Friday, 10 May 2013

Mock Trading Journal - Entry 2

I have traded terribly the past few days. I made a loss of more than $2,200 in my account due to a few mistakes. This has led me to conclude that my previous trading gains were simply beginner's luck and I am not as good a trader that I thought I was. To be honest, I did not even use any strategies at all. I was buying and selling based on my own instincts. I will post my order list here before I analyse the various mistakes I have made and hopefully, you will be able to benefit from my mistakes.

I have started using stop losses and take profits for my trading activities now. The highlighted green area is my take profit price and the highlighted red area is my stop losses order. Lets look at the 2 sell order for USD/JPY order #5923203 and #5925394. With regards to this 2 trades, I was already making losses in order #5923203, but I went on to make another sell order #5925394. This was because I believed that the price will come down. The fact is, it did not. I was not moving with the market, I was praying for the market to move the way I wanted it to. In fact, I did not even know that there was a strong US data coming up and that was the real reason why the USD kept appreciating against the JPY.

In fact, just 1 day after this event, news came out that the USD has officially broke the 100 mark against the JPY. I got complacent, and traded the markets based on my feelings instead of using logic. This mistake if continued, could lead me to some significant losses and trauma if I was using real money. Therefore, before I do a single trade from now on, I am going to make sure I see a trend, or signs of the market breaking through support or resistance before placing an entry order.

My recklessness has also made me another loss when I attempted to buy the GPB/USD pair believing that the pound will appreciate against the USD. The US data also affects this currency pair and I made a reckless error by not giving much thought before buying this currency pair. In my mind, I was only thinking about recouping my losses from the USD/JPY bad sell order and this led me to another loss. Not surprisingly, all my trades against the USD lost. Only one trade was profitable and its betting on the rise of USD/CHF pair and it was a minor profit, just 0.1% while my losses piled up to 22% to 23%. From now on, I am also going to use percentage gains and losses instead of absolute figures. Absolute figures can misled me into thinking I am ahead when I am really not.

I am going to wait for the market to stabilise before placing my next trade and this time, I am definitely going to put much more thought into each trade, and not use my feelings to decide my trading decisions.

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