How did I mess up this trade?

Last night (about 7:30 GMT) I sold USDJPY short and got in at 111.99. I noticed on the 1H chart that the MA5 had crossed the MA20 and was already below the MA100. The RSI was below 50. It seemed like a good chance of a down turn.

So I sold short at 111.99 and set a stop loss at 112.16 which is where the MA5 had crossed the MA20. The price bounced around a bit and my stop loss was hit and closed me out.

I got up this morning and saw that in the next hour there was a very nice down turn in price that I missed.

So, did I set my stop loss too low? Did I misinterpret the signs? Any thoughts would help so I can learn something here. The price was down as low as 111.45 in the next hour. Would have been a nice little profit - sigh.

Squid

Welcome to the world of trading ... i sense frustration in the post, but don't be, it is a situation that you need to learn to deal with, as it will happen to you and everyone else many times in the future as that is the nature of the beast. There will however, be times where you will price will miss your stop by a pip or two, these are all too easily forgotten by some when the scenario you mentioned happened, and the danger is the trader starts to blame the market for "being out to get him/her".

I can't offer you advice on your trade, as only you know the true reasons for it, but what pleases me about your post is you seem to be asking what did "you" do wrong, and not blaming external forces. Keep this accountability and you will do fine. Start blaming others and you will fall into the trap of moving stop losses, or worse still, leaving a loss believing it will turn around next hour, have a look at the EUR/USD recent movement over the last couple of weeks or so to see what can happen with this strategy.

Best of luck!

Hey Squid,

I agree with Akuma99. Those are some great points.

At this point, I would also be asking myself some questions.

1. Did I enter and set stops based upon a known, defined set of rules that I'm trading by?
2. If not, which rule(s) did I violate?
3. If so, did I follow the rules exactly? I wouldn't be concerned or upset at myself if I followed my rules precisely.

Trading is a numbers game. You should be well aware of how frequently your rules return winners versus losers. If for instance, your system typically returns 6 winners and 4 losers out of every 10 trades, you should just recognize that this was one of the losers.

The bigger concern I have about your trade, though, is that you are either not following a set of rules consistently, or, worst, you are following a set of rules but you have no idea what the aggregate probability of success is for those rules. So, you're either not following a set of rules, or following a set of rules that tend to fail more frequently than they succeed. That's a big problem that needs to be fixed before proceeding.

stockwet

Hey Squid,
I'm pretty new to all of this trading as well, and it seems to me like you are trading the Bunny Cross system? If that is correct, you should try and follow her guidelines set out where you would get in 30 pips (USD/JPY) after the WMA's cross at 1.1216. Remember to move your S/L if the market moves in your favor to where you lose less. Bunny suggests moving to B.E. once you are 10 pips up.

Sometimes this stuff happens, but remember a main goal to have is to preserve your account balance, and it seems like you did that. You will trade again tomorrow! Best of luck out there.
~J

Did you check where the piviot levels were , generally this is what I do :
When I have a trade setup, say Long, I wait for price to retest the Piviot level below the Long setup, If the trade still looks good, i will trigger my long trade.

Generally this way I have protection arround my Stop, whch generally is on the other side of another piviot level.

This way If i am stopped its bcoz of a wrong trade, not bcoz of a bad stop.


Hope this helps

There's only 2 reasons why you messed up this trade. The entry and SLs were OK.

1. You did not consider the current conditions of the market. This caused you to have a greater expectation of what the market has to offer. You should have placed a target just above the bottom of the trading range.

2. You went to sleep. Next time do not go to sleep until you have set your stop loss to break even or better yet assured profit.

Assuming you are using bunnygirl...

Your SL was too low! Your SL was 17 points away from your entry. I don't know what your filter level is, but if you used 20 pips filter then your SL should be 25 to 30 pips away.
The signal was a good one if only you put your SL above the original cross. Also, i usually take 20-25 pips for something that I'm not monitoring ...