Forex Review: Reflecting on My Q4 2014 Performance

After a little bit of time off to relax and enjoy the holidays, it’s time to kick it back into gear for 2015, starting off with a review and reflection of my Q4 2014 performance.

Basic Forex Trading Stats

Total Number of Trades Ideas for Q4: 12
Wins: 6
Losses: 2
Breakeven/No Trade: 4
Win % (winning trades / triggered trades): 75.00%
Average Winning Trade in %: +0.49%
Average Losing Trade in %: -0.71%
Largest Drawdown: -0.71%
Total Q4 Blog Profit / Loss in %: +1.53%
Total 2014 Blog Profit / Loss in %: +3.57%

Looking back at my fourth quarter, it was pretty clear that my big win percentage had a lot to do with my strong bias for going long the Greenback. 10 out of 12 of my ideas were USD long biases, resulting in 6 winners, two losers (USD/JPY long and USD/CHF long), and the other four were “no trades/breakeven.” With the Fed ending QE, the U.S. economy showing improvement, and price action favoring the Greenback, it was common sense to play those ideas when the fundamentals and technicals lined up.  And more often than not, it worked out pretty well.

While the quarter turned out positive, there were a few things I could have done better:

  1. Keep consistent with my risk per trade. My two best trades in terms of return-on-risk were both GBP/USD shorts, and coincidentally, those were the only two triggered trades where I went with only 0.50% risk vs. my usual 1.00% risk. Instead of 0.50% gains on each, they could have added another full 1.00% to the bottom line performance.
  2. Cut my losses quicker.  In my USD/JPY long loss, I recognized the shift to risk aversion but didn’t cut the loss quickly enough.  It was a 0.71% loss that could have been cut down to only 0.30% – 0.40%, again adding a nice chunk to the bottom line.
  3. Holding onto winners. The U.S. dollar had a heck of a run in Q4, and I should have managed my trades better to weather the pickup in volatility and hold on to what could have been big winners.

Overall, I’m pretty happy with how I performed, not because I came out positive but because I think I executed pretty well.  I stuck to my system of combining fundamentals and technicals, and focused on managing my risk after I got into the trade. I kept it simple and didn’t really over think the process.  That’s really all I can control, and when the market does goes my way, it can be a positive for my trading account.

With the +1.53% fourth quarter gain, this forex learning blog performance finished up +3.57% for the year on 17 wins, 10 losses and 12 no trades. 

This puts me in the mix with the benchmarks that I like to measure my performance against: the Barclay Hedge Currency Traders Index (+2.52% YTD thru the end of Dec.) and the Barclay Hedge Discretionary Traders Index (+0.72% YTD thru Dec.).  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 2014? Please share your thoughts in the comment box below.  Thanks for stopping by and good luck in 2015!

  • ForExchange

    Hi Pipcrawler!

    Congrats to your winnings. You made some great trade executions. 75% winning trades are also great.

    I have a question on your USD long bias. I am into intermarket analysis and the USD is very dependent on the direction of the commodities. Well, the commodities are very cheap now and it is not so easy to push them even more down. So this would mean they either will trade range or sometime pick up and go north. This would be bad for the USD. How do you see this?

    Have a great year in 2015,

    FE

    • Pipcrawler

      Sorry for the late reply on this comment ForExchange…kinda lost trade of my comments for a bit. By now, you’ve probably seen the Greenback continue to rally, so that answers your question. But to give you my answer whether it is at the beginning of the year or now, it’s all about how the story develops and probabilities. I can’t say whether or not USD will reverse because I (or anyone that I know of) can’t tell the future. Fortunately, you don’t need to be a fortune teller to make money. If you’re a directional trader, find the plays with the best probability of being successful and manage each trade the same: cut losers quick and try to ride winners for as much as you can. It’s simple but not easy, and it takes a lot of trading to really get it. To answer your question directly, US is the only major economy likely to raise rates and it’s the most liquid, heavily regulated market, which makes the US the most attractive, safe, interest rate baring country down the road. That’s where big money goes so the probability is that USD strength will continue (with set backs of course) until that dynamic changes, whether it’s tomorrow or 20 years down the road.

  • Łukasz Domański

    I’m just wondering: is Forex a good choice (taking into consideration high-risk and a lot of time required to keep up with news/charts/economic data) if you just got 3.57% in 2014. I mean – it’s not bad (for sure better than over 90% of forex traders) but this is easily possible to get similar return from bonds – almost effortless!

    • The Threat is Real (UK)

      If you apply yourself properly & you know what you’re doing, you can make 20 pips per day…which is 1%…now multiply that by the number of working days in the year…possibilities, possibilities 🙂

      • Łukasz Domański

        apparently over 90% of traders “don’t know what they are doing” (because they lose money or break-even in long-term)

        • Pipcrawler

          I would venture to say that 90% of retail traders don’t have enough deliberate practice and experience in the markets. It takes time and effort to develop a skill, especially one as demanding as market speculation. Life situation and available capital are big factors as well. I think most people have the capability to be profitable over the long term, but to get there is as tough as becoming successful in any other professional field or skill set.

      • Pipcrawler

        I’m not a day trader so I couldn’t say whether it’s possible over the long term, but I’m pretty sure it is doable if you are sitting in front of the markets all day to wait for the right setups and to be able to manage a trade well. But yeah, anything is possible.

    • Pipcrawler

      Thanks for you comments! Forex is just another asset class among many in which you can trade. You either get it and found your own way to trade it or you don’t. For me, it’s one of many different ones I trade because I want to diversify my opportunities, and I trade it in a way that’s pretty conservative because my goal isn’t absolute alpha (but that would be nice). My goal is consistent profitability with low account volatility. Why? Because that what people really want when you trade their money–to not lose it. Believe it or not, investors are more emotionally tied to losing money rather than making it. Sure it’s possible to make big profits in FX if you’re willing to take on a lot of risk, but I think the process to get there is out of the scope of what this blog is intended for which is providing examples of simple analysis, and good risk and trade management practices for newbie traders.