Fear and Impulse Trading Forex
by Trader Rich
Last night was a night of mixed emotions for me. I usually don’t hold positions longer than a day but I was holding on to the USD/JPY for a little longer waiting for the pair to decline a bit. It finally did and I grabbed over $1000 when I closed the trade at 118.35. I was fearful that it would retrace again toward 119.00 and therefore I just wanted to get back on track for the week. As a lot of you know, the USD/JPY plummeted last night (right after I exited) and was sitting at the 117.00 this morning. If I would have held on to the position, I would be sitting up over $5000 on 1 trade. I will put this one behind me but I made a real big mistake on my next trade.
Immediately after exited my Yen position, I started scanning my charts and came to the CHF/JPY and the price sitting right on solid resistance line. Thinking it was oversold and not knowing that the Yen was having a huge downward move (after my exit), I impulsively and foolishly entered a long trade in the CHF/JPY. The Yen pushed downward and hit my stop in about 30 minutes. I lost about $600 on this trade. This was a total impulsive move, one in which I entered the trade without really looking at anything but 1 line.
From past history, when the USD/JPY has had a large downward move during the Asian trading session, a USD bearish move follows for the GBP and EUR during the European session. That is why I went long on the EUR last night and made 44 pips on 3 lots which amounted to $1300.
So I probably only caught about a third of the Yen move and fearful of giving back my profit, I gave away the other two-thirds. It’s no wonder I always hear that the hardest part of trading is the exit.
The last 2 weeks, I’ve had to scratch my way back after starting the week down. Last week I was able to do it with a $700 profit. This week, I’ve made my way back to -$475 with 1 trading day to go. I’m not going to rush into anything though so if my week is done, so be it.