Wrap up for another week (and also the prior two weeks)….
Statistics & Data
A whole of lot of statistics coming up….
This week I completed 29 trades over three and a half trading sessions. My net result was a loss of 0.8R. This follows a gain of 4.3R last week (9 trades) and +1.1R in the week before that (38 trades). That amounts to 76 trades, with a net gain of 4.6R – for the K7 strategy. Or in other words, 25 trades a week making a return of around 1.5R. I imagine nearly every single trader (retail or professional) would laugh at those figures. Laugh all you want – I will be happy if I can make those returns on a consistent basis.
These figures compare to a loss of 7.0R over 72 trades for the Levels strategy. Hence, thus far, it looks like a decent difference.
The other point to note is that the Levels trades were executed over a two-month period, whereas the same amount of K7 trades were squeezed into a three week period. And actually over those three weeks there were only eight full sessions and three 1/2-day sessions.
The last three weeks of trading have felt pretty good (and fun!). I tried out some new things (including some what i can only call ballsy trades – where I am basically trying to catch a falling knife). The thing is, I feel like I am getting fairly okay at monitoring the markets. Most of my trades have been on Cable and DAX (just like with the Levels strategy) and then also EURUSD. The remaining trades (10 out of 76) were on AUDUSD, USDJPY and the FTSE.
Out of the 76 trades – there were 30 winners (avg +0.96R) and 35 losers (avg -0.69R). The average break-even trade was -0.003R, and there were 11 of those. Ignoring the scratch trades, the win ratio was 46% and the average RR was 1.39.
My average ratio of transaction costs (spread+commission) to stop size has been exactly 6.00%. This means that on average the transaction costs eat 0.06R into every single trade – meaning that in total I have churned through 4.5R (76 x 0.06). It’s coincidence that this figure is about the same as my net return.
Summary of my trading approach?
My approach has been a lot more fluid. I look at key levels (basically my attempt at spotting likely support and resistance), pivot levels for the forex pairs, round numbers (’00 handles in the forex pairs, ’00 levels in the indices), news schedules, correlation between pairs, the US dollar index. I also take into account the trend, some technical patterns and some of the EMA’s. I also pay a lot of attention to the information coming across on the squawk. I didn’t make hard and fast rules about when and where to enter and exit. I have just been firing away whenever I considered I had an edge. This does seem to go against a lot of what my mentor/trading coach has been trying to drill into me over the past two years. I can’t actually document and state what my entry setup is for these trades. I also try to monitor where I am at mentally and physically and am aware how this might impact my interpretation of the charts. I try to get in at good prices, waiting for retracements. This is often counter-intuitive, as I start selling when price rallies and start buying when price falls!
Because I am taking so many trades I spent a lot of time in the markets, and experimenting with how to manage the trades. It does make me really tired. By 12 noon I am generally pretty munted and need a good 60-90 minutes away from the screen.
Additionally as I am taking so many trades, my strategy development progresses much more quickly. I think I would find it difficult to test this trading approach in the ForexTester environment. There are a lot of variables that I look at, many of which I might not be able to encapsulate in testing.
So what will happen next?
I am just going to continue trading like this – and hope that it continues to go well. For next week I will increase the value of R from £125 to £140. Whatever I am doing seems to be working.
I will maintain big efforts on the Psychology aspects too – including the pre-session mood-enhancers and the post-session reviews.
I want to say a special (and really massive) thanks to Ms Turquoise for her inspiration in a conversation three weeks ago, which got me going in quite a different direction…