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Weak Long, Weak Short
Last week I learned a lesson regarding the terms "weak long" and "weak short" - you would have heard phrases such as "shake out the weak longs" and so on.
I was short the AUDUSD pair early in the week, but then some comments I heard on CNBC and in a newsletter followed by some upward movement combined in my mind to make me convinced I was on the wrong side of the market. It spooked me out of the trade. Well then of course for the rest of the week the AUDUSD continued to push down. Then it hit me that I had been a "weak short" - i.e. easily spooked out of the market by any random comments and not a believer in my own technical analysis which said SELL. I followed this by happening to read a comment in Jesse Livermores book about how the same thing happened to him all those decades ago - just a random comment and he got spooked out of what turned out to be a hugely winning trade. So there's a lesson in this obviously. For starters, it made me see that I have become somewhat too influenced by my sources of information, which are CNBC and Bloomberg, and the one newsletter I read which is Action Forex. These are all great free resources, BUT the point is that in a way it is better to not listen to this stuff. I think the only one I will pay much attention to is Bloombergs "on the economy" show, which is very balanced and rational. I'm finding CNBC's Foreign Exchange program is so random and double sided. And they are slightly more manic in their reporting style, i.e. "Its going up!" ---"Its going down!" --- "It's going up again!" --- "Up!" "Down!" "Up!" "Down!" I guess they have to do this just to have something interesting to say. They need to report SOMETHING. The truth is that the currencies trend ever so slowly on a day to day basis (if you stand back and look at the trend minus the volatility), and you wouldn't have much of a show if each day you said "Slightly lower today" -- "Slightly lower again" --- "Once again its slightly lower" So what they do is make manic reporting out of each days price fluctuations. I realized that listening to this has been having a bad effect on me. I think I'll still listen to it because they do talk about interesting things etc, but I need to armour myself against it influencing my decisions. I need to learn to just trust my own technical analyis and either be right or wrong due to myself. It is very frustrating to exit what turns out to be a winning trade because you basically believed what amounts to a 'hot tip'... Yet again, it is interesting to see that each lesson you learn in this process is always one of the classic age old lessons. |
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