NFP reaction

US non-farm payroll was released last Friday, and job creation had beaten expectations by nearly 50%. Looks like greenshoots in the US economy, right? Unfortunately, wage growth remained stagnant, and much of this job growth was in temporary jobs. Overall, the NFP figures were good, but not good enough to push the EURUSD down (I am currently short EURUSD). 

The importance of discipline

I missed out on taking a signal this morning, simply because I'd forgotten one of my trading systems that I had recently developed. This was due to me taking two weeks off over Christmas and becoming disconnected with trading. That mistake cost me $300 in lost profit today. Very expensive.

Sitting out of the market for an extended time might cause a trader to become rusty. If you do decide to take time off, try to maintain the same trading routine, but without actually taking the trade. You want to remain as sharp as possible, so when you do return to live trading, nothing has changed. 

Review of December Campaign

I can't believe it's 2016! 

December was relatively quiet. I chose to sit out of the market midway through December as Christmas approached.

Trades opened: 5

Profit factor: 4.07
Account growth: 4.54%

I only opened five trades, which is really quiet. I definitely could've traded more as the week before Christmas was volatile enough to trade. I think I was too conservative in deciding to sit-out half the month.

Major Developments

I recently finished designing a new system for the 4H timeframe. The backtest covered the major pairs and consisted of 248 sample trades over the last 2.5 years. I looked for very large pinbars (range > 1.5 ATR(6)), and found those that formed at 08:00, 12:00 and 16:00 tended to perform well (the time is based on NY close), especially if the reward-to-risk exceeded 1.67-to-1 (entry is the break of the pinbar, with my stop loss placed at the end of the long wick). 

Here's an example equity curve for reward-to-risk of 1.67-to-1, using 2% risk per trade, initial balance of $25,000.

(click to enlarge)

At the moment, I only trade the daily and weekly timeframes. If I can start trading the 4H timeframe, then my number of trades per month will increase significantly. Lets hope! 

One thing I noticed is that lower timeframes seem to require a higher reward-to-risk to be profitable, while the daily and weekly timeframes tend to favour smaller reward-to-risk. It's just an interesting observation. I wonder if this pattern will hold in my next 4H system. 

2015 YEAR IN REVIEW

Time to review 2015. 

RESULTS

Overall, I finished the year up 18.77%. A large chunk of that growth occurred in the last few months when I began trading the majors exclusively.

These are the results of ALL trades, including minors and exotics.

All Trades (Majors, Minors and Exotics)
Trades taken: 112
Equity growth: 18.77%
Maximum drawdown: 10.55%
Average reward-to-risk: 1.06
Win rate: 57.14%
Profit factor: 1.26


And these are the results of trades involving the MAJOR pairs only.

Majors Only
Trades taken: 30
Equity growth: 17.46%
Maximum drawdown: 8.12%
Average reward-to-risk: 1.04
Win rate: 73.33%
Profit factor: 2.32

Of the 18.77% growth, 17.46% came from trading the majors. Basically, the bulk of my profit came from trading the major pairs.

It should be noted that I only opened 30 major-pair trades, which is a relatively small sample size.

Here's the final equity curve (I've kept the y-axis confidential for privacy):

Major developments this year

Dropping the minors and exotics

I re-examined my trading journal a few months ago and found that the bulk of my profit came from trading the major pairs. I've been trading the majors exclusively since then and experienced significant success. I also revisited my backtests and found my systems performed better with the majors vs the minors and exotics.

Development of nine trading systems

This year, I developed nine technical systems to trade on the daily and weekly timeframes. Alot of these systems are based on older systems that I used to trade, but have been updated or modified. 

I can't daytrade

This isn't really a development, but my experiments with daytrading ended with failure. I just can't do it!

Surviving January 15, 2015

This was the day when the SNB (Swiss National Bank) depegged the Swiss franc from the euro. Many accounts were blown up. I had a live position on the CHFSGD but escaped, losing a few % of my account. Lessons a) use a stop loss (although it didn't help everyone) b) avoid pegged currencies c) don't deposit all of your equity with a single broker (only deposit enough to provide margin). 

