Friday, December 30, 2016

2016 YEAR IN REVIEW

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

RESULTS

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. 

Myfxbook
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.

NZDUSD

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. :)

Sunday, December 4, 2016

Review of November 2016

I ended November slightly positive, growing the account by 0.65%. However, this doesn't balance the loss I made back in October (-2.5%).


Trades: 7
Account growth: 0.65%

I'm on track to finish 2016 with a return of over 10%. In fact, if December is friendly to me, I can finish with a 15% return. 

My number of trades for November was low, 7 vs my monthly average of 11. Out of curiosity, I checked to see how the number of trades per month affected my monthly performance.

Average number of trades for winning months: 10
Average number of trades for losing months: 12.33

Number of trades for best month (4.45% return): 4
Number of trades for worst month (-2.93% return): 18

Essentially, during losing months, I'd trade more often. I put this down to being more loose with my signal criteria. When you're losing or find yourself in doubt, TRADE LESS!

During November, I paid greater attention to retail sentiment, which reduced the number of trades I put on. I also kept my risk very low for the month, capping my max position size to 1%.

RESEARCH

My research for November was very dry. I didn't develop any new leads or insights. It's becoming a struggle to find new angles to research. 

NEXT MONTH

The markets will tend to settle down as Christmas approaches. I plan to stay out from the 19th of December, and re-enter after New Year's Day.

Good luck to everyone, and have a merry Christmas! 

Monday, November 28, 2016

Daily Trade - 28 Nov 2016

I'm preparing to go long on the USDCAD with a buy limit order at Friday's low. Price action is quite choppy, but this is good for limit entry orders.

(click to enlarge)

Retail sentiment is 69% bearish, which is good.


If triggered, I anticipate this trade to close within 2-3 days. There's no major news on the horizon for the next 72 hours. 

Friday, November 25, 2016

Daily Trade - 24 Nov 2016

I went long on the GBPCHF. Price just broke through a short-term resistance level, and produced a solid engulfing candle pattern. 

(click to enlarge)


Retail sentiment is mostly bullish, though (63%).


I don't like trading WITH retail sentiment as they're usually wrong, but the technicals for a long position line up very well, so I'm taking the trade, but with reduced risk (0.75% instead of 1% that I normally trade).

Upcoming events:

Nov 28 Monday - ECB speech regarding Brexit. Potential for significant impact, although it'll be the politicians, and not the central banks, that'll determine the nature of Brexit. Bank of England has already released its post-Brexit economic forecast, which is very bullish. I'll stay in the trade during this event.
2 Dec Friday - NFP. Last one for the year, but generally doesn't move the GBPCHF much. Will stay in the trade unless very close to profit target.

Friday, September 30, 2016

Review of September 2016

I managed to scratch a bit of profit during September, increasing my account by 0.44%.

Myfxbook

Trades: 7
Account growth: 0.44%

September has been very quiet. I normally open 10+ trades per month, but during September, I only opened seven. I was more selective about my trades this month, mainly because of the loss I endured during August.

I limited my risk to 0.5%, up to a maximum of 1% for a few trades. I believe if I had been more aggressive with my risk, I probably would've grown my account by 1% for the month. That's the price you pay for being conservative.

I also reached my 100th trade milestone this month. A snapshot of my trading account is below (click to enlarge):





My profit factor is currently 1.31, which is on par with my backtests.   

RESEARCH

I've devoted September to researching ranging markets, with limited success. I've developed a range breakout system, although I'm not 100% happy with it. This is a backtest equity curve from 239 sample trades, from 2012 to 2016:



My main concern is how "lumpy" my wins are. I'd prefer to see a more even distribution of wins and losses. I'll continue my research in October.

NEXT MONTH

My current drawdown is still over 5%, so I'll keep my risk to 1% per trade during October. Once my drawdown falls below 5%, I can ramp up my risk to 1.5%-2%.

Week in Review: 26 Sept to 2 Oct 2016

This week was profitable. I opened two trades, winning one and exiting another at breakeven.

GBPNZD

I saw a good sell signal on the GBPNZD on Monday morning, and went short at Friday's high. Price moved in my favour quickly, and I took profit at 1.1R. I thought about extending my profit target, but didn't want to get too greedy.





EURGBP

The EURGBP hit resistance at 0.87000 this week, and produced a bearish signal. I went short at the break of Tuesday's low. 

However, Wednesday produced a neutral doji. When Thursday failed to break any lower, I decided to play it safe and exit near breakeven (technically it was a loss, but only -0.08R). Wednesday's neutral candle and confusing signals on other GBP pairs compelled me to exit while I was still able.




THOUGHTS

I continued to keep my risk low this week (0.5%-1% risk per trade). The week was uneventful, which is a good thing.  

Friday, September 23, 2016

Week in Review: 19 Sept to 25 Sept 2016

This week has been pretty quiet. I only opened a single trade.

Both the Federal Reserve and Bank of Japan released monetary statements on Wednesday, which complicated things a little.

EURJPY

On Monday morning, I went long on the EURJPY. I placed a buy order at Friday's low, anticipating that price would rebound upwards.

Because my profit target and stop loss were pretty tight, I hoped to close this trade by late Tuesday, just before the Bank of Japan's announcement on Wednesday.

However, by mid Tuesday, price was going nowhere and hovered near breakeven. I didn't want to be in the market by Wednesday morning, so I closed the trade at a very small loss (-0.2R).

When the BOJ announcement came out, price fell and would've hit my stop loss. I'm happy to have got out relatively unscathed.




RESEARCH

I'm currently focusing on a range breakout strategy. The backtest results look interesting so far. I'll post more details if further backtesting is successful.

THOUGHTS

September continues to be slow. I've kept to my risk limit of 0.5%-1% per trade, and will continue to do so until I see my equity curve turn positive again.

Being aware of news saved my hide this week. Always plan your trade around major news events.

Thursday, September 1, 2016

Review of August 2016

August has been pretty brutal. My account slid -2.93% for the month. 


Trades: 18
Account growth: -2.93%

July and August has seen volatility drop across a large number of pairs, especially the JPY and GBP. Most of my systems rely on breakouts with a trend, so quiet, indecisive markets hurt me alot. I think this hole needs to be plugged, so I'm going to spend September focusing on researching quiet market conditions, and hopefully come up with something that's tradeable. 

As mentioned in my previous post, I've already reduced my risk for August to a maximum of 1.5%. But my drawdown is becoming uncomfortable (around 6% now), so for September, I'm reducing my risk further to 0.5%. At this point, it's not about making money. It's about stopping the bleeding, and waiting for my equity curve to turn upward again with some consistency. Once that happens, I can bring up my risk again. 






Tuesday, August 2, 2016

Review of July 2016

I'm back. I took a "break" over the last few weeks and took my mind off trading (although I still traded). I just wanted some time off to recharge my batteries and do something else with my free time besides trading. 

July was a breakeven month for me. I grew my account by a marginal 0.08%. 


Trades: 12
Account growth: 0.08%

I closed twelve trades in July, which is what I expected. The major theme for me was the "Brexit" referendum and its aftermath (although the GBP has calmed down now. But I feel a major move is about to take place again as markets don't range forever).

Because I only broke even for July, I'm reducing my maximum risk to 1.5% for August. I'm not in tune with the market, but I'm not completely out of tune either. I think 1.5% strikes a reasonable balance.

I believe that sticking close to 1:1 R:R ratios has prevented a losing streak for July. My distribution of wins and losses during July is well-mixed. 

My sticking point for July is being more aware of news. There was at least one trade that I should've avoided (I went long on the USDCHF just before the Federal Reserve made an announcement on 27 July. This was a stupid trade, and was purely based on a technical setup that became invalid on the release of news). ALWAYS be aware of upcoming news as they have the power to overturn technical setups. 


Friday, July 15, 2016

Week in Review: 11 June to 17 July 2016

I've finished this week near breakeven. I had one winner, one loser and one breakeven trade. 

AUDNZD

I opened this trade on Monday, feeling very confident. The AUDNZD had just broken downwards and retraced back to the previous support level. I went short at Friday's high using a sell limit order, but the AUDNZD rocketed upwards and eventually took me out.





EURCAD


I spotted a two-candle reversal pattern, and went short at the break of the low. I wasn't too happy about the low probability of this setup, and only risked 1% instead of my maximum of 2%. My problem was the close proximity of two support levels, which had to break to reach my profit target of 1R. After a few days, I decided to get out near breakeven (technically I was profitable, but my profit was only 0.1R, which is nothing). I should've avoided this trade in the first place. 




CADJPY

This was a straightforward trade. I saw a bullish pinbar and went long at the break of its high, and aimed for a reward of 1R, just below the next resistance level. The trade hit my profit target the next day.



THOUGHTS

Don't trade a setup just for the sake of trading. IF you must trade, only risk a small amount. And if you do something stupid and realise your mistake, get out. 

Saturday, July 9, 2016

Week in Review: 4 June to 10 July 2016

The market has calmed after the 'Brexit' referendum, and now I'm back to trading normally again. 

This week has actually been pretty busy. I closed five trades, with three winners, one loser and one breakeven.


GBPNZD

This was my "big" Brexit trade that I opened the previous week. 

Shorting the GBP was an easy decision. But short it against what? I flicked through my charts and decided that the GBPNZD provided the best trade. It offered a good setup AND offered the best overnight swap rate. Since I knew the trade could take weeks or even months, I felt the GBPNZD was ideal. 

My short hit its profit target at 1.80000 a few days ago. My reward was 0.5R. I could've aimed for more, but 1.80000 is a significant support level, and a 0.5R reward is profitable, according to my backtests, so I got out here. However, if 1.80000 breaks and I see another bearish setup, I'll happily go short again.





NZDUSD

I opened this trade the previous week, after spotting a pinbar in line with the bullish trend. This trade worked out perfectly, and I hit my profit target on Monday, banking 1R reward.




USDCHF

I identified a pinbar setup and felt there was room for the USDCHF to fall. However, the market moved against me right after my entry, and hit my stop loss on the same day. Looking back, trading in FAVOUR of any European currency (EUR, GBP, CHF) was probably foolish, in the context of Brexit.




EURUSD

After losing on the USDCHF, I identified a bearish engulfing candle on the EURUSD, and went short. This was three days before the release of NFP, and I was hoping to hit my profit target before then.

Alas, by the time of NFP's release, my trade was still open. I decided to exit at breakeven and avoid NFP. My reward was only 0.75R, and since major news are unpredictable, I thought it best to sit out.




EURAUD

I also shorted the EURAUD, after spotting a continuation pattern. It looked like the EURAUD wanted to break down further, so I aimed for a reward of 0.75R, just above the support level at 1.45000. Price came agonisingly close to my profit target on Friday night after NFP, but then stopped falling. At that point, I felt it was better to take profit at 0.6R, as the markets were closing for the weekend.




THOUGHTS

It feels good to be back at trading.

GBP should continue sliding, although I think some news traders who went short will begin to take profit (as I've done). Alot of GBP pairs are hitting long-term levels of support / resistance now, but once these levels break (and I think they will), the GBP should freefall. I don't see much political leadership in the UK at the moment, with David Cameron resigning and Brexit leaders Nigel Farage and Boris Johnson walking away from the mess they created. 


Monday, July 4, 2016

Semi-Annual Review: Jan to June 2016

Whew, we're halfway through 2016 already! That means I've got six months worth of trading performance to review for your pleasure. :)

Trades opened: 63
Account growth: 18.17%


The first few months were choppy. I initially focused on only trading the majors, then added the minor pairs halfway through February. The equity curve picked up after that. (Protip: ignore the "expert" advice about trading the majors only. If you trade the minors as well, you have a greater selection of setups to choose from.)

I've been pretty conservative with my position sizing, and tend to risk between 0.5% and 1.5% per trade. During the last few months, though, I've increased my max position size to 2%. I'm still committed to my drawdown rules (my general rule is to halve my max position size after a losing month, and double it after a winning month, up to a max of 2%). 

The last few weeks of June were really quiet. Because of a cluster of events like 'Brexit' and numerous interest rate decisions, I chose to sat most of June out. Psychologically, I began to lose touch with the market, and my research and backtesting slowed to a crawl. Keeping engaged with the market is crucial, even during "downtime". 

Week in Review: 27 June to 3 July 2016

I returned to the market this week, and opened two trades. I went short on the GBPNZD, and long on the NZDUSD. Both trades are still open so I can't post their summary until they close. 

Sitting out of the markets for a few weeks has made me lethargic towards trading. I noticed that I've scaled back my backtesting and research ALOT. With markets returning back to normal, I hope to get back into my stride. 

