Tuesday, February 6, 2018

Review of January 2018

Had a good start to 2018. Bagged three winners, while enduring one loss.

10th January - NZDUSD

Saw a small retracement during the uptrend, and went long on the break of the bearish candle.

17th January - NZDUSD

Went long on the NZDUSD again, but was quickly chopped out.

19th January - GBPCHF

This trade moved in my favour very quickly.

24th January - EURGBP

Went short on the EURGBP after a small retracement and bagged a win.


With the holidays over, I began to spend more time on backtesting and research again. Fingers crossed for the rest of 2018!

Saturday, February 3, 2018


I really should get back into blogging...

Anyway, this were my results for 2017.


Trades taken: 81
Equity growth: -6.58%
Maximum drawdown: 14.08%
Average risk per trade: 1.06%
Profit factor: 0.82

These were my results for 2016...

Trades taken: 121
Equity growth: 15.3%
Maximum drawdown: 8.61%
Average risk per trade: 1.18%
Profit factor: 1.26

So I made a loss of -6.6% at the end of 2017. It's not a good thing. I initially started the year with blistering position sizes between 2% and 3%. I felt very confident after being profitable for two running years.

By mid-year, my drawdown approached 14%. I'd begun reducing my position drastically to around 0.5%-1%. 

One particular trade blew a 5% hole in my trading account (mentioned here). 

I noticed some psychological effects in my trading as a result of an extended drawdown:

1) I traded less. In a way, this is a good thing. If you have a negative edge, you WANT to trade less, and ideally, not at all. But because I traded less, my self-identity as a trader began to fade. In my opinion, during extended drawdown, try to trade, but trade extremely small. A token position worth a few dollars may be preferable than nothing at all. At least you'll stay connected with the market, and get cheap feedback on your trading. 

2) I spent more time on other hobbies. It's good to diversify your interests. But because I was doing other things, I spent much less time on research and backtesting, which impaired my self-improvement as a trader.

3) I began losing vision of my future. This is probably the big one. When your dream begins slipping away, it's very easy to grow disillusioned. You lose alot of motivation. Honestly, I don't have a solution to this, except to just keep grinding, and perhaps to keep your vision vague? I know some people recommend setting specific targets to hit, so you can find the most efficient strategy to hit those targets (e.g. to lose X kilograms per week, I need to reduce my daily energy intake by Y calories). But you can't do that with something as unpredictable as trading. Just take one trade at a time and execute. 

So what to do?

I made a list of what I think are positive and negative sources of edge here. This wasn't a random exercise. I wanted to see what I could implement (or get rid off) to get my trading back on track.  

Going into 2018, I'm sticking to a single strategy for now (low volatility breakout). I don't have full confidence in some of the other systems I developed. My #1 goal is to finish 2018 with a positive number. The size of that number doesn't matter, as long as it's positive.

Thursday, December 28, 2017

Sources of positive and negative edges

Just a rough summary that I scribbled in my notebook.

SOURCES OF POSITIVE EDGE (apply as much as possible)

+ trade against retail sentiment
+ trade with positive carry/swap
+ historically positive technical strategies
+ trade in favour of hawkish vs dovish currencies
+ trade higher timeframes
+ possess more trading capital
+ mental resilience
+ anti-martingale position sizing (reduce positions as you lose, increase as you win)
+ longevity (the longer you survive, the more you learn)
+ meditation & exercise
+ emotional detachment from outcomes
+ have other income sources
+ ignore other traders' opinions (trade your edge only)
+ check markets routinely and on time (don't enter late)
+ constant learning & journaling
+ networking

SOURCES OF NEGATIVE EDGE (avoid as much as possible)

- fees and commission
- negative carry/swap
- price gaps and extreme spread (avoid news & trading over weekends)
- no trading plan and strategy
- not following trading plan and strategy
- martingale position sizing (avoid increasing positions after losing)
- emotional investment in trades ("I must win", "I'll look bad if I lose" etc)
- performance anxiety / trigger-shy
- excess leisure (erodes discipline and drive)
- distractions (time and energy are diverted elsewhere)

Thursday, October 26, 2017

Latest update on 2017 results

Just a quick update on my trades for this year.

I'm currently at a -2.95% loss for the year, just below breakeven. I'm not really happy, but it could be alot worse. 

This whole year has basically been a grind around the breakeven mark, falling behind, pulling ahead, and then falling behind again.

I backtested all my systems up to the present and dropped those that stopped performing,. I'll wait until when (or if) they return to profitablity. Waiting is free. 

It's very important to have drawdown rules in place. Reducing your risk during drawdown will allow you to survive until your trading turns around. It's boring, but it has to be done. 

To be honest, I violated my own drawdown rules a few times, and paid the price. If I had been true to my rules, I'd probably be slightly profitable by now. During August, I risked 3% on a single trade when I should've stuck to 1%. I held the trade over the weekend, and the market gapped against me on Monday morning. I lost 5% when price opened way beyond my stop loss, more than the 3% I anticipated. I might talk about this trade in a future entry as it provided a few key lessons - stick to your rules, and maybe reduce your risk when leaving a trade open over the weekend.  

