Bronze,
This does not sound very appealing. You will take a $1 profit on a trade on a $10,000 account? So you could have 100 wins with no losses and only book $100 profit. It sounds like a lot of work for a very small return.
Maybe I don’t understand your exit strategy correctly.
Ended up being a solid trade! Took home $6.70 for both traunches. Sold first traunch at 1.11553 and bought back at 1.11472 for $1.62 profit and second trade was sold at 1.11715 and bought back at 1.11461 for $5.08!
Thanks for your post and please allow me to clarify. This is a highly active strategy and could be considered like a micro scalping strategy. I have logged 341 trades over the past month and it IS a lot of work. As for providing minimal returns. I have to disagree. Small return per trade, yes, but cumulative return on the portfolio, I think it’s pretty solid. Please look up my trading strategy on myfxbook and search for Bronzbeardtrader. I gained 8% for the month and I think that speaks for itself. For every trade I put on I do aim for a $1 return ($1 return goal per trade per $10,000 account value) but my average gain is about $5.50 per trade. This is a function of me not being able to look at the markets all the time which is actually helping me out lol.
Hello! Markets are a bit wide right now but once they tighten up I am looking to put on trades in 2 more underlyings. If anyone wants to participate in the above let me know what underlying and long or short from the following: USDJPY, EURUSD, AUDJPY
Thanks! 2 for 2 so far.
Alright guys, taking a little bit of heat here from my current holdings. Right now I have about 6% of buying power at work in a combination of the AUDUSD (long), EURGBP (short), EURUSD (short), and USDJPY (long). My biggest position is short the EURGBP and I have 6 traunches on. I started shorting the EURGBP at 0.77282 and price has moved about 90 pips up from there. I have continued to add short positions as price moved up and my average price/break even is about .7780. I will continue to add to each of these positions if price keeps moving against me. My goal is to add 2% per week and I’m about half way there so far. Let’s keep it going!
Wow, just took off all positions for about $60 profit. Super stoked! I will wait a little bit before reloading, only need about $30 now to hit my weekly goal. I prefer to not hold any positions over the weekend so I may stop trading for the week at that point.
I have officially hit my goal of 2% for the week (which is $200 of $10,000 account value)! I have 2 positions still on. I am short the EURGBP and Long the USDJPY. I only have 1 traunch on in the EURGBP and 2 traunches on the USDJPY with 1.64% buying power being used.
Here are some stats for the week:
$ Return - $212.10
% Return - 2.12% (based off $10,000 starting account value) and 1.98% growth from the week before
Total Trades for the week: 85 (since sunday)
Total Return since Inception - 9.23%
Inception Date: January 17th, 2016
Here is a link to myfxbook account where you can see more stats:
https://www.myfxbook.com/portfolio/bronzbeardtrader/1484041
Another interesting stat was that I was able to hit my 2% goal for the week with ONLY using a max of 7% of my buying power. Very solid!
Update: Ended up taking a very nice profit on EURGBP short. Close out both positions for a total profit of $39.87. This was definitely a gift from the trader gods!
I still am long USDJPY and other than continuing to fade that move, I won’t be adding any new positions for the rest of this week. I have hit my goal and will happily take a few days extra days off until the new week starts back up on Sunday. I ALWAYS prefer to be completely flat heading into the weekend. This enables me to control my risk a lot easier and doesn’t subject me to potential outlier moves or market gaps.
Nice thread, like your attitude. Unfortunately, your shotgun-scale down method will only work until you get into a trade that relentlessly moves against you for weeks or even months. If you continue to scale down in this trade you will be losing more money in it than you will able to make up in your other trades. Good Luck.
Rodney, you are absolutely correct and that is my biggest fear. Being able to survive these relentless moves will be the key to success here. I fully expect a massive drawdown at some point but being able to trade through it will be essential. When a move starts growing teeth, I no longer start putting positions on in other underlyings so that all my buying power can stay dry incase I need it for more cost basis reduction. With my current position sizing I can withstand 200 positions in one underlying before i max out my buying power. I have considered once I get to 50% of buying power I then could reduce my position size again in half therefore giving me another 100 more positions that I can use at my disposal.
I did withstand a 360 pip move against me in the EURGBP which ended up being my biggest winner. I got to a max of 27% buying power and added 1.1% to account value. I’m hoping I can get more experience with some large moves against me because that will be the deciding factors. I do have the ability to reduce my current size by 1/2 to what it currently is which could give me 400 trades at my disposal from the start. We shall see. All in all this is just trading and figuring out how to continue to trade through relentless moves and being able to keep my position sizing small will be key.
I’ve been thinking about this some more and if i do start really getting into the trenches with a position, I can start taking profits on positions. I typically don’t do this when my positions are small, but this might be another technique I can use to extend duration, reduce my size, and take some risk off the table.
To put things in context, a move that would be massive enough to wipe my account would be extremely rare and to be honest I don’t foresee this happening (I may find out that my position sizing is too big at the moment {i.e. part of the reason i am demo trading}, but even if i reduced it to a 4th of what I’m doing, I would still be on track for a 25% year). Take a look on myfxbook at the most popular strategies they have on there and all the most successful strategies that have the highest returns have a pretty sizable drawdown, 40-70%. I am swinging for 100% per year with my current position sizing and when doing so, you should expect some sort of solid drawdown like that at some point in the life of the account and I have accepted that.
Here is a chart of the EURGBP that has been my biggest challenge yet. This is a daily chart and the entry and exit are indicated on the chart. Essentially, I was able to take a pretty solid profit with a 38% fibonacci retracement in price from the top. I implemented a technique of adding positions on a 2 hour basis and any time price moved a certain amount up or down. I was able to reel my break even price up from 50% to about a 38% retracement. Since I had a 16% drawdown here I am going to use this setup as a barometer and hunt through the charts of the pairs i trade to see if i can find any moves that may have blown me out. I will report back.
I knew a grain trader about 40 years ago who was quite successful for a long time, using a method similar to yours. The difference being - he would lighten up as the market swung back his way and then add on if it continued against him. This enabled him to make money during long congestion areas. Then the grain market caught fire in the early 70s, he was caught short. I never saw him again. Good luck
Thanks again for your comment Rodney. That is extremely similar to what I am doing. Pretty much the exact same thing, so I appreciate you sharing. I will take this as a testament to the power of this method, but also the need for an insurance policy. It doesn’t sound like your grain trader friend had one.
You have forced me to think and ponder on this for a good deal of time now (which is a good thing!), and I think the way you get around this is by having multiple accounts. The real danger to this strategy is if you get caught by a one of these super rare, huge outlier moves and if you have all our eggs in one basket, you’re toast. It would be a little annoying to have to manage, but if you had 3-5 separate accounts and you only traded one pair in each account, then you would be fine. If one account blows up, then so be it and you would still survive to trade another day. Your returns would be so great from the other accounts combined that it wouldn’t be a deal killer. It would require more $$ to have enough capital to setup for each account, min. of $5,000 per account to start, but it adds a layer of diversification to the situation that your grain trader friend didn’t have.
On a more personal note, I trade a crude oil future options strategy as well, so I get an additional layer of diversification here as well.
I looked back over the 25 year currency charts and it seems that the majors do have a tendency to oscillate back and forth without extreme moves. I would stay away from the Mexican Peso. A lot will depend on the distance you place between each added contract. I still think that in the long run you will wish that you had incorporated some type of direction following into your system. It’s very difficult to buck a strong trend with real money.
Hello! I apologize for my lack of posts this week. I have been pretty busy with real life stuff, but anyways I have also been busy trading. I’ve considered turning this into a long short strategy and I have opened up a second demo account that is essentially just taking the opposite positions of the other account and using the same scaling methodology for the most part. I have renamed my original myfxbook account to BronzbeardContrarianTrader as well please see below for both accounts:
https://www.myfxbook.com/portfolio/bronzbeardcontrariantrader/1484041
https://www.myfxbook.com/portfolio/bronzbeardtrendtrader/1531176
My ultimate goal would be to reconcile these accounts on a regular basis so that the gains in the other are funding the losses in the other account and therefore enabling the losing account to sustain long periods of draw downs (and hence be able to sustain larger moves against it). Right now the portfolios are a little off balance because when I started the bronzbeardtrendtrader account, I had a losing position on in USD/JPY, but I have been trying to scale the other account to size to make an effective hedge. I am still trying to work out some kinks in managing both accounts and how to scale the hedge in the best way, but so far I’m up 2% for the week in the new account and I’m up about 1% for the original account. Not bad at all!
Let me know if you have any questions!
Performance Report:
BronzbeardContrarianTrader - 12.59% since inception on 1/17/16
https://www.myfxbook.com/members/bronztrader/bronzbeardcontrariantrader/1484041
BronzbeardTrendTrader - 2.58% since inception on 2/21/16 (though equity is currently down about 8.44%)
https://www.myfxbook.com/members/bronztrader/bronzbeardtrendtrader/1531176
This was my first week since implementing the hedging account. The portfolios are still a bit off balance because when I started, I had a losing USDJPY position that I originally had on in ContrarianTrader (which I traded through and ended up being a solid winner) and now the hedge is a big loser in my TrendTrader account. This is gong to be the norm where one loser from one account becomes a loser in the other account as price continues to move around. Though, the USDJPY position is throwing off the strategy a bit since it didn’t start off flat, so I have decided that I will not be putting on any more hedges for that position and will just trade through it in the Trend Trader account until it comes back. At that point I will start off on an even foot for that USDJPY underlying.
I am pretty satisfied with the overall results so far (combined 2.75% for the week). Though I did stay a bit lighter in original position sizing due to a good amount of buying power already going to the USDJPY. I am always taking profits on my hedge position which causes me to be under hedged which bodes well for when the hedge starts to turn into the core position.
The real risk of this strategy is allowing a position to get too big. Either I can start taking profits on the core position or the buffer from the hedge will balance out the losses in the core position. As of the first week the hedge has been 34.5% effective ($292 Profit in against $844 drawdown). Not too shabby so far.
My goal is to make this strategy as mechanical as possible. I have a pretty consistent mechanical method for scaling when first starting out positions and adding to them ( with a .02 lot position sizing I add to the position when it goes down $5 and then again for each $5 down, for exampled USDJPY is down $5, I add to it, If the original position gets down to $10, ill add another leg etc.). I also am mechanical with my profit taking, once the position is up at least $1 per leg ill take a profit, but if i have more than one leg on then i will take a profit only when the cumulative gain of the positions for that underlying is greater than $1 per leg (i.e. if i had 3 long positions on in USDJPY, once the total long position gets to greater than $3 ill take a profit).
Once a position starts growing teeth (i.e. my USDJPY position currently on), I will add to the core position on a timeframe basis (i.e. add a new position every 2 hours) and on a price basis with the addition of adding to the position when price is going my way (i.e. add to the position when it goes down $5 and also add when the position goes up $5). This is just an effort to try and reel in the break even price so that I can continue to increase my probabilities. The trick here is just trying to do so but also trying keep my position sizing in check.
Now that I have implemented a hedging position, I am working on a new set of mechanics for the hedge account. The mechanics are the same for take profits and scaling the position, but i want to update my mechanics for the original position sizing as i think it should be based off the size of the Core position that is it hedging against. I’m thinking that I will want the hedge to always be at least 25% of the core position. I will be experimenting with different hedging sizes but i want to try out different percentages of the hedge in relation to the core to determine what size might be optimal.
Also, I would like to ideally reduce my position sizing to 1/4 of what it currently is, but I don’t want to take a hit to my profitability. 100% a year is my goal and if i can become very efficient with my hedging i think i can effectively reduce my position size to at least half of what it is (though 1/4 would be best) and still be able to hit my goal. Once I have more data on the hedging technique I can tweak it more. Also, since this is demo accounts I can’t implement the reconciliation of these accounts (which is what the ultimate goal is once I get some real $$ in here) so i will need to theorize on what the best mechanics would be for doing that. Nonetheless, I’m having fun with this and I’m learning a lot!
Heading into the new week I’ve realized that I’m way off on my hedges from where I want to be. I have AUDUSD on as a core , but no hedge, I have my EURGBP 75% hedged and the USDJPY is way under hedged ( though I don’t plan on adding any more to the hedge doe this one.) for next weeks close I want to have at least a 25% hedge on for each core position I have on.
Wow! Awesome week so far. Already at 75% of my goal, which is 2% per week.! I’ve realized I feel more comfortable with using the Hedge as 50% of the Core and it has paid real nice so far! If I find out that these types of results are somewhat normal for the strategy, I will definitely cut my position sizing.
https://www.myfxbook.com/members/bronztrader/bronzbeardtrendtrader/1531176
https://www.myfxbook.com/members/bronztrader/bronzbeardcontrariantrader/1484041
Crazy week so far.
Broke the 20% mark on my contrarian account and have almost raked in 10,000 pips since inception! Pretty solid for about a month and a half since inception.
The downside though (which logically makes sense) is that my trend trader account is getting hammered. Down about 15% right now. For the EURGBP position i’ve decided to increase my hedge from 50% to 75% because i’ve implemented a time based and movement based method for adding to the position since i’ve had it on for over a week now. I think once I have a position on for about a week in the Core and i implement these other methods for adding to the position, I will increase my hedge from 50% to 75%. Right now the hedge is working about 54% ($838 weekly gain in Contrarian Trader/$1550 loss in equity for Trend Trade).
It is very exciting for me that I have about a 8%+ gain so far [B]this week[/B] in the contrarian account, because this ultimately means that the strategy is running a little hot right now and that I will have the ability to reduce position sizing with my current methods and still be able to get a decent return. This amount of volatility can get pretty intense so might make sense to lower the position sizing.
