January 2020 Review

Hey traders!

I’m super excited to be back. I know I’ve been AWOL for a few weeks, but rest assured I have not forgotten about you and I haven’t given up on my transparent trading journal.

As you should know by now, I had a rough year last year. You can read all about it in my article titled 2019: The Year of No Return.

My year in 2019 turned out exactly as you might guess from that blog title – I didn’t make any money. I ended the year -1% from my starting capital. But as you will read in that article, it’s hardly the worst performance I’ve ever produced – and I’m determined to make sure this year goes better.

Obviously there’s not a lot we can do in regards to controlling our specific returns as forex traders, but I did learn a hell of a lot about myself and my trading last year and I’m excited to build on that knowledge going forward and improve my trading process and strategies.

This year I’ve decided to pull things back a bit and go back to focusing on my strengths which is higher-timeframe trading. It has been my observation that I seem to be much better at analyzing the Daily and 4HR charts and so this year I will be focusing much more on those timeframes.

I’ll come back to actively trading the 1HR and 15M chart once I’ve achieved a confident level of success on the higher timeframes, but for now that is the path I’ve decided to take. And so far, so good!

Plus I’ve decided to double-down on my YouTube channel this year, and so trading the 4HR timeframe allows me to focus on content-creation, my health, and spend less time fretting over the charts and missing opportunities.

I’m still trading the 1HR chart this year, but instead of trading momentum and pullback setups I’ve opted for a more interesting (and more accurate) trading strategy revolving around the infamous Bat Pattern.

The Bat Pattern (or AP1 as EAP students know it) is a series of Fibonacci retracements that, when hit in a specific order, produce extremely high-probability consolidation trading opportunities.

Given that last year my biggest weakness was consolidation and whipsaws, I’m super excited to begin adding this trading setup to my trading plan – and as you will see in today’s post, it has been extremely promising so far.

My Trading Results For January

As of the end of January I have taken only 6 trades. But of those 6 trades I have won 4 of them, giving me a 60% win rate so far.

Obviously it is way too soon to know if that win rate will continue to unfold at such a high level, but I have a huge amount of confidence in my strategies so I’m excited to see how things progress this year.

Here are my trades for January:

Trade #1

Trade #2

Trade #3

Trade #4

Trade #5

Trade #6


Review

This year is going to be very different to last year in terms of how I review my trades. It took me between 2 to 3 hours last year to complete each week’s journal review, which in hindsight was a bit of a waste of my time.

I keep very detailed records in my personal trading spreadsheet and I analyze them regularly, but sharing them with the world is extremely time consuming. Plus I get the impression that not many people really care about the nitty gritty details of my trading.

So this year I’m keeping things extremely simple, and I will only discuss trades which are interesting enough to invest the time in analyzing with you guys.

I’m also considering turning this journal into a video review which may save even more time, but I’ll talk about that later once I’ve had more practice with YouTube video creation.

Anyway… so far this year I’ve had some great trading opportunities.

I started the year out with two losing trades in a row which is always fun. But I stuck to the plan and kept grinding out Good Trades regardless, and thankfully my luck turned around pretty quickly after starting on that sour note.

As you can see, I’m pretty stoked that I added Bat Patterns to my trading. Trade #2 and Trade #6 are textbook consolidation trades, and I couldn’t have scored a better entry price on either of those setups even if I’d tried.

In the past I used to try to catch the top or bottom of price moves all the time, and most of the time it ended in losses at best and disaster at worst.

But thanks to this phenomenal price action pattern I was able to get filled at the daily high on two occasions with minimal effort. Once price began to create the D-completion leg, I simply entered my limit order and left the charts alone to play out.

The first Bat trade (#2) put me through a lot of pain and I was convinced that it was going to lose. But I stuck to the plan, gave it the benefit of the doubt and let the trade play out. Thankfully I was spared a 3rd loss in a row and the market actually rolled over and hit targets to my own surprise.

Trade #4 and #5 were great trend-continuation setups that I went over in my most recent Market Analysis video. Unfortunately USD/JPY hit my first target and then retraced to stop me out for break-even on my second position by a hair, and then rolled over into further bearish movement.

So I was unable to get a solid two-target win out of that setup, but hopefully AUD/USD will treat me a little better. I am still involved in that trade, and so far so good.

Anyway that’s about all I have to say in this review post. Given that I’ve moved to 4HR trading and 1HR advanced patterns, I’m getting far less trading opportunities than I did last year when I was trading the 1HR and 15M charts.

But so far that hasn’t prevented me from making decent gains, and because this strategy has a fairly high win rate, I am able to increase my risk per position to 2% per trade. That’s a double-edged sword of course, as when I lost my first 2 trades of the year it put me into an immediate -4% drawdown.

But I quickly made that back on the next few trades and now I’m up 4%ish.

So I need to make extra certain this year that I do not break my rules and I only take the best setups that present themselves because I can’t afford to enter a prolonged losing streak like I did last year. The good news is that this strategy is extremely effective and I have a lot of confidence in it, so I’m not really worried about that this year.

Well, that’s it for today. I’ll speak to you guys next month and hopefully this strategy will continue to perform well in the coming weeks. I feel that combining trend-continuation with consolidation setups is a wise move and I’m excited to see what can become of this strategy over the course of this year.

Be safe out there everyone, trade green, and I’ll speak to you next time.

~ Matt.

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