A very slow month for me when looking at the total of pips gained. Very slim pickings and to be honest, I ended last month licking my wounds so to speak.
I think the initial point to make was that April was still a positive month. It was just a difficult month, which hit all my on-going performance averages very hard, so, whilst I am grateful for a positive outcome based solely on pips, the rest of my trading performance statistics suffered.
The headline stats: -
THE WEEKLY FX PREMIUM:
April 2021: + 236 net pips generated
Year to Date: + 6,247 net pips generated
2021 Objective: = +15,480 pips
40.36% of annual target achieved
Based on my thoughts of how the FX market is going to behave through the summer, (this is covered in the Soapbox section 1), I have severely reduced my RISK exposure via reducing the number of open trades.
Currently, I am holding 5 x Position Trades (Core Positions) all of which are multi-positional. In addition, I have 3 x Radar Trade positions. Therefore, all my open trades equal 30 in total. In real terms ignoring the longer-term trades, I am managing on a day-to-day basis just 3 open trades. Looking forward I think between 0 and 5 open trades is probably going to be the optimum number.
1. THE SOAPBOX:
THE LINE OF LEAST RESISTANCE EFFECT
Last week we witnessed a FOMC Press Conference from Jerome Powell the FED Chair, that can be summed up in a few short words,
“IF WE CAN’T SEE IT, WE DON’T BELIEVE IT”
in Powell’s own words regarding the U.S. economic recovery
“IT IS UNEVEN AND INCOMPLETE AND THERE IS A LONG WAY TO GO”
I booked losses on a couple trades last week and finally accepted that nothing is going to change vis-à-vis FED monetary Policy possibly until the latter part of Q3 2021 or even into Q4 2021.
As a Forex Trader what does this mean?
From my perspective, we are in nothing more than a LINE OF LEAST RESISTANCE trading environment.
I know, over the past couple of months, I have talked repeatedly about BLACK SWAN events’, “Blow Off Tops” and capitulation moves. Whilst these thoughts are still in my head, we need a FUNDAMENTAL MARKET TRIGGER to activate the domino effect move lower. What could this be is the conundrum.
We are basically in middle of a potential parabolic move higher in equities. To achieve my “Blow Off Top” that I have previously discussed we need the abnormal levels of market buying to continue until there are no sellers left. Given what has been happening recently, we are shortly going to end up with a one-way market all buyers and no sellers. At this stage the move higher will be extreme, violent and then all of a sudden it will stop. The reversal will potentially be just as violent BUT accompanied by panic selling as we reach capitulation. This can be called a BLACK SWAN event.
Look, right now the FED and the U.S. GOVERNMENT point to Wall Street and the levels of stocks to make the case that the U.S. economy is in really good shape. As I have said sooooo many times Wall Street does NOT represent the state of the U.S. economy, although recent data has been strong.
Markets are so well manipulated and rigged; it is so hard to actually get to the truth. Market leading institutions are making vast sums of money on the back of FED supported rigged markets and the wealth gap has grown so much the gap between “The Have and The Have nots” in the U.S. in particular, has never been so great.
We seem to be in a position, where all markets can rally at the same time. Something has got to give and frankly, my thoughts are that it will not end well. History shows that exaggerated moves never end well. With the S&P just slowly grinding higher, this is giving FX what can only be called whipsaw moves, which are no good for any trader really, especially trend based. Everything is being bought at the expense of the USD. The USD has been made the scapegoat for current FED policy.
So, how do we trade?
Basically, long commodity currencies and short the USD would appear to be the only way. You must have observed though that commodity pairs are just not reacting well to upward moves in equity markets. Generally speaking, any “RIPS” are being sold into. Whilst this seems a straightforward plan, it sounds a little crazy but, I have lost pips trying to do this!
Recently I have been saying that trying to trade away from USD related pairs may be the way. I have tried several cross-rate pairs and looked at several more. The trades that I did try all ended in failure. The cross-rate effects were just not good. This gave me little conviction to jump in on other non-USD related trades, and to be honest very few of the remaining ones available to me met with the entry criteria in my TRADE PLAN.
For the next few months pending a FED change in policy, I think we drift until a “BLOW OFF TOP” or we just drift and drift along into the final months of 2021. Should we just drift, FX will drift along the LINES OF LEAST RESISTANCE. What concerns me more is that we will enter from now until the FED moves on policy what is called THE SUMMER DOLDRUMS of trading. The doldrums usually apply to late July and August. I think May, June, July, August and possibly some of September will represent the SUMMER DOLDRUMS this year.
FX is just not responsive to economic data; it is all based around what the FED says or does not say.
