Weekly Review April 6 2013

7 April

Attached is the trade worksheet for April 2013.

The past week was a gift from the BoJ to all traders. Many traders would have doubled their account or more. Some lucky and patient ones who captured >90% of the 600 pips in EJ and 500 pips in UJ would have earned enough to retire for the year 😉 I imagine that if my account had not been decimated by the Cypress disaster it would be over $500k and I too would be in heaven right now. But let’s get back to this real world.

Trading is a very dangerous business precisely because of weeks like this. An objective observer would say that this was a piece of luck, not all due to a trader’s ability or discipline. But anybody who made big money this week will be feeling like God, master of all he surveys. Pride goeth before destruction. Such an inflated sense of one’s ability inevitably leads to disaster further down the road. I’ve been there, done that. Therefore, I am cautiously happy about the outcomes of the past week for my account.

My account is up almost 60% for the week, a good start to the month. It’s not the greatest outcome one would have expected, but it is good enough. My eye is on the long term and consistency. If I could ask the gods one gift, I would ask to make just 20% per week, but consistently 20% every week! Compound interest will take care of the rest. In fact, I have set myself an informal target: to see how many weeks can I go without having a net loss for the week. If I can prevent disastrous losses, the winnings will take care of themselves.

A few comments on the trades this week. Early in the week I was caught on the wrong side of a long AUDUSD trade. My conviction was that being long AUDUSD is fundamentally a non-losing proposition so I ignored my system when it indicated to go short at 1.0460 with a 20 pip loss. However, over the next session I analyzed the charts again and realized that there was a chance that AUDUSD could go to 1.0350 or even lower. I would have to hold my trade through the loss, all the while stressing about it. My behaviour also reminded me of my ‘conviction’ long in EJ and UJ in early March and the disaster it led to. I therefore quit my AUD trade for a sizable loss of nearly 11% of my account. Nevertheless, that was the right thing to do, as it freed me to focus on the opportunities available in the yen pairs. I did what at the time was painful for me but was the right trade (albeit late). The outcome, in net, was good for me and my account. This kind of action+positive reinforcement is what I need a few more times to train my psychology to execute temporarily painful actions. From that angle I am very happy with the AUDUSD trade.

On Friday I closed the long EU and long GU trades because I was tired. The trades went on to hit precisely the levels I had in mind for exits. Taking those trades would have added about 20% more to my account. This is also a step towards adjusting my psychology of aiming for consistency rather than the home run. Trading is a marathon, not a sprint. One cannot expect to capture each and every trade and at the same time expect to live a normal life. Therefore, I’ll be happy if I can make small, consistent profits as long as I avoid a big loss. The winnings will then add up.

Blog Wksht 2013April06

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