I made a terrific, novice blunder. I've been watching for a place to enter a long position on USD/JPY because it has been trending nicely for the last couple of months. A few days ago, I entered a position near near where it was apparently moving towards the bottom end of the trending channel. Expecting this to not be a day trade, but instead hang onto it for a couple days, I was rather happy last night, as I was shutting down when I was up over 40 pips, with only a single line of resistance between the current price and my price objective.  In the morning:

Oooops

I've been kicking myself all day for such a rookie mistake. All I could think of this morning is: Why didn't I set up a stop on this trade? Normally I play for high percentage, with the prevailing trend trades where my expected win-loss ratio is 2:1. Anything that looks like it'll reap 10 pips is game, so usually a 5 pip stop is set up; Larger stops are used, of course, if higher targets are set.

I don't claim that all my trades are winners, or that even the majority of my trades are winners, but as long as I take profits greater than half my losses, I'll come out ahead. Since this was a long term trade I had larger risk, as well as larger expectations for profit. I even knew at which point I wanted out (the red line), but with the chaos around my home last night, I turned off the platform without putting in a stop order.

This morning, I was punished for it. Had the stop been in place, I would have rolled down15-20 pips, and it would've been lost in the usual pile of bad trades for the day, but without the stop it has turned into 5 bad trades worth of losses. Talk about a learning opportunity.

Normally Risk Management is Rule number one, and I foolishly forgot about it. Now Rule number 2 is: Always follow Rule #1

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