2014 Year End Post/FPM Performance

It's been a WILD trading ride for me this year... probably the wildest since 2008, not long after I started this blog.  The markets continue to fascinate me and even though I consider myself so much more knowledgeable now then I did back then, I continue to learn each and every day.

During 2014 that learning included more instruction "outside" of my own observations and self-teaching.  I built upon my recent professional mentorship from last year by spending the spring of this year taking two online college courses... one in finance with Nobel prize winner Robert Shiller at Yale, and another in behavioral economics with Dan Ariely at Duke.  I learned a lot from both and have found ways to put their teachings to use in my own work in systems development and daily trading activities.

While studying with two professors considered the leaders in their field in the finance/economics arena was very helpful in furthering my education about the markets, it pales in comparison to what I learned during the first several months of 2014 from my own trading!

From the end of 2013 into 2014 I spent 8 months in a HUGE drawdown.  I had only one winning month during the winter/spring of 2014, and it was an anemic one that really didn't make much difference to the overall equity in my account.  (For the way I trade I really considered it a losing month as well.)  At one point in June I was close to a 60% drawdown and had traded the actual cash value of my account down to less than 1/3 of what it had been just a few months before.  (Read that again... I didn't say I lost 1/3 of the cash value... I said that's all that was left!)  I'm not going to lie and say I took it all in stride... there were a few times where I questioned if the past decade had all been a waste of my time.

Then came July.  The U.S. Dollar started getting some legs... and I started seeing some trends start.  Then the FED/Janet Yellin started getting hawkish on the U.S. economy and talked about the end of Quantitative Easing and maybe even the beginning of interest rate hikes in late 2015... the Dollar gets even stronger... the trends really start to kick in.  Then the European Central Bank head Mario Draghi goes on a rant about the Euro and defending Europe's economy by devaluing the Euro... Dollar gets stronger... so do the trends. Then PM Abe in Japan does the same... says he still won't allow a strong Yen because Japanese export based businesses won't be able to compete amongst the other Asian countries... trends really start to move.  By September I found myself sitting on an almost 30% profit for the year after being down almost twice that much just several weeks before!

As I sit here writing this year-end post, the trends that started in July are still well underway and I'm going to close the year out with over a 50% profit (right now it's at 54%).  Although I'm not in the prediction game, being human I do have opinions and am pretty sure I'll see these trends continue into 2015... even if we experience a small correction along the way.

Going through the 60% drawdown of 2014 is what shakes most retail traders out of the game.  Even with all of my focus and training on the psychological and risk management side, I was still questioning my methods and systems.  The difference is I had the discipline to stick with them and come out the other side.  I've said it and experienced it before... but never to this level of a 60% drawdown... and hope that it's a long, long, time before I have to go through any drawdown that large again :-)

Usually I end these posts with an opportunity to purchase my trading systems.  I got too busy to keep up with the eBay listings last year and basically stopped selling for awhile.  I'm considering offering them back in 2015 at a lower price as I've been doing some work on another system that I feel performs just as well (if not better) that's even easier to trade.  More information on that in 2015.

Happy New Year, and I hope you learned as much as I did in 2014!

Jim
www.forexprofitmonster.com

Forex Profit Monster Results 4th Quarter and 2013

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(The portfolio of currency pairs being traded on the 4 Hour chart with Forex Profit Monster consist of:

EUR/USD, USD/CHF, USD/JPY, GBP/USD, USD/CAD, EUR/JPY, AUD/USD, GBP/CHF, AUD/CAD.

This portfolio will remain the same each quarter unless stated otherwise.

All results INCLUDE transaction costs... THIS IS REAL LIVE TRADING so all costs, spreads, slippage, interest rate swap, etc... are included in the results.)
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The 4th quarter of 2013 was a nice end to the year, showing almost a 7% gain.  There was a lot of volatility in this quarter... especially in December.  At one point the returns for the quarter were almost double what they finished as.  I contribute this extra volatility to the "big money" money managers making changes in their positions and portfolios for the coming year.. and this volatility usually continues into January.  After 7 years it doesn't get any easier to watch some "paper gains" disappear, but if you're going to be a successful trader you must understand you will never capture every pip of a move.  The goal is to grab as much of the "middle" as you can... and to not let your emotions cause you to enter or exit a position early (or late).

Here are the results:

4th Quarter: + 6.71%

102 total trades  Win rate: 32.29%

Max Drawdown: 9.68%  Average "Reward to Risk" ratio: 3.42 to 1

As you can see there were some very strong/long trends during Q4.  While the win rate was only slightly higher than Q3, the R/R ratio was much stronger this quarter at 3.42 to 1.  This accounts for the extra profits captured in Q4.  Here's an equity graph of the account balance during Q4:

Of course the end of the 4th quarter also brings an end to the year, and here are the numbers for 2013 overall:

2013: + 34.34%

Win rate: 29.84%

Max Drawdown: 17.84%  Average "Reward to Risk" ratio: 2.9 to 1

Here's the equity curve of the account balance for 2013:

Thanks for following along and best of luck in your trading!

