Day 178: Overzealous trading

Profit: -$161.10 Total: $1,894.14

Just like how a professional NBA defender would get faked out by a quick crossover, the same happens in the markets. Today, I was the embarrassed defender who get played by the stealthier opponent. There are two problem about a fake out: 1.Unpredictability and 2. Speed. You never see a fake out coming which means it catches you when you’re the most vulnerable. To prevent this from happening, always prepare for the worse. Be on your heels and get ready to quickly change your tactics just incase the unexpected happens. It also wouldn’t be a fake out if it wasn’t for it’s quick speed. Fake outs will happen in a blink of an eye. Whether it’s a quick cross over or a reversal in the market, expect the move to happen in a matter of seconds. In trading, always be alert, especially during high volatile periods. Anything can and will happen in a day of trading.

I admit, I was overzealous with my trades today. It’s Monday, it’s an action packed week, FOMC meeting on Thursday; I was just too excited. I normally start off my mornings with smaller size positions, just to get a feel for the market. Instead of diving head first into the pool, I usually like to get my feet wet and start slow. This morning, the opposite happend; I full out jumped from the highest diving board attempting crazy flips and tricks and….. ultimately ended up on a belly flop.

Here was my logic. One can argue the EUR/USD and the GBP/USD are both overbought. The two currencies rallied in the hopes of a no rate hike. GBP/USD made a double top and the two pairs even opened bear on Sunday. I also expected investors to take their long EUR/USD and GBP/USD profit and exit before Thursday, which will cause a brief pullback. So when the markets opened this morning and the dollar showed signs of strength, I heavily stacked up on some shorts with large lot sizes. As stated above, I got faked out by the market and price soon hit my stop loss. It’s funny how in the moment everything you trade seems like the perfect move, but looking at my trades now, I was a completely reckless idiot.

Here’s what a fake out look like. I thought the bearish move would continue throughout NY session but it quickly reversed into a mini rally. The double bottom should’ve been a red flag where I took out my positions…

Screen Shot 2015-09-14 at 5.31.39 PM

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