Meeting up with other traders

I finally met up with a few traders in real life! Retail trading is a lonely career, so I think it's important to branch out and meet other traders. 

Goals for 2016

Capital raising

Basically gather more money to trade with. This means more hours at work and leveraging my profits. I hope to make 2016 the year of the Big Push.

Improving the quality of my trades

This will be an ongoing process. I'll remain mindful of news and nearby S/R levels when determining my trades, and focus on the majors exclusively.

Opening a myfxbook account

I plan to open a myfxbook account early in 2016 so everyone can follow my results live. 

Professionalise my blog

I'm still treating this blog as a personal diary, but if 2016 is successful, I plan to make my blog much more professional.

That's a wrap. Good luck in 2016, traders!

A trade I didn't take (GBPUSD)

With the FOMC press conference this week, I decided to sit the whole week out. In fact, I probably won't trade until after New Year's. 

Anyway, this was a trade I was tempted to trade on Monday. I saw a bullish pinbar on the GBPUSD. My technical indicators all said "BUY", but zooming out, I saw that the GBPUSD was in a longer-term downtrend, and I'd be buying into the upper boundary of the descending channel, posted below.

(click to enlarge)

I also considered the major FOMC decision this week, which has been widely anticipated and speculated for the whole year. This may be the first Federal Reserve hike since the GFC in 2008. Before the release of major news, the market will usually be choppy and indecisive as traders stay out. I took that into consideration as well.

And with the upcoming news release, there may be widely fluctuating spreads and gaps. Just another reason to stay out.

Major indecision + major channel resistance + wide spreads = STAY OUT!

Half the battle is in finding winning trades. The other half is in avoiding losers. 

Review of November Campaign

November draws a close in a few hours, so I may as well post my results for this month.

edit: my last open trade for November just closed.

Trades opened: 12

Profit factor: 2.11
Account growth: 10.21%

Seven of those trades involved the minor / cross pairs, while the remaining five involved the major pairs. Interestingly, all five trades involving the majors won.

Major Developments

Halfway through November, I analysed my last 100 trades and found that most of my profit came from trading the major pairs. I've decided to drop all the minor pairs, and trade the major pairs for the foreseeable future. Since I'm trading fewer pairs, I probably won't trade as often. I'll see how it goes.

But to balance this, I also developed three new trading systems this month. Two are on the weekly timeframe (a weekly pinbar system, and a weekly low volatility candle system), and the other one's a small pinbar reversal system on the daily timeframe. 

With December around the corner, we can expect volatility to drop, especially during the second half of the month. I'll continue trading during the first two weeks of December, and then take a well-deserved break. :)

Then, I plan to finally open a myfxbook account on January 1, 2016. Now you can see my results live!!!

My performance on Majors vs Crosses

I've just notched 104 trades now, and spent tonight going through my trading history. I'm always looking at ways of improving the quality of my trades, and checked to see how I performed trading the major pairs (EURUSD, GBPUSD etc) versus the crosses and exotics. 

Performance of the Majors

Number of trades: 22

Profit factor: 1.79

Performance of the Crosses and Exotics

Number of trades: 82

Profit factor: 1.03

I also looked at my performance on JPY and non-JPY crosses.

Performance of JPY Crosses

Number of trades: 20

Profit factor: 1.35

Performance of non-JPY Crosses

Number of trades: 62

Profit factor: 0.92

Combining the results of the majors and JPY crosses...

Performance of Majors and JPY Crosses

Number of trades: 42

Profit factor: 1.55

Basically, my trades on non-JPY crosses and exotics have held me down. 

So where to from here?

I'm still deciding whether to drop more pairs. I've already dropped the exotics due to widely-fluctuating spreads and gaps. After over 100 trades, it appears I have a good edge trading the majors and JPY crosses. 

Interesting results. And this is why it's important to keep a trading journal. :)