One of the students I coach got himself into some pretty decent trouble last night while trading GBPJPY, when we connected this morning for his lesson he told me that he pretty much blew up his whole account, so we decided to go over the trades he made.
He was scalping last night and would up really churning up his account, and lost a pretty nice chunk of cash flip flopping his trades trying to chase this pair all over the board, Chasing and flipping trades is especially dangerous in forex trading because of the spread, when I broke down his trades I estimated he spent about 30-40 pips in just spreads!, not including his losses on top of that.
I have marked on the chart the time frames where the majority of the flip flopping occurred.
Lesson of the day: DON'T EVER flip flop trades, and for the love of god don't chase things around after the trade didn't work, it makes it impossible for you to clearly identify your entry and exit points, and spreads (or commissions if its an equity account) will destroy you. You may get lucky once in a while (which is the worst thing that can happen because you think it can work) but you WILL blow through your account chasing the other side of losing trades.
He was scalping last night and would up really churning up his account, and lost a pretty nice chunk of cash flip flopping his trades trying to chase this pair all over the board, Chasing and flipping trades is especially dangerous in forex trading because of the spread, when I broke down his trades I estimated he spent about 30-40 pips in just spreads!, not including his losses on top of that.
I have marked on the chart the time frames where the majority of the flip flopping occurred.
Lesson of the day: DON'T EVER flip flop trades, and for the love of god don't chase things around after the trade didn't work, it makes it impossible for you to clearly identify your entry and exit points, and spreads (or commissions if its an equity account) will destroy you. You may get lucky once in a while (which is the worst thing that can happen because you think it can work) but you WILL blow through your account chasing the other side of losing trades.