GBPJPY Long- Wednesday 30th October 2024

Instrument: GBPJPY

Trade Type: Long

Timeframe: [4HR]

Entry Price: [199.557]

Stop Loss (SL): [1.08752]

Take Profit (TP): [N/A]

Risk-Reward Ratio: N/A

Outcome: Non-Profitable

Entry/Analysis:

This morning, I had initially planned to avoid trading due to a heavy workload and the intense environment at my workplace. However, despite my intentions, I found myself drawn to the charts and spotted a potential long opportunity on GBP/JPY during a brief, unplanned glance. At the time, I observed that price appeared to have broken above a significant daily supply level and was now retesting it. The presence of several downside rejections on GBP/JPY reinforced my belief that the price would likely resume its bullish movement.

Moreover, a complementary observation on the yen basket added to my mild level of confidence: price was rejecting the 0.618 Fibonacci retracement level and seemed to be holding a supply zone, suggesting a potential continuation of the yen's downward trend. This reinforced my belief that GBP/JPY might have bullish momentum, which led me to take a long position at 199.557. The plan was to use a trailing stop to capture as much of the potential upside as possible, aiming for a longer-term target around 207.874.

However, this entry was rushed, made in a less-than-ideal mental state, and based on incomplete analysis. Shortly after entering the trade, GBP/JPY broke below the demand zone and triggered my stop loss. My lack of focus and the emotionally charged environment led to an impulsive entry without full validation.

Exit/Outcome:

The trade quickly turned against me as price fell below the demand zone that I had perceived as stable support. My stop loss was hit, resulting in an unnecessary and preventable loss. The rapid breakdown invalidated my original analysis and highlighted that the setup I entered had weak technical foundations. My strategy to trail the stop in hopes of capturing a much larger move turned into an overconfident risk that did not align with my initial trading plan, resulting in an exit without profit.

This exit underlined the importance of entering trades with a more thorough review of key technical indicators, rather than a partial glance. Notably, I failed to account for the significant distance from the 200 EMA, which often suggests a higher likelihood of a pullback before any further continuation. A more comprehensive analysis might have prevented me from entering this weaker trade setup.

Psychology:

Reflecting on the psychology of this trade, I realize that my decision-making was impaired by both environmental and emotional factors. The rushed entry was driven by a desire to act quickly in a high-pressure environment, where I was only able to devote limited mental resources to the analysis. Trading during working hours, in such an intense and distracting atmosphere, led to a diminished quality in my analysis and execution, revealing a clear lack of discipline and focus. This decision was not in line with my typical A* setups, and it reflected the risks of trading without full commitment and concentration.

This trade also served as a reminder that my emotional state heavily impacts my performance. Entering a position while feeling unfocused and distracted led to weak execution, overconfidence in a subpar setup, and a lack of adherence to my standard process.

To prevent similar issues in future trades, I will implement the following improvements:

1. Strict Time and Environment Discipline: I will establish and enforce a clear rule against trading during working hours or in high-stress environments, where I cannot give my full attention to analysis and execution.

2. Enhanced Technical Checklist: Before taking any trade, I will thoroughly review key indicators and price levels, including the position relative to the 200 EMA, to confirm the strength of the setup. This checklist will act as a final step to prevent rushed, impulsive decisions.

By maintaining discipline and adhering to my trading plan, I can improve my performance and avoid the pitfalls of emotional and distracted trading.

Trade Score:

Execution: 1/3

Psychology: 1/3

Overall Trade: 2/6