Discipline – The Trade That Got Away

I want to continue with my trades long JPY.

I want to place these trades (a few short pips underneath current price action) in currency pairs such as EUR/JPY and GBP/JPY. I want to get short NZD/JPY as well AUD/JPY not to mention CAD/JPY. I want to push a bunch of buttons. I want to enter a bunch of orders. I want to do it right this second! Right here! Right now! My god let’s do it! Do it! DO IT!

But no……….I can’t.

I’ve got patience. I’ve got trade rules. I’ve got plans.

I’ve got millions of trade opportunities in front of me, and a lifetime of trades –  lying in wait.

Most importantly of all. I’ve got discipline.

I’ll sit tight here a while longer and see how things shape up come London open. Frankly, I’m not satisfied with this correction in Nikkei and JPY and still feel there is further downside in risk. I still have reservations about taking positions of any reasonable size so will stick to my guns….and stay on the sidelines.

Why Patience Beats Impulse in JPY Trading

The Anatomy of a Perfect JPY Setup

Here’s what I’m actually waiting for before I unleash hell on these JPY crosses. First, I need to see a decisive break below the 200-period moving average on the 4-hour charts across multiple pairs simultaneously. When EUR/JPY, GBP/JPY, and AUD/JPY all start singing the same bearish tune, that’s when the orchestra gets interesting. Second, I want confirmation from the yield differential story. If Japanese 10-year yields start climbing while global risk sentiment deteriorates, we get that beautiful double-whammy that sends these crosses tumbling. Third, and this is crucial, I need to see the Nikkei decisively break its recent support levels with conviction. The correlation between Japanese equity weakness and JPY strength in risk-off environments is too reliable to ignore.

The technical picture I’m monitoring shows potential head and shoulders formations developing across several JPY crosses. But formations mean nothing without follow-through. I’ve seen too many false breakdowns in these pairs to get excited about patterns alone. What I need is volume confirmation, momentum divergence on the daily charts, and most importantly, a shift in the fundamental narrative that supports sustained JPY strength.

Risk Management When Everyone Wants the Same Trade

Here’s the thing about popular trades – they work until they don’t. Right now, every hedge fund and their mother is positioning for JPY strength. The COT data shows massive short positions building in JPY crosses, and when positioning gets this crowded, violent reversals become inevitable. That’s exactly why I’m not jamming the buy button on USD/JPY puts or loading up on short positions in the commodity currency crosses just yet.

My position sizing strategy for this JPY campaign is built around the assumption that I’ll be wrong at least 40% of the time. Each individual position gets no more than 1% risk, and I’m staggering entries across different time horizons. If GBP/JPY gives me the setup I want, I’ll start with a small position and scale in only if price action confirms my thesis. The moment I see coordinated central bank intervention or unexpected hawkish commentary from the Bank of Japan, I’m cutting everything and reassessing.

The Macro Forces Driving JPY Dynamics

Beyond the technical setups, the fundamental backdrop for JPY strength is building like a slow-motion avalanche. Global growth concerns are mounting while inflation remains stubbornly persistent in major economies. This creates the perfect storm for risk-off flows that historically benefit the Japanese Yen. Add in the fact that Japan’s current account surplus provides natural buying pressure for JPY during times of uncertainty, and you’ve got a recipe for sustained strength.

The Bank of Japan’s policy divergence story is also reaching an inflection point. While other major central banks are either pausing or preparing to cut rates, the BOJ has more room to maneuver if global conditions deteriorate further. Market participants are finally starting to price in the possibility that Japanese monetary policy might not remain ultra-accommodative forever. When that shift in perception gains momentum, JPY crosses tend to move violently and quickly.

Execution Strategy for Maximum Impact

When I finally pull the trigger on this JPY thesis, execution will be everything. I’m not looking to catch falling knives or pick tops. I want to ride the momentum wave after it’s already established direction. My entry strategy involves waiting for clear break-and-retest patterns on the daily charts, then using shorter timeframes to refine my entries.

For the crosses I’m targeting, I’ll be using different approaches based on their individual characteristics. GBP/JPY tends to move in violent swings, so I’ll use wider stops and smaller position sizes. EUR/JPY typically offers smoother trends, allowing for tighter risk management and larger positions. The commodity currency crosses like AUD/JPY and NZD/JPY will depend heavily on global risk sentiment and China developments, so I’ll monitor Asian session price action closely.

The beauty of having multiple JPY crosses in play is the diversification of catalysts. Brexit uncertainty can drive GBP/JPY lower while RBA dovishness hits AUD/JPY. I don’t need every trade to work perfectly – I just need the overall theme to play out across enough pairs to generate meaningful profits. Discipline means waiting for the right moment, then executing with precision and conviction.