Monday, November 30, 2015

Review of November Campaign

November draws a close in a few hours, so I may as well post my results for this month.

edit: my last open trade for November just closed.

Trades opened: 12
Profit factor: 2.11
Account growth: 10.21%

Seven of those trades involved the minor / cross pairs, while the remaining five involved the major pairs. Interestingly, all five trades involving the majors won.

Major Developments

Halfway through November, I analysed my last 100 trades and found that most of my profit came from trading the major pairs. I've decided to drop all the minor pairs, and trade the major pairs for the foreseeable future. Since I'm trading fewer pairs, I probably won't trade as often. I'll see how it goes.

But to balance this, I also developed three new trading systems this month. Two are on the weekly timeframe (a weekly pinbar system, and a weekly low volatility candle system), and the other one's a small pinbar reversal system on the daily timeframe. 

With December around the corner, we can expect volatility to drop, especially during the second half of the month. I'll continue trading during the first two weeks of December, and then take a well-deserved break. :)

Then, I plan to finally open a myfxbook account on January 1, 2016. Now you can see my results live!!!

Thursday, November 19, 2015

My performance on Majors vs Crosses

I've just notched 104 trades now, and spent tonight going through my trading history. I'm always looking at ways of improving the quality of my trades, and checked to see how I performed trading the major pairs (EURUSD, GBPUSD etc) versus the crosses and exotics. 

Performance of the Majors
Number of trades: 22
Profit factor: 1.79

Performance of the Crosses and Exotics
Number of trades: 82
Profit factor: 1.03

I also looked at my performance on JPY and non-JPY crosses.

Performance of JPY Crosses
Number of trades: 20
Profit factor: 1.35

Performance of non-JPY Crosses
Number of trades: 62
Profit factor: 0.92

Combining the results of the majors and JPY crosses...

Performance of Majors and JPY Crosses
Number of trades: 42
Profit factor: 1.55

Basically, my trades on non-JPY crosses and exotics have held me down. 

So where to from here?

I'm still deciding whether to drop more pairs. I've already dropped the exotics due to widely-fluctuating spreads and gaps. After over 100 trades, it appears I have a good edge trading the majors and JPY crosses. 

Interesting results. And this is why it's important to keep a trading journal. :)

Saturday, November 14, 2015

WEEK IN REVIEW: 9 Nov to 15 Nov 2015

It's been a quiet week. I only entered one trade and won, pocketing a 0.67R reward.


I saw a low volatility retracement candle at Monday's close, and went short at its low. Price hesitated every time it approached my profit target. My profit target was finally hit on the third day of the trade. 

I think my profit target was too conservative, and I could've aimed for a 1R reward as there was still plenty of room to the most-recent swing low. Of course, I say that with the benefit of hindsight. 

The EURAUD is one of the higher-yielding currency pairs. The overnight interest added 5% to my profit, and I also collected an extra 15 pips in positive slippage. Not too bad!

(click to enlarge)


It was a quiet week, and I was tempted to open sub-optimal trades just so that I'd have a position. I held my nerve.

Tuesday, November 10, 2015

WEEK IN REVIEW: 2 Nov to 8 Nov 2015

Last week was comfortably profitable. I'd entered four trades, won three and lost one. 


This trade had been opened the previous week, on the 29th October. There was a bearish engulfing candle, and I went short at its low the next day. I took profit at 0.71000, with a reward of 0.5R. Price progressed downwards a little further past 0.71000, before rebounding back up. 

(click to enlarge)


Likewise, this trade was also opened the previous week, on the 30th October. Momentum was strongly bullish, and I detected a bullish pinbar. There was scope for a 1R reward before meeting the next major resistance level, so I went long and took profit at 1R. 

(click to enlarge)


This was a straightforward setup. I saw a low volatility retracement candle at the close of 2nd November, and went short at its low the next day. I took profit at 1.25R a few days later. A nice simple trade.