For more information about purchasing Forex Profit Monster for your own trading (and also my daytrading system Forex Day Monster), visit my website at www.forexprofitmonster.com.  Or you can visit my eBay page (http://www.ebay.com/usr/jimsgr8stuff4less) where I list one or two systems per week at a discount off the regular price on the website.

Jim

www.forexprofitmonster.com

Forex Profit Monster Results 2013 3rd Quarter

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(The portfolio of currency pairs being traded on the 4 Hour chart with Forex Profit Monster consist of:

EUR/USD, USD/CHF, USD/JPY, GBP/USD, USD/CAD, EUR/JPY, AUD/USD, GBP/CHF, AUD/CAD.

This portfolio will remain the same each quarter unless stated otherwise.

All results INCLUDE transaction costs... THIS IS REAL LIVE TRADING so all costs, spreads, slippage, interest rate swap, etc... are included in the results.)
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The 3rd quarter of 2013 was actually a profitable quarter... even though the equity graph posted below doesn't look like it.  One of the unfortunate things about mark to market accounting is that you are accounting for ALL value in the account, including open equity, so an equity curve of an account balance can be deceiving.  Q3 was a quarter where some of the trends came along toward the end of the quarter and were not closed out but carried over into Q4.  This makes the account balance curve look like it's still in a drawdown even though the fund is at new equity highs:

Here are the stats for Q3 for Forex Profit Monster:

3rd Quarter: + 4.33%

104 total trades - Win rate: 30.39%  

Max Drawdown: 17.26%  Average Risk/Reward ratio: 2.17 to 1

Some things of note... even though the win rate was about the same as Q2, the returns weren't as big because the average risk/reward ratio was smaller.  In "human english" for those not as experienced in trend following it just means the trends were there... they just weren't as strong/large/long during this time period.

Here is an equity curve for the first three quarters of 2013:

This equates into a total growth of 25.89% for the first three quarters of 2013.

In the next post I will provide the results for the 4th quarter and the blog will be up to date until the first quarter of 2014 comes to a close!

Thanks for following along and best of luck in your trading!

For more information about purchasing Forex Profit Monster for your own trading (and also my daytrading system Forex Day Monster), visit my website at www.forexprofitmonster.com.  Or you can visit my eBay page (http://www.ebay.com/usr/jimsgr8stuff4less) where I list one or two systems per week at a discount off the regular price on the website.

Jim

www.forexprofitmonster.com

Forex Profit Monster Results 2013 2nd Quarter

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(The portfolio of currency pairs being traded on the 4 Hour chart with Forex Profit Monster consist of:

EUR/USD, USD/CHF, USD/JPY, GBP/USD, USD/CAD, EUR/JPY, AUD/USD, GBP/CHF, AUD/CAD.

This portfolio will remain the same each quarter unless stated otherwise.

All results INCLUDE transaction costs... THIS IS REAL LIVE TRADING so all costs, spreads, slippage, interest rate swap, etc... are included in the results.)
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The second quarter results for Forex Profit Monster were much better than the first quarter, showing a gain of almost 21%.  April and the first part of May were drawdown periods, but good trends were caught across almost all pairs in mid-May. Some of these trends carried over into June and that was the month that saw most of the profits realized.

Here is the FPM equity curve for the 2nd Quarter of 2013:

2nd Quarter 2013: +20.77%

103 total trades  Win rate: 31.06%  Max Drawdown: 10.12%  Average Risk/Reward: 2.73 to 1

Again, the chart above and the information regarding total trades don't match exactly due to some open equity trades being carried into the 3rd quarter.

You'll see that our win rate increased from the 1st quarter to 31.06%. While I still lost almost 70% of the time, I managed to earn close to a 21% return for the quarter.  This is because my risk to reward ratio stayed static while my win rate increased by about 11% from Q1.  The drawdown also increased, but only by about 7%.  I consider a 10% drawdown a small drawdown for my trading, especially when you look at return v. drawdown (a 3 to 1 ratio).  During prolonged losing streaks I expect to see drawdowns as large as 50-60% across time. While this won't happen very often, it is possible for the risk amount I take (on average about 1.5%).  To keep drawdowns smaller simply reduce the amount of risk.  Cutting the risk in half (to 0.75%) will reduce the drawdown by about the same.

As mentioned in the previous post, you must be patient and wait for your profit opportunities.  The months of May and June were abundant with those opportunities, even if January, February, March and April were not.  Here is the equity curve for Forex Profit Monster for the first two quarters of 2013 in total:

This equates to a 20.67% gain on the portfolio after the first 2 quarters of 2013.

Remember, this equity curve would be even higher but does not include the open profit trades carried into the 3rd quarter.

