Analysis of last week’s trades – 18-May-2013

I usually do a post-mortem of all my trades at the end of the week, to see what I did right and what I did wrong. I compare this with the mechanical system trades that I record in a separate worksheet. This helps in two ways: a) it validates the system trades and tells me if the system rules are working well; b) it shows the mistakes I made as well as the right actions I made. This  reinforces the lessons I have learned and those that I still need to work on.

Here is a list of my trades of this week.

12-May 23.53 USDJPY 101.82 23 -40 102.05 13-May 0.11 23 $920
13-May 1.03 USDJPY 101.96 23 -40 102.02 13-May 13.31 6 $240
13-May 8.33 EURJPY 131.65 65 -30 132.17 13-May 13.31 52 $1,560
13-May 15.45 EURUSD 1.299 55 40 1.298 13-May 17.21 10 $400
13-May 15.45 GBPUSD 1.5352 60 40 1.529 13-May 17.21 62 $2,480
14-May 6.47 EURUSD 1.3007 60 30 1.2971 14-May 11.25 36 $1,080
14-May 6.52 GBPUSD 1.5324 50 30 1.5276 14-May 11.25 48 $1,440
14-May 11.25 EURUSD 1.2971 50 -30 1.2973 14-May 16.21 2 $60
14-May 11.25 GBPUSD 1.5276 30 -30 1.5268 14-May 16.12 8 $240
14-May 16.44 USDJPY 102.25 80 30 102.25 16-May 13.41 0 $0
14-May 16.44 EURJPY 132.61 100 20 $0
15-May 2.02 AUDJPY 101.22 50 10 100.7 16-May 52 $520
15-May 9.33 GBPUSD 1.5237 45 20 1.5208 15-May 11.58 29 $580
15-May 14.49 GBPUSD 1.5257 55 20 1.5207 17-May 13.35 49 $980
16-May 1.28 EURUSD 1.2889 50 10 1.2822 17-May 13.35 67 $670
16-May 15.05 USDJPY 102.07 -50 -20 102.17 16-May 15.17 10 $200
17-May 2.18 USDJPY 102.31 80 30
17-May 13.35 EURUSD 1.2822 65 -20 $0
17-May 13.35 GBPUSD 1.5208 50 -10 $0

The main lesson from this week is that I should expect a period of consolidation / range trading after a big move up or down. Markets don’t turn around immediately after a big move  reaches a significant support or resistance – markets thrash around for a pretty long time before one side becomes a clear winner.  The more I trade, the more I feel that I should simply stay out of a pair for a day or two after that pair has had a major move. If one has to trade early in the week after a big move the week before, the style should be day-trading for small moves, not swing trading.

Now to my trades:

UJ shorts and EJ short on 13 & 14 May: Resulted in losses of -23 pips,-6 pips, -52 pips: this was based on price showing a loss of momentum after the big run-up last week. The trades were essentially correct, especially the second short at 101.96. I should have given the trades more time to play out. In this case I should have waited at least 2-3 days to see what ranges develop, and then trade the edges of the range.

EU and GU longs on 13 May: Again based on loss of momentum and expecting a bounce or turn. As with the yen trades, the idea was right, but I should have traded as a range trader, not a swing trader. As I myself have said often before, the first bounce will never be a complete turnaround – expect the pair to test its recent highs/lows again. This is a common theme in strong trends: The trends retrace between 38-50% of the last swing before resuming the trend. The logical way to trade this insight is to take profit at the 38 or 50 Fib and reverse there, where we can expect the bounce to end. I didn’t do this, as this is not a written rule of my trading system. I will add this rule in – on the first bounce off significant support or resistance, take profit at the 38 Fib and reverse with a tight stop. Both these trades were profitable for a while as they retraced 38% of their last down-swings.  That is where I should’ve got out and reversed. I didn’t get out as I was following my swing trading signals, which was the mistake.

When the bounce trade got stopped off, I should normally take this as a signal to go short. I didn’t go short early when my first trades got stopped out. I don’t really know why I didn’t reverse when first got stopped – the only thing I can think is that I was convinced the pairs would bounce more. I ignored the charts to follow my opinion. That is another error.

