Reflecting on My Performance for 2011

Good morning forex friends! With 2011 quickly winding down and trading pretty much a wrap for the year, it’s time to do the most beloved (or hated) of trading tasks: reflecting on your trading performance. I’ll share with you an example of how I reflect in hopes that it will help you do your own. Check it!

Obviously, the first step to reflect on your trading performance is review your past trades in your trading journal. Now if you don’t have a trading journal then shame on you! How can you improve if you don’t even know what you did or the mistakes you made? So, if you don’t have one yet, go start one at MeetPips.com :)

Alright, so after reading all of my blog entries for 2011, I’ve put together these basic stats to tell me what and how I did:

No. of Trade ideas: 54
Trades Triggered: 36
No. of Wins: 19
No. of Losses: 17
Trades not Triggered: 18
Win%: 52.7%
Average gain per winning trade: +0.697%
Average loss per losing trade: -0.736%
Net gain: +0.737%

Just with these basic stats, I see a few things. First, the good…

I think I did a pretty good job with my analysis to find the probable direction of the market and high probability entry levels. This makes sense as my trade plan framework tends to be jumping into a trend with a matching economic/sentiment bias, coupled with a support & resistance (and sometimes divergence) as my entry signal. I won over half of my triggered trades, and after digging deeper, half of those untriggered trades would have been triggered and profitable had I did a better job with my entry (more on that in a bit).

Second, I did a pretty good job at risk management by limiting my losses. My usual max loss per trade plan was 1% of my account. Above, we can see that I kept the average loss per losing trade at -0.736%. This was due to reducing risk on some of the day trades and cutting out of trades early when the market sentiment changed. Although, I could do a better job on the latter as I did let a trade or two ride after sentiment shifting news came out.

Now, for the bad.

I didn’t do a great job of maximizing my winners. My average win was 0.697%, even though most of my setups go for a 2:1 or better potential return-to-risk. Digging back into my past trades, this was due to weaknesses my trade management technique, or should I say weakness in my trading psychology. Often, I’d try to go for a bigger profit and not take some profits of the table (like this Cable trade) at an obvious inflection point. Then a news event or reversal would happen killing my profit and sometimes turning into a loss. Or I would just take a trade off before letting it fully mature. I’ll admit that the fear of losing profits, or letting a winner turn into a loser did get to me more than it should have.

Second, I need to do a better job with my entry technique. As I mentioned above, there were about 9 untriggered trend trades, some narrowly missed by a few pips, in which I may have been too conservative with my entry. Each one would have turned out to hit max profit potential, which was probably more frustrating than the losses. I did pretty well in the first half of the year by scaling into trades, but pretty much stopped using that entry technique as the markets became even more unpredictable and choppy in the second half. I’ll look to return to scaling into trades more often as it looks like this process would have helped those untriggered trades turn into profitable ones.

Stepping away from the numbers and reviewing my thoughts on the news and fundamental landscape, 2011 was definitely tough to figure out. Actually, price action and behavior was just nuts! When Greece and the European sovereign debt crisis took center stage in the second half of the year, it turned into a news/headline trading market. The market focus and sentiment shifted almost daily by simple rumors of what a central bank, European leader, or credit rating agency may or may not do. By October and November, I reacted to this market environment by becoming way too conservative and ended up missing a lot of trades or deviating from my usual trade setups.

Overall, while I do still have some of the same issues as in 2010, I think I did much better, not only in my overall numbers, but in my analysis of the fundamentals and price action; I just need to do a better job in trade execution and management. As we’ve all heard time and time again, the entry is important, but what you do after you’re in the trade is what counts. Also, while I know I didn’t end up in the red, I know I could have done much better with a little bit more focus and discipline. Sometimes just showing up mentally prepared to take on the challenges of the day is the hardest thing to do.

Well, I hope my journal reflection of 2011 has helped guide you in preparing your own final journal entry of the year and figuring out your resolutions for 2012. So, cheers to always being prepared, to better trade management and discipline in the new year. Good luck my friends and good trading!

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  • The Forex Koala

    It is good you have proper risk management.. i believe this is fundamentally important! All the best for 2012 :)

    • pipcrawler

      Thanks all the best to you and good luck!

  • SwordOFManagement

    Scaling in does not increase your risk, it reduces your space.

     If you have 5 lots with a 40 pip stop and you buy 3 lots at +40 pips (80 space) then your “stop” is at (5/8) * 80 from the current price & that is 50 pips. Again, 8 lots and 50 pips from the current price is equal to your initial risk; think of it as a new position.
     A stop for 2 lots would expand your remaining space (from the stop loss to the “stop”) by 1/3.
     A stop for 3 lots (8/5) would increase your remaining space by 60%.

     If you wish to add slower then cut your space by 10 to 20%:
    From 5 lots to 6 (5/6) cuts your space down by 16.7%.
     (5/6) * 80 =  66.6 pips from the current price & a stop for 2 lots at -30 would bring you back to 54.9 pips and 4 lots.

     When you have 1 lot and zero space (“stop”) you finally lose your initial risk.

  • Baifriend

    Frankly, isn’t the gain of 0.737% too small? 

  • Walkerrpw

    I like that it gives us newbies somthing to look at, what does this convert into pips won for the year if you dont mind me asking
     
    thanks

    • pipcrawler

      My risk isn’t dictated by pips, but rather a percentage of my account and where my trade is invalidated.  So, the pips will always vary as well as my position size.  With this risk management strategy, overall pips is irrelevant. 

  • James

    So are you saying that yout total ROI gain for the year was 0.737%

  • Fx7days

    Hey Pick of the day :) , i like your trading system and i think its logical but the problem that its on a smaller time frames like the 15 mins , why you dont move to the daily , believe me i traded the 15 mins for 2 years and i barley made 55% win for the hall year !!!!! when i moved directly with the same system to the daily i made more than 80% win for the hall year , because its accurate doesnt have allot of noise and it makes good pips too , you can check the system here in the in forum 
    link to forums.babypips.com…  maybe you change your mind from the 15 mins system merry christmas : )

    • pipcrawler

      I’m not the most comfortable with holding positions overnight in the current environment.  Market sentiment is the current driver of price, and it seems that news events is has been in charge of market sentiment in the past few months.  I prefer to see what I can pull from the market during the day and close out at night for now until conditions change.  If conditions do change, I’ll be sure to check out them 4 hour/daily charts with ya!