23 Jun This Week’s Swing Trading Round-Up & This Year’s Trading Regrets! 23rd June 2013
One new swing trade was taken this Week in the form of a EUR:AUD Swing short. In view of the risk attached due to there being very little technical confirmation that I’d be able to pull the trade off, I decided to close it and go flat into the Weekend with a view to re-opening it next Week when further confirmation is in place. The trade delivered 120 pips profit in less than 18 hours so the result was quite satisfying. If and when this trade is re-entered I’ll post details in the comments section under the relevant supporting post.
Of note so far this Year is the lack of swing trades I’ve taken compared to previous Years. This could be partially down to the fact that other commitments have kept me away from the screen much more than usual therefore missing the lower risk entry prices. Automated entries would be an ideal solution but I prefer to take positions live whilst watching the chart because this gives me a better idea of the volume and volatility surrounding a potential move.
Looking back at previous analysis posted so far this Year I do have some quite big regrets for either not entering, or entering and giving up too quickly on some set-ups. These are occasions where I didn’t stick to my own rules one of which is to let the stop loss take me out if the trade is wrong, unless I’m almost certain the trade really is wrong.
Here are this Years top 3 trading regrets:
GBP:NZD set itself up for a wonderful swing long trade being strongly supported on all time frames across all of my most reliable T.A methods:
Back on May 7th the chart looked like this, and I said I’d buy it:
Here’s the chart as it stands today having rallied an impressive 1700 pips without a single break back below my planned entry price. For some unknown reason, I just didn’t take the trade:
GBP:USD The target entry price was anywhere between 1.5751 and 1.5780 for a swing short that could take GBP:USD back into its macro down trend. This is the chart from the original post:
And then this chart screen shot taken just as the set-up was coming into the entry zone:
In all fairness even though price did achieve my lowest desired entry price of 1.5751 it only did so for a couple of seconds and immediately began to sell off, but I’m now left kicking myself for not taking the trade as price now sits 400 pips lower in as many days. The trade may well remain a valid one, but the further away it travels from the desired entry point, the higher the risk becomes for the potential reward:
Gold. This was a technically brilliant trading set-up that I fell in love with as soon as I spotted it. As soon as the targeted entry price came available I snapped it up entering a short position. This screen shot is taken from the day of that entry:
I held the trade for almost a fortnight and nothing happened….. Price just moved side ways in a tight range whilst my broker continued charging overnight financing. Even though my stop loss hadn’t been threatened in the slightest, seeing this trade bounce between a small profit and a small loss day after day took its toll, so I decided to just give up on the idea. By the following morning I woke up to see price had suddenly decided to make its move, and here we are some Weeks later with my target having been achieved and price residing 2040 pips lower than my original trade entry:
Clearly I need to understand why I make such sudden trading decisions that take me out of some of the very best trading set-ups.
This may sound crazy but I wonder if its a psychological thing caused by a couple of factors behind bad trading decisions early on in my trading career. When you think back to your first Year or 2 of trading (which are inevitably loss making Years), you’ll see a potential set-up but being cautious you’ll wait for confirmation before entering the trade. By the time you get that confirmation and enter the trade its too late and price begins to rebound. You then find yourself taking a hefty loss on the position. You soon learn that chasing a move that’s already begun often ends in failure.
The other factor is a trading set-up that looks easy. When you’re new to trading and spot an “easy” trade you virtually always end up being wrong.
As your skills develop your view of “easy” subconsciously begins to change and eventually you find yourself ignoring any trading set-ups that look “easy” because it inevitably falls flat on its face. But in actual fact your view of an easy trade now is probably very different to what it was early on. The Gold set-up was a very simple “easy” set-up with a simple trend line as the line in the sand. Surely trading can’t be this easy? Surely the price of Gold World-over cannot be determined by a line drawn on a chart?
Well, yes it can! You need to remember that every other trader in the world is drawing the same lines on their charts, and if enough of them make a trading decision based on those lines the future price of that index is then determined.
Trading is never “easy”, but if everything is pointing to a certain technical outcome, then the decision to enter that trade should be an easy one!
Enjoy your Weekend.