I think we've all been there...we've made a trade, we're happy with that trade, and yet our reasoning behind the trade was wrong! Today I'd like everyone to welcome Bob Iaccino from TraderOutlook.com. Some of you might reconognize the name, and that's because Bob is a frequent contributor on CNBC, CNBC Asia, Bloomberg Television, Bloomberg Radio, CNN, CNN International, Fox News, and several other media outlets as a special guest analyst. Yeah he's all over the place and he knows what he's talking about.
Enjoy the special Sunday guest blog, please post comments to Bob or about the article, and spend a few minutes on TraderOutlook.com and watch his forex videos!
I remember one of the smartest human beings I’ve ever mentored, in my 15 years in the markets, explaining a trade he wanted to place. Let’s call him “Neal.” Neal told me that the Fed needed to raise rates immediately and he was piling up long USD. Well, the rate rise never came, but he made $1oK on his position anyway. The market was pricing in a larger rate rise in the future. He then prances around my trading room like a show horse, talking about how he was right for taking such a large long position. I walked over to him and proceeded to tell him that we were taking the money out of his account. “What?! Why?!” exclaimed Neal. “Because you were wrong. You said the Fed was going to raise rates immediately and they didn’t,” I told him, “so you have to give the money back.”