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%). 

Myfxbook

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. 

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. 

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

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.

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). 

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.

Myfxbook

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. 

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)