2010: Great Start…Not-So-Great Finish

Good Evening Forex friends! It’s my turn to share my 2010 swing trading performance, and overall it was mixed. I started 2010 strong, winning 80% of my trades in the first half, but took quite a few jabs to the chin in the second half trying to fight the trend. Before I talk more about that, here’s my 2010 stats:

Total P/L (%): -3.94%
Win Ratio: 48.14%
Total Trade Ideas: 31
Trades Not Triggered: 5
Avg. Win %: +0.64%
Avg. Loss %: -0.87%
Longest Winning Streak: 4
Longest Losing Streak: 4
Maximum Drawdown: -3.82%
No. of Short Trade Ideas: 26
No. of Long Trade Ideas: 6
Most Traded Pairs: GBP/USD, EUR/USD
Least Traded PairS: GBP/JPY, EUR/AUD

Looking at my stats against this year’s price action and fundamental story, I found two main issues with my swing trading this year:

  1. Not being flexible with my fundamental bias
  2. Not maximizing my winning trades

For those who have read all of my blogs, you know that I was bearish on the economic outlook throughout the year as unemployment remains high, housing has yet to recover, government debt across the globe is becoming uncontrolable, and so on and so forth. This means I tend to be “risk aversion” bias and most of my trades have been going short (26 out of 32 trades) a high-yielding currency in favor of a “safe haven” currency. When I looked back on the year, this worked very well in the first half of 2010 as debt crisis worries pushed assets into USD, JPY, and CHF (be sure to check our 2010 economic and price action reviews in the Piponomics blog). So, in the second half of the year, when economic data showed signs of life (which I could never fully accept) and risk tolerance grew (as can be seen in Forexgump’s 2010 Eurozone review), all of my short positions (going long safe haven currencies) were going against a NEW trend higher. The stats speak for themselves:

First half 2010: 9 out of 11 winning trades
Second half 2010: 4 out of 16 winning trades

Lucky for me that I had such a strong, compounding run up at the beginning, otherwise 2010 would have been a pretty bad year.

So, my biggest weakness in 2010 was that I wasn’t flexible in my fundamental bias in accepting that the economic environment was changing.

The second main weakness to point out from my stats was that I didn’t maximize my winning trades. My average win was smaller than my average loss, showing that I need to let my winners run and/or scale into them further if it goes my way. But looking back, there were too many times price action was just too choppy and I would be taken out at breakeven or a loss before the market would go my way (possibly a sign I need to do a better job of adjusting my stops).

Last issue to point out after reviewing my year was that I did have 3 trade ideas that led to multi-hundred pip moves, but unfortunately my trigger orders were barely missed before they moved (Check out my EUR/USD, GBP/USD, and USD/JPY missed trades of the year…haha). This shows me that I need to do a better job entering into positions because while they are just 3 trades out of 30, the moves were huge enough that with proper trade management they would have been the difference between being down 4% versus being up 10% or more on the year.

Overall, it wasn’t a terrible year. While I did make my mistakes, I had a ton of great ideas and I thought I managed my risk and emotions very well. A lot was learned by going through another year of uncharted economic/trading conditions, and from keeping a well organized trading journal. That’s all we can really ask for as growing traders and hope we can apply those lessons to future trades.

Thank you so much for checking out my blog this year and I hope all of our blogs have inspired you to keep your own detailed trading journal of your quest to consistent profitability. Have a safe and happy new year celebration and I’ll see ya in 2011!!