Sunday, June 26, 2016

Week in Review: 20 June to 26 June 2016

No trades were opened this week due to the Brexit referendum. I'll return to the market next week. 

Sunday, June 19, 2016

Week in Review: 13 June to 19 June 2016

There were no trades this week due to four central banks releasing monetary statements at the same time. 'Brexit' referendum is also taking place next week. I plan to sit next week out as well. Polls are coming out every day that can potentially swing the market. 

Monday, June 13, 2016

Review of May 2016

May has been another good month, with my account growing by 3.7%. It's slightly down from April (4.22%) but I'll take it.


Trades: 11
Account growth: 3.7%

Nothing major stood out in May, which is a good thing, I suppose. I spent a bit of time on the 4H chart, but noticed (again) that 4H and daily signals tend to correlate highly e.g. a massive pinbar on the 4H chart will probably be a pinbar on the daily chart as well. 

With four profitable months in a row, I'll increase my risk for June and start pushing hard on my advantage (max risk per trade will be 2%).

edit: I also developed two more 'systems' during April/May. These two are based on trend reversals. I've now got seven 'systems' in total, which is enough. My goal now is to focus on plugging other holes that reduce my edge (money management, psychology etc), rather than purely backtest and develop systems. 

Saturday, May 28, 2016

Week in Review: 23 May to 29 May 2016


I had a good run this week, two winners and one very small loss. I also have another trade currently open. 

AUDNZD

I went short during the previous week, after seeing a reversal pattern. This was a standard trade, and I got out at 1R on Monday. My profit target was almost perfect, as price reversed back up afterwards. The AUDNZD may still fall further, but I'm going to sit it out until I see another bearish signal.

Profit: +1R




GBPUSD


I went long at the previous week's Friday low. I've found that Friday's highs and lows are good re-entry points, as this is where many other traders will re-enter after closing their trades for the weekend. I managed to hit my profit target the next day, just below the swing high.

Profit: 1.1R




EURJPY


This trade didn't quite work out. I saw a low volatility retracement, and went short at the break of its low. Price then ranged for the next two days, coming very close to hitting my stop loss twice. By Friday night, I saw that price wasn't going anywhere, and decided to exit before the weekend at a -0.1R loss. Price action on the EURJPY looked very choppy, so when I saw the opportunity to get out at near-breakeven before the weekend, I took it.




THOUGHTS

I have another trade that's still open (short EURNZD). I left it open since its about 100 pips away from my stop loss, so it has enough room to cater for any weekend gaps or widened spreads.

Sunday, May 22, 2016

Week in Review: 16 May to 22 May 2016

I finished this week at a slight loss. I lost one trade, and won another.

GBPUSD

I opened this short the previous week, just after the BOE released its monetary statement. I saw no real reason for the GBP to rise, and a bearish setup that I'd identified earlier was still valid, so I went short. Price fell halfway towards my profit target before reversing and stopping me out. 

Profit: -1R




CADCHF

This was an "after-weekend continuation" setup. On Monday, I went short at the previous week's Friday high. Price came within 4 pips of my profit target before reversing, and I decided to take profit at 0.4R. I didn't manage this trade well, and I think my emotions got the better of me (my trade would still be open if I had left it).

One thing I noticed was that the overnight swap was very expensive. After leaving the trade open for four days, the overnight swap had cost me over 5% of my position size. New rule: avoid shorting X/CHF pairs.

Profit: +0.4R




THOUGHTS

Be more mindful of negative overnight swap as it can consume your edge. Conversely, favour trades with positive overnight swap. 

Sunday, May 15, 2016

Week in Review: 9 May to 15 May 2016

I only opened two trades this week, one winner and one breakeven. The winning trade was quite funky, as I'll explain below.

AUDNZD

I spotted a two-candle reversal pattern, in line with the downward trend, and went short at the break of the pattern. I initially aimed for a reward of 0.75R, which is below 1R. However, I spotted a potential support level near 1R, and felt safer taking profit at 0.75R.

Price did reach 0.75R... sort of. A major news release on Friday caused the AUDNZD to fall, but it also widened the spread considerably, up to 15 pips. The chart shows the bid price, but you need to add the spread to show the ask price (for a short trade, the ask price is what's used to exit the trade as you're now "buying" from the market to close the short).

