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The Shortest Pip
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At around 7 AM NY time this past Wednesday things were looking mighty bleak at BK. The week prior I had shorted AUD/NZD -- which produced a picture perfect setup for type of trades we do -- only to watch it come within 3 pips of my target and then retrace all the way back to stop us out and THEN proceed to once again turn to the downside.
I was beating myself up over the pricing of the entry in the trade, playing the ever popular and the ever useless second guessing game of “if my aunt had b-lls she’d be my uncle.” And now with that sour memory still in my mind I was staring at USD/CAD which had broken out through the key 1.1000 level just the day before and in typical USD/CAD fashion refused to move higher, catching all the breakout traders like myself leaning the wrong way. The pair had floundered throughout the night and was moving dangerously close to my stop.
55, 54, 53. “F -just stop me out already!” I thought to myself, my mood darker than the winter New York night.
52.5, 53, 54.
It was like water torture, but the trade managed to stay alive by 1/2 of one pip.
By morning USD/CAD had moved off the lows and of course in wake of the dovish BOC announcement it raced to fresh yearly highs and we eventually made 168 pips on the trade. That was followed by 150 pips on GBP/AUD the day after that and another 150 pips on EUR/AUD the day after that. Voila, suddenly we had the best week in our history.
So what does this week in market teach us? That the difference between losing and winning can often rest on one single pip. That’s is why we should never be despondent when we lose, nor ecstatic when we win. To trade for the long term means to stick to a process irrespective of the vagaries and frustrations of the day to day flow. At BK we have been much more disciplined in our approach this year and that hopefully is far more important than the weekly pip tally which is much further away from your control than you think.