Tuesday, March 12, 2013

Learnt a few lessons today

Today's been quite extraordinary. I could've made an enormous sum of money on four winning trades, but only walked away with one.
Lost Opportunity #1 and #2: USDJPY
This was completely my fault. When I decided to wake up and check the market at 6.45am (local time), I saw a beautiful low volatility candle on the USDJPY chart.

Unfortunatelly, the start of the new market day occured at 6am, and the top of the low volatility candle was broken within minutes. Therefore I missed out on a beautiful long entry (I normally trade these candles with with 0.5:1 reward:risk).
Dejected, I totally ignored the possibility of the market reversing, and neglected to put in a pending short just in case price broke the low of yesterday's candle. And guess what? It did, and again would've won with a 0.5:1 reward:risk.
Lost Opportunity #3: XAUUSD
This "lost opportunity" wasn't completely my fault. In fact, some news must've came out, causing gold to spike in a minute. At first I thought I must've entered an incorrect entry price for my pending long, since it was filled just before my take-profit target. This resulted in an absurd reward:risk of 1:100 or so. My trade closed in profit within a short time, and I tried to figure out why my order was filled so late. Did I commit a typo with my order? Looking at the 1M chart, I saw massive volatility.

I've suffered a bad case of "slippage", when there is a significant difference between desired price and executed price for an order. Some slippage can be positive. For example, I may sell a currency pair during a volatile bull run, and my executed price is higher than the sell price I entered (so basically I sold at a higher price than I intended). In normal trading, however, most forms of slippage are negative, and you'll normally encounter them during volatile or illiquid periods.
There wasn't much I could do. However, I did learn to take a screenshot of your order before it is triggered. That way you can be sure about your order's details. For awhile I thought I made a typo until I zoomed into the 1M chart and saw the spike. Screenshots will also help you with any future disputes with your broker. It's something to keep in mind.
So yeah. Lots of opportunities went begging today. I must keep to my trading schedule and dutifully check the market at the start of every new day, no matter how tired I may feel.

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