Terrible trading through the ECB rate announcement

Well the day started off alright, but ended very badly tonight.

The rate decision was an expected cut, but Euro zoomed up instead (after rising from a recent low of 2960 six trading sessions ago to a high ECB announcement high of 3220.

I sold on the first hesitation in price action, my thinking was that the initial spike was done and logic would reassert itself as traders saw the opportunity to sell the EURUSD at a good price around 3200. This in fact turned out to be a great decision.  But, I failed to capitalise because I got scared out of it as I was getting smashed by the EURJPY trade and I wanted to take risk off in EURUSD around breakeven. As things stand, EURUSD now trades 3070 so I absolutely dropped the ball on this one.

In EURJPY, things went sour when it exploded north after my entry. When it hit -135 pips all I could think about was survival. The market was moving fast, and moving against logic. The incredible reversal came after Draghi announced the ECB would be open to further cuts (implying negative rates)...but by now I've tilted so hard that I was incapable of thinking straight, let alone executing properly.

The below chart shows the carnage.

Trader Rage

Update

Yes, I blew yet another account since the last update, all that +$13,000 went up in smoke over 2 days which is what happens when you trade without stop losses...!  Basically I haven't been updating this blog for the past 2 months as there's nothing good to report -- I've been stuck in neutral gear since then, it's like I've completely lost my touch of the markets and lost my trading mojo for the next 6 weeks.

Presently I've recapitalised the account with another $2,000 and obviously still in a fragile state I'm not wanting to lose that in a hurry.  My experience so far has shown it is possible to turn $2,000 into $13,000 quite quickly, but you really have to be selective in your trades.

At the moment, I'm doing more reading than trading, which can only be a good thing after going on such a wide ride.  Thinking more broadly about market sentiment and orderboard updates through news outlets like Forexlive.com, FXMA, MNI, Ransquawk....seeing how news &/or rumour filtering out throughout the day affect the market, thinking a bit more about trader expectations in relation to these events, thinking about orderflow and liquidity issues and basically trying to get into what is described as the orderflow mindset -- an ever elusive concept.

For example, today I took a simple 30 pips gunning the stops beyond the well-reported option barrier at 3700, which was due for expiry on Friday in 3 days.  I'd lost 30 pips yesterday making this play by the way, so the results netted off.  But the difference is that, once the barrier broke, thin markets resulted in a rush upwards to 3800, and offers eventuated near 3840-50.  Could have held on perhaps? But it's still a new experience to me.

Been a bit slack lately...

Err no this journal is not dead, just in hibernation haha...  I've been trading per usual, but haven't found the time to update this journal like a good boy...  Feeling a bit guilty yes, so err what's been happening in life lately? 

• Lots of research, planning and work around our trip to Brazil Carnaval 2012...Flights are locked in, accommodation in Rio de Janiero almost booked in;
• Lots of mid-week functions in June/July (dinners, functions, birthdays, going-aways, jazz festival, brazil planning, etc) which kinda broke the journal updating rhythm;
• Watching the Tour de France (Carn Cadel, go you good thing!); and
• Weekends have been ridiculously busy with brunches, catch-ups, wedding engagments, house-warmings... bla bla bla.

Its all nice, but honestly, I'd rather get back to a set routine.

What's happening with trading?  Around the time of my last update, I was languishing in the doldrums having blown up my account (for the nth time) earlier.  Fortunately, the taxman will recognise my prior losses as tax deductible which takes away some (some, not all) of the sting.

In the 2nd week of June I recapitalised the account with $2,300.  Since then, I've managed to triple this account with some very highly leveraged calls.  The technique is still (i think) the same, thinking about orderflow, keeping tabs on publicly available orderboard info, looking at price action around key support/resistance levels, with additional confirmation coming from technical analysis (simple things like moving averages, fibonacci time series and fibo arcs, and to a lesser extent, some usage of oscillators).

Certainly, this type of thinking would have been impossible for me to digest when I first started trading live in April 2009.  I think my first exposure to the world of trading was in mid-2007?  That's 2+ years of live trading, and 4 years of exposure.  It takes a bit of time to work out what is what in this environment. 

Yesterday, some poor sap on IRC chat recounted how he lost $20,000 down to $667 in a 200 pip move related to last week's European contagion volatility through some 400:1 leverage broker.  You are always going to get fucking dipshits doing that kind of thing, but not like that, come on...  These dopes are the same ones that those IG Markets TV ads are appealing to: "Get thinking, and take a position" <insert graphic of jetfighter flying to the moon>.  I'm tempted to say 'give me a break' but what the heck, the market always needs fresh blood.

And so to another day of trading...