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Entry Points
By Laetitia Vaval | November 28, 2007
A few days ago I entered a pretty bad trade. This trade turned out bad because of my entry point. I had a long position in the EuroUsd from 1.4812 that got closed for some reason (neither my stop nor my limit were hit and I didn’t close the trade manually). So, in the morning when I checked the status of my trade and saw that the Euro was now up at 1.4920 and assumed that it would trade back up to eventually reach the long-awaited 1.50 level. So I bought 3 lots at 1.4928 (looking back at this trade, I can affirm that it was almost an “impulse” purchase). I put my limit price at 1.50 (210 pips upside potential) and my stop price at 1.47 (yes, i know, more than 600 pips downside potential) and completly ignored the 1:2 risk:reward ratio. Of course, since then the Euro has lost about 200 pips, and I am currently down over 500 pips). Looking back I realize how random, my entry point was and understand the importance of patience and discipline to choose a precise entry point. I was afraid of being left out from what could have possibly been the Euro’s final ascension towards 1.50 and immediately jumped in witout considering many other factors.
noneTopics: Wall Street Warrior |
December 3rd, 2007 at 10:23 am
Boy how much like me that sounds man. I got in a short on the GBP/USD at 1.9659 back in mid August when the market was flying down. I jumped in because I didn’t want to miss out on the move. You know it, the pound immediately went up and stupid me in denial went on to lose over $14,000 on that trade… rule #1 - don’t trade on emotion.