MeetPips.com

Ahhh 2011. As the year comes to a close, it's only fitting that I look back on how my trading account fared for the past 12 months. So here goes...

In terms of profitability, it's not exactly a pretty picture. I ended with a 7.73% dent on my account as I hit a bad losing streak sometime in August to October. I did manage to recover some of those losses during the last few months of the year as I pushed myself to stick to the rules I had, no matter how difficult it was.

My accuracy has actually improved, especially towards the end of the year, as I cherry-picked the trades that I'd take. From an above 50% probability of losing, I managed to trim that down to 47.92% as I scored some consecutive wins in November and December.

However, these winning trades weren't enough to put my account back in the black as I risked smaller on my trades. I really can't quite figure out whether my percentage risk has a psychological effect on my trading, but I did observe that I tend to manage smaller positions better. With less risk, I don't hesitate to cut my losses or take profits early when necessary compared to when I have a full 1% risk.

The downside to that though is that I usually end up with small wins and big losses, as seen in this profitability graph:

Trying to have bigger winners than losers has been a challenge for me ever since I started trading and I really REALLY want to be able to conquer this in 2012. I noticed that I usually find it easy to close winners early but find it difficult to cut losses early. I've never really been the greedy type to insist on holding on to a winner even when there are clear signals to exit, but I've also been the hopeful one who prays that a loser could make a turnaround and end up winning. Maybe I'm wired wrong or maybe I'm just being human, but I can't stress enough how challenging it is for me and how I want to work on it so badly. 

As for currency pairs I was most/least profitable with, I was actually completely surprised to find out that AUD/USD was my LEAST profitable pair while EUR/JPY was my MOST profitable pair. You see, AUD/USD is one of the pairs I watch really closely since I like commodity currencies and I know how this pair usually behaves (or so I thought). On the other hand, I rarely look at EUR/JPY since I'm not so familiar with cross pairs. I'm not quite sure what to do with this information but I think it's interesting to take note of for now. And oh, look at these pretty colors!

 

Overall, I think I'm getting more and more accustomed to the current trading framework that I use, which involves fundamental analysis, support and resistance, retracements, and risk sentiment. Truth be told, fundamentals and technicals are the easy part since a couple of years' worth of experience made me familiar with recurring patterns. When it comes to market sentiment though, ahh, that's where my weakness lies.

I'm not sure if it's just because sentiment kept shifting over the past months but I have to admit that most of my losing trades were a result of my misinterpreting market sentiment. And it's not just those times where I tried to anticipate when the markets would turn. Even when I tried to simply go with the flow and play trends and retracements, I also got wiped out. For some reason, that made me feel completely off sync with the markets and I had an even tougher time bouncing back. I guess that explains the losing streak I had during the third quarter of 2011.

Then again, I think this was one of those unusual years when just anything, even the unimaginable, could happen. I mean, joint central bank easing?! What in the world...?!

Well that just serves as a reminder of how the forex market really is. Expect the unexpected... but be prepared for the worst. As they say, it hardly matters how good you are in reading the markets. It all comes down to proper risk management, and I think that's how I managed to improve my trading in November and December. That and my rule of no trading when I'm not in front of my platform.

I do hope that I'm on the right track when it comes to improving my trading performance, but I'm looking forward to exploring new frameworks next year. As I mentioned in one of my older posts about a trading seminar I attended, I was reminded that plenty of different strategies exist and that there's always more to learn. My gameplan is to keep working on the current framework that I'm used to but to to stay open to new systems or strategies out there. Here's to staying hungry!