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Down 400 Pips and In Denial |
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Monday, February 04, 2008 |
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 I don't give personal trading advice for two main reasons: - I'm not confident enough with my skills as a forex trader (yet.)
- I'm not a financial advisor and don't want to be responsible for your money. That's your job.
I received an interesting email from a trader today. I don't want you to get the impression I'm berating or laughing at him because what he writes can serve as a reminder and lesson to all of us. He writes... I was just wondering if you had any advise on EUR/AUD. I had gotten into the trade at 1.6600. and as you probably know it is down nearly 400 points and is showing no sign of a turn around. Do you have any advise if it will reach the 1.66-1.68 area soon? There are so many problems with his mindset and strategy that can be inferred from this three sentence email: - He has no strategy! Maybe he had an entry strategy but obviously no exit strategy.
- He is clearly in denial. Unless he was trading a weekly chart, he's was very likely wrong on this one.
- He's looking for advice from me.
- He's probably searching the forums for an answer to his question that no one could possible provide. Actually they can provide the answer but who knows if it's the right one. No one knows the answer. No one can see into the future.
- He has a false sense that the pair will turn around. Maybe the pair will turn around tomorrow or next week or never.
I know I said that I don't give advice but seriously, he should cut his losses. You should know the point when your position should be exited before you get into the position and never hope for a turnaround that may never happen. I would recommend he quit trading until he goes back to the drawing board and develops a complete written trading plan.
We have all been there, it a mistake we all have to make,,well maybe most of us.
Im no expert but i think it has to do with the idea of us hatin to loose money,,but as traders we learn over time that losses are part of the game,,i think we can all learn sumin from this guy here.
What i have lernt is to always have a game plan,,always have an exit,,weather it is to avoid losses or to lock in profits. People should place more emphasis on their exits as it it jus as important to you success as your entry is,,and maybe even more important.
My advice to this trader in denial is also to jus cut your losses, it obvious you dont have a exit strategy,,,so just get out and refresh you self, start a new if you may.
Remember its always better to have a small loss or a small gain than a huge loss. I agree. I wonder how much time he has spent on \\\"demo\\\", or backtesting his trading plan. I think sometimes people are closer to \\\"gambling\\\" than they are to \\\"trading\\\". The lure of making a quick fortune in Forex is very strong. I feel for him, as I have surely made my share of poor decisions. Hopefully he will learn from this experience, and make the necessary adjustments. I wish him well. What he's looking for is for you (or ANYONE) to say "Hold on, it will turn around" and then he will breath a sigh of relief and the pain will go away. Simon, spot on... The EUR/JPY isn't looking any better either. all you can hope for is to keep at it and learn from your mistakes |
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Last Updated ( Monday, February 04, 2008 )
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