Looking ahead, we have FOMC meetings as follows: -
- June 16th
- July 28th
- September 22nd
I think the earliest meeting that we will see the potential of a FED change or hint of a change in policy, possibly initially Tapering will not happen until the September meeting.
For most of the FX market, the bigger traders, larger institutions will be drawing up their plans over this weekend and the week ahead for the remaining time this year based upon FED policy.
So am I.....
2. WEEKLY FX PREMIUM: MARCH 2021 PERFORMANCE:
The complete set of spreadsheets can be found on my homepage at https://www.weeklyfxdrivethru.com under the “History / Performance” tab, sub section “This Year’s Performance”.
2.1: MARCH 2021 OVERVIEW:
2.2: MONTHLY PERFORMANCE SUMMARY:
2.3: YEAR TO DATE PERFORMANCE SUMMARIES:
2.4: MY THOUGHTS ON THE MONTH and YEAR TO DATE:
2.4.1: THE NUMBERS:
April was a difficult month for me trying to leave behind my economic based fundamental view of the market and replace it with this mindset of BUY, BUY and BUY some more, basically, if it moves... a BUY IT mentality.
As mentioned already, whilst I am grateful to have a positive end of month result, all of my other measurable statistics have been blown apart
- Monthly pips of +236 pips.
- Year to Date now at +6,247 pips basically 40% of my annual objective, leave me on target.
- Pips per completed trade:
My objective monthly and year to date is 40 pips
April = 6.74 pips
Year to date = 39.29 pips
- Ratio of Positive to Losing trades
My objectives monthly and year to date is 80% (positive) / 20% (negative)
April = 62% / 38%
Year to Date = 79% / 21%
Not very pleasant reading at all, however, one poor month does NOT make a trend.
2.4.2: THE TRADES:
I feel like a bold child.
I can see exactly where I was chopped up in trades and instead of standing aside and NOT trading, I entered at good levels with acceptable risk parameters that have worked well for me in the past. However, the trades did not perform as expected and losses were taken. This is all part of trading. You get yourself up, brush yourself down and move on. As I have stated on numerous occasions before FX Trading is a marathon NOT a 100-metre dash.
I have often said exercise patience maybe I did not give enough thoughts to my own words.
50% of losing trades were AUD/USD. I was most definitely at different times of the month swimming upstream, fighting the currents. I could see that the AUD was just not performing well but my timing was off. Both FLA013 and FLA019 combined totaled a 187-pip loss.
The other losing trades were CAD/JPY and EUR/USD both short.
57% of my FLASH TRADES were negative last month.
I just have to make sure that my trade selection moving forward is stronger.
9 positive and 9 negative trades. The pips total was negative 195 pips.
Immediately, I look to see was I taking pips off the table too soon on positive trades and not accepting losses. The answer being 100% honest is yes.
EUR/JPY (RAD074 and RAD085), I extended my stop loss to 132.00 on both trades around the ECB Press Conference in the month to give me flexibility and I did not follow up adequately to re-adjust and I paid the price of taking a combined extra pip loss of 120 pips over the original stop loss level of 131.40.
Looking at the other losing trades in my trading trade journal, if the truth be told, I would enter the same trades again today if they presented themselves. What can I say?
I am still operating a “Grab ‘n Go” approach with my CORE trades. Having multi-positions in place allows me to take this approach. So, there are no real surprises in that I am taking 50 pips here and there across all the trades.
3. WEEKLY FX PREMIUM SUBSCRIPTION INFORMATION:
Information about how to subscribe to the WEEKLY FX PREMIUM is located on my website at the top of my welcome page at https://www.weeklyfxdrivethru.com under the “SUBSCRIBE” tab.
3.1: WEEKLY FX PREMIUM OVERALL PERFORMANCE:
4. WEEKLY FX PREMIUM SUBSCRIBERS:
5. MY FINAL THOUGHTS:
Always remember longevity in Forex trading can only be achieved through trading with good RISK, TRADE and HEAD MANAGEMENT, and above all set your position sizes in accordance with the size of your account and allow for some flexibility. Trade with a TRADE PLAN, basically, plan your trades and Trade your Plan.
Mental toughness is key, and this is all about emotional control. Your mind can do amazing things, but only when it wants to, threat and alert will get your mind’s attention.
“Everyone has ability. It always comes down to mind games. Whoever is more mentally strong, wins” – Mohammed Ali.
Remember when you are trading you are on your own. It is you and you alone who presses the execute button.
“Coming second only means that you are first of those who lose” – Ayrton Senna
Finally, be GRATEFUL for your wins and COUNT THEM. Keep a POSITIVE MINDSET in play at all times, regardless of the market conditions.
The Pip Accumulator
BLOG VERSION: #411 FREE NEWSLETTER
DATE: 2nd May 2021