Great and wonderful day, traders! Ok today, I will post about the experience of the last trade series. Before I begin, I must give props to my brain. Check out the picture below.
This is a picture, with time stamps, of tweets I tweeted before or at the exact time things were happening so I can not alter the data.
I posted tweets at almost the tippy top and right at the bottom of these moves. Now here is the question. How did I know that this was the top and bottom? Did I have some proprietary indicator? Did I have inside information? Am I psychic?
The answer might surprise you. I will reveal this secret to you in code form. Figure out the code and you will know my proprietary way of finding these tops and bottoms. Here is the code…
i nahulaan, Domyślałem, Kitaláltam, mwen dvine, am ghicit, 我猜, i divenis,
मैं अनुमान लगाया
Alrighty then. I think you can figure it out from there.
Ok so I will explain how to totally fubar your trades and still profit. First, we must examine the word ‘fubar’…
According to the free dictionary online, which does properly describe the word…
Fubar- foo*bar, adjective, slang, utterly botched or confused, [f(ucked) u(p) b(eyond) a(ll) r(ecognition).]
Basically this means you have taken something apparently normal and screwed it up so bad, you are an embarrassment to all humankind.
So how did I screw up my trades and still profit? Well by now, you know I hedge my trades a lot. I use two accounts and take profits on one side and place orders in the other account to profit if price goes the other way.
This week, I had a hunch that price was going to drop on the GBPAUD. The reason was that it was in a super huge uptrend, without any type of pullback whatsoever, and I could feel a pullback coming. I didn’t know when or where it would happen so I placed a short trade series and hedged with long positions in the other account.
Instead of sticking to my basic rule set, I used my intuition to predict where price was moving. BIG MISTAKE! Every time I thought price was going one way, it went the other way. Every time I thought price had bottomed or topped for that mini move, I was dead wrong. I was placing trades that were not in accordance to what I told myself prior to the trade. I think I made every mistake in the book.
But I held on as price moved north. I kept on trying to sell the pair. Of course I was hedged so that I could not be hurt badly if price took a 400 pip upswing but it still pissed me off that this stupid pair would not fall. No matter how hard I stared at the screen, it just would not do what I was telling it to do.
So I averaged into my position with small size. NOTE – I was not making the newbie mistake of averaging down. This will blow your account and I do not suggest it. That being said, I was averaging down in a calculated manner and the size was so small that if my account was blown on one side, it would have doubled the other account so this averaging down is a moot point.
As I was averaging into my position, my hedges were making money and here is where I screwed up. I took the profits on the hedges waaaay to early. I would take profits on one side at 10 or 20 pips. I should not have taken them for 50 pips or so for this particular trade series.
At one point I took a hedged position at a larger trade size and if I would have held it, I would have made twice as much money as I ended up making. The reason i took a loss on that position was that as soon as….and I mean about 2 seconds after I took the long, price plummeted. I got out at a small loss and as soon as I got out, guess what happened? You guessed right, price turned around and went in the original direction I took the trade to begin with.
I was putting on half sizes when I should have been putting on double size. I was taking a 10 pip loss when it would have made me a profit. I ened up costing myself a lot of money.
In the end, after this whole battle was complete, I made a nice profit. Trading is war. you win some battles and lose some battles. In the end, it all comes down to how much you lost when you lost and won when you won.
The moral to the story is this… before I tell you the moral, I will give the answer to my proprietary method of picking the tops and bottoms that I talked about at the beginning of this blog. My super secret proprietary method was…..
wait for it……
It’s gonna be LEGEN……….
Yes I guessed. I used a hunch. I felt the market. Whatever you want to call it.
So again, the moral of the story is this… No one knows what the market will do. you might think you know but you don’t. CNBC doesn’t know. DailyFX doesn’t know. Hedge Funds don’t know. You don’t know. I don’t know. There is no way to know.
It is not what you know. It is how you respond to what happens in the market. This market is a funny thing. A person can literally screw up their whole trade set for the week and as long as they have not traded too large, the market is forgiving and will let you try again next week.
Here are all of my trades, in both accounts of the gbpaud this week. Feel free to reverse engineer them and you will be able to paint a picture of how I did it.
This weeks JoaquinFX Trading performance
Happy trading! Catch you on the flip side….