It's a pretty surreal experience to be typing this from the middle of the great Pacific Ocean. I've just touched down in Samoa for a little R&R late last night, and am sitting at the resort restaurant watching the waves break.
As I reflect on my trading performance over the past couple of months, I see three phases:
Trading with confidence;
Not understanding where the market is; &
Lazy trading.
The first phase is easy because I did all the hard and necessary homework. I was plugged into the information flow and was reading sentiment accurately. I had played out potential scenarios in my mind and was prepared to trade in response. I executed with confidence, and when the market moved against my positions I was acting with courage by staying strong and even adding more.
The second phase occurred during the period I tried to short the Euro, but for two weeks all negative news had little discernible impact I had misjudged the effect the Yen and USA QE would have in supporting the EURUSD. I held on to this trade for way too long - 2 weeks - probably should have cut it short by a week when I started to recognise the warning bells. What kept me in the trade was stubbornness as I was looking for a much bigger 300-500 move. In the end my patience ran out after 2 weeks. Although the timespan for the trade idea should really have been 4 or 8 weeks, I was not happy with the way the price action did not reflect the fundamentals of bearish Euro news. In retrospect, getting out was an appropriate decision as the overall picture did not make sense to me.
The third and final phase before I flew out on holidays is the worse, and had the potential to cause the greatest amount of damage. I was totally unfocused, I wanted to be 'in the market' for its own sake rather than an expression of a well thought out idea, I had lost track of the daily happenings in the information flow, I did not play any scenarios in my mind, I traded purely on technicals, I got scared easily when the trade started to move against me, I felt like I was on the back foot most of the time.
Trading is a performance sport and it requires commitment and 100% focus.
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