Whatever happened in the markets, after about a month of not much movement in my Kiwi and EurGbp and equity shorts, today the Jackson Hole symposium was a catalyst: not much of what was said by Yellen caused a reaction, or at least it was a reaction that was then neutralised; however, in the hours that followed, a big sell-off in S&P500 and FTSE100 led the charge for a risk-off move, with Kiwi-Dollar following suit and breaking below 0.73…
Interestingly, UsdJpy actually rallied above 101, whereas a risk-off move would see it breaking below 100: this pair, at times, will follow the USD in a rally, although its fundamental is not Dollar-led but risk-led.
Today my total positioning shed something in the region of over 800 pips, and from earlier this month my total drawdown has today been reduced by about 1600 pips, currently being just under -10200 pips.
As per this morning, my total drawdown is just loitering around the 10000-pip figure, thus shedding 1800 pips since its peak (11800 pips).
A return to the 9000s seems likely, mainly driven by a Pound resurgence (positively impacting my Pound longs versus Kiwi and Euro, and my FTSE100 short).
Once these themes regain traction with September liquidity returning (and the FOMC rate decision on the 21st), there may be a slightly rosier outlook ahead for my strategy… Kiwi/Usd and S&P500 shorts will need a risk-off sentiment gathering pace, something which we have all been wondering about since August 2015 - the timing of it is the big unknown.
After the ‘flash crash’ (if that is what it was) of October 2016, where I lost all my money in my live account (as I discussed in my FreeFX video here: FreeFX video: Time to admit Defeat? ), I opened a £50000 demo account with FXCM, with some help from @Jason_Rogers, in Feb.2017.
Since then, I traded that account and nothing else, first only through UsdTry (as discussed in my thread here: USD/TRY: an incredible pair ) then also through other exotic pairs, namely EurTry, UsdMxn, UsdSek, and UsdZar. Following an account rise to above £58000,between Nov.2017 and Feb.2018 I made some changes due to the UsdTry entering a long congestion period: trying to make money on other exotics I overtraded and reduced the account to between £10000 and £11000.
Since then, I brought the account up to about £36000 but then pursued long-term carry through buying Turkish Lira and managed to accrue nearly £2000 in positive carry. However, in August the Turkish currency crisis reached fever pitch and the Lira plummeted to new record lows each day until, in spite of careful management, I was margin called and lost a big part of that account.
In September I started rebuilding a strategy and some confidence: after some bad trades in unfamiliar territory, which reduced my account even further (to about £330), I started again on day trading and concentrating on the no-commission, low-spread, cheap maintenance margin requirements afforded by the Nasdaq100.
I am now approaching £1700 and I know that the trailing stops approach is working well.
Well, latest update… that Oct. 2018 demo account eventually died but I opened one in July 2019 and I did almost everything right, and as you can see on my UsdTry thread (USD/TRY: an incredible pair ) I am up by quite a bit… I am determined.now to protect capital to reach the end of the twelve.month period since opening this account with a positive P/L.
When that happens I will start looking at my.options…
@Fx.: I.am.including.you here as you asked about my trading…
This seemingly endless scaling of profit has had its difficult moments, so do not fixate on the percentage but think of the skills required to turn bad trades into good ones, recovering from losses, and just keeping going.
All.in.all it is quite a good run and it could be that I have found a way to manage situations that will serve me well for the foreseeable future, however it is never a case of a market (e.g. currencies) always giving the same returns or opportunities each year, so it may well be that the great runs on the EURUSD and EURTRY that I exploited may stall to a flat, choppy mess in my next trading year.
Still, I am happy with the way in which I have.managed myself, especially as I treated my demo money like real money and really looked after profits. This will give me.more.confidence to reconsider opening a live account in future, as it has been my.only profitable run of this kind since starting demoing in Sep. 2012.
