Slippage Is So Evil...

The trend is my friend?

Did anyone think I would ever get out of a trade with more than +10 pips?

Finally, it's happened.

I was targeting anywhere from +100 to +300 pips on a long GBP/JPY trade about an hour back, but slippage is just so evil. This is why I think when setting your target, you should always account for 3x current spread and consider it as part of your risk:reward ratio prior to trading. So, if the spread is 10 pips and you want to target 100 pips, if you can only get 70 pips out of the trade due to slippage, would your risk:reward ratio still be good? If you're really conservative, I would even go for 5x current spread - whatever you fancy, really. We always need to have a good margin of error in our trading.

This trade was one where I noticed my other favourite setup - the classic bullish divergence. This one I'll call the little red dress - silk, of course!

I was so tempted to Stop & Reverse when the trade initially was about -20 pips against me. But I told myself to take the disciplined approach and honour my stop for once.

I knew sentiment was working in my favour on this long GBP/JPY trade. Equities futures were bullish at the time I made the trade. I also had a divergence on hand. I had to control my self-sabotaging behaviour.

So, I stuck to my trade and was rewarded with double my usual profit - exactly +20.67 pips. One cannot even buy a bottle of good champagne with this and you may find this funny that I would be couch-jumping at such a small profit, but I was at one point about +38 pips. Slippage and retrace risk are evil, I reiterate.

I would like to thank my forex broker (who else can patiently put up with my trading tantrums in such a gentlemanly fashion?) and also that inspiring video from Boris Schlossberg.

Wow, I can actually do this!

I'm going to now start daydreaming about more and more profits! : )