Well, what a day!
After seeing a lot of setups, and adding to the number of open positions – it was looking okay. After the losses on the aggressive stops from the two STAM trades (AUDJPY and EURNZD) and my loss on the USDCAD S3 trade this morning, my open positions made up for these losses and a little bit more. However at this point I had some seven open positions, with a total risk of 4R.
Sometime in the afternoon, some bad news came out of China and this fuelled Yen strength and hammered the AUD and CAD currencies – which is not ideal if you are long AUD, CAD and short Yen. One of the traders in the trading office had some positions similar to mine and came out right away. I waited for 10-20 minutes and then also had to close all the positions, finally coming out with a loss of 1.2R for those positions – giving me a net loss of 2.42R for the 8 trades I entered today and yesterday. So all in all I managed to keep losses to a minimum to some extent.
Is there a lot to learn from today? Well, what I did well was not to overleverage. In realising that I had correlated positions on Yen and CAD, and AUD to some extent, I did adjust the position sizing – so that was fine.
In terms of keeping an eye on the news – I could have checked the charts more quickly when the news on China came out – I actually waited for the next 15M candle close before checking the charts again.
In terms of cutting the positions – I didn’t have to cut the positions instantly because I had carefully managed the overall risk beforehand. I did want to give price some chance to recover, in case it was going to turn into a short spike. When I realised that this wasn’t the case, I came out.
I guess the main question this brings to bear – once again – can I actually manage to make consistent profits? My equity curve thus begs to differ. Here’s a shot of my equity curve after some 150 trades, stretching back to May 2013:
When I had that meltdown in mid February, I realised that a big factor was not trading closely in line with a trading plan. I have combated this over the last 2-3 weeks and am trading in line with distinct setups – at the moment only STAM and S3 – unfortunately at this point, I don’t really know whether these strategies are definitely profitable. Obviously it’s not going to help to trade in line with the trading plan, if the trading plan itself does not contain one or more profitable strategies. What am I doing about this? I am taking my coach word for STAM and S3 being profitable strategies. With S3, I am actually in the middle of doing quite a lot of testing – I will continue with that testing to see what it gives me. If the testing says that S3 is unlikely to be profitable, then I won’t continue trading it, else I will. And then it’s onto the next strategy idea and so on….
Things could be easier sometimes……