Motty's FX Consultation for Troubleshooting | Episode 3 Jumping In
When you’re looking at charts, I think there are many times when it suddenly moves a lot, and if you jump in and enter without any particular basis at such times, it often goes against you afterwards and you take a loss… that’s a common pattern, isn’t it?
Note: This article is a reprint and revised edition of an article from FX攻略.com December 2018 issue. Please note that the market information stated in the text may differ from current market conditions.
Actual Failure Stories
Even though the daily profit was finally positive, greed got the better of me and, when there was a bit of movement, I entered “I think I can grab this!” without any real basis. In fact, that was the top or bottom, and afterward it moved strongly in the opposite direction. Eventually the day’s profit was breached and the profit and loss reversed. To make up for it, I entered again without basis, widening the wound, and I did such foolish trading. When greed is strong, trading without basis usually leads to getting wiped out.
MottiWhen there’s a big move, you think, “I don’t want to miss this opportunity!” and you jump in, right?
Editorial Team: Indeed! If you see a big move on a 1-minute chart, you might enter on impulse…
MottiSometimes you can gain profits by jumping in, but usually you get slammed, so you have to be careful!
Editorial Team: We might end up doing it out of greed, so I’d like to know some coping methods.
MottiAnyway, it’s important to look at the chart from a broad, large perspective!
The exact cause of failure in jumping in is!!
Jumping-in trades can work sometimes, but when they don’t, it’s often due to the reasons above! Even if the price moves a lot and makes new highs and lows, entering just on that basis is dangerous. If you don’t understand the reference points on higher time frames, the rate of ascent/descent at the times of new highs and lows, you might end up going long at the top or short at the bottom and ultimately suffer a big loss due to the move against you. You have to watch the charts carefully for this—trading at the times of releases is also a no-no!
