Looks like I somehow lucked out with my forex trading in the second quarter, but even when things look good, there’s always room for improvement.
Basic Forex Trading Stats
Total Number of Trades Ideas: 8
Breakeven/No Trade: 4
Win % (winning trades / triggered trades): 100.00%
Average Winning Trade in %: +0.22%
Average Losing Trade in %: N/A
Largest Drawdown: N/A
Q2 Total Realized Profit / Loss in %: +0.92%
After looking back, I think what really helped me was that market behavior mostly shifted to play on fundamental drivers rather than news/crisis events. There were several central bank stories that played out as expected (ECB rate cut, U.K. strong recovery and RBNZ rate hikes), which benefitted forex traders like myself who play longer-term positions and take the big fundamental picture into consideration. Also, with the FOMC deadset on their Tapering program outlook, there was less uncertainty in the markets, which unfortunately lead to a decrease in volatility (and opportunities).
In terms of my performance, I’ll first focus on my trades triggered. Directionally, they were all fundamentally biased (mainly monetary policy divergence) and with the longer-term trends. My entry techniques were half and half retracement pullbacks and trendline breaks. What I could definitely improve on is my trade management as I was too aggressive with trailing stops (short EUR/NZD) or closing ahead of major events (short EUR/GBP). In both of those trades, the market kept moving my way, so I left a lot of pips on the table. In my AUD/CHF and GBP/JPY long plays, I think I played them the best I could and the market just ran out of steam on both occasions, but that GBP/JPY did rally further much later down the road. So, a lot pips given up being too aggressive in protecting my profits and I’ll just have to manage my winners better in the future.
As for my non-trades, I had long GBP/CHF and AUD/CHF ideas that didn’t trigger because I was waiting for a deeper pullback but never got them. And for my one breakeven trade, this was a +200 pip winner for a while and nearly hitting my target before the market reversed and hit my trailed stop at breakeven. That’s a trade I probably should have taken profit early as broad euro sentiment turned bullish while broad risk sentiment turned bearish. Adapting in real-time is always a tricky thing as you don’t want to deviate from your plan, but you should recognize what’s driving the market and how it will affect the short-term outlook of price action.
At the end of the day, that second quarter was good and the markets behaved in my favor, but there’s still a lot of work to be done with my trade management. But to stay positive, that 0.92% gain covered a lot of my weak Q1 blog performance, putting me down slightly by -0.34% for the year and mixed against my benchmarks: the Barclay Hedge Currency Traders Index (-1.64% YTD thru the end of June) and the Barclay Hedge Discretionary Traders Index (+0.52% YTD thru June). Hopefully, I can execute better and the markets will continue to behave in a similar fashion (but with more volatility) for Q3 to get me in the green and beating all of my benchmarks.
That’s all I got for now forex friends…How did you do in Q2 2014? Please share your thoughts in the comment box below. Thanks for stopping by and good luck in Q3!