Forex Review: Reflecting on My Q1 2014 Performance

I decided to take a break from forex trading this week to recharge and reflect on my first quarter forex blog performance.  Here’s a brief review of the market environment and thoughts on my performance.

Basic Forex Trading Stats

Total Number of Trades Ideas: 9
Wins: 4
Losses: 3
Breakeven/No Trade: 2
Win % (winning trades / triggered trades): 57.14%
Average Winning Trade in %: +0.38%
Average Losing Trade in %: -0.22%
Largest Drawdown: -0.41%
Total Realized Profit / Loss in %: +1.06%

First, it was a much different market environment than in the fourth quarter of 2013.  Emerging market economic data fears and geopolitical events ignited a shift in traders to be more cautious and/or take risk off of the table.  This resulted in some of the strong market biases come to a halt or were reversed in may currency pairs.  It also didn’t help that a lot of the best performing currencies in 2013 looked pretty frothy, which I’m sure prompted quite a few traders to take profits off the table as sentiment shifted.

I was focused on playing trends since they were everywhere in Q4, but this quarter I made one big change to my trading processes: I mostly stayed away from U.S. Dollar pairs. With the eventual Taper from the Federal Reserve (and the fact that it continues to be unprecedented story), I decided to stick to the trends I was seeing in the cross currencies. They’re actually great for longer-term trend trading as they are not as strongly affected by wackiness going on with U.S. monetary policy, and they trade more inline with fundamental themes.

This broad strategy turned out decently for me, even though the trends that were so strong in 2013 (like GBP and NZD) pretty much ended.  While I had more winners than losers, I wasn’t able to get big wins due to the behavioral changes of big pull backs and/or choppiness.  And I was a bit slow to adapt to the new environment and brief increase in volatility.  If there was one thing I could have done differently (and improve on), was to quickly adapt to the risk off sentiment in late January and shifted back into my fundamental biases when the market was oversold and the Ukraine-Russia tensions softened up in February.

In terms of trade management, I think I did a pretty good job of execution, with probably an exception with my first EUR/USD trade.  Looking back, I should have taken some profit off of the table to lock in some profits rather than just moving my stop to break even and letting the trade run back up to it.

And probably my one big mistake was trying to do a day trade on USD/JPY in February during the NFP report.  Not that I think I executed on it poorly, but the mistake was that the trade wasn’t inline with my overall market strategy of focusing on long-term trades.

Overall, I’m happy to end the quarter with not only a profit, but my average winners being bigger than my average losers, and a +50% win percentage on trades triggered.  Of course, I did miss some moves like the strong turn in sentiment on the Aussie and Canadian dollar, which could have enhanced my return.

My performance also beats my benchmarks: the Barclay Hedge Currency Traders Index ( -1.84% YTD thru March as of April 5th) and the Barclay Hedge Discretionary Traders Index (-0.83% YTD thru March as of April 5th). Besides consistent profitability, consistently outpacing the “pros” is a long-term goal, both of which I still have many, many, many years of practice to go (and hopefully a lot of luck) for me to achieve.

That’s all I got for now forex friends…How did you do in Q1 2014? Please share your thoughts in the comment box below.  Thanks for stopping by and good luck in Q2!