Diary of a Littlefish – May

Posted on Posted in Diary of a LittleFish

Within the last month I was only able to trade the first and last weeks of May. I was travelling for two weeks and didn’t have access to my laptop, despite this it turned out to be one of my strongest months, and the first profitable month since November last year.

Having introduced some additional instruments the previous month, it was these instruments which provided the large moves that this system I’m trading takes advantage of. It was primarily the decline of Gold and Oil that contributed to the overall c. 1,300 pips gained. Although the SP500 gained over 200 points as well.

It wasn’t entirely the additional instruments making up the 1,300 point gain, within the currencies, GBP/USD and EUR/JPY both had a great month each with over 200 pips gained. It was the EUR/USD and USD/JPY that provided the net losses to this month, but nothing like what it’s been in the past.

It is important to note that 1,300 pips gained for two weeks trading seems like a lot but that’s the beauty of the strategy. I’ve said it before, but I’ll mention it again, because I place trades every morning I may already have open positions on the same pair and in the same direction. So over 4 days the winning positions are amplified and because I have no target price, (I just let them run until the end of the week) I can take advantage of those sharp bursts of price movement with little or no retracement. For example in the first week of May, I was in 18 separate positions by Thursday across all the currencies and instruments I trade, with many having multiple trades open in the same direction. This means that when price did shoot off then I was already in and instead of just one trade gaining say 100 pips I had three separate positions capturing 100 pips each.

18 positions open at the same time may seem risky, but they were all controlled, even with 18 trades open I wasn’t anywhere near losing all my capital even if they had all been losers. And even then, half of these had already gone past their entry point so was essentially a risk free trade.

 

May Results
For the first time since November (which was a month with over 1,400 pips gained), I had a profitable month. The month of May saw the strategy gain 1,351 pips.
With the addition of three extra instruments my total number of trades placed over the two weeks was 48, which is just below my average when I was trading just currencies across a full month. So next month I’m expecting this to be a lot higher.
This month saw 54% of my trades turning out to be winners, but again this isn’t a an overwhelming number of winners, just over 50%, but it again goes to show that you don’t have to have 80% win rate to be profitable. Importantly my average pips per trade was a positive 25.

 

I emailed the LFX team to update them on the month of May and saying that my patience is starting to pay off with this strategy. And I got a great response: “Welcome to lesson 1”. Essentially sticking to your plan and riding through the drawdowns, you will reap the benefits of the strategy.

Essentially in one month I have made up from the past 5 bad months. And I’m hoping I have come out of the long drawdown and entered a few months of profitable trading.

I have still been keeping an eye on the news throughout the trading week and have been using some gut instinct (having looked at the 30min charts every weekday morning for the past 8 months) as to whether a particular currency is ranging / not moving, so if there isn’t high impact news I don’t place a trade. I haven’t done this often, but it is a skill I will no doubt improve on as time goes on. Which I am hoping will impact my trading in a positive way and essentially cut out those trades that tend to lose because of lack of volatility in the market.

 

ADDITIONAL BITS AND PIECES

As always, few bits I’ve seen over the last month.

 

This Month’s Book – “Born to Run” – Christopher McDougal

This Month’s Podcast – ChatWithTraders: 125: Getting hired—who trading firms and hedge funds are seeking out w/ Matthew Hoyle ( https://chatwithtraders.com/ep-125-matthew-hoyle/ )

&

Two Blokes Trading Podcast –  050 – Trade Supply and Demand Levels Like the Banks (http://twoblokestrading.com/050-trade-supply-demand-levels-like-banks/ )

 

This Month’s Quote – “We can’t become what we want by remaining what we are” – ??

 

Other Interesting Stuff:

A look back: The Bloomberg Keyboard – https://www.bloomberg.com/professional/blog/look-back-bloomberg-keyboard/

 

Fixing FX: The Currency Trader’s New Guide to Ethical Behaviour – https://www.bloomberg.com/news/articles/2017-05-25/fixing-fx-the-currency-trader-s-new-guide-to-ethical-behavior

 

It’s not just Bitcoin anymore… – http://www.bbc.co.uk/news/business-40021902

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Trade The Plan; Rinse & Repeat