Forex Trading Review – Week 26

This was another slow week, but another positive gain for my equity curve so that’s a good week as far as I’m concerned!

We are into the American summer period where markets tend to slow down a little bit, so it’s not surprising to me that I haven’t had any big winners the past few weeks.

This slow period has given me more time to backtest and reflect on my trading process and I have implemented some changes including adding two more currency pairs to my trading portfolio: GBP/USD and USD/JPY.

According to my backtesting, including these two pairs in my 1HR pullback strategy increased my average gain respectably without increasing my average drawdown at all. I like the idea of further diversifying my portfolio and if these pairs don’t worsen my drawdowns then they can only serve to widen my trading net, so to speak, which is always a good thing.

I’ve also begun trading on Mondays again on selected pairs. After performing more backtesting and analyzing Monday stats I’ve found that my 1HR pairs perform acceptably on Mondays, but 15M trades and EUR/JPY in particular does not. So I will be much more selective in which pairs I trade on Mondays going forward, but Mondays are now back in the trading plan.

That’s about all I need to say, other than this first half of the year has been a hugely valuable learning experience and I’m extremely happy with how things are progressing.

When I began this trading journal I set what I believe to be an ambitious goal of +50% gain on the year. Considering this will be my first official profitable year on my trading record (excluding last year which ended quite well but was still technically a drawdown), I think that being half way to that goal half way through the year with minimal drawdown is something to be proud of.

Obviously I must stay humble and focused on the long-term, my job is never done and I can never relax and allow myself to feel too comfortable. But so far I think I can safely say I am on track to achieve my trading goals.

The 50% goal is just a nice number that I picked (which is also within the reasonable possibilities of my backtesting results) – so I don’t really expect to hit that number (or care if I don’t). It’s more just a benchmark figure to strive towards than a hard goal.

The market will give me what it gives me and I have no control over my gains. But I designed my strategies so that +50% annual gains are achievable, so you never know. Now that I am consistently profitable, my first milestone goal is to hit a +50% year with a max drawdown of 15%.

After that I will aim for a +100% year with a max drawdown of 15%, but for now I just want to end this year with a positive gain of any magnitude. There will be time for setting more ambitious goals when I have more live-trading statistical data to work with and I can start experimenting with increased position sizing and more variance in strategies.

24th June – 28th June

Trade #111

Reflection:

This was a Monday morning trade.

USD/CAD had just entered trend-continuation on the Daily chart after failing to find support at 1.33 so my bias was bearish and I was looking to ride this baby down to the next level of support.

Unfortunately I was stopped out for break-even on my second position during a retracement, making this a smaller win that I’d hoped for, but a win nonetheless.

Trade #112

Reflection:

This was my second attempt to capture this trend-continuation move lower on an intraday timeframe.

This time I got a valid entry on the 15M timeframe as price began to make lower highs and broke a previous support level below the EMA.

This is technically a pullback trade within consolidation, but my rules state I can take these trades if the higher timeframe trend is intact and price action has given me convincing reason to believe that price is likely to retest the outer zones of support or resistance within that consolidation.

Unfortunately price decided to whipsaw around a bit which is one of the dangers of this style of trading and I was stopped out for a loss of 1%.

I am exploring filters and position sizing optimization for this market condition (consolidation), but as of my current trading plan, this trading setup met my rules so it counts as a Good Trade.

Trade #113

Reflection:

Third time’s the charm as they say, and this third attempt to capture trend-continuation lower on the Daily chart finally paid off.

I took this trade at 9PM and it took a few more hours to play out than I expected. I went to bed around midnight, fully expecting this trade to lose overnight given how close price was hovering near my stop loss.

But I gave my strategy the benefit of the doubt, left my position on, and went to bed expecting to wake up to a loss.

To my surprise, when I woke up around 5AM and decided to quickly check the trade, I discovered that it had in fact played out profitably. My rules state that after a 2:1 ATR move from my entry I must exit the trade after a higher-high higher-close candle.

While I was asleep price put in several higher-high higher-close candles, and so as soon as I saw that the trade was still running I closed it at market for 3R profit and went back to sleep, making this a +3% winner which made up for my previous loss (and the loss that followed this trade).