I went long EU & GU again on 14/15 May – the entry was too late. The same mistake – trading swing style in a range trade, this time after the bottom of the range had been identified by the earlier test. The correct entry was at the time of the re-test. I was in swing trading mode and waited for the confirmation which made the entry too late. Also, did not exit at the 38 Fib.

Finally on Friday I got the message that EU and GU were still headed lower ;-( and I finally went short. Ideally the short should have been when these pairs hit the 38 Fib retracement of the last swing – get out of the long and reverse into shorts.

I did try a second UJ short but the buying pressure in UJ is very strong still, so I immediately got out it and went long. That was a good decision. As also the decision not to close the very poor EJ long entry at 132.61! The last EJ entry was upon a break of the upper resistance, but there was no follow through and I ended up buying at the very peak of the range. Fortunately the buying pressure in UJ has kept the EJ well supported too and I may yet end up making a profit on this very poor EJ entry.

For comparison, here are extracts from my systems trade log for the month of May. The last column is the profit/loss in pips:

EURUSD:

30-Apr 14.25 1.3115 40 2-May 4.05 -1.3177 62
2-May 4.05 -1.3177 35 7-May 11.59 1.312 57
7-May 11.59 1.312 70 9-May 13.35 -1.3135 15
9-May 13.35 -1.3135 35 13-May 8.01 1.2986 149
13-May 8.01 1.2986 50 14-May 20.01 -1.2935 51
14-May 20.01 -1.2935 60 16-May 0.05 1.2874 61
16-May 0.05 1.2874 40 17-May 13.35 -1.284 34
17-May 13.35 -1.284 50

Total Profit = +259 pips.

EURJPY: still long from 128.45 on 30th April. Up +350 pips at 132.05.

USDJPY:

26-Apr 4.02 -98.8 40 1-May 8.01 97.47 133
1-May 8.01 97.47 50 7-May 3.55 -98.97 150
7-May 3.55 -98.97 45 9-May 14.24 99.25 28
9-May 14.24 99.25 50 13-May 4.01 -101.88 263
13-May 4.01 -101.88 32 14-May 16.45 102.24 36
14-May 16.45 102.24 60

Total profit = +482 pips

GBPUSD:

30-Apr 14.25 1.5517 40 2-May 4.05 -1.5555 38
2-May 4.05 -1.5555 50 7-May 15.05 1.5455 100
7-May 15.05 1.5455 50 9-May 14.11 -1.552 65
9-May 14.11 -1.552 50 13-May 8.01 1.5378 142
13-May 8.01 1.5378 60 13-May 16.15 -1.5315 63
13-May 16.15 -1.5315 45 16-May 8.01 1.522 95
16-May 8.01 1.522 50 17-May 13.35 -1.5207 13
17-May 13.35 -1.5207 55

Total profit: +364 pips.

Advertisements

2 thoughts on “Analysis of last week’s trades – 18-May-2013

  1. JUDY

    Zen, I don’t know much about FX trading. I do use the future market to see equity market trend.
    I’m probably not as experienced as you do since I didn’t know US market until 2003. However, being through 2008 market crash, I’ve become a “sore-loser” about losing money. After I make money from the market, I would like to keep it as mine since I’ve worked hard for it. I lost 6% of my profit in April in total. It made me really upset. It is just me. I made most of loss back now. But I just don’t want to put myself into that situation anymore.

    I think something really missing in your trading is risk control from what I read. Good luck.

    –Judy

    Like

    Reply
    1. ZenFXTrader

      Judy, thank you for your comment. Yes, I am aware that I take larger than usual risk, so my swings up and down are larger. If I were to reduce the risk level, my potential profits also reduce. For example, with your level of risk, what is the average profit you can make? but you do point to one thing that I need to think more deeply – can I reduce the risk on my entries. As someone else also pointed out, my stops often are too wide, i.e. my entry level is not very good. I’ll think about this.

      Like

      Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s