it went up again ... pretty good even!

Now I was a bit nervous this afternoon (morning for US people, I live in Belgium) with the numbers coming out ... so I figured out that I didn't want to go in negative territory again. I figured: I'll put my SL on my open (scale-in) positions on breakeven, and start a hedge if the EUR/USD goes down, so I don't loose my profits ...

As anticipated the news-releases meant down for me, so I opened up a hedge trade. But against my own plan I closed my open positions, meaning that I was now in the market only with my hedge position.

As you all know, the euro quickly reversed, and triggered my SL on my hedge position, but my original positions weren't in the market anymore ...

So a) I lost on not having my open positions open anymore, disabling any further profits and b) my hedge-position was closed out at SL ...

Now, I initially thought I did wrong, because I didn't stick to my original plan, but now afterwards it shows that the euro didn't rebound as powerfull as I thought.

Should I've stayed in the market, or did I do good?

I wrote down the whole story on my blog, for those interested ...

http://www.forexnation.net/forexblog.aspx

Tx for any comments!

Greetingz,
Koen<
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