I should rename these posts "Disasters in Day Trading" ;)
After holding on to a AUD/USD short position that I'd opened at 0.8323 for more than a day, while the price bobbed up and down within a few points of my entry price, the AUD suddenly dropped down rapidly to 0.8305 late last night, then levelled out at 06/07. As both DW and I had short positions open I woke her up to ask if she wanted me to close out her position. She got up to have a look at the chart and, after a bit of hesitation, decided to close out at 0.8306 at a good profit on this trade.
I was impatient for her to decide and make her trade, as I then had to log out of her account, and wait for the MarketMaker app to close down, before I could log into my account to close out my position. Unfortunately the AUD rebounded to 0.8311/13 before the trading software was open with my account on the screen. I thought about still closing out at this price, which would have made me a $100 profit on the trade, and possibly then going long on the AUD to gain from any continued increase back to its previous trading level of around 0.8323. In the end I decided that this may just be a temporary upwards jig in a general down trend, as has often happened before, so I kept my short position open, waiting for the AUD to drop back down towards 0.8300 (which would have made back my losses from the previous day's trading).
Instead the AUD continued back to its earlier level of 0.8322/24 so I left my position open expecting the AUD to level of at this level and possibly drop again later in the evening. At that stage the chart looked like there was a slow downwards trend in place. I shut the trading window while I did some blogging, then went back a short while later to check on the spot price. Shock! Horror! The AUD had continued to climb rapidly, and was sailing through 0.8341, 0.8342, 0.8343... I was now down $200 on this trade and it looked like this could be one of those vertical moves of nearly 100 points. At this stage I lost my nerve, and, after holding my trade open for over a day, closed it out at 0.8343. I immediately bought the AUD at this same price, hoping to make back some of my losses if the strong uptrend continued for a while. Of course, the AUD immediately reversed direction and started dropping, so I closed out that position at a small loss. After watching for a little while it looked as if the upward spike in the AUD had definitely lost all momentum, and the AUD was drifting lower, and started to drop a bit faster. I then went short the AUD again (I should have not closed out in a panic in the first place! D'Oh!), only to see the AUD regain some ground. At this stage I gave up in disgust, closed out my position (again), and went to bed.
Today the AUD has slowly drifted back down to yesterday's low of 0.8308, so if I had not bothered watching the screen last night and just kept my position open for 2 days instead of one day, I'd have actually made a good profit, rather than losing $255 in three losing trades in a row. My trading account is now down below $1,000 (after I transferred in a second $1,000 last week - bringing my total trading kitty to $2,000) so I can only trade A$50K rather than $100K. I think I'll just watch the market for a while before I attempt another trade. It will take a long time to claw back my losses. Trading is good fun, but it's turning out to be expensive entertainment.