Trade Update - GBP/AUD Short CLOSED

Update 03-19-08 7am:
This trade is a prime example of what NOT to do in trading. I committed every possible mistake and broke every single rule. But somehow, I still managed to break even and not lose any money.

Total Pips: 0
Total Profit: $0

What went wrong:

• Entered trade just for the sake of trading. I did not have the patience to wait for the ideal trade. Instead, I just wanted to enter any trade available.
  
• Entered trade too early. I did not follow the HAS system rules, and entered the trade as soon as I saw a single red candle across multiple time frames. I did not wait for the 2nd confirmation candle. Part of the reason is tied to the above one.
• No stop losses. I ignored the fundamental money management principle, and did not add any stop loss for the pair. My idea was to stop the order when the signal changes. But within minutes of entering the trade, I was down almost -400 pips per lot or about $1200 for this trade.
• The next money management principle I ignored was not closing the trade when the signal changed. When the signal did change, I was down more than $1200, and I didn't want to close the trade and take the loss. So I just continued holding the position hoping it would break even.
• Finally, I let emotions take over, during entering and especially when exiting the trade. If I had followed my rules, I would have exited this trade for a -300 pips loss, instead I let it ride and was lucky to break even.
  

The one thing I did do right was place the trade in the direction of the long term trend. The weekly and monthly charts still had a downward trend and this helped me break even in the long run.

Update 03-17-08 6pm:
After a brief pullback, this pair is starting to rise again making my life miserable. I am still continuing to hold this. Tomorrow 2 important economic data for UK is being released. Hopefully that will help me break even with this trade. I am still trailing by -341 per lot in this trade.

Update 03-16-08 8:40pm:
This week has started as a disaster. Due to the worsening of the US credit markets, the Asian markets have opened sharply lower. Bear Sterns agreed to a $2 per share purchase by JP Morgan Chase in an emergency bailout. The Fed also cut some interest rate. All these resulted in the Aussie & Yen moving lower sharply against other currencies.

Since I opened this trade without a stop loss, I am down about -365 pips per lot, or a total of -1095 pips for this trade. I have not yet closed this position, but this is definitely a disaster which is going to set me back a lot. Lessons learnt?

• Reinforces why I need to stick to the rules and not break them. Wait for the 2nd HAS candle to confirm the trend.
• Always have a stop loss. I would have exited this trade long back instead of having to hold on to with a 400 pips loss currently.
  

The Trade:
As with other pairs, the Sterling is showing weakness against the Aussie Dollar. So I am shorting this pair.

System:
This trade is based on the HAS system on the 4 hour charts.

Reason:
After a brief rally for about 2 weeks, the Sterling has been steadily moving down the past few days. Finally today I got the signal from the HAS system to enter this trade short. The daily time frame switched from blue to red and the rest of the time frames already showed red. I entered this trade even though there is only one red bar instead of the 2 I look for mainly because the lower time frames are showing a downward trend. So I feel this trade will make us some profits.


Trade Rating:
I give this trade a 4 star due to the following reason.

• There is only one red bar across all time frames (H4 and above) when I entered the trade.

Entry & Exit:
Lots: 3
Entry (Short): 2.1418

I have not yet set a stop loss or target point for this trade. I will be doing this depending on how the trade progresses.