So this is what was going through my head when the trade was approximately 3R/+100 pips/+$15,000.
"OMG, I'm so happy to be long Aussie again having stopped out by two pips last week, it's like a second chance at life. I've been saying for years this pair is going to 1.23, it must be my destiny. I have a great profit, enough to recoup the previous two losses, but I've only held the position for a day, it's broken the previous high and downtrend line, it's behaving as expected, I'm long 1.5 million, fucked if I'm closing out now. If anything I should be adding. Life comes down to a few moments and for me this is one of them, it's time to back my judgement and go for the home run. How will I ever live with myself if I close out for 100 pips when my long held view is we trade 2000 higher."
I actually don't have a problem with this thinking. I know it reeks of greed and fear of missing out, but I honestly believe that holding the position was the harder course of action at the time. Of course I wanted to take profit, in fact I did take 1/3rd profit at +92 pips, but put it back on because I thought I was being a pussy. It took guts to be a pig, and I don't regret the decision. Had we continued higher I would have been the man, and obviously I'm now a zero, but I'm proud of myself for being prepared to fail.
What I do regret is that I did not act when the pair broke down. I should have closed some or all of the position when we broke 1.0490, but instead got all "deer in the headlights". I reverted to the weekly charts and assured myself all was ok, that I needed to give the weekly low a chance to hold, and this may have been the case, but only with a small portion of the original position. I started living in hope and denial. I knew what I was doing, not doing, and should be doing...but did not do it. That's just bad trading.
So another tough lesson, I need to sort out my exit strategy. My mentor and I have discussed it at length and I'm unsure of where I stand. He feels I have been scaling out too conservatively, not getting enough from my winners, and there is some truth to that. Looking over past trades, those that work generally move at least 1.5R, and I'm clearly leaving a lot on the table, which is why I stopped scaling out 3 trades ago.
But I would also argue that I must protect the downside and reduce risk as the trade starts working. The truth probably lies somewhere in between. There is plenty of risk in the 10% position structure, so I don't need huge multiples if I can continue at 65% win, but I could also extract more than I have been. This current trade is a good example. I didn't scale out, and had I exited better, say on the break of 1.0490, would have taken over 2R, which still would have been my best trade to date.
Considering the lack of clear exit strategy and how married I was to my AUD view, it's easy to see why I acted the way I did. It was wrong to be making decisions on the fly, and I need to sort this out before continuing.
As for the account, well, it's grim. A 100k investment from three years ago is now 50k, the lowest since inception. I must now return 100% just to break even.
As ridiculous as it sounds, my trading has improved a lot over the period, particularly since starting this journal. It was only in light of these improvements that I was authorised to trade bigger. Consecutive losses since making this change have had a material impact on the account, but this was always the risk. Account volatility is high, it's not easy to deal with, but despite the situation I still believe I can succeed. One trade at a time, I will not give up.
