The Trials and Tribulations of a Currency Trader

Well I am creating this post asking for help. I will start describing myself. Then my history with trading/investing. Then I’ll move in to my current system. It’s a bit of a long read but you will discover the trials and tribulations of a currency trader. I am hoping to gain insight and ideas about how to move forward.

First a bit about myself and who I am and where I am in life. I am a Canadian male and am turning 27 this year. Finance has always been an interest to me. When I graduated high school I proceeded to study business admin in college and moved to finance for the second year graduating with a finance diploma. Then I went to university the year after and got a commerce degree. My post secondary education has tough me a tremendous amount about business/finance and I have learned some very useful things to apply to my everyday life. I have a good job for my age and make slightly more than the average Canadian at this point. I am am good at setting goals for myself and working towards them. People who know me would say I’m ambitious, stubborn and smart. My job is one of the most stable there is, it has a incredibly strong union, office work, defined benefit pension and amazing job security. Furthermore I have begun creating a second pension for myself, I have an online trading account that I have been buying 4 ETF’s on a monthly basis that provide me with world wide exposure. The goal is to continue 100 every month for the next 30 years, never sell and continue to buy more during stock market crashes. I know the stock market will never go to zero cause the governments won’t allow it. As far as the stock market goes, a long term ETF approach is a very strong one provided you don’t panic during the market crashes like many did in 2007/2008. Furthermore at this point I have owned a condo in a fairly major and expensive city for two years and have been making huge progress at paying down the principle since I know how amortization schedules work due to finance classes. As far as personal finance/career goals go, I am far ahead of most of my peers and am very close to the median Canadian family net worth. I have zero stupid debts coz business school taught me better. Enough about who I am.

Now onto trading. I first started trading due to my brother. He is 8 years older than me and was into stocks and options before I turned 19 (the age of adulthood). I remember him telling me in 2007 and 2008 about the stock market crash and the financial meltdown in 2008. He was the one who pushed me to open my first trading account. Urged me to take part of the stock market manipulation by buying call options on things such as UPRO (triple leveraged SMP500). This was a total disaster. I think I started in 2011 and this continued through 2013. I had zero ability or skills to succeed in options trading and lost money. A fair bit of it. I’m not sure how much, I have an estimate though. I could probably find out if I wanted. I was living at my parents house, only had to pay for school and my car really so I had money to burn. I told myself that I was learning and it cost money to learn to trade, especially since I didn’t have a mentor, My brother never really helped me out, he never told me how much money he was making. Looking back it I know with certainty he wasn’t making anything and basically lost all his extra money for a decade. When I look back to this now I realize that I was making ALL the typical trading mistakes (over leverage, revenge trading, emotional random positions) the list goes on. If it’s a trading mistake I made it. It got to the point where I figured I couldn’t go on with option trading. Despite the massive stock market rally fueled by the American government printing money I was unable to make any of it. All I really had to do was buy UPRO calls and hold them but I was not able to do it. I gave up shortly after 2014 started. I knew I needed to start fresh and looked to the foreign exchange.

I had heard about FX of course, in investment class in second year there was a chapter about it. I knew about swapping one currency for another and how that could yield profits if it appreciated. I remember saying to my brother in 2011 when USDCAD was 0.9000 that we should buy USD with our CAD coz it would never hold below parity. His words were “why would you want you buy their shitty dollar?” Well looking back that was the dead bottom for USDCAD. Anyways I started to look at trading systems and started to realize I had been going about it ALL WORNG. I started to realize in order to be successful i needed to have a strategy that I could stick to, and attempt to remove the emotions from my decision making. I placed my first trade on a demo account on EURUSD. Within an hour or so EURUSD went higher and my fake trade was in profit. I said goodbye to options and dove into the world of FX.

Next I discovered both baby pips as well as expert advisors (algorithms). I was in amazement with them. All the sudden I had a way to make trades, prevent overleverage, use a strategy and attempt to get probability on my side. I thought I was on the right track, and in many ways I was. I next up discovered a website that had access to 600 expert advisors for 100$. It was a pretty good deal. Sadly Metatrader 4 changed the way the code was compiled and so many of them no longer worked…. I didn’t know how to code so it was not in my ability to fix them. I briefly started to learn to code using Jim Dandy tutorials and made a bit of progress but ended up giving up on learning to code. Next I started asking questions about optimization of algorithms on here and someone told me to contact someone named DARWIN. Which I did. At this time he was working on a project called DRAFTA. It was a tool for optimizing expert advisors and then testing them. Very promising stuff. I dove headlong into this and was discussing it for a year or so with DARWIN who is a German, we talked many times over Skype. I started moving headlong into the DRAFTA with all these EA’s from the website. Some of them were showing very real promise. I was testing them and running them on multiple Metatrader 4 platforms. I began using real money and it was working well. At one point my account had doubled over 8 or 9 months or something. Then they all started to not work, all the sudden it was going sideways. One I was running in 2015 was making good money during the USD rally but during a FOMC I was caught with many longs on USD and JPY that were stopped at the USD bottom and gave back a tonne of gains. I created a journal on excel spreadsheet since I learned from babypips that it was so important. I started to think that the algorithms were not all them seemed. Many I developed on this DRAFTA program seemed to fail in real life. I even question DARWIN if DAFTRA was lying since the results were not the same as what should be happening. I sorta ended up giving up on the algorithms, I had many that I had developed but it was work to run them, maybe I just never really got a good grip on when to derisk or make it not trade. My original goal was one that I’d just leave and then re-optimize at certain intervals. Maybe it just does just not work like that. Last I talked with DARWIN he was making a system for manual traders, not sure what ever happened with the algo one but last time I tried to make it work it wasn’t working. In order to it to work it needed to connect to DARWINS computer. Anyways onto the next part.

So during some of the algo stuff I was working on manual systems. The manual systems I was trying to developed were varied. I tired short term day trading strategies, I tired long term trend following strategies, range trading strategies, indicators. All of them. I have multiple spreadsheets with info on why trade was taken, the results, the time, the before and after pictures. Still have them all. I was never really able to make any consistent profits (what we all are seeking). However I have learned a lot in the last few years regarding risk management, leverage, and deliberate practice. Some systems I tired I would make some money in demo account, switch to real and consistently lose money. Then I’d give up at 25% loss over a few months or something and go back to the drawing board.

Fast forward to today. Now I consider myself a breakeven trader using real money!!! Now I know no one wants to be a breakeven trader but I always remind myself just how far I have come over the last 7 years. I have constantly stuck with it despite large challenges, blown accounts, pitfalls and many years of hard work. It has not been easy and really I’ve had to do it all by myself. I have never had a mentor or anyone to hold my hand or lead to the right path. Never had anyone to review my positions, keep me focused or provide encouragement. If I keep going eventually I will reach constant profitability rather than periods of profitability and then periods of unprofitability. At least I’d like to think so. Just like how Mark Douglas describes the middle of the ground traders in his book “The disciplined trader” or maybe it was the second one “Trading in the zone” my account now looks like a roller coaster, up, down, down, up but not actually going anywhere.

My current system that I’m working on is a modified 3 ducks system that on here. I ditched the 5 M timeframe, use the h1 and h4 with the MA 60. The goal is to buy and sell into strong trends on h4 and h1. I identify the support, resistance and the trend lines on the chart and try to plan my trades around them. Risk to Return ratio is always 1:1 or greater. I keep stats on the daily range, R:R, amount risked, percentage risked percentage gained. I take before and after pics of the charts, I mention the reasons for the trade and at the end what happened as well as what I could do better. The goal is to improve upon my trading flaws and improve the strengths. I read pip daddy’s London and American recaps daily and try to do my journal promptly. I am aware of all news events and try to modify the risk ahead of the schedule. I know I have an issue with overtrading but its really difficult not to. One technique I am using to adapt is to only use .25% on each trade so even if I load up on one currency coz it is weak or strong I will still only have max 1.75% at risk. I know about locking in gains, letting winners run, cutting losers short if my original idea is invalidated. The way I see it I am already doing many of the things required to succeed, I’m just not fully there yet to be consistently profitable but I think I’m close.

I guess I’m making this post in an attempt to move to the next stage of trading. I am wayyyy to stubborn of a person to give up on stuff because it is hard. I am always willing to work on something that I start until I succeed and to be honest trading currency is a huge technical challenge that I crave. It is by far the hardest thing I have done and when I read books like the disciplined trader I see myself in some of the things that are said. I am currently rereading it after a few years and I have noticed I am better than what I was a few years ago. I read on here that no trader is an island and so I’m trying to join myself up to the community rather than fight it out along on the FX battlefield very morning and night by myself.

Does anyone have any tips for me? I guess you can tell I’m in it for the long haul. I know for a fact I am overtrading, although I am not sure how I go about preventing it…… It’s very, very elusive. Does anyone want to review some systems/trades? Perhaps the current one that I deem I’m the most successful with? Does anyone have comments or suggestions? Any tips for improvement? Any help is appreciated. The battle is hard fought out on the exchange so I turn to allies for support.


Great post, thank you.

Some suggestions -
you might be too close to the detail
don’t focus on minimising the loss rate or minimising the cost of losers, focus on maximising the size of winning positions when its a good one: pyramid the best winners: do away with TP’s
all the above suggest willingness to trade longer-term

Keep going.

On the 1hour chart,
Price trading above daily open, look only to buy.
Price above MA 60, look only to buy.
Hourly closed above MA60 and daily OPEN, ENTER buy.
Stop loss will be the same hourly LOW.
Close trade between 4 to 8hours later.

Does this help? If it does, describe to me your system in detail, and please ask me some specific questions about your system. :wink:

Okay well here is my logic. I want to buy/sell into only good trends. I define a good trade as an H4 60 MA slope. I want to avoid the trades that are not sloping. If the “duck” (name I use for the 60 MA) is sideways I avoid the pair because it is ranging and not trending. Next up I want to buy/sell against levels of support and resistance. If it is an uptrend as seen by a sloping duck on H4, I want to look for a pullback to the support or a trend line, and then buy in direction not the trend. Now the H1 duck comes in place because sometimes they will both be trending, this is even more positive. I am willing to try and buy breakouts if there is two aligned ducks (both sloping up or down hard). The SL is placed based upon support/resistance, same with the TP. Although I try to let the TP run by moving it higher and locking in gains using the SL. Always use a 1:1 or > risk to return, most of the time I am average 1:1.89 right now over 240 trades. Overtrading is an issue I know in 38 days I have 233 trades although some were never triggered because the pair never hit the entry, maybe 20%. I am working hard at trying to not overtrade lower probability setups.

I have found that waiting for the market to come to me is more advantageous than buying at market. Sometimes buying at market is worth it but most of the times it’s too easy to buy at market on low quality/late setups and overtrade feeding off the fear of missing out. Seems like almost all mistakes come from fear in some form or another.

See the trade on CAD/JPY today. I was waiting for it for several days and over the EUR session last night risk aversion saw price fall and hit my entry, followed by a move to the resistance. My was set for 2 days. Notice the H4 duck Is in a strong slope. This is what I’m really looking for with this system. Price hit the TP and I have set another order in almost exactly the same place with almost the same parameters.

In my journal this is the logic from the trade I’m showing.

H4 - pair is trending higher, strong slope

H1 - pair is trending higher, strong slope

Logic for trade - buying on a pullback to the support level. Pair is overall bullish and risk taking is prevalent. Just want to ensure I get a good entry on a move higher.

Stop loss - sl is below the two Supports and the two rising Trendlines

Take Profit - tp is at the Resistance level

Result - Waited for the market to come to me, pair was triggered on the Risk Adversion rally overnight, then ran higher throughout US session and hit the TP,

My thoughts/improvement - Well the trend was good, the entry was good, the best part was I waited for the market to come to me. Then I entered and didn’t jump the gun

This is how I conduct each trade. There are 4 pics in total, 2 before and 2 after.

Thanks for the encouragement, can you please explain pyramiding the ebst winners? I have experimented with the no TP in the past but has since found adding a TP and then trying to move it higher while locking in gains works well. Please see my response to the other commentor with the system logic and a picture.

That’s an interesting idea! Thanks for sharing.

Base on your entry criteria. i don’t see how you can overtrade. You should always risk a certain % capital amount (utilised margin) at any point in time. At around the same price, no new position should be added. Averaging should be done at a significant different level. Different days or fundamental conditions.

In addition, by eyeballing, scroll back the charts and look for cluster of choppy price action or consolidation periods to backtest your strategy, and see how well you fare during those times.

Normally, 3 days after NFP, FOMC or extreme high impact news release trading should be halted. 3days should be sufficient to allow erratic market conditions to settle down or normalise.

Various ways of doing it in detail, but the idea is the same - as a position moves with the trend into profit, keep it open rather than close it and add a second position. This can be the same size as the first or smaller but the principle is that you also move the stop with the trade so that whatever you lose on the second position does not exceed the loss of profit on the first. So now you’re still risking the same or less capital as with the first trade but you have two trades that can bring you profit. Risk is kept focused on loss of capital, not focusing on loss of unrealised gains from open positions.

In general principles, if you think an uptrend has a 75% probability of continuing higher from where/how you got in, and a p[rice rise occurred, why would you exit if this probability has now increased to 80%? The rational thing to do would be to add to the position.

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