Surviving the Choppiness that Defined 2011

To say that trading was wild on cross-currency pairs this year would be an understatement. Between central bank interventions and the European debt crisis, we saw a lot of crazy moves this year. Despite the choppiness in the markets, I don’t think I fared too badly at all. I was able to catch a few decent winners here and there and had less cancelled trades as compared to 2010.

Here’s a look at some of my trading statistics over the past year.

2011 Cyclopip Trading Statistics

Total Number of Trade Ideas: 44
# of wins: 12 wins
# of losses: 17 losses
# of Breakeven trades: 3
# of Cancelled trades: 12
Win/ Loss Percentage: 41.37%
Total Profit / Loss in pips: +375
Total Profit / Loss in %: -4.53%
Largest Winning Trade: +853 pips (+4.12%)
Largest Losing Trade: -140 pips (-1.00%)
Largest Drawdown: -420 pips (-5.00%)

I also included a chart of my account balance, but expressed in percentages:

Account Balance Expressed in Percentages

Overall, I took a -4.53% hit on my account, with the majority of my losses taking place during the middle of the year. This was also the same time that I had my largest losing streak and drawdown of the year, as I lost 5 straight trades.

Still, considering that we didn’t really see any smooth trends on the cross-currency pairs this year, I don’t think this is too bad at all. I did see more winning trades this year, and my win / loss ratio improved to .705%. I also took more breakout trades, which was something that I had wanted to work on this year.

Speaking of breakouts, what kind of year-end review would this be if we didn’t do a recap of the Trade of the Year?

Looking back on all of the trades that I took this year, one clearly stands out. Can you guess which one?

Trade of the Year

That’s right, it was the 853-pip EUR/JPY winner that I bagged back in April! If you recall, I was able to open a total of 4 positions on this trade before it finally came to an end. This gave me a return on 4.12%, which was downright AWESOME compared to the 1% that I risked on this trade.

Sadly, not every trade of mine went as smoothly. But even though they didn’t all turn out as awesome as that big win on EUR/JPY, I learned something from each and every one of them.

Let’s do a quick rundown of our key learnings for the year so they may serve as reminders when trading crosses in the future. Here it goes!

  1. Keep the U.S. in your sights.
    Just because we don’t directly buy or sell the dollar when we trade crosses doesn’t mean we should altogether ignore what’s happening in the U.S. It is, after all, the world’s largest economy. As such, developments in the U.S. can affect markets worldwide. That means that even a cross-currency trade might react strongly to U.S. news, as we learned with this particular EUR/JPY trade that we took earlier this month.
  2. Keep your risk-reward ratios attractive yet reasonable.
    As tempting as it is to go for 10:1 winners each and every time, the market environment doesn’t always call for such a trade. Similarly, we shouldn’t take a trade if the risks outweigh the rewards. You have to strike a balance between the two. While we can’t be too greedy, we also shouldn’t short-change ourselves, guys! This is exactly why I insist on only taking trades with better than 1:1 reward-to-risk ratios.
  3. Never bet the farm on one trade.
    I have to admit, I dodged a lot of bullets this year because I always kept my risk in check. There were times when I was tempted to trade huge positions because the setup looked perfect… only to find myself getting burned when all was said and done. Luckily, I make it a point to NEVER risk more than 1% on each trade. That way, if I end up taking a hit, it’ll feel no worse than a slap on the wrist. Just take a look at this EUR/CAD trade
  4. Don’t be afraid to press your winners.
    I could’ve improved my profitability so much this year if I had been more aggressive with some of my winners. I think I still have room for improvement in this particular aspect of trading. For instance, I could’ve easily doubled or even tripled my profits on this AUD/JPY trade if I had held on longer and/or added to my position as the pair broke above a key resistance level.

    Of course, not every situation calls for aggressiveness, but I suppose I just need to fine-tune my ability to read market environments and capitalize on opportunities.

  5. Be flexible.
    Some crosses, such as EUR/JPY and GBP/JPY, are known for their volatility. And while that presents us with chances to grab more pips (Oh yeah!), it also means we have to be extra vigilant and flexible. These markets can turn without warning (Need I remind you of this EUR/CHF trade?) and opportunities may present themselves at anytime. Your ability to twist and turn with the markets may decide whether you end up in the red or in the green at the end of the year.
    1. And with that, I bid you all farewell! Now, I’m off to hit the holiday feasts! Thanks for sharing 2011 with me, fellas! See you all again next year!

  • Costarica

    well, let hope 2012 give us more pips..

  • ZeGermans

    From looking at your archives, 2010 wasn’t a good year for you either. Maybe next year.

  • Jim Bean

    Shouldn’t your win/loss percentage be around .41? You lost more trades than you won. Having a .705% would indicate you win 7 trades out of 10.

    • Abdallah Douha

      divide 12 by 17 and you get a .70588%

      • Jim Bean

        That’s not win percentage. My total trades excluding breakeven cancelled trades is 29 not 17. 

        If I”m the Miami Heat, and my record is 10-10, my win percentage is 50%, not 0%/ 

  • Galnaami

    thanks for sharing us your experience.