Forex Trade Review: USD/JPY

Risk aversion took over this week, which typically means broad gains for the Japanese yen.  This was enough to push USD/JPY down to my long orders, but it also created an environment where it didn’t make sense to be long at the moment.  Closed my trade down manually…here’s a quick review.

Original Forex Trade Idea: Putting Orders in for USD/JPY Long

USD/JPY 1 Hour Forex Chart

USD/JPY 1 Hour Forex Chart

As I mentioned above, risk sentiment is shifting big time back towards risk-off mode.  This is partly due to the weak manufacturing PMI numbers signaling a global slowdown, but also geopolitical fears and Ebola fears in the U.S. Equity markets are starting to fall, commodity markets having already been getting killed all September, and we’re starting to see the Japanese yen turn higher.

On USD/JPY, after sellers held the major psych level of 110.00, sellers began unwinding positions on risk aversion sentiment, pushing USD/JPY below the moving averages and the minor support at 108.50. With the momentum still strong today, and with U.S. NFP coming up tomorrow, I decided to close manually at 108.07 to limit my total loss.

Total: -93 pips/ -0.71% loss

In hindsight, I probably should have waited for bullish reversal candles as it would have had me waiting long enough to see how bad global PMI data would be. The Ebola news was kinda out of the blue, so there was no way to see that in advance. Overall, the shift from fundamental drivers to sentiment drivers was quick and I should have adjusted quicker.  On the positive side, it was a good choice to keep the trade small and to close it today, although I probably could have closed it a little sooner to save a few pips.

With NFP going on tomorrow, that’ll be it for me this week, which is good because it’s time to do my quarterly review to see how I did and find out what I can improve on for the remainder of the year. Look out for that post to see if my mistakes can help you improve; until then…good luck and good trading!

  • ForExchange

    Hi Pipcrawler,

    well, it was an unlucky close, if you sticked to your original 107.70 SL then you would still be in the trade for a better price. Well, that said it is always be smart in a hinsight.

    I just shared my view because I am also in a similar trade with USD/JPY but did not close it as you also said, it only has to do with sentiment, nothing with fundamental, so after sentiment cools down it retraces, I do not see a reason to take a loss. It already turned, but as you say the NFP report might change some things. I will decide if I close my trade before the report or not.

    Waiting for you Q3 analysis.

    • Pipcrawler

      Hey ForExchange…it looks like an unlucky close indeed. Thanks to NFP, USD/JPY rocketed higher to near 110.00 today…doh! But I don’t usually dwell too long on what happens after, other than how I can improve my thought process. At the time, given the price action, and the upcoming events, closing was the sound decision for me. Of course, I’ll reflect on it this weekend and see how I can do better next time. Thanks for your comments buddy, i really appreciate it!

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