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.