(click to enlarge)


This trade was a loser. I detected a bullish pinbar aligned with bullish momentum, and went long at the break of its high. My reward was 0.5R, just before the swing high. It was pretty tight. Unfortunately, major news came out the same day as my entry (BOE interest rate decision), stopping me out. Looking back, 0.5R reward is too low for a major news day. If the BOE decision was favourable, I only would've won 0.5R. If it was unfavourable, I would've lost 1R. The R:R ratio was lop-sided for such a major event. 

(click to enlarge)


Be more aware of critical news events, especially central bank decisions and NFP. If there's a major event, aim for a reward of at least 1R in order to exploit favourable news. If I can't aim for a 1R reward (perhaps because support / resistance is too close), then stay out. 

Thursday, November 5, 2015


I finally closed my 100th live trade for this year! I started my current portfolio of systems back in May 2015, averaging about 4 trades a week. 

The statistics

Number of trades: 100
Number of trading systems: 4
Average position size: 1.96% equity risk per trade

Current equity growth: 11.35%
Maximum drawdown: 10.42%

Average reward-to-risk: 1.06
Winning probability: 55%
Profit factor (wins) / (losses + costs): 1.17

Equity Curve

I've kept the y-axis blank for privacy reasons.

(the x-axis shows "101" trades as my "first" trade is the initial balance).


If the current trend continues, then 20% annual growth seems reasonable, on par with professional hedge funds. The max drawdown of 10% is pretty normal. My profit factor of 1.17 falls within my backtest results (1.10 to 1.30). 

After reviewing my journal, I saw a number of trades that were prematurely closed due to psychological reasons like fear or impatience. If I had kept all those trades open, most would've hit their profit targets, so my performance should actually be better. A good trader needs to handle his mental state, so I'll continue to focus on this.

Wednesday, November 4, 2015

STATUS UPDATE: Dropping exotics

I've made the decision to stop trading exotic currency pairs like the EURTRY, NOKSEK and USDHUF. The spread on exotics gets extremely wide after the NY close, up to half the average daily range. This will reduce my frequency of trades, but I want to avoid getting stopped out by short-term wide spreads as much as possible. Exotics might be tradable on the weekly timeframe where the spread becomes relatively small, or where you're trading with extremely wide stop losses. It was a hard decision as I enjoy shorting the EURTRY and EURZAR (the overnight yield on both these pairs is massive, especially on Wednesdays).

I've also noticed that exotics tend to gap over the weekend pretty badly. It's awesome if it works in your favour... but it can also go against you. Risk management is key.

Tuesday, November 3, 2015

WEEK IN REVIEW: 26 Oct to 1 Nov 2015

I ended last week slightly down. I opened five trades, with one winner and two losers, and two left open over last weekend. 


This trade was a small winner (0.5R). I spotted a bearish engulfing candle / pinbar, and went short on the break of its low. I took profit at 1.53000. Price moved down a bit further, and then rebounded back up.

(click to enlarge)


This trade was technically sound. I went short on the break of a low volatility retracement candle. If you look at the chart, it would seem as if price never touched my stop loss. However, a major news announcement occurred on the 27th October (NZ Trade Balance), and the bid-ask spread widened to 34 pips. The chart shows bid prices, but if you changed it to ask prices, the high of the 27th October would've been 34 pips higher, showing my stop loss getting triggered. The NZ trade balance was very different than what was forecasted (-$1.2b vs -0.8b) so this would explain the wide spread. This was a bit of a "black swan".

(click to enlarge)


I was quite unlucky in this trade. I spotted a low volatility retracement candle, and went short at its low. I was hoping to see the most recent swing low get broken, and aimed for a reward of 1.5R. Price rebounded a few days later to take out my stop loss, and then stopped. Price massively gapped downwards on Monday, so I missed out on some very nice profit. Ah well! That's how it rolls. 

(click to enlarge)


I opened two other trades, short EURGBP and long GBPCHF. They were left open over the weekend. Will post their results once they close.


I fumed quite a bit over my AUDNZD loss. You can avoid spread spikes by closing trades before a major news event, but since I'm a swing trader, that'd mean exiting and re-entering all the time. I don't think that's feasible. I've traded for a relatively long time now, and these huge spikes (30+ pips) are pretty rare. You can account for these "black swans" in your backtests by increasing your transaction cost assumptions.