It's also important to find interests outside of trading. During times of drawdown / breakeven, you'll want to find other sources of success or motivation in your life. It could be fitness, knowledge, or maybe a new skill. Don't base your identity solely on being a trader. 

Survive. Play great defence. If you truly are better, you will win in the end. And if you aren't better? A tight defence will keep you in the game indefinitely. 

Thursday, July 6, 2017

Hey hey!

Just a short message. I've set comments to moderated / disabled since this blog has been spammed to hell. Still alive and trading. :)

Friday, December 30, 2016


Hey everyone, here's my performance review for 2016!


This year I made a return of 15.3%. Most of that was made during the first seven months of 2016, which was then followed by slow, gradual drawdown which has thankfully stabilised over the last few months.

Trades taken: 121
Equity growth: 15.3%
Maximum drawdown: 8.61%
Average risk per trade: 1.18%
Profit factor: 1.26

My results from 2015...

Trades taken: 112
Equity growth: 18.77%
Maximum drawdown: 10.55%
Average risk per trade: 1.96%
Profit factor: 1.26

Yeah, my profit factor for 2015 and 2016 are exactly the same. It's not a typo. 

Here's my equity curve from both 2015 and 2016:

2015 - 2016
(click to enlarge)

Take note of the linear regression line, and how R^2 is 0.89. This is from real world results. That is beautiful. If you're wondering why the first half of the equity curve looks more volatile, it's because I traded with higher risk in 2015 (average 1.96% per trade), while in 2016, my risk was nearly half, at an average of 1.18% per trade.

Major developments for 2016

I'm officially a trader
It's time to officially call myself a trader. After half a decade of learning and two years of consistent live trading, I've assembled a very good equity curve that I'm very proud of. That's real, hard cash that I've extracted from the market by myself. It's all real. 

At the start of the year, I opened a public Myfxbook account that I've maintained throughout 2016. It's been an interesting experience, but after a year, I no longer see much upside in continuing the account. I've noticed myself becoming anxious with people watching my trading account. What do I get out of it? I've considered trading other people's money and using Myfxbook to attract investors, but in the end, I feel better trading for myself only. It'd be nice (and lucrative) to trade other people's money, but there's alot of legal and psychological obstacles to overcome that can only erode my edge. And for me, trading is about freedom. So I plan to turn the account to private early next year. 

Goals for 2017

Plugging leaks
At this point, it's no longer about finding the "perfect" trading system. It's about finding and plugging all the leaks that erode my edge - physical, mental, financial, psychological etc. I'm taking inventory of everything. If it harms me, I'm letting it go. 

Reduce work hours?
If I can maintain my trading results, I can look at reducing my working hours in my RL job. That's the dream of all traders, right? :) At the least, I've got options. I have one foot out of the rat race already. It's a very good place to be. :)

And that's that! A profitable year is a good year. 

Friday, December 9, 2016

Week in Review: 5 Dec to 11 Dec 2016

Hey everyone. I only put on a single trade this week, which I fumbled as I'll explain below.


I'm not happy with this trade. Not happy at all.

Basically I saw a good bullish setup on the NZDUSD. According to my system, a reward-to-risk of 0.5R to 1R was ideal. I tended towards greed, and aimed for a 1R reward. My profit target was below the next resistance level, so I thought it was still reasonable.

(click to enlarge)

Retail sentiment was slightly bearish (55%), which tilted the odds towards a bullish breakout.

(click to enlarge)

Price did breakout in my favour, and reached 75% of my profit target. And then the European Central Bank statement came out for that day, causing the NZDUSD to tank. I wasn't aware of this until an hour later when I logged on, at which point I promptly closed the trade near breakeven.

Mistake #1 - Being away from the charts during a big news event

I was away from a live chart and didn't realise how big the reversal was until an hour after the ECB statement came out.

Mistake #2 - Being casual about big news events

I honestly didn't think the ECB would influence the NZDUSD that much. I need to be more mindful of central bank statements, as central banks are the biggest players in the forex market. Anything that can move the EURUSD can spill over onto other pairs as the EURUSD is the biggest currency pair in the world. Plus the ECB and the US Federal Reserve are the two biggest central banks in the world. Respect.

Mistake #3 - Not taking profit before a big news event

Price was between 0.5R and 0.75R before the ECB statement came out. It was within my profit-taking "green zone" for this particular system. My policy is to close profitable trades before big news, especially when it is near my profit target. But because I was away from the charts, I wasn't aware of the situation and didn't close the trade at a profit. 

Mistake #4 - Being too greedy

While the reward of 1R was technically good, news events should be taken into consideration as well. Will my trade have enough time to reach its profit target before news comes out? If the answer's no, then a tighter profit target might be better (in this case, 0.5R to 0.75R). 

My loss was very minor (-0.1R, or -0.15%), but it's the mismanagement of this trade that hurts more. It was pointless. I did have the option of keeping the trade open as it only fell back to breakeven, but I felt the psychological pain would be alot greater if the trade turned against me completely and hit my stop loss. I'll take the very small loss and consider it a cheap price for these lessons. :)