Expectations

Expectations can be very dangerous in certain lines of work. Trading is certainly one of them. You can not expect the market to behave the way you want it to. It is advisable to plan your trading day; but if it goes against that plan, you have to react accordingly. If you don't, you will get hurt.

Such was the case today. With the dollar rebounding during the previous day, I was expecting the dollar to continue to rebound and begin a reversal. There were many reasons for me to expect this including Elliott Wave theory. However, like many theories, interpretation is subjective to some extent.

Well, the dollar did not continue to rebound. Instead, the exact opposite happened and in a big way. The dollar lost almost 300 pips and the pound/yen pair followed suit. This was disastrous for me and I did not react quickly enough. Instead of taking care of some short sells when the dollar rebounded at a less painful place, I was forced to take them in the middle of the European session at a more painful place when it was clear that the dollar was going to take a beating.

This meant liquidating 10 older positions at a larger loss than I wanted to take. If anyone ever tells you that forex trading is easy, run the other direction!

Today I made 56 new trades, closing 53 winners including 8 older trades, 16 losses including the 10 older ones I mentioned, and 12 trades remain open. The net pips today is -2512.2 pips, or -40.75% loss. This wiped out the extraordinary gains of the past two days.

Keep this in mind, it wiped out gains from just two days of trading.

Here are the daily stats from Wednesday, October 21, 2009.

Open

High

Low

Close

Pip Interval

GBP/USD	1.6380	1.6634	1.6344	1.6604	290
EUR/USD	1.4942	1.5044	1.4887	1.5014	157
USD/CHF	1.0115	1.0152	1.0034	1.0058	118
USD/JPY	90.77	91.26	90.47	90.97	79
GBP/JPY	148.67	151.52	148.41	151.05	311

May the pips be with us!

The Pipmaster
Email: titangroupfx@gmail.com