Trade #114

Reflection:

I was rather hesitant to take this trade because the Daily chart was starting to look heavily oversold to me and price was testing into a key Daily support zone.

But this pair has a tendency to enter long periods of oversold territory whenever things shift with the fundamentals, and it seems that the previous FOMC meeting changed the market’s bias on this pair dramatically. Plus there was still a few more pips to go before we officially tested the heart of the support zone.

That being the case, I decided to take this setup despite my fears of a deeper pullback. Sure enough, price retraced a bit further, stopping me out for a few pips before continuing lower yet again.

But technically this trade met my system’s rules, so it’s still a Good Trade.

Trade #115

Reflection:

My final trade for the week was a break-even trade, so not much to say about this.

The Daily chart had just put in a large rejection doji with a super thin candle body after testing the Daily 50-EMA and resistance zone. So my bias was bearish, and I was expecting a potential trend reversal on this timeframe.

Luckily price hit my 1:1 break-even target before continuing up to retest the Daily resistance zone.

No loss, followed my rules, Good Trade.

Weekly Reflection

Last Week’s Goal: Execute my plan flawlessly.

Overall Grade: A

This was yet another solid trading week.

I only made +2.72% on my total equity, but every positive increase in my equity counts towards the long-term expectancy of my strategy so I am always happy to end the week on a positive note no matter how unimpressive.

Monthly Review

Here is my equity curve after the month of June:

Monthly Return: +3.74% | Annual Return: +27.28%

Here are my monthly stats for June:

And here is my drawdown graph for the year:

As you can see, this time AUD/JPY and USD/CAD under-performed the other pairs. Last month USD/CAD was the best performer, and in April AUD/JPY out-performed all the other pairs – so that goes to demonstrate the importance of diversifying your portfolio.

I have added two more pairs to my trading plan, so it will be interesting to see how that effects my trading stats going forward.

It’s also worth mentioning that the past few months have had minimal drawdown. The worst point in my drawdown (the max adverse excursion) since May has been -1.94% which is fantastic. Like all traders, I prefer my drawdowns short and shallow, so that’s a nice reprieve from the struggles of the first half of the year.

It’s impossible to know whether my drawdown will worsen or improve over the coming months but I am optimistic that if I maintain focus and keep executing my strategy as best as I can then I am unlikely to see much worse than the beginning of the year.

That gigantic spike in April is a glitch which I have mentioned several times before, and my real max drawdown is around -8% which I am perfectly comfortable with. And hell, even if it really was -12%, that isn’t all that bad either, although I do prefer my drawdowns to be constrained to 10% or less.

In any case, so far my strategy has been performing about as good as I expected. Not as good as I’d hoped (obviously, because we always want to make more than we do), but also not nearly as bad as I’d feared.

So I’ll keep on executing as I have been, keep analyzing my stats and looking for ways to improve my edge, and we’ll have to wait and see where that takes my equity curve throughout the rest of the year.

Discipline Review

This month has been a solid notch on my trading track record. Although I didn’t make much money, with only a +3.74% gain, I did back up last month’s +15% gain with a positive month and I made no trading mistakes in doing so.

This is the first month in which I haven’t intentionally broken my rules, although there were a few occasions where I made minor trading mistakes. But none of them cost me any money, so again, that’s a step in the right direction.

I am more proud that I had a flawless month of trading discipline than that I ended the month with a positive gain. Now I fully understand the power and value of focusing on my process over the outcome.

I will continue to focus on my process over the next six months and keep improving what I can improve.

Conclusion

This has been a solid and positive ending to the six-month mark of my trading year.

I’m happy with how things are progressing, but I am also preparing to enter the next stage of my trading which is position sizing optimization and increasing my strategy portfolio.

I would like to introduce a structure-based trading strategy into my trading plan, but I have a lot of testing left to do before I can implement that into my live trading.

So the next few months will be spent doing more of the same: trading pullback setups as best I can, while improving that strategy and developing new strategies.

In the meantime… thanks for reading, I appreciate your time and I hope you find my musings and experiences valuable and that you learn something helpful from this journal.

Good luck with your own trading, I’ll speak to you soon – and as always, if you have any comments or questions please leave them below, contact me on TradingView or check out my YouTube Channel.

Next Week’s Goal

Execute my plan flawlessly.

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This Week’s Review
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