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