One month down, 11 more to go and and even though I though January was particular boring and uneventful I am moving forward. So lets take a look at this week, then January as a whole and wrap with some thoughts and ideas as we move into February.
Let me take a minute and run through my trading strategy as it sits
right now. I use Oanda (which may or may not be important to this strategy) and one of the reason is it has decent swap rates which it pays out as ‘Financing” in your account activity (I’ll be referring to it as ‘swap’ for cohesion). In my strategy I only enter trades that have positive swap rates, that means I am only selling EUR/USD and EUR/CAD, and i’m only buying USD/CHF and CAD/CHF. The robots are set up the same way, selling the EUR pairs and buying the CHF pairs. This is strictly personal preference and the strategy will work and give more trading opportunities if all pairs were bought and sold regardless of swap. I have traded both ways on EUR/USD and it works fine.
So on the 4H chart I am currently using Full Stochastics(14,3,3) and MACD(12,26,9) its not sexy or complicated, it just works. Set up for a buy is once Stochastics is close to 20 (I prefer less than 20 but sometimes it just doesn’t get there) start watching the MACD line just the line and when it turns from falling to rising thats the signal to buy. Selling is just the opposite waiting for the MACD line to turn after Stochastics is up around 80.
There is no initial stop loss or take profit set, I don’t believe in taking a loss and will only close a negative trade as a wash (profit taken from a successful trade off sets the negative trade). Oanda is good for this because it lets me reduce trades by as little as one unit at a time so I can really just whittle down negative positions.
Side Note: Warren Buffet was ask how much money he lost in (i believe) the 2008 recession and his reply was “I didn’t lose anything because I didn’t sell anything” (I have no idea if this is true, but its the same philosophy I take in trading.
Exiting the position is the same rules for entering, if you bought a position follow the selling rules for exiting, if you sold follow the buying rules. I like simplicity, I’m not trying to reinvent the wheel, I want to flip through my charts for a few seconds every 4 hours and that’s it. So lets say I sell EUR/USD and for whatever reason when the buy signal comes around to exit my position the position is still negative. I don’t close losing trades. It goes to Mitigation.
Mitigation is just what I call it, and it is the main purpose of the robots. Swap and profits from the robots go towards washing losing trades. Every time the account is checked profits from the robots used to reduce the size of the losing trade and daily finance payments (swap) is used to reduce it as well. As a note, I rarely go 1:1 with my reductions if the robots made $0.50 I might take $0.45 or $0.42 and keep the difference as profit. Ending a week with $0.00 is not very motivating, ending a week with $3.00 is at least moving forward.
I keep robots in a supporting role only, the percentage of my account they control is small. I use the Finch by Rob Booker, and they also share the same philosophy of no stop loss and never closing losing trades. They work fine; until they don’t, so I don’t encourage anyone to use robots without fully understand how they work, and are capable of trading their way out of any bad trades the robots make.
The only other thing of note is I have a large (relative to the margin it uses) position in EUR/TRY that I am currently working my way out of. Oanda did have a very generous swap rate for it and for a stretch I was being very conservative with my trading while I was setting up the strategy as it is today. Oanda has since changed their swap rates and EUR/TRY is taking up too much margin for the return I am getting for it. I started the year with 0.07 lots of EUR/TRY and I as of today I still have about half of that.
I know this is already terribly long winded and my spouse would like to do something today besides watch me sit at the computer (Season 3 of Sabrina is out on Netflix after all), but let me go over what happen this week, and then quickly this month. I ended this week with $4.19 or 0.17%. EUR/CAD and CAD/CHF posted a signals to enter trades following their respected rules and just looking at the pattern after trading this way for a few months it seemed like a false signal. I followed the rules and entered the trades anyway with 0.04 lot sizes and those trades are currently down $40 and $30. This isn’t unusual for the system, and I don’t have a problem carrying negative trades. I’m currently testing Bollinger Bands to see if I can see a difference in false and real signals but that is not part of the system yet. At any rate I don’t count open positions in my profit and loss data because it is still an uncertainty, only closed trades and paid swaps. I had 17 trades this week, all of them by the robots, and all profits this week came from them and swap paid to me. I still have $1.40 in paid swap I have not accounted for because its paid at market close and on Fridays I am not able to wash out trades with it. When the markets open tonight I will wash out some more EUR/TRY and whatever is left will be added to the this weeks data. I ended January with $73.60 (again leaving out the $1.40 swap) which is a 2.96% for January.
I don’t know how you guys benchmark your performance, or if you do, but I benchmark my performance against the performance of my 401k retirement accounts of which I have 2. My 401ks have gotten slaughtered the last two week, I don’t know if its Coronavirus, trade wars, Brexit, Impeachment,a new Recession. They just drop like rocks to the point it cost money to have a 401k in January. (hats off to anyone that started one in January) they are sitting at -1.21% and -1.11% for January as of Friday. So 2.96% is great. I am hoping for more trades in February, I am already in EUR/CAD and CAD/CHF. EUR/USD and USD/CHF are both ready i’m just waiting for a signal from the MACD line to enter. I think they will all go early in the week so maybe i’ll have some successful trades by Wednesday.
I’ll start posting a link as soon as I’m allowed, until then
myFXbook member : Zacj346
portfolio: No Shoes Trading
Current strategy started Oct. 2019