These are the 3 market conditions that any day trader should be well aware of... Shown above is the 1HR candles for GBP/JPY between 14th Oct - 16th October (Wed - Thu - Fri last week)Why?
1. There are times when you scalp your trade up and down when the movements are trending in one way or breaking imminently the other way.
2. There are times when you thought the price is trending north but the fact it is ranging or breaking in other way.
3. There are many times when you plan for breakouts gain but then it either maintains in certain sideways range channel or trending channels. It just never happens...
In any of this condition, you have to plan your trade accordingly to the environment that is presented upon you. Since otherwise, you could end up losing or not making good profits when there is a golden opportunity.
For instance, last Wednesday night was a very good example on how undiscipline act could lose you a very good swing opportunity. I was going long on the GBP/JPY pair, entering at exactly 143.00 with profit target at 147.00.
Sounds too big right with 400 pips as target. Well, we'll see...
Initially I plan to swing this position with breakeven stop loss once I reach a 50 pip gain position. The next morning, yes it is already in the positive 50 region and I immediately move my stop loss to breakeven at 143.00 and profit target at 147.00. With GJ pair, you know anything can happen especially on Thursday and Friday.
I told myself not to check the market again until Friday night as I should have nothing to worry about with the zero dollar at risk. Worse case scenario is I won't gain anything from this position. So why worry?
But then, by afternoon, I couldn't resist but to check again on this position and yes, it is still in good position but not even in the 50 pips region. First, I have violated what I pledged that morning, and then come the second violation -> I closed the position at merely 40 pips gain... I guess not being greedy could be the best option.
And yes, afterwards, I did not look at the market at all. And you knew what happened?
That afternoon, just hours before London Session is opened, BOE announced that they will stop their Asset Purchasing programs at least for a while. What does this mean? It means, they will stop pouring the sterlings into the market and hence will increase the demand for the sterling again.
By that announcement, the pound rallied like a crazy horse going to the north especially seen on the GJ and GU pair, and I didn't notice this was happening until later that Thursday night...
By 8.00pm Thursday, the pair has already reached 146.97, shying 3 pips away from my original target, if I were to hold that position. WTF! I told myself... and how am I supposed to know that this could happen?
And to cut the story short, by the next day (Friday), the pair even went beyond the 149.00 marks in which a potential 600++ pips has gone. Huh.. what a lost... In the refining business, we would call it LPO (Lost Profit Opportunity) everytime the plant failed to make money... it's not real lost in terms of assets, but still a lost considering that good opportunities do not come all the time...
See, the point is, the market is very dynamic and do not behave the way you expected it to be all the times. And you need to stick with your original plan, with some flexibility when necessary. In this case, I never thought such news would hit the market and that is the reason why I pulled out.
Like what Soros always said, it is not a matter of being right or wrong, but how much you gain when you're ight and how much you lose when you're wrong.
In my case, I guess I have no objection to that statement AT ALL. Soros is absolutely right & I need to learn on getting big gains once in a while when I am correct coz I do lose big when I was wrong last time...
Have A Nice Weekend.... ;)
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