Ichimoku: beware the butcher (GBPJPY)

Underestimated the nickname and got butchered in the process! Oh well, at least there’s ample material to learn from 🙂

buy gbpjpy 14-15/01/2019

First few hours went according to plan however the final outcome turned abysmal financially even though the overall direction was properly chosen. Unfortunately lack of discipline, understanding and mental fortitude burned me badly. Attempts at scaling in backfired horribly – summary of this nightmare at the end of post.

Proper entry: Chikou above price, Tenkan over Kijun, both rather flat but will do. Bounce from “top” daily S/R level, correction, rebound from second daily S/R, growing Kumo – let’s go!

Proper entry

Scale out: partial TP halfway through between daily S/R – locked in some profits, made a buffer, direction favorable…

Scale out

Scale in #1: loaded-up after single H1 candle closed above daily S/R – why so hasty when decisions were supposed to be taken on H4 timeframe? Bad form to put it gently.

Scale in #1

H1 candle didn’t hold the weight and true picture was available after H4 closed – one can clearly see the elongated wick at upper part. Scale in quickly turned sour and even more so since it was a “double-size” in comparison to earlier position and it almost touched its breakeven. Finally I lucked out with breakeven for the scale in #1 at night.

Lucky breakeven on scale in #1

Since no lesson was learned here is a second attempt at scale in: Chikou pointing up, bullish Kumo, S/R pierced (at least this time I did wait for H4 to close), Tenkan neutral versus Kijun, still have leeway on initial position – what can go wrong, right?

Scale in #2

To be honest I’m lost here. In theory one should bail the position when H4 closes below Kijun but in this case it just went downhill bigtime. Lack of knowledge and experience resulted in first waiting “too long” to bail on the position and then “jumping the gun” on closing after terrible loss was already sustained. Scale in #2 was a loss from the get-go, what’s even more disheartening was taking the initial position into “loss” territory along with it.

Closing: loss of 5074 basis points

And now for the real kicker here – the aftermath picture. To be honest I’m still pondering on my lack of reaction to this rollercoaster – guess I must’ve tuned out real hard (accepting the situation would be the perfect attitude but I’m not convinced my skill is so good at the moment).

The worst thing is that the price “returned” to a place where all my positions would be winners – this isn’t clearly visible on the last screenshot since I’ve checked it even later. Mighty sad since I’m the only person to blame here – the strategy / method is fine, the failure was due to human error.

  • consider both regular ranges and volatility of specific forex pairs before starting a trade (what constitutes an “excellent” trade in basis points)
  • watch for “political” events like Brexit – trading any GBP pair close to important meetings & statements may be very risky
  • lower the timeframe to H1 if H4 results in scary ranges especially if there is an issue with closing and/or opening positions
  • use proper technique of scaling in (expected move, correction, continuation move confirming the trend = enter) instead of “it’s moving in my direction, let’s jump in”
  • commit to a “cutoff” point when price is in our favor to have clearly cut point of bailing before getting screwed (breakeven or better if possible)
  • if for whatever reason the position was “overheld” up to next major S/R (eg. weekly) then at least wait and see if the level holds and rebounds for a potential save – a few hundred points doesn’t change all that much when current loss is in high single thousands