Trade Journal Of My First Real Money Attempt at Forex

[wesmip1]

Well I have to say I an definitely very new to forex trading although I have had a lot to do in the sharemarket. I look after my own superannuation (similar to the 401K in America) but it is heavily focused on my local share market in Australia.

I am looking to broaden the horizon and see if I can make some money in forex. So while I do realise I am very new to this arena I think I have a solid background as a beginning.

I have spent a good few months playing with a demo account and understanding the concepts such as margin, free margin, pips, points, lot size, etc. So I think I have learnt the basics and I then started to formulate how I was going to attack the market.

My trading methodology is simple:

1. Find profitable experts and follow their tips
2. Make sure the experts use different types of trading (breakout, swing, trends).
3. Risk a very small amount on each trade.

With those simple principles in mind I went out and read a number of blogs, experts reports, free system ideas, forum tips, etc. I spent hours looking into the history of certain EA’s, systems, experts, etc and came up with a short list of about 30 “systems” to follow. I ran these in a demo account for a couple of months to check I knew what was going to happen and my likely margin requirements. During this time I took notes and statistics on each “system” and made a decision on whether it suited my risk profile, timeframes, and comfort level. I dropped a number of systems and then settled on those I felt were the best of the bunch. This left me with 5 systems which I could follow and I wrote an EA to collect the information automatically for me and trade the positions for me.

The results of this EA will be shown in this journal. I will treat this as a scientific study (which is how I learnt to trade shares). My hypothesis is that I will make a profit over a two month period which will be my test case. That can be broken down into 8 trading weeks and I would expect that I should make a profit on at least 6 of these 8 weeks for this to be a successful test that warrants further investigation.

My starting capital is $600 for this test based on an expected high margin requirement of $300. If the margin requires does get higher then this then I am willing to put in another $400 but no more during the test period.

I will be trading micro lots. I will trade 1 micro lot per $2000 in the account so I do not believe that I will increase the size during the test period. I understand some people change their lot sizes based on the stop loss to limit risk to a % of the account but this is not how I do it and its a personal choice to do it this way to limit my margin requirements to a known limit. Modifying it to use a % means my margins would fluctuate a lot higher.

I started this on Monday 16th June 2014. The results below are for the first week.

I welcome any and all comments.

So as can be seen above there were a lot of trades during the week with a strike rate of around 58%. The Net Profit for the week was 38.03 which is more than acceptable and probably higher than I would expect from future weeks.

I still have open 11 trades with 6 of these being in profit. The open positions are showing a net loss of $3.38.

Because I am using a small account I am getting hit with higher spreads than I would if I went at this with a lot more money. A lower spread may have resulted in about another $6 in profit.

The breakdown of currencies traded this week are :

AUDJPY 1
USDCHF 2
EURJPY 3
GBPJPY 3
GBPUSD 3
USDJPY 8
EURUSD 45

Break Down of profit per currency:

AUDJPY -2.460000
GBPJPY -1.030000
USDJPY -0.820000
EURJPY -0.320000
USDCHF -0.090000
GBPUSD 2.010000
EURUSD 40.740000

I’ll leave at that for the week and see how we go again next week. Hopefully its another profitable one for me and all of you reading this journal.

[wesmip1]

Well Week 2 has come to a close and I learnt a lot more things in my real money trading.

The first thing I really learnt was that risk is an important factor for me. I need to limit it and feel comfortable with the positions which are being put on. Because of this I have made changes to the way I am trading and have removed some of the profitable systems which I was following. In fact I removed the top 2 systems because they did not suit my risk profile when trading real money. The result of this is less profit each week but should result in a more stable profit and less drawdown.

Due to these changes I had to close out a number of positions that I felt needed to go even though the system said to hold for longer. These closures combined required me to take a loss of about $17. I am much happier now that I have taken away these trades and I did note that they turned even far worse and could have resulted in further drawdown.

The second thing I learnt was patience. Or rather that I was impatient. I should have known these systems were not going to suit me but I included them because they were very profitable. They were also too risky. I need to learn that I don’t need to have on a position at all times and I do not need to have lots of positions on at once. I am combating this negative trait by trusting the systems that I am still following and letting them run their course. Also I noticed I was constantly looking for a profitable position to close out and solidify that gain. Of course the systems knew better and let them run and made a much better profit compared to what I have would have taken myself.

Ok lets see the figures for the week.

Here is an overall graph:

I am now showing a closed profit of $56.69 and an floating equity of +2.38 for a total of $58.73 profit. Last weeks end profit was $34.65 so we came in a little less at $24.08.

So running weekly totals are:
Week 1: +34.65
Week 2: +24.08

I am still trading micro lots. My strike rate is now 59% which is quite good considering the losing positions I closed out to remove those systems. I still have 3 trades open over the weekend which is a lot less then last weeks 11 trades. Of the 3 trades open 2 are in profit and 1 is showing a small loss $1.69

Overall I good learning week which will hold me in good stead going forward. I believe I have tightened up my risk profile which will ensure even less chance of an account blowup.

Good Luck to all those trading next week.

[wesmip1]

Week 3 is an interesting week. I made a lot of money on my closed positions but I also lost a lot of money on the positions which are still open. The EA has chosen not to close the positions yet so I just will go with my test and let it do its thing.

Here is the running summary of the EA :

I am now showing a closed profit of $69.04 and a floating equity of -25.62 for a total profit of $42.89

So running weekly Totals:
Week 1: +34.65
Week 2: +24.08
Week 3: -15.84

That is the first losing week.

I am still trading micro lots. My strike rate is now 58.46% which shows that I don’t hold open positions till they destroy my account. The EA will happily remove positions when it needs to. There are 8 open positions at the moment. The longest has been held from Tuesday. There is also one from Wednesday and the rest are Friday trades which remained open for the weekend. Of the 8 positions 7 are showing a loss. Of those only 3 are showing a large loss of more than 20 pips which were the Tuesday and Wednesday positions.

I learnt this week a bit more about patience and I would say I failed miserably at it. I have analysed my trades (for the few months this has been tested in demo + live stats) and I know that a certain condition makes the majority of my profit. I thought I knew better and have taken positions against the big indicator. I finally changed my EA to only trade when this indicator shows it is profitable to trade and I think this may be a big help going forward but it also means a lot less trades.

Overall I have survived my first losing week and am looking forward to a new week where I can push through to a new high.

Good Luck to all those trading this week.

[wesmip1]

Week 4 turned out to the a good week. I am not surprised considering it had a poor week during Week 3. It has pushed on to a new high.

One thing which came up this week and was worth mentioning is that there has been a lot of talk on EA’s and signals and how they are detrimental to your long term success. I have a very different opinion on that. If you can find an EA and signals that are profitable and not just martingale systems that increase your risk, then you can make a very good profit from them. In fact they are even more valuable then learning to trade yourself. I know this could be a bit controversial but give me a sec to explain. If you are learning forex so you don’t have to work for your boss and eventually you are good enough at it that you leave and earn your money from the markets, you are still an employee to the market. You still need to trade your time to investigate and make trades. If you are using an EA or signal then you might not look at the market at all for a week but you will still make money. It is far better to have a passive income which requires none of my time then to learn to do all my trading manually.

Saying all of that I still think you need to understand how to trade forex and especially risk management otherwise you are not going to know what a good EA or signal is.

So lets look at the results:

There were 14 trades this week and 10 of them were profitable. The overall profitable trades sits just below 60%.

I am now showing a closed profit of $77.15 and a floating equity of -0.01 for a total profit of $76.51 (the difference is swap).

So running weekly Totals:
Week 1: +34.65
Week 2: +24.08
Week 3: -15.84
Week 4: +33.62

That’s a return of approx 12% in 4 weeks which is equivalent to 156% a year.

Overall this was a really good rebound week and hopefully we push up over the $100 profit by the end of next week.

Good luck trading this week.

[wesmip1]

Another week has past and I realised by the end of this week by restricting the signals I am following I am actually increasing my risk and not decreasing it.

Here is the details so far:

There were 5 trades this week and 4 of them were profitable. The overall profitable trades sits just above 60%.

The problem this week was the open positions are showing a loss of $22.46

So running weekly Totals:
Week 1: +34.65
Week 2: +24.08
Week 3: -15.84
Week 4: +33.62
Week 5: -17.55

My largest losing week so far. Hopefully it bounces back like it did after the last losing week.

God Luck trading.

[Lakoenza]

@wesmip1

Another week has past and I realised by the end of this week by restricting the signals I am following I am actually increasing my risk and not decreasing it.

Here is the details so far:

There were 5 trades this week and 4 of them were profitable. The overall profitable trades sits just above 60%.

The problem this week was the open positions are showing a loss of $22.46

So running weekly Totals:
Week 1: +34.65
Week 2: +24.08
Week 3: -15.84
Week 4: +33.62
Week 5: -17.55

My largest losing week so far. Hopefully it bounces back like it did after the last losing week.

God Luck trading.

Hi Wesmip,

Thanks for your personal thread. It was a really fun read. But I am now interested how your journey is going. Your last post was almost three months ago. I would like to know!

Bye.