Friday, September 12, 2008

Rock - Roll! - IFCN Wk 40 – Fri – Equity: $1,174.29

To say we had a volatile week is the largest understatement possible. We had gigantic profits by Thursday on all of our trades, as anyone knows who took this week's FirstStrike trades.

If we had gotten out at the maximum point of profit on each of our trades, we would have been up more than $350 dollars – or 31.8% for the week, a truly huge percentage gain for just one week. As it was, we ended up only 6% higher than last week. Profitable, but not earth-shaking. I still will take those profits over losses any day.

-50% Trailing Stop Revisted-

In the past I introduced you to the idea that when gains are outsized early in the week – you can adopt a simple trailing stop strategy that originated in the trading pits. The moment profits become larger than a certain size, such as 300 pips in a trade, you can protect half of the existing profits on a trailing basis.

For example: the week's short Gbp/Jpy trade had 835 pips of profit at 10:00 AM on Thursday. Using the 50% trailing point after we had 300 pips in profit would have trapped at least 417 pips in profit for the week. As it was, holding until Friday's close only garnered 103 pips.

Where this trailing setup loses out is situations where the market makes large reversal swings, stops you out and then goes on the same direction it did previously and you lose out on even larger profits. There are trade-offs for using or nor using all trailing strategies, and losing large potential profits like we did this week was a great example.

The 50% trailing strategy can be a benefit in markets like we saw this week, but by no means all market types. How can you tell the difference? Good question. If you can't, don't use it.

Still, it was a profitable week and we are at a new equity high We are up 134% since Dec. 2007.


Here's the week's recap:

The data below is as of Friday's close, Sept.12, 2008:

Start of week equity: $1,104.38

OneNightStand Exit(s) on 09/08/08 :
Total Profit: $ -0-.

Completed FirstStrike trades this week:
  • Eur/Usd: Short @ 1.4364, exited Friday at 1.4214 for a 150 pip profit.
  • Gbp/Jpy: Short @ 194.27, exited Friday at 193.24 for a 103 pip profit.
  • Gbp/Usd: Short @ 1.7872, exited Friday at 1.7871 for a 1 pip profit. (Breakeven stop was placed)
  • Usd/Chf: Long @ 1.1199, exited Friday at 1.1312 for a 113 pip profit.
  • Usd/Jpy: Short @ 108.31, exited Friday at 107.80 for a 51 pip profit.
Total losses: 0 pips
Total profits: 418 pips
Net profit: 418 pips ($69.91+)

OneNightStand 09/12/08 entry(s):

End of week equity: $1,174.29 (includes unrealized P&L)
Total Gain for Week: $69.91 (6.3% weekly increase)

We had no OneNightStand trades this week. I'm just as glad, because it was inevitable that the dollar would have to correct sometime. Since it obviously started a retracement today, I'm glad it didn't hook the ONS trades and then reverse the way it did.

Anyone who took the trades this week and held to the bitter end has my admiration and respect. It took character to give up profits that have a tendency to beckon to you and beg you to take them.

Looking forward to next week.

Joel Rensink

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1 comment:

The Archiphage said...

I can't say I held out to the very end, but most of it. I figured that I didn't want to wait through the last 5 hours of trading on Friday to see if any more profits would disappear. I figured that with the late hour, the chances of significant reversals back in my direction were small considering how one sided the trade had been for the last several weeks. I was not interested in paying any more to find out if I was wrong in that assessment, so I closed out a few minutes after the Michigan sentiment numbers were released. This time around, it was a good decision. Still it was quite a fantastic week even if we didn't capture the whole moves. I had a nice week outside the Challenge account as well... I trust you did the same. Take care.