The next post will feature the results of the 3rd quarter of 2013.

Thanks for following along and best of luck in your trading!

For more information about purchasing Forex Profit Monster for your own trading (and also my daytrading system Forex Day Monster), visit my website at www.forexprofitmonster.com.  Or you can visit my eBay page (http://www.ebay.com/usr/jimsgr8stuff4less) where I list one or two systems per week at a discount off the regular price on the website.

Jim
www.forexprofitmonster.com

Forex Profit Monster Results for 2013 1st Quarter

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(The portfolio of currency pairs being traded on the 4 Hour chart with Forex Profit Monster consist of:

EUR/USD, USD/CHF, USD/JPY, GBP/USD, USD/CAD, EUR/JPY, AUD/USD, GBP/CHF, AUD/CAD.

This portfolio will remain the same each quarter unless stated otherwise.

All results INCLUDE transaction costs... THIS IS REAL LIVE TRADING so all costs, spreads, slippage, interest rate swap, etc... are included in the results.)
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As promised in the last post, here are the results of Forex Profit Monster from my fund performance from 2013.  For those of you who have been following the results of FPM for the past several years, remember there are a couple of differences now.  First, the GBP/JPY pair in the portfolio has been replaced by the GBP/CHF pair.  For those of you with "inquiring minds" this was done to balance the correlation in the portfolio to keep it from being too Yen heavy.  As mentioned previously it definitely cost me some money during 2013 as the GBP/JPY pair has had some huge uptrends since mid 2012 and the GBP/CHF has only had some minor trends during 2013, but I will accept a smaller return for less correlation and downside volatility.  I will also most likely be adding the GBP/JPY pair back into the portfolio at a later date once the size of the account allows for trading more pairs.  Speaking of which, due to growth in the value of the account I've also added another pair to the portfolio; the AUD/CAD.  This pair was selected to keep the portfolio balance in tact.  The currency pairs being traded on the 4 Hour chart with Forex Profit Monster now consist of:

EUR/USD, USD/CHF, USD/JPY, GBP/USD, USD/CAD, EUR/JPY, AUD/USD, GBP/CHF, AUD/CAD.

This portfolio will remain the same until otherwise noted.  

The other change being made to how the results are posted is that instead of posting the results in pips won/lost, I'll be posting the equity gained/lost by quarter.  The figures used include open equity on trades and therefore I use "mark to market" accounting of the equity value of the account at the end of the trading month.  This means the value can be more or less than the current cash value of the account, but is the value if all open postions were closed out. This is how most money managers provide statements for their clients and is also how I track my performance for this fund.  It is also the easiest way for me to transcribe the results to this blog without much extra effort.  This will allow me to post results in a timely manner and keep those following my progress with FPM from losing interest due to lack of information being posted.

One more note... all results INCLUDE transaction costs... THIS IS REAL LIVE TRADING so all costs, spreads, slippage, interest rate swap, etc... are included in the results.

With that out of the way, here are the results of Forex Profit Monster for 2013...

1st Quarter 2013:  (-0.0009%)  

86 total trades  

Win rate: 20.93%  Max Drawdown:  3.83%  Average Risk/Reward ratio 2.72 to 1

Yes, you read that correctly.  A loss of 9 one thousands of a percent LOL.  If you are new to trading you're probably wondering why I bother.  Three months of trading, almost 100 trades, and NO PROFIT... plus all of the transaction costs (remember, these are included in the results so no extra money was paid out to achieve these results).  Well the answer is easy.  You'll learn that being profitable in the markets means being patient.  No one wins all the time.  In fact, most of the best traders LOSE most of the time.  You have to wait for certain market conditions over short periods of time to collect your profit.  To be a good trader isn't really that exciting... in fact if you're doing it correctly it should really be quite boring.  The best way to trade is defensively... lose as little money as possible while waiting for your gains.  If you're thinking about getting into trading for the excitement learn to adjust that viewpoint quickly or don't even bother trading!

What you should be taking away from these results is that I was able to lose almost 80% of my trades but really not lose any money.

Here is a graph of the equity curve of the 1st Quarter of 2013.  This graph only shows closed trades, not open equity, which is why it varies slightly from the information above.  I have also removed the cash value on the Y axis for privacy reasons.  The numbers on the X axis are the number of trades executed completely (opened and closed).  As you can see from comparing this equity curve to the information above, there are 5 profitable trades open being carried into the 2nd Quarter of 2013:

That's it for this post... I will post the results of the second quarter of 2013 in the next post.

For more information about Forex Profit Monster (and my daytrading system Forex Day Monster) vist my website at www.forexprofitmonster.com.  Or you can visit my eBay page where I list one or two systems per week at a discount from the website pricing: http://www.ebay.com/usr/jimsgr8stuff4less.

Thanks for reading and best of luck in your trading!

Jim

www.forexprofitmonster.com