My Year-End Trading Review

Huck’s Discretionary Trading

Oh, boy! Looking at my annual stats now, I can tell my discretionary trading needs work. The funny thing is I actually started the first quarter of the year quite well, winning 8 out of my 10 trades!

huck.discre.png

I feel like I’m not as in tune with macroeconomic factors as I should be… which is dangerous because I don’t think I can afford to completely do away with fundamentals, especially since most of my trades are swing trades.

There were lots of times when I found myself getting burned by some trades that looked nice (almost perfect) technically, but were against fundamentals.

Ultimately, I think I’ll need to put more effort into my analyses next year if I want to really be successful at discretionary trading. I’ll definitely have to add more tools to my trading toolbox to become consistently profitable. But this girl’s got no problem with that! It’s just like adding more makeup to my makeup kit! Teehee!

Anyway, right off the bat, I can already list down some of the changes I can make. First, I’ve been told that my hair looks a lot better short so I think I’ll have it up to my chin next year. Oh, right, we’re talking trading.

Hmm… One thing I’ve noticed is that my average losses are larger than my average wins. I think that’s a clear sign that I need to work on trading setups with better risk-reward opportunities.

And, as a lot of people have suggested, I should also start paying more attention to longer time frames. Sometimes, I UNKNOWINGLY take trades against the trend because I failed to consult the daily charts. Gah! The trend should be my friend… BFF even!

I’ll definitely be giving my discretionary strategy more thought and come up with other potential improvements over the holidays.

The HLHB Mechanical System

huck.hlhb.pngLooking at the stats, I have to admit that I just love the HLHB system’s high reward-to-risk ratio. The maximum percentage of my account I could lose per trade is just 1%, but the 150-pip trailing stop allowed me to have huge rewards. In one trade, I was able to gain 4.88%, which was 5 times what I risked! Pretty neat, huh?

I think it could’ve performed a lot better though. For one, the signals were faaaaaaaaaaaaar too few. I only had TWELVE trades for the year… That’s an average of just one trade a month! Secondly, I only gained 4.60% this year, less than the 1% gain per month I was initially hoping for.

Also, while I do admit that I was saved so many times by my filters, they also caused me to miss some big trades. The challenge now seems to be finding a way to generate more signals while also making sure that the system is able to filter fakeouts.

I have no definite plans yet, but I am thinking of replacing the Stochastic filter with the Average Directional Index (to measure the strength of my trade) or reducing my 30-pip filter (to get in more trades). What do you guys think? Should I change the rules of my HLBH system? Or is the 4.6% gain of my HLHB system good enough for a “noob” mechanical system?

The BOTTOM line

I think it’s fair to say that the HLHB system was my saving grace this year. Even though it only logged in a total of 5 wins this year, those wins were big enough to make up for my discretionary trading net loss and keep me positive for the year.huck.overall.png

Overall, I can’t say I feel too badly about my results. Not only did I NOT blow out my account, but I managed to come out of 2010 with a small profit. Not too shabby for a noob, eh?

The best part is I know I still have plenty of room for improvement, which means things will only get better from here! I’m determined, I work hard, and I’m willing to constantly push myself to become a consistently profitable trader. So 2011, you’d better be ready because I’m gonna be back better than ever!

So I guess that’s it for 2010. Thanks for following me and commenting on my blogs this year, guys! May you all end the year with a bang! This is Huck, signing off!

  • winstonereed

    Not to be overly critical but you can make 4.5% RTI in much less risky “investments”. I think most of us are in FOREX for better-than-average returns. A trading method using the 5,10 EMA crossovers as the crux of the system may look tempting when reviewing charts historically but in practice I think they ultimately fail or produce lackluster results. I use 5,10 EMAs but only to supplement my trend trading strategy. On the positive side you did end up positive for the year and that’s great!

  • winstonereed

    Not to be overly critical but you can make 4.5% RTI in much less risky “investments”. I think most of us are in FOREX for better-than-average returns. A trading method using the 5,10 EMA crossovers as the crux of the system may look tempting when reviewing charts historically but in practice I think they ultimately fail or produce lackluster results. I use 5,10 EMAs but only to supplement my trend trading strategy. On the positive side you did end up positive for the year and that’s great!

  • FX4Sure

    I consider ADX is indispensable for trading, and I use only stochastics when there’s a ranging market, oscillators can stay overbought or oversold for long time.

  • FX4Sure

    I consider ADX is indispensable for trading, and I use only stochastics when there’s a ranging market, oscillators can stay overbought or oversold for long time.

  • http://www.turnkeytrader.com LarryLivingston

    Not too bad considering whhat u were riskin on each trade. Love the review.

    Seems like u
    Did did dd did you did very well you did w

  • http://www.turnkeytrader.com LarryLivingston

    Not too bad considering whhat u were riskin on each trade. Love the review.

    Seems like u
    Did did dd did you did very well you did w

  • tradecraft

    Huck, I think the entry rules for your HLHB system are basically fine. The only thing you might think about changing is the way you apply them and maybe making the entry a bit faster. I posted about this in a comment on one of your earlier trades at

    http://www.meetpips.com/members/Huck/blog_entries/40634-hlhb-weekly-update—november-26-2010#all.

    Assuming a sell signal, If STOCH14 is already oversold when the crossover happens, as long as the fast MA is still below the slow MA, I’d just wait for STOCH14 to get back out of oversold territory and begin trailing a sell stop at the prior day’s low. Reverse this for a buy.

    You are correct that your HLHB system misses some really good moves. According to your trading plan at meetpips, your rules call for two long positions when the EMA10 crosses above the EMA20 AND stochastic is between 50 and 80 and two shorts when the EMA10 crosses under the EMA20 AND stochastic is between 50 and 80. There is no reason to require both the MA crossover and the stochastic reading to occur at the same time to trigger the entry order. Doing that treats the MA crossover(trend indicator) and stochastics together as an entry setup. If you consider the EMA cross as the trend indicator and the stochastic filter as the entry setup, you will miss the initial thrust of a move when you are most likely to get faked out, but, so long as the EMA cross is still intact, catch a continuation after a pull-back(indicated by stochastic moving out of overbought/oversold territory) as the trend resumes. This very often makes it possible to use smaller stop-losses and to go for bigger reward/risk ratios because the stop-loss can be placed just beyond the highest high of the pull-back(usually smaller ATR) once the new trade is triggered.

    With the usual warning understood that all trading strategies and methods must fit your personality and risk preferences, and these changes may not fit yours, I think you should try gradual changes like this first.

    As always, I will not be offended if you completely disregard all of this.

  • PointsOnly

    In regards to the macroeconomics and classical charting, I think that its important to match up reveral patterns with candlesticks on the Daily and Weeklys as well as formations on the hourly. Look for consolidation and then the break. Find out what caused the break and reversal in the trend. What caused price to consolidate on the shorter timeframes? Then look for a major news release or event taking place in the counter currency. Ride the trend once you have made a decretionary decision. Don’t forget to use good position sizing strategies.

  • PointsOnly

    In regards to the macroeconomics and classical charting, I think that its important to match up reveral patterns with candlesticks on the Daily and Weeklys as well as formations on the hourly. Look for consolidation and then the break. Find out what caused the break and reversal in the trend. What caused price to consolidate on the shorter timeframes? Then look for a major news release or event taking place in the counter currency. Ride the trend once you have made a decretionary decision. Don’t forget to use good position sizing strategies.

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