Paper trade: Covered NZD/USD @ 0.74302 (-60 pips) and AUD/USD @ 0.90917 (-88 pips)

Got stopped out of both my NZD/USD and AUD/USD shorts around lunch time. The big mistake in both of these trades is that I shorted them while they’re making new highs. As written on my 3 rules, never catch the top/bottom. At the time of entry, I was looking too far back into the charts for the resistance levels. In NZD/USD’s case, it was January 2008 (Fig. 1) and for AUD/USD, I was looking at April 2008 (Fig. 3). It’s not that they aren’t important levels, but recent momentum (Fig. 2 and 4) takes precedence over some price level over a year old.

A lesson to remember is that recent memory is always fresher than older ones. If I’m to extrapolate from older price levels, assume a lower probability and manage the risk accordingly.

NZD/USD

NZD/USD, 3-hour

AUD/USD

AUD/USD, 3-hour

Related posts:

1. Paper trade: NZD/USD shorted 1/6 size @ 0.73967, stopped out 0.7406 (-9.3 pips)
2. Paper trade: stopped out of AUD/JPY 83.59/84.90 (-130 pips) and EUR/JPY 136.73/137.50 (-77 pips)
3. Paper trade: Short NZD/USD @ 0.7520, out 0.7308 (+212 pips)
4. Paper trade: Stopped out AUD/JPY longs @ 81.3 (+7 pips) and 81.29 (-28 pips)
5. Paper trade: Closed AUDUSD short @ 0.9057 for +126, +26, -13 pips