Sunday, December 7, 2008

Traders Respond #2-- IFCN Wk 52 –Fri- Equity: $1,597.81

I'm posting some more of your emails-- readers and successful traders who were willing to share your experiences.

Your responses are valuable to others because trading is a very mental process. As a mechanical process, almost anyone can physically enter a specific forex trade consistently. Nevertheless, personal attitudes about value and conviction are involved, making consistent execution of a methodology-- even one you have determined should be successful-- a veritable leap of faith similar to the belief that a parachute will open when you jump out of a plane.

Reportedly 3,.000,000 skydive every year. Not all survive.

Total Skydiving Fatalities since January 1, 2004 (http://www.dropzone.com/fatalities/)

Failing at trading isn't as bad as risking a jump to your death – for most people. But it is hugely challenging and any valid insight can save capital and heartache for many others.


--- “ value of placing trades each and every time...”

Hi Joel,

I've learned so much from your website and I believe there are many traders out there with a similar story to me.

I jumped from FOREX strategy to system looking for that great performing one that made 100 to 200% returns a year. I thought that if I found that system, I would have the key to trading. Your blog and articles have taught me that that thinking isn't correct. I needed to train myself to be a good trend follower.

I learned from you the value of placing trades each and every time, especially in times of drawdown. I've learned to manage my emotional bias by looking toward the positive expectation of the system and not each individual trade. This can only come by proving to yourself that your system has a good edge. I've come to believe that with these things, along with realistic, consistent position sizes, you can be a successful trader.

I began trading FirstStrike and OneNightStand in the middle of September, 2008. The very first week we began FirstStrike Plus, I hit a 42% account increase (back in October)! Now, I'm almost at my 50% milestone!

Yes, drawdown will come again. But thanks to you, I have the tools to continue to be profitable in the long run. This is not luck, it's consistency.

Please feel free to share my story.

Gxxxx Nxxxx



----- "Up about 40%" -----

Hi Joel,

Just wanted to drop a note, congratulations for the first year of your excellent blog. Thanks for all the time you put in there, I really, really appreciate it.

After all the problems I had first 6 months my fx accocunt is now up about 40% (not counting the open profit this week).

Thanks,

Txxxxx


----- "currently up 99% from March 2008" -----

Hi Joel,

I have had great success trading your systems this past year. I am currently up 99% from March 2008. Through reading your blog and finding the edge of each system, I was able to devise a money management strategy that has allowed me to add an additional 29% for the year compared to when I was just using a trend filter. I can see how want-to-be traders have a hard time trading FSP and ONS. After trading them for almost nine months, I have not exited my profits early once. It has been extremely difficult at times, but when you look at the edge of the system and see those numbers it gives you confidence to keep holding onto the trade. Thanks for answering all of my questions. The only website I read about trading now is yours. So much knowledge and little hints everywhere to help FSP become more profitable.
--
Thanks,

Bxxxxx


----- "Volatile Returns!!..., by design----

Joel,
I haven't been following your trades for a year yet. I think it was May when I ran across your site after Peter Crowns posted one of your missives on Forex Factory. I think I'll look back on that event as having been a fateful one. Since I started following your trades, I've had what I can only call stunning success in my trading. I've taken the $120 that I allocated to the Challenge account to over $300 since May. Obviously I'm taking more risk per trade than you do in the Challenge account. I set my spreadsheet to calculate for 5% equity per trade and I just focus on tolerating the awful drawdowns. I've seen that account equity over $700! It stands this minute at about $385.

(JR's note: That's 265% return at present--- at peak > 480% return)

I'm sure you know well what that kind of extreme risk feels like. Part of what knocked me so hard was actually the trading in Silver. I let myself believe the 'fundamental story' and get too cavalier about catching falling knives in XAG. I blew at least $200 tilting at that particular windmill. In typing this, I'm somewhat surprised that I needed to learn that lesson again. I will have to be ever vigilant to keep myself from doing something similarly stupid again.
Now for the even more extreme trading, I took another $111 and started taking trades with 15% of the account equity at risk. I'm blogging the experience here:
Forex Rollercoaster of Death - http://forexcoaster.blogspot.com/

My 3 inspirations for the idea have been yourself, Larry Williams, and Van Tharp. (in descending order of importance). It has indeed been a rollercoaster of death! I've traded that hundred bucks all the way down to $18 and change, and all the way back up to $467 or so. Just now it stands at $323. I'm compiling a lot of statistics as I go along, which I publish every trading day after 10 am. There's also a little race going on between myself and another trader. I publish a simple line chart of both our equities, but I can't let myself care who wins, since I don't want it influencing my decisions. Mostly, however, I have very few decisions to make. I pick entries based mostly on hourly DIBS setups, although I sometimes play for reversals. My only real edge appears to be that I always honor my stops without fail, and I try not to trail the winners too closely. I calculate the historical expectancy of my trading as I close each trade. So far it's at about 0.63% per trade, which seems to me to be screamingly, stratospherically high even with the huge risk I put on. That's averaged over 100 trades so far. I fully expect that number to come down. I've tried smoothing it with a moving average, but I think my sample set is to small for that to make sense just yet. As it stands now, I'm about 1,300 trades away from $1 million. (I track and publish that statistic too.) Optimistically, that means I need to take something like $5.8 million in losses along the way, so I try to focus on that in order to keep my psychology on track. That ain't easy, as we both know.

