Forex Review: Reflecting on My Q3 2015 Performance

With September far behind me, it’s time to do my quarterly forex review to see what lessons were learned in Q3 and how I can continue to improve.

Basic Forex Trading Stats

Total Number of Trades Ideas for Q3: 10
Wins: 5
Losses: 3
Breakeven/No Trade: 2
Win % (winning trades / triggered trades): 62.5%
Average Winning Trade in %: +0.26%
Average Losing Trade in %: -0.39%
Largest Drawdown: -0.50%
Total Q3 2015 Blog Profit / Loss in %: +0.13%

Taking a quick look back through my trading journal, it’s pretty apparent that the main driver of forex price action in the third quarter was China (currency devaluation and economic concerns) and the September FOMC decision (will they raise rates or not?).  These were major drivers causing a lot of choppiness as economic data and sentiment shifted, which was especially apparent in August with the huge risk-off sentiment thanks to China’s currency devaluation.

So it’s no surprise that a lot of my Q3 trades were focused on the comdolls since they are the strongly influenced by shifts in global risk sentiment and what’s going on in China, and I apparently did well going with that. 5 out of 8 trades won is great win percentage, and I even was able to hold a couple of those trades (CAD/JPY Short & GBP/AUD long) to my max target. I only let one loss (GBP/CHF long) go all the way to my max loss, which in hindsight, should have been cut early. And as for my breakeven trades, the NZD/USD short should have been a winner if I just closed ahead of the RBNZ interest rate cut, while I was just too prudent with my GBP/AUD long idea, which would have turned out to be a huge winner on the China currency devaluation event.

While my ideas and setups were good and I managed open trades well, I had one big problem: I was taking on too little risk. Because I was looking at taking short-term trades (and because of my drawdown in the second quarter), I went from risking 1.00% per trade to 0.25% per trade. This hindered my performance greatly because my best trades were won with very small position sizes, and my few losses were on larger bets. On a risk-to-return basis, had I stuck with the 1.00% risk per trade, my total gain would have been +1.19% vs. the +0.13% total for the quarter. That’s a huge difference in performance, especially since I am trying to climb back up from my Q2 setback.

So, I obviously still have a lot to work on, especially since this quarter’s positive return improves my blog performance to only being down for the year (-1.16% YTD thru September) relative to my benchmarks: the Barclay Hedge Currency Traders Index (+3.15% YTD thru the end of September) and the Barclay Hedge Discretionary Traders Index (-0.05% YTD thru the end of September).  It’s really a small loss, but I don’t like to be behind my benchmarks…and definitely not in the red.

Overall, I love seeing that a majority of my ideas are working and that I’m managing trades better, now I just gotta step up my risk again to go along with maintaining (or improving) my daily/weekly preparation and execution.

That’s all I got for now forex friends…How did you do in Q3 2015? Please share your thoughts in the comment box below.  Thanks for stopping by and good luck in Q4 2015!