Friday, February 29, 2008

Dollar melt down! All New Total Equity Peak--IFCN Wk 12 -Fri- Equity: $623.28

We have reached a key point this week. We have survived our first major drawdown and succeeded in attaining new equity highs!

What you find out the longer you trade is the single solitary fact-- you spend the majority of your time with substantially less wealth than you've had in the past. Drawdowns occupy more than 95% of your trading life.

Get used to it. I did, but I still don't like drawdowns.

So, weeks like this are some of the few times that you really feel validated. Charging to a new equity high (in just one big week) after a 16% drawdown (from $580.41) helps you get the feel of what high reward trading is all about.

FirstStrike Trading theory:
Drawdowns take place due to insufficient trends, so FirstStrike's small fixed losses do their jobs. As equity drops, so does the capital risk for each trading pair. Your drawdowns tend to slow to less than a linear rate. When the statistical trends re-emerge, you gain back the temporarily lost equity-- exponentially.

We have achieved a 24.6% total increase in the last 12 complete weeks of the Alpha account for the Ultimate Forex Challenge! That is an effective 105% annual return.

It will be very unlikely that we will continue at this pace for long. The odds are in our favor though,  that we'll hit our 50+% return goal later in the year.

I'll keep putting in the trades.  And, I'm glad to have you watching the progress.

If anyone put on trades similar to these this week, feel free to drop me a note. I'd be interested to hear how they worked out, and if you use a different platform than Oanda.

I got an email from a reader this morning after sending out the ONS orders:

Joel,

All my entries were like yours except the GBP/JPY. The 10 was over 40 so I set up a buy stop and not a sell stop. I am assuming you looked at the angle of the 10 and thought better to short? Or was it the news out of Japan last night? Thanks

C-----


My answer:

On my charting package, the 10 was under the 40 on the GBP/JPY. Hence the trade signal.

Breakouts, all by themselves; have an edge. Some breakouts edges are bigger than others, of course.

In the simple system of ONS, the moving averages just filter out some less favorable (read: lower probability) breakouts. So, a trader could figure: Since it is a close call, with the angle of the averages and how close the breakout is... etc., and decide to take it. I personally wouldn't have a problem with that, since the stoploss takes care of the risk. Maybe take that kind of trade with 1/2 size.

But in this case, my charting package showed the 10 day average just barely under the 40. So that made it a short.

Thanks C------


This week we had some good OneNightStand trades.  Just one loss, the Eur/Usd.

This week's Alpha account trading recap:
Start of week equity: $486.25

Completed FirstStrike trades:
  • Eur/Usd:  Long @ 1.4867, exited @ 1.5176 for 309 pip profit
  • Gbp/Jpy:  Short @ 210.64, exited @ 211.24 for 60 pip loss
  • Gbp/Usd: Long @ 1.9709, exited @ 1.9856 for 147 pip profit
  • Usd/Chf:   Short @ 1.0836, exited @ 1.0418 for 418 pip profit
  • Usd/Jpy:   Long @ 107.91, exited @ 107.67 for 24 pip loss
Total of    84 pips in losses.
Total of 874 pips in profits.
-----
OneNightStand Exit(s) on 02/25/07:
Exited short Usd/Chf @ 10873 for 8 pip loss.
OneNightStand 02/29/08 entries:
  • eur/usd: Long @ 1.5231, stopped out @ 1.5176 for a 55 pip loss
  • gbp/jpy: Sold @ 207.94, unrealized profit of 147 pips
  • usd/chf: Sold @ 1.0484, unrealized profit of 77 pips
  • usd/jpy: Sold @ 104.57, unrealized profit of 73 pips
-----
Unrealized P&L:           $ 31.15
End of week equity:  $ 623.28 (includes unrealized P&L)
Total Gain on Week: $ 136.78 (28.1% weekly increase)

See you Monday!

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to:
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1 comment:

Cmartin371 said...

Hey Joel,

Thanks for the blog. I missed your posts at FF so this is great. And thanks for answering my e-mail above.
The 10 was above 40 on Oanada so I took the long which never would have it any ways. I was tempted to go short because the MA's were so close and the momentum was short, but I stuck with the rules.

Chris