As with the end of every quarter, it’s time to quickly reflect on the opportunities the market presented, as well as both the good and bad decisions I made. Here’s my reflection on my Q2 forex performance.
Basic Forex Trading Stats
Total Number of Trades Ideas: 13
Breakeven/No Trade: 6
Win % (winning trades / triggered trades): 37.50%
Average Winning Trade in %: +0.17%
Average Losing Trade in %: -0.21%
Largest Drawdown: -0.28%
Total Realized Profit / Loss in %: -0.34%
First the bad. Looking back, there was a bias that I held on to strongly that tripped me up: super bullish on New Zealand Dollar and quick theme changes for both the Aussie and Japanese Yen.
I was bullish on the Kiwi because the RBNZ was expected to hike interest rates (which they did), but the reaction wasn’t a huge bullish move because it had been already expected and priced in before hand. In April, Kiwi bulls were taking profits off of the table, which I saw as opportunities to get long on a pullback in NZD/CAD and NZD/JPY. Unfortunately for me, those pullbacks lasted longer and went deeper than I expected, all the way until June before the Kiwi found a bid once again and resumed its rally.
My second pair of losses came from playing AUD/JPY long (which turned against me when Aussie economic data turned sour and Japanese data turned a bit brighter) and then going short AUD/JPY, which turned again as traders refocused on monetary policy, interest rate differentials and a shift to broad positive risk sentiment. Both were great setups that I’d continue to take over and over again that just didn’t work out as the stories quickly changed.
And while I did have losses, the most frustrating thing for me was missing four winners because of my habit of waiting for pullbacks, letting big events scare me out of great trade setups, and trailing stops too tight. I was on point with the directional analysis for both NZD/CHF long and CAD/CHF long, but my entry techniques kept me out of both. I missed that CAD/CHF entry by 5 pips!
On my first EUR/USD short of the quarter and my GBP/USD short, I trailed my stop too tight, causing the former to miss out on a bigger profit, while the latter stopped out at breakeven before hitting my target.
And finally, I called of my EUR/USD short this week ahead of the ECB meeting. My entry at 1.3700 turned out to be the top of the week before sellers came in big after a strong NFP report yesterday. I’m not actually frustrated with this call as I think it was the proper procedure, but it’s always annoying to see big momentum moves that you were already setup to be in.
But to end on a positive note, I did have three winners and two open trades in USD/JPY and EUR/AUD that are currently profitable (they will count toward the third quarter). And I’m also not too beat up with my overall loss because it was a quarter in which we saw declining forex volatility and choppiness–always a tough environment to trade in if you’re a longer term swing trader.
So, that second quarter setback leaves my blog performance being up +0.97% for the year (not counting the open trades), still putting me above my benchmarks: the Barclay Hedge Currency Traders Index (-1.64% YTD thru the end of June) and the Barclay Hedge Discretionary Traders Index (+0.52% YTD thru June). 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.
Going forward, I’ll continue to try to improve my entry techniques by scaling in more, and I’ll try to give my trades more room to breath and be profitable by holding off the urge to trail my stop unless absolutely warranted.
That’s all I got for now forex friends…How did you do in Q2 2014? Please share your thoughts in the comment box below. Thanks for stopping by and good luck in Q3!