Q1 2014 Forex Blog Review

As I let my EUR/NZD short trade marinate, I thought I’d take a moment to reflect on the how my blog trades did in the first quarter of 2014.

Basic Forex Trading Stats

Total Number of Trades: 7
Wins: 3
Losses: 4
Win % (winning trades / triggered trades): 42.86%
Average Winning Trade in %: +0.36%
Average Losing Trade in %: -0.39%
Largest Drawdown: -0.87%
Total Realized Profit / Loss in %: -0.51%

In terms of market behavior, we saw a shift in broad risk sentiment thanks to geopolitical and emerging market fears in January and February.  Also, a few of the major currencies saw strong sentiment in 2013 supported by economic trends, but those same trends shifted a bit in 2014.  This prompted central banks to make adjustments to monetary policy and/or guidance ( like the Fed Taper), and influencing forex traders to adjust their biases and positions.

I wanted to build upon my gains in from Q4 2013, but it looks like it wasn’t in the cards as market behavior shifted as described above. And after looking over my trades in the first quarter, the main issue that I think held me back from a better performance was recency bias.

Because Q4 2013 was one big, risk-on trend and I was able to catch some of that, I failed to remember that the market environment could shift. Also, because I was more successful with a particular set of currencies or forex pairs (like my EUR/GBP trades), I didn’t pay enough attention to other currency pairs that had more attractive behavior that was supported by the shifts in sentiment and economic data.

Basically, this means I was a bit slow to adapt, causing me to take so-so trades that were chopped up in the behavioral shift, as well as missing (or getting late to) the best opportunities created by the changes in market driving themes.  Focusing on the longer-term and being a risk averse trader, it seems like “being late to the party” has been something I’ve struggled with and need to focus on in the future, especially since I truly believe that missing legitimate opportunities hurts my performance more than losing trades.

On the positive side, I felt like I traded well in terms of executing my processes and not being afraid to take calculated risks, which means that I should continue to improve with more practice and experience.  Also, while it was a small negative return, it was enough to outpace my performance benchmarks: the Barclay Hedge Currency Traders Index, which took a hit YTD by -2.08% and the Discretionary Traders Index which down -0.63% YTD through March (as of Apr. 3). Knowing that I’m keeping up with a lot of the pros out there let’s me know that I just might be on the right path!

Well, that’s about it for my review. How did you do in Q1 2014? Share your thoughts in the comment box below.  Thanks for checking out my blog and good luck in Q2!