Well, let me wrap this up by saying that it's definitely been a fascinating, frustrating, gut-wrenching, fantastic, exhilarating journey. Looking back, I can scarcely believe how ill-equipped I was for this trip when I began it. I think I'm less so now. Your inspiration, example, and guidance have been a tremendous help along the way. Thanks again!

-Dxxxx
aka Archiphage



THANKS SO MUCH FOR YOUR RESPONSE!!!!! And to the others I didn't get to publish - your strength of character impresses me.

-----
Friday was an exciting and turbulent day.

There were two OneNightStand trades taken which resulted in losses. The short Usd/Jpy, and the short Gbp/Jpy. I was already short both of these markets with FSP from earlier in the week. I only added minimal size on these trades (we are extended to extremes on the downside over many weeks) so my losses from the failed ONS trades were relatively insignificant.

The first Friday of the month has the US employment report which usually has significant impact on trading. This week was no different in that regard.

The United States' Bureau of Labor Statistics reported that Non-Farm Payrolls for the month of November fell by more than 533K, the greatest drop in 34 years. The Labor Department also said the unemployment rate rose to 6.7 percent, the highest level since 1993. At first this news caused some currencies to gain on the dollar in knee-jerk fashion like you would expect, then the dollar got amazingly strong. But, as time went on and the dollar couldn't dominate any longer, the Euro and Sterling regained strength. This kind of trade tore up many traders who primarily trade news events.

The eur/usd FSP trade; entered Thursday-- got stopped out Friday after the news hit. Then the market stopped falling and recovered nicely..., but without me.

The usd/chf trade, still on from last week-- got stopped out when the dollar got stronger after the employment numbers came out, and then exhausted itself.... the Usd/Chf fell back by the close without our short trade.

In fact, the action of all of the forex pairs, and the lack of continued strength in the dollar after the significant news-- caused me to exit the short FirstStrike Plus trades: gbp/usd, gbp/jpy, and usd/jpy at technical price areas exceeded after the news and their subsequent reactions. My exits were much better than their respective Friday closes.

I normally would prefer to exit the remaining FSP trades on Monday as usual. With increasing dollar weakness as the day went on and the day's news was digested, it became obvious that exiting early was the advantageous thing to do.
-----

Friday's FirstStrikePlus trade executions:
  • eur/usd: Long @ 1.2848, stopped at 1.2644 for 204 pip loss..
  • gbp/usd: Short @ 1.5149, exited at 1.4640 for 509 pip profit. (news failure exit)
  • gbp/jpy: Short @144.02, exited at 135.75 for 827 pip profit. (news failure exit)
  • usd/chf: Short @ 1.2062, stopped at 1.2225. for 163 pip loss.
  • usd/jpy: Short @ 94.38, exited at 92.39 for 199 pip profit (news failure exit)
FirstStrikePlus trades will be exited on Mondays at 00:00 CST if profitable. (First-Profitable-Open Exit) See complete rule-set for effective trade management.

OneNightStand trades taken Friday:
Short Usd/Jpy @ 92.06, stopped at 93.06 for 100 pip loss.
Short Gpy/Jpy @ 134.10, stopped at 135.10 for 100 pip loss.

Trading account equity: $1,573.81

Silver position equity: $24.00
(Current XAG price: $9.52 – 200 unit position average: $9.40)
TOTAL Current Equity: $1,597.81.

I know that many appreciate the emails you readers of this site have sent in about your results.. Thanks again for all of your responses.

I am flat for the weekend. Next week might be the start of dollar weakness. How extreme can the dollar's value get? (answer: Very extreme, but everything comes to an end, as we've seen in many examples this year.)

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: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

1 comment:

The Archiphage said...

I'm glad to see someone else was thinking the same way about exiting early. I got a few more pips than you on GBP/JPY (my exit: 135.15), and you bested me on GBP/USD(my exit: 1.4681). I also held out on USD/JPY figuring it might get dragged down if US equities hit the skids again in the final hours. That didn't work out so well, and I ended up taking the system exit (92.89). Not bad of course... just another reminder that there's pretty much always a better exit in hindsight. Thanks for the kind words and the ink on your page... I'll be curious to see what my traffic looks like after today. Take care...