Forex Account Update as of 4/30/2012 [Through 12/31/2011]

Continuing my account updating:

OUTSTANDING ORDERS as of End of Day 11/30/2011 settled by End of Day 12/31/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
11/07/2011 SELL 0.01 eurchf 1.22875 12/16/2011 1.22191 +5.38
11/30/2011 SELL 0.01 gbpjpy 122.416 12/01/2011 121.949 +5.85

*Net profit means profit after consideration of swap fees (these can be negative or positive)

New Orders since End of Day 11/30/2011, settled by end of day 12/31/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
12/02/2011 SELL 0.01 eurjpy 105.574 12/02/2011 105.051 +6.72
12/07/2011 BUY 0.01 eurusd 1.33584 12/08/2011 1.34206 +6.22
12/12/2011 BUY 0.01 gbpusd 1.55600 12/12/2011 1.56250 +6.50
12/13/2011 BUY 0.01 chfjpy 82.413 12/15/2011 82.887 +6.05
12/13/2011 SELL 0.02 usdjpy 77.989 12/30/2011 77.309 +16.64
12/14/2011 SELL 0.01 usdcad 1.04049 12/15/2011 1.03390 +6.40
12/15/2011 BUY 0.02 audusd 0.98813 12/15/2011 0.99356 +10.86
12/21/2011 SELL 0.01 gbpusd 1.57331 12/21/2011 1.56687 +6.44
12/22/2011 SELL 0.02 cadjpy 76.219 12/30/2011 75.747 +11.34

New Orders Since end of day 11/30/2011, still outstanding as of end of day 12/31/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
12/06/2011 SELL 0.01 usdchf 0.92497
12/07/2011 BUY 0.01 eurgbp 0.85187
12/13/2011 BUY 0.01 eurjpy 101.742
12/13/2011 SELL 0.01 usdtry 1.8803
12/20/2011 BUY 0.01 euraud 1.29814
12/23/2011 BUY 0.01 eurcad 1.33078
12/27/2011 BUY 0.01 usdjpy 77.859
12/27/2011 SELL 0.01 usdmxn 13.9129
12/28/2011 SELL 0.01 gbpjpy 120.411

Carried Orders Since before end of day 11/30/2011, still outstanding as of end of day 12/31/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
08/04/2011 SELL 0.01 usdcad 0.96454
08/04/2011 SELL 0.01 usdmxn