Good afternoon forex friends! It's the end of 2012 already?! Time does fly by, doesn't it? Well, it's that time again where I take a moment to look back at how I did over the quarter, and reflect on how I did in 2012.
So, let's start with the fourth quarter stats:
No. of Trade ideas: 8
Trades Triggered: 6
No. of Wins: 1
No. of Losses: 5
Trades ideas not Triggered: 2
Average gain per winning trade: +0.13%
Average loss per losing trade: -0.63%
Net loss: -3.05%
I definitely took a beating as I was only able to get one small win during the quarter. Looking back at my notes after every trade, I think I can say that my biggest deficiency was trade management.
Q4 was a tough one as market focus shifted almost daily in between the European debt crisis, the US politics and the Fiscal Cliff, and mixed global economic data. I'll be honest, it was tough mostly because I had strong biases on the effects of austerity in Europe and how the US political landscape would unfold. These biases and the constantly shifting market sentiment got me out of trades I should have held onto (like my long-term EUR/USD short), or holding onto trades that were profitable at one point, but easily taken out by the news event of the day (like my USD/CHF short or long USD/JPY trade)
In hindsight, I think I could have done a better job of cutting trades quicker, especially since I felt like I knew the markets would be pretty volatile during this time. Also, because of my strong bias of how bad the European debt crisis is, I definitely missed out in the strong rally in risk after the US Presidential elections and after Greece got its debt deal in November.
It all looks so easy and makes sense in hindsight, right?
So, rather than finishing strong, Q4 was a big hit on my 2012 performance. Here are my overall numbers:
No. of Trade ideas: 44
Trades Triggered: 30
No. of Wins: 15
No. of Losses: 15
Trades ideas not Triggered: 14
Average gain per winning trade: +0.45%
Average loss per losing trade: -0.57%
Net loss: -1.92%
It was another struggle this year as it looks like I came in quite a few percentage points below my benchmarks of the currency indices at Barclay Hedge and Hedge Fund Research. And after quite a bit of reflection over the holiday, here are a few take aways:
- Consistency is the key. This is the holy grail of success that not everyone wants to believe because it is the longer, more difficult road to prosperity. No one reaches their goals without doing all of the small things that, when put together, leads to personal/professional development and improvement. And it's the ones who do it regularly and deliberately without fail, that become the superstars of their chosen craft or profession.
For varying reasons, I was not as consistent as I could have been in doing the prep work and staying focused on the markets like my buddies Cyclopip and Happypip, who both had very good trading performances in 2012.
We can't control where the markets go, but the things we can most definitely control are our focus and efforts. Consistently doing the little things right like Cyclopip and Happypip will be my main focus for 2013.
- Don't always wait for the perfect price. Probably the most frustrating stat from 2012 is that out of my 14 untriggered trade ideas, 11 of them would have been wins had I not tried to get in on a pull back (e.g., like my last trade of the year on GBP/USD). Sure, it's nice to call the top or bottom, but I'd rather have an imperfect entry and make some pips than being potentially perfectly right, then missing the move. I did adjust mid-year with my entry technique, which helped, but it is also something I'll continue to focus on going forward.
- Stay flexible--When the story changes, you have to change. Since the financial crisis of 2008, the market has evolved into a sentiment, news driven environment. 2012 was no different and after looking back, there were many of my trades that quickly turned into losers by a sudden shift in sentiment. Now, we can't know if this type of behavior will continue in 2013, but I'll look to be less fundamentally biased and more willing to adjust my positions more quickly when news and events change.
So, that's my take on 2012, and hopefully I can improve in 2013. Overall, I'm confident in my ability to gauge market biases, I just need to do a better job of going with the flow and managing open trades. That should come from focusing on doing the small things more consistently, right?
Thanks for checking out my blog everyone, and I hope you all have a safe and fun weekend ringing in the New Year. Cheers and I'll see ya in 2013!
- A Reflection on My Second Quarter Performance 05:02 02 July 2012
- Reflecting on My Q1 2013 Performance 10:45 08 April 2013
- Reflecting on My 3rd Quarter Blog Performance 08:00 02 October 2012
- Reflecting on My First Quarter Performance 08:00 05 April 2012
- Reflecting on My Performance for 2011 09:00 29 December 2011