Unfortunately the ask price failed to hit my profit target by a few pips, and reversed back up. With the market closing in a few hours, I decided to exit with a profit of 0.5R. 

It was a pretty funky trade, winning but not quite winning. 

Profit: +0.5R




GBPUSD


Last week's Friday candle was bearish engulfing, so I felt confident going short on Monday. The major news event for this week was the Bank of England's monetary statement. This was coming out on Thursday, giving me over three days for the trade to act out.

Unfortunately, the trade went nowhere. A few hours before the BOE's news release, I decided to get out at breakeven and sit on the sidelines.

The BOE statement was neutral, although the GBPUSD rose a bit. I didn't see anything bullish from the BOE, and thought the GBPUSD's rise was unwarranted, and re-opened my short at a better price. 

At this moment, the trade is still open. An image of the original breakeven trade is below. 




THOUGHTS

I noticed that NZD crosses tend to have the biggest spreads. It should be taken into consideration when opening a trade, perhaps closing trades before news or the weekend. If you look at the AUDNZD chart on top, you can see that the spread's widened to 17 pips just before the close. 

Saturday, May 7, 2016

Week in Review: 2 May to 8 May 2016

This week's a little busier than usual. I'd entered four trades and finished the week up.

NZDUSD

Late last week, I saw an upward trend channel and spotted a two-candle reversal off the bottom of the channel. This was going to be a longer-term trade, and I saw myself holding this for a week or two. I went long at the break of the bounce's high, and aimed for a reward of between 0.75R and 1R.

Unfortunately, the Reserve Bank of Australia reduced interest rates on the 3rd May. Since the AUDUSD and NZDUSD are highly correlated. the NZDUSD began crashing. Central banks are the biggest players in the forex market, so I thought it was prudent to move out of the way, and exited the trade at breakeven. Price continued to fall and would've triggered my stop loss.

Profit: 0R 




GBPUSD

I felt that resistance between 1.45000 and 1.46000 was going to break. This resistance area had been tested twice in the last few months, and every test usually weakens resistance/support. My trigger for the trade was seeing a bullish two-candle reversal pattern. 

I aimed for a reward of 1.5R. Price did break and reached 1R, but then reversed on the 3rd May after the RBA decision. I guess the RBA's decision triggered a flight towards the USD. I got stopped out a day later.

Profit: -1R



CHFJPY

This was a standard pinbar trade. I saw a bearish pinbar in line with the trend, and saw scope for a 1R reward. 

Profit: 1R



AUDNZD

This was a tricky trade. Volatility had shrunk significantly on the AUDNZD, but after the RBA's decision to reduce interest rates, I felt bias was in favour of the NZD. The candle on 5th May was extremely small, so I felt a downward breakout was imminent (in favour of the NZD), and went short at the break of the low.

I initially aimed for a reward of 2R, but price didn't quite reach it in time. Since this was the first Friday of the month, NFP was going to come out. Also, the AUDNZD is quite exotic, and I've seen the spread widen to 30 pips before and after the weekend. I decided to take profit at 1R to play it safe. I probably should've aimed for a smaller reward in the beginning if I was planning to get out before the release of NFP and the weekend. The good thing is that I had reduced my position size for this trade to 0.5%, so even if I did hold the trade over the weekend, a loss wouldn't have been big. 

Profit: 1R



THOUGHTS

- If planning to close trades before the weekend, aim for a more modest reward. Alternatively, reduce the position size for the trade.

- Major news can cause correlation between multiple currency pairs, and should be taken into account (especially anything related to central banks).

- Don't stand in the way of a central bank.


Sunday, May 1, 2016

Review of April 2016

I chalked up another profitable month in April. I grew my account by 4.22%, which was slightly less than March (4.27%). 


Trades: 11
Account growth: 4.22%

Lower frequency of trades

I didn't trade as often as I did back in March. I only executed 11 trades vs March's 16.

Broke 10% benchmark

I also managed to reach the 10% growth benchmark, although a few losses in the last week of April brought me back down to 9.1%. I should reach 20% this year, and possibly even 30%. A 30% return would be fantastic, but we'll see. According to Myfxbook, my average monthly growth is 2.29%, so 30% is feasible. 

Next month

I spent a bit of time in April backtesting on the 4H timeframe. I'll probably continue to invest more time on the 4H in May. I'm not expecting much, though. 

Saturday, April 30, 2016

Week in Review: 25 April to 1 May 2016

I ended the week slightly down. There was a big move on JPY pairs, and unfortunately I was on the wrong side. However, I mitigated my risk so it could've been worse. Without further ado...

USDJPY

There was a bullish engulfing candle on Friday 22 April. It looked like bears were getting trapped to me, so I went long during Monday's open, with a wide stop loss at the bottom of the engulfing candle. I'd set my reward at 0.67R, just below the next level of resistance. I normally don't aim for rewards less than 1R, but my backtest has shown that this signal is still profitable with a 0.67R reward.

Just prior to the Bank of Japan monetary statement on Thursday 28 April, I tightened my stop loss to just below the mid-week pinbar. Central banks can be your best friend or your worst enemy. If the BoJ was favourable to me, then price should shoot upwards without looking back. If the BoJ was unfavourable, my tightened stop loss would get me out quickly.

It just so happened that the Bank of Japan's statement was unfavourable (hawkish for the JPY) and I got stopped out within three minutes, literally. 

My original risk was 1.5%, but due to my tightened stop loss, I ended up losing 0.61%, or 0.4R. 

Profit: -0.4R




EURJPY


This was basically the same trade as the USDJPY. I spotted a low-volatility pinbar touching 125.500 and figured that if this level broke, then the EURJPY should shoot upwards. However, I knew that this trade would be highly correlated with the USDJPY, so I reduced my risk (or position size) to 0.5% for this trade.


While price did break through 125.500, the BoJ statement on 28 April reversed the breakout and hit my stop loss.

What's interesting is that price came within 4 pips of hitting my profit target just before the BoJ statement. There's a lesson here.

Profit: -1R




THOUGHTS


Lesson #1: Tightening the stop loss before a major news announcement can work if placed at a logical level (a good stop loss should give price enough space to "breath" for the first minute or two after a major news release, but also get you out quickly once the market has made its decision).

Lesson #2: Sometimes close enough is good enough. Price came within a few pips of my profit target on the EURJPY before the BoJ announcement. Basically I was risking my entire trade + the floating profit, just to win a few more pips if news came out in my favour. Closing the trade, tightening my stop loss, or moving my profit target upwards would've been better options (my preference would've been to close the trade and pocket the profit). 

Lesson #3: Reduce risk when there's a good chance of correlation with existing trades. 

Friday, April 22, 2016

Week in Review: 18 April to 24 April 2016

I hope everyone's enjoying their Friday! :)

This week has been relatively quiet. I only entered two trades, but both trades won, so I'm not complaining. 

USDCAD

This was an extremely good trade. I'd even say that is my best trade so far this year.

The USDCAD has been in a bearish trend for the last few months. During Monday, I thought that Friday's high would be a good place to go short with a sell limit entry, as this was a good spot for bears to re-enter the downward trend. 

Fortunately for me, the USDCAD opened above Friday's high, so my short got filled at a very good price. My profit target got hit later in the day. Quick and very profitable, just the way I like it. 

Profit: +2.5R




AUDJPY

This was a pretty poor trade. While the setup was technically correct, resistance was very close to my entry. I reduced my risk to a very conservative 0.5% and tightened my reward to 0.5R. I ended up exiting at 0.2R and scratching the trade. Price was struggling to break upwards, and I didn't like the risk I was taking for a 0.5R reward, so I got out with a tiny profit. Looking back, I think I should've avoided this trade. However, I kept my risk very low (0.5% vs the usual 1%-2% that I usually trade). If you're speculating and don't feel confident, it's okay to stay out. If you MUST trade, then keep your risk low. 

Profit: +0.2R




HITTING 10% RETURN FOR THE YEAR!

I also just hit the 10% milestone for 2016. Next stop... 20%. :)

Myfxbook link


Sunday, April 17, 2016

Week in Review: 11 April to 17 April 2016

Last week has been pretty busy. I closed five trades, with mostly-positive results.

GBPNZD

This is what I call an "after-weekend continuation". The bears have control of the GBPNZD, and many bears would've exited on Friday to limit their exposure over the weekend. A good place to re-enter would be Friday's high, which is where I went short. I took profit just above support, marked below.


Profit: +1.1R



EURNZD


I spotted a bearish engulfing candle at the close of Monday, and went short on Tuesday. This was a standard trade, and saw enough scope for a 1R reward before I'd hit support.

Profit: +1R



AUDCAD

I had went short the previous week after seeing a bearish engulfing candle. I'd set my reward at 1R, and price came within 5 pips of hitting my target before reversing. Shorting the AUD is expensive, and I was losing about 1% of my profit for every day I held the trade open. Holding the trade overnight on Wednesday would've cost me 3% of my trade, since the overnight swap is usually tripled on Wednesdays to account for Saturday and Sunday. Rather than lose 3%, I decided to exit the trade with a tiny 0.2R reward.

Profit: +0.2R



GBPJPY


I think I mismanaged this trade. I spotted a low volatility candle at the end of a retracement, and went short at the break of its low. Price did break downward for awhile, but then returned back to my entry point, so I decided to scratch the trade and got out at breakeven. If I had kept the trade open, I'd still be in it. 

Profit: 0R



CADJPY


I went long on the CADJPY after spotting a small, shallow retracement, and got stopped out the next day. The previous day's high behaved as resistance and stopped price from advancing upwards. 

Profit: -1R



THOUGHTS

Avoid shorting the AUD (and NZD). Holding overnight positions is just too expensive.

Thursday, March 31, 2016

Review of March 2016 Campaign

March has been profitable. I've managed to beat my performance in February (4.27% vs 3.96%).

Myfxbook

Trades opened: 16
Account growth: 4.27%

More trades

Because of my decision to go back to trading the minor crosses late last month, I've traded more in March than I did in Feb (16 trades vs 10 trades). I believe this would explain my higher return in March.

Steady as she goes

Nothing major happened in March. My trading has become quite routine and ordinary, which is where you want it to be. There was no major drawdown to report. However, as March ended, I sensed a minor psychological fear of turning a positive month into a negative month, and manually closed a few trades early to pocket the profit. Most of those trades would've hit my original profit target, so I've left money on the table.

Next month

I've ended the first quarter of this year in profit. I think I'll press my foot on the gas a little bit harder and increase my maximum risk to 2% for April. 

I'll also endeavour to become less obsessed with Myfxbook metrics. It messed me up a little in the end. I'll reduce my time looking at Myfxbook and live charts (every time I looked at a live chart, there's a small chance of messing around with a trade. Look at a chart enough times, and those chances accumulate. Ditto with Myfxbook, where every glance increases the obsession with Myfxbook metrics). 

Tuesday, March 1, 2016

Review of February 2016 Campaign

February has been good. I managed to recover from my losses in January, and made a bit of profit above that.


Trades opened: 10
Account growth: 3.96%

Back to the Crosses

After January's loss, I reduced my position size to a maximum of 1.5%, and became more selective with my trades. Because I was more cautious, I only opened three trades in the first half of February. Psychologically, I found that much too little. With so few trades put on, I found myself becoming more attached to the outcome of those few trades. That's definitely not a good thing. A trader should be objective and detached.

Halfway through the month, I revisited my backtests and research, and decided to trade the minors again (but not the exotics). I expanded my backtests to make sure I was doing the right thing (all the systems I currently trade have been tested on 25+ currency pairs).

I was reluctant to go back to the minor crosses, as changing your trading plan is usually bad. My systems and risk management are still the same. But trading more often has cured that psychological itch, and I found myself much more objective again. A win here and a loss there doesn't matter so much, as there'll likely be a new trade tomorrow.

Next month

Because I'm finding more trades more often, my plan is to continue limiting each position size to 1.5%, and let compounding do the heavy lifting. 

Thursday, February 25, 2016

Bad dream

I woke up from a horrible trading dream this morning. I was daytrading (something I don't normally do), and opening positions via market execution. After I opened a position, I'd enter my stop loss a few seconds later.

I was trading on the 5M AUDUSD chart, and opened a long position. As I tried to type in my stop loss and enter it, MT4 (my trading software) began to freeze and become unresponsive. The AUDUSD suddenly started to crash, and I remember desperately trying to close the trade. But because MT4 had froze, I couldn't do anything. 

In my dream, I had an $8,000 account. After about 10 seconds of frantically clicking on my screen, MT4 finally began to respond again and I closed my trade. My account's balance had fallen to $2,900 in a matter of seconds.

