Thursday, May 22, 2008

Psychological Swing Trading Mood

Today I was into swing trading and that usually means that I'm counter trend oriented. Market was biased down in direction of usd strength all over. Gbp/usd had news and spike up. My idea was that it will get back down, than down big as all other currencies. So that was my counter trend idea. If I'm in getting profit than I look where will next ten pips be so I try to take them, it's usually in the direction of trend. I was more in thinking and trading today.

After one small trade that spiked back up just when I was taking profit so it cut it in half I had another short. Gbp/usd was in the range which can be good and bad. So I stayed most of the time in small loss. I re shorted an market came down to my break even point. Than I had idea that I'm ashamed to confess that it occurred now after so many trades and not before. Why I don't take the profit from that second trade. In that way I would buy little insurance, lighten up on position and easily ride it on. Before I would just add, average up 2, 3, 4 times. Emotions would take over and it's way to disaster. All that just because of greed. If my idea is correct I would gain massively on that big position. I never do. So this way with taking profit I can still stay with my idea and first position and it would be big profit if I'm correct and that one position. Why would I need 2, 3, 4 positions one is enough. Well that simple thing I realized just now, all because of greed.
So when I had second chance to take down second position with around 10 pips of profit I took it.
I stayed 7 more minutes in first trade but when it started to come back I changed my mind. There was another news at 12:00 so I figured that market will wait in that range. At this point I was at +6 pips.

Later I got totally emotional overwhelmed and started to average down in gbp/usd again. I was at one point more than 50 pips combined in the loss. I got out at some point. Than I was about 20 pips in the loss, so I started scalping gbp/chf to cut down the loss, never mind the risk in that state of mind. And finally I'm at -1 pips for the day. I was playing old tune let's put gbp/usd at rational level because it's now irrational. Everything was falling slowly against the dollar but pound that was in crazy rally against it all.
In the end I had need to get to break even at all cost. It's text book psychology degree case of emotion driven trading
This is me, I expect this from time to time. I don't get all that exciting any more about this bad behavior. The important thing is that there is good trading the majority of the time. I can't run or hide from me. I got the accept this occurring.

No comments: