Forex Trading Review
Today was a poor day I made two consecutive bad decision and in trading that hurts, successful trading means making good decisions and whenever I make a bad one I dwell on it, two bad ones can push me over the edge.
At times like these I stop trading and do a thorough review of where I am at, see how the trading is going and analyse the mistakes to try to make sure I don’t make them again.
It is exactly half way through February so a review now makes sense. If you don’t already use MYFXBook I strongly advise that you join, it is free and gives you all of the data you need to analyse how your trading is going.
To put this review into context the account I look at is one I use to show off my trading system, I set a target of trading $50 into $50,000 using my signals hoping to make some money and get a great advertising tool. The project is split into 3 stages: each stage requires me to multiply the account by 10. The first stage $50 into $500 completed in December 2017 and took 4 months. Stage 2: $500 into $5,000 started in January and is ongoing.
How is the Forex Profit Going?
Key Forex Metrics
Can we really make $50K this year?
To get to $50,000 this year we have got to make 41% per month, that would hit $50,000 in December, of course it is unrealistic to hit 41% every month but we are aiming for that as an average, some months will be far worse but we hope we will have a few really good months and to be honest if it takes 18 months rather than 12 it will still serve our purpose and the purpose is to show what a fantastic system we have designed unique to us using mathematics that nobody else has considered applying to Forex (I was a maths lecturer for 20+ years) and economics that the industry considers a bit beyond the realm (that’s the work of Tony Plummer).
A couple of errors today but good money management and trade selection means we are on target for the year and it was a case of lost opportunity rather than lost money. I have made a note that I will not repeat these errors, I am very good at that I learn quickly and never make the same mistake again.
The 30 traders who are following me on this journey will also have made very good money and should end up the year $50,000 better off than they started it. That will make it a great 2018 if you fancy joining them click the link to read about the signal service and take a free signal as a trial. The last free signal made more than 1,000 pips!
On December the 27th I moved the $500 dollars from Hotforex and deposited with XM to take advantage of their 50% deposit bonus. The whole purpose of this experiment is to trade $50 into $50,000 using deposit bonuses and high leverage, I will take advantage of any other free money that comes along.
The Equity has finished January at more than $1,500 as you can see from the image, I still have 3 open trades that will carry over into February but this is all about building equity and making the most of it.
Top trades this month have pretty much all been selling the dollar, I am very keen to be on the right side of the trend as the strategy is a swing trading one, the only way to make the kind of gains we need is these medium term swing trades. I always ensure that risk reward is greater than 2:1 and I try to cut the losing trades early and let the winners run to target.
Using MyFXBook I can check some key metrics to make sure I am actually trading the way I intend to.
Average win = 238 pips ($113)
Average Loss = 47 pips ($22)
I am really pleased with that wins are much bigger than losses, average trade time is greater than 2 days with average loss being less than 1 day and average win greater than 4. Risk of Ruin is also pretty good, remember this is a pretty high risk high leverage operation but the risk of loosing 40% or more of the account is less than 0.5% which is really great.
Every trade I take risks around 10% of the equity, that is a bit less than I was running at before January but I seem to have had more trades open at the same time so I had to moderate a little, especially when trades are correlated
Stage 2 Continues
Stage 2 of the plan will continue next month, stage 2 is trading $500 into $5,000. I split the target into 3 stages each one requiring me to multiply the equity by 10. I would really like to finish stage 2 in the next 3 months which would put me on target to finish the entire project by October 2018. The 2018 deadline is less important than completing the plan but it would be cool to finish in 1 year. How many other ways can you turn $50 into $50,000 in 1 year?
Want to Join in?
All the trades I take are from my signal service, I don't take any other trades and people subscribing to the service know every trade I am taking, the service only costs £50 a month so all followers made a significant profit this month even if they are only trading a $500 dollar account like this one. If followers closed all trade now they would have made a profit of $770 for an investment of $500 a pretty good return for 1 month.. If you are interested check out the signals page or send me a message.
A small objective achieved
I continue to trade the $50 account aiming for a target of $50,000 this year. Today the account passed the milestone of equity being higher than $1,000 for the first time, thats pretty good as I hit $500 less than 1 month ago. The trading plan is pretty straightforward, I am using the trades from my signal service with a much higher leverage than I would advise. To make this work I have to be prepared to cut my losses early and let the winners run. So far it is working out really well.
Forex Trades for 2018
I think the trade of the year will be to sell the dollar, it is going bearish against everything. Last year I repeatedly sold the Yen to great effect and I am expecting to have the same results but this year selling the USD.
December was another Great Month.
The $50 account has hit a major milestone, equity passed $500 and the first deposit bonus of $50 was released. This is a pretty major step in the right direction, to make the target of $50,000 we need to multiply the equity by 10, three times and we have just completed the first time. That means we are one third of the way there and it only took 4 months, I think that is great.
It is now time for stage 2 of the project, I have withdrawn the money from HotForex (that went really well, less than 24 hours to my account, they seem like a good broker) and I have deposited it with XM using there 50% deposit bonus. We know have equity of $750 and I will be trading with XM for the next few months as I try to clear the new bonus. (one small point I withdrew $513 from Hotforex which landed as £355 in my account so I had to add £2 to make it back up to $500 when depositing with XM, Charges and $-£-$ conversion. I will have to be more careful next time.
December was a pretty good month, we started with $184 and finished with $513 which represents a significant growth. The big winning trades Oil, AUDJPY and Litecoin are shown below they are all great examples of my trading system
The Forex Plan for January
I have added a few extra assets, namely soft commodities and some stocks and opened the MT5 account with XM giving me acces to stocks and Crypto. I will be trading with each stop loss set to 20% of my account and with a risk/reward ratio of 3:1 minimum, after that it will be the usual plan of buying pullbacks against the trend. Each day I complete a journal of trades I am considering taking with entry points and stop loss values, I will continue to take those Journal trades but in most cases will look to enter manually for a better price to help the R:R if I can. December was a great month for the journal trades (that is how I trade my main account) I posted nearly 9 hundred pips on 6 closed trades. The hit rate was 75% and 2 trades remain open (oil,AUDJPY) showing more than 400 pips between them.
Want to Join In?
When I started the $50 project in September 8 other traders decided to follow along, a few of them have made it to the $500 stage but most have not. Those that fail do so for one of two reasons 1. Over trading, they just take loads of extra trades 2. They cut the winning trades too early. It is a learning process so hopefully they are on track now.
If you do want to join in I offer my trade journal, and email each time I trade the $50 account. There are quite a few extras like videos explaining the system and charts showing the pattern I am trading it is free to anyone who signs up to XM and deposits through my affiliate link or you can join through the signal service. Check out the signal service page for a full rundown of what i do.
The $50 account approaches $200
The high risk project to trade a free $50 into a serious amount of money continues to make progress. The account closed November in pretty good shape, here is the monthly statement from HotForex
The project remains on target to hit the $50,000 in 18 months but this is still very early stages we are only 3 months in but so far we have delivered 278% which is pretty good. The original target was $250 by year end and I think that is achievable.
As long as we don't have a big loss, which is always a possibility, the increased trade size should make the profit target achievable. The trade size is now up to 0.03 lots 3 times the original starting size, we also have access to more assets, we can now trade the crypto currencies as well as two indices (Nasdaq and Nikkei) plus several commodities. Previously we only had the margin to trade Currencies.
The Big winners this month were as follows
These two trades delivered the lions share of the profits, the biggest loser was AUDJPY at -$8
I am hoping to use this account as a training tool in 2018, I am planning a daily livestream broadcast analysing all the market opportunities, talking about my system and explaining with live examples my thoughts and actions. This will be a major change for my working and I am currently putting the technology in place, I will be running practise livestreams on an occasional basis in December before I commit to the everyday version.
Sign up if you want to receive further information and my occasional news letter
Profits all around
It is shaping up to be a great autumn for my trading system, after a quiet summer things are really moving. The most important thing about trading is being on the right side of the trade, if you are looking to trade the USDJPY you need to know if you are looking to buy or sell. The second most important thing is timing the entry, you need to have a good technical plan that means you do not buy at the highs or sell at the lows.
My technical system does exactly that, it gives clear guidance about what to trade, when to trade and in which direction. This week we have had one medium term trade activate (buy USDJPY at 113.49 stop loss 113 with a target of 117: this trade is currently up 50 pips and looking good for its target). Two short term trades buy Palladium and Buy GBPJPY both of which delivered a nice return (total nearly 150 pips in 4 trade). There are a lot of trading systems, I have tried most of them, but this Plummer wave approach is the most reliable I have found, I designed it around Elliott Wave but made major adjustments to suit the specific nature of Forex trading. The system now provides me with a full time income and I think it is finally complete and working to its full potential.
The system identifies those assets that have a Bullish or Bearish sequence, in effect those that have a trend and in which way the trend is going. We then find pullbacks against the trend at higher degree, this means we are always buying the dips and selling the rallies, we are never on the wrong side of the trade and we never buy at the high. Of course we are not always right but you don’t have to be right every time to make good money in Forex, you Just have to be right enough of the time and make sure your wins are greater than your losses.
The system is currently giving a further medium term entry signal and has 2 short term entry ideas, the short term ideas give followers the asset and the criteria to look for to open a trade. All of the trades require a Plummer wave pullback to trigger the entry and hopefully everybody following my trades is learning how to recognise this important technical indicator and use it to their advantage. Followers have regular video updates on trades and a daily email explaining thoughts plans and ideas.
The short term ideas let you know what to trade and in which direction (two thirds of the puzzle) but the trader must find the entry point by applying the rules of the system, often these short term trades require constant monitoring and by nature are only expected to last for a few hours. In our system short term means the hourly chart we never go below that time frame.
Medium and long term trades are given as full signals Entry, Stop and Target with guidance about what to do when the trades become live. These longer term trades can be set as limit orders and allowed to play out over a number of days. Medium term trades are found on the 4 hour chart and long term trades on the daily chart.
The image below shows the live USDJPY trade with the green box representing the Buying area, a limit order was placed at the top of the box and a stop loss at the bottom. In around 75% of cases the asset turns inside the box and moves on to be a profitable trade, which is exactly what happened in this case. This trade is now risk free with the stop loss having been moved to zero.
If you are interested in receiving the signals, training and all of the information necessary to implement this trading system it is provided free to all those who open a new trading account at XM by clicking the affiliate link on the micro signals page, I receive income from XM for every trade that is placed on account that has joined by following the link. This affiliate link is what pays for the signal but it is free to the trader. If you don’t want to open an account with XM you can buy the signals via the paypal link on the signals page, paying subscribers also receive a 45 min 1-1 skype training session which accelerates learning and can receive the short term trades as signals should they wish it.
After 6 weeks equity is up 50%
Using higher leverage makes trading difficult and risky, on my normal account i risk 2% on every trade so it really does not make any difference if the stop loss is 50 pips or 500 pips I just adjust the position size. I just cannot do that with this tiny account, i follow strict rules which mean i end up taking trades and then stopping them when they loose -10% inevitably often the rules require opening them again and sometimes loosing again. It is not a trading style that I like or that comes naturally to me but so far it is being successful. I designed the strategy specifically for this account, i suppose it is somewhat related to my semi pro poker days, fold under pressure and bet when you think you are ahead.
The results show a 55% return which is really promissing, when the markets begin to trend again I hope that this will rise quickly however at this rate it will take exactly 12 months to get the account to $2,500. I now expect that to be my minimum target as it assumes difficult trading conditions for the entire 12 months, a more reasonable target would be $5,000 in 12 months which assumes 6 months good trading and 6 months difficult. (of course that does mean multiplying the account by 100 in 12 months which is the thing I am really chasing)
Other statistics point to the difficult trading conditions Drawdown is at 39% that is higher than had been expected I set 33% as the target for this. Win rate is at only 40% and the starting target had been 50%.
Comparing this attempt with my previous ones I am pleased, the new rules have had the desired effect of keeping me in the game when things go badly, in previous attempts I would have been bust at this point so the new improved rules are working well.
All of the trades come from my signal service, I am offering that for free to customers who sign up and trade through my affiliate link, alternatively I do have a subscription service if you are interested.
The $100K Challenge
I have tried to turn a small amount of equity into a large sum several times, I have failed on each occasion but every time I fail I review what has happened and spend time improving my strategy and changing the way I approach the task. My total return on the 6 separate attempts is a little over $13,000, I lost the initial equity on 4 occasions and won money on only 2. I have no doubt that I get better each time I attempt this and feel that I get ever closer to achieving the dream.
For this seventh attempt I am starting with $50. The target is $50,000, it is only $50 as I have been given a no deposit bonus as a reward for writing a review, rather than add to it I am going to see how far I can trade it, I have opened a MyFXbook account so that the trading results will be verified and available for all to see. A link to myfxbook is on the right.
Success depends on a whole host of things but in truth it boils down to two key points
Hopefully I have got these issues worked out correctly this time.
Trades will risk a maximum of 10% of equity, (not the first one we don’t have enough money) this will be worked out by using the stop loss as defined by retiredearlyFX signals. I will look for trades that have a risk reward of 3:1. This means that loosing trades will cost 10% of equity and winning trades should receive a 30% return.
With a hit rate of 70% and every trade following the 30% win and 10% loss it takes around 47 trades to get to $50,000 or 47 trades to multiply the equity by 1000. I am hoping to average 3-4 trades a month giving me a time frame for the project of 11-15 months. That is much longer than the previous attempts and reflects the change in money management.
I have written at length about the swing trading system I use to choose trades for the RetiredearlyFX signals, it is a relatively simple system that trades pullbacks in a ‘buy the dip’ mentality. I always trade with the trend at higher degree and have developed an effective method that delivers consistent profitable trading.
For this project I will use a subset of the signals I generate, the signals will be reduced as follows: