$500 "Heartbreak" lesson - Market Timing & Hard stops

1:38 AM

So last week I entered a trade on Friday, shortly after I found myself in my stop loss territory.

Fundamental Reason for shift? Sentiment? None?

Later, news reported the Yen strengthened "Global Concerns over Italian Elections". Italian elections are not new news, neither had anything changed within those 4 hours.


But it happens.

Arguing the injustice in the market is quite pointless so instead let me offer two lessons.

1) When making a trade, consider market timing.

I entered a trade based on economic expectations. And not only was I correct, I was very correct.

Trade numbers came in at -1,086 Yen, as opposed to 636 expected. Exports at 1.3% vs. 4.7% expected.

Because of what I can only call market sentiment, I lost quite a bit of money.

I do not trade on the news because there are too many High Frequency Traders that will take your lunch. The better option then is to only enter when most markets less traded, or before the news.

2) Hard stops

In any technical system, stop losses are important. But what happens when adverse movements happen for no reason? Is it good to have a stop then?

My guess is no. I wrote on how the brokers tend to push prices down to trigger stops. (read more here)

It does not mean prices will continue trending in that direction.

So unless the reasons for my thesis are wrong, there is no sense in stopping 

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