Closed USDJPY short at 96.20; -40 pips.

13.43 gmt

Closed the hedge trade, short USDJPY at 96.20, -40 pips, -5.6%.

The pair has generated a long signal, although strictly speaking I should wait for this 4hr candle to finish at 1600 hrs before the signal is valid. If UJ remains above 96.00 by the end of this candle, the long signal is confirmed. Looking at the price action I think the risk of UJ dropping back below 96 in the next 2 hours is remote indeed.

If it moves higher as expected and goes above my long entry at 96.66, then the hedge has been successful. Instead of a 80 pip loss I only suffer a 40 pip loss.

Let’s hope we don’t get a nasty whipsaw here !

Edit 14.03:

The system long signal validity threshold is closer to 95.92/95, not 96.05 as I wrote earlier. The pair has just retreated to 96.05 after the NY options cut, so there is some risk still!

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6 thoughts on “Closed USDJPY short at 96.20; -40 pips.

  1. Pramod Kadambi

    Zen

    I have been reading you for a long time. You are a good at picking trades but you are terrible at taking losses. This hedging strategy, If I remember right, blew up your account about a year and half ago. When you are wrong, you are wrong. Just get out. You are a good trader and will make things back very quickly.

    PK

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    1. ZenFXTrader

      Hi Pramod, You are right, you have hit the nail absolutely on the head. This is my greatest weakness. I have been thinking over the week-end about how to manage this immediate situation and what I need to change in future to not get caught this way. Compared to some years ago, my situation is a little better – I have less at risk these days, so even I do take the hit it will be big hit to the account but will not bust the account. Thanks for your constructive feedback!

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  2. Pramod Kadambi

    Zen

    Your strength is in picking intermediate term reversals and you have the patience to wait to clean up on the profits. I see that you take much smaller positions now but your biggest problem is not position sizing at this point. As jesse livermore said ” not taking a loss does more than just damage to the pocketbook. It damages the soul” or something to that effect. Just my two cents.

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    1. ZenFXTrader

      Thanks Pramod. I still have a lot to do in overcoming this weakness. Right now, I am working on how to get out of this situation with the least damage.
      My rules don’t do well when a pair seems to have changed its intermediate direction, then reverses sharply. The loss is largest in such a situation. Even my ‘test’ system which I run simultaneous with my live account shows two large consecutive losses in UJ although its still up about 20% for the month. I resolve that this episode of not taking a loss will be the last for me, because even after taking such a relatively large loss my system is still overall positive. I need to trust my rules more. Thanks for your support and encouragement.

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      1. Pramod Kadambi

        Zen

        If you want to know, I was up 250% for the year. On the damn Beppe Grillo / berlusoni issue, the UJ tanked about 400 pips in 2 hours. In one half, I lost about 40% of the profits cos I was long 1600 dollars a pip. But I was out when UJ went down by 100 pips. It fell 200 more pips after that. However, I was shocked and also in the middle of seeing patients in my office.and could not capitalize on the short side. Later that day went long and made a 1/3rd of the losses back but am yet to recover completely
        I saw you short EJ at the very bottom that night when I was still long. Felt quite sorry for you since you had escaped the late NY carnage but got into a lot of trouble with the hedging strategy, in violation of your own stop loss.
        I would not have posted if you did not make the mistake again, You promised not to make the mistake again. If you hedge, I feel you will be trading with a bifurcated mind. It also means you are having difficulty taking the loss. An experienced tape reader with your abilities I feel will make it up within 24-48 hours, especially in volatile markets, even when your sysyem is not working. Remember the EUR/CHF trade form a couple of yours ago when you caught 500 pips .

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      2. ZenFXTrader

        Thanks for sharing your experience – its great to know that I am talking to an experienced serious trader! I take your words very seriously, and I like it that with the frank comments about my weakness you also point out my strengths. Again, thanks for your very constructive feedback, I can only improve from here on!

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