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.

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

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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. :)

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%).

Myfxbook

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! 

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.

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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. 

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. 

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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.

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.  

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.