Lessons:

- trade small so a catastrophic move won't wipe you out (my position size was obviously excessive if I lost $5k in a few seconds)
- enter your stop loss WITH your order, not AFTER 
- don't trade short-term (longer-term trades give you more time to respond)

Sunday, January 31, 2016

Review of January Campaign

I finally opened a myfxbook account (found here), and will be basing my monthly reviews on its statistics.

January hasn't been great. The majors became choppy, particularly the EURUSD, and I finished in the red, with a monthly drawdown of -3.42%.

Trades opened: 9
Profit factor: 0.74
Account growth: -3.42%

The 4H Timeframe

I tried to forward-test a system that I had developed on the 4H timeframe, and often found myself trading with or against positions I had already opened on the daily timeframe. Basically, I was hedging or adding to my swing trades on the daily timeframe, so there wasn't much point in trading the 4H. I think signals on the 4H and daily timeframe might be too correlated, so I've shelved research on the 4H timeframe for the moment. If you are a swing-trader and want to trade a shorter timeframe, then the 1H or 30M is probably better. 

Next month

In February, I'm planning to reduce my maximum position size to 1.5% until I'm back at breakeven.

Thoughts on Myfxbook

The psychological pressure from opening a myfxbook has been less than I predicted. It's actually forced me to be more accountable for my trades. If I open a trade, there better be a good reason, as it will turn up on my results. This has reduced the temptation to do anything stupid. 

Monday, January 18, 2016

Myfxbook account

Just putting it out there. Feel free to follow my trading results! 


Trading rules:
Timeframe: Daily
Pairs: USD Majors
Method: Technical Discretion
Position size: 1%-3%
Drawdown killswitch: 50%


I intend to keep my positions between 1% and 3% of my equity, which is pretty aggressive. If I hit 50% drawdown, then I'm killing the account and halting trading. Last year's drawdown was 10.55% after 112 trades. Hitting 50% drawdown is unlikely, especially since I tend to use 1:1 R:R ratios. 

Sunday, January 10, 2016

NFP reaction

US non-farm payroll was released last Friday, and job creation had beaten expectations by nearly 50%. Looks like greenshoots in the US economy, right? Unfortunately, wage growth remained stagnant, and much of this job growth was in temporary jobs. Overall, the NFP figures were good, but not good enough to push the EURUSD down (I am currently short EURUSD). 

Thursday, January 7, 2016

The importance of discipline

I missed out on taking a signal this morning, simply because I'd forgotten one of my trading systems that I had recently developed. This was due to me taking two weeks off over Christmas and becoming disconnected with trading. That mistake cost me $300 in lost profit today. Very expensive.

Sitting out of the market for an extended time might cause a trader to become rusty. If you do decide to take time off, try to maintain the same trading routine, but without actually taking the trade. You want to remain as sharp as possible, so when you do return to live trading, nothing has changed. 

Monday, January 4, 2016

Review of December Campaign

I can't believe it's 2016! 

December was relatively quiet. I chose to sit out of the market midway through December as Christmas approached.

Trades opened: 5
Profit factor: 4.07
Account growth: 4.54%

I only opened five trades, which is really quiet. I definitely could've traded more as the week before Christmas was volatile enough to trade. I think I was too conservative in deciding to sit-out half the month.

Major Developments

I recently finished designing a new system for the 4H timeframe. The backtest covered the major pairs and consisted of 248 sample trades over the last 2.5 years. I looked for very large pinbars (range > 1.5 ATR(6)), and found those that formed at 08:00, 12:00 and 16:00 tended to perform well (the time is based on NY close), especially if the reward-to-risk exceeded 1.67-to-1 (entry is the break of the pinbar, with my stop loss placed at the end of the long wick). 

Here's an example equity curve for reward-to-risk of 1.67-to-1, using 2% risk per trade, initial balance of $25,000.

(click to enlarge)

At the moment, I only trade the daily and weekly timeframes. If I can start trading the 4H timeframe, then my number of trades per month will increase significantly. Lets hope! 

One thing I noticed is that lower timeframes seem to require a higher reward-to-risk to be profitable, while the daily and weekly timeframes tend to favour smaller reward-to-risk. It's just an interesting observation. I wonder if this pattern will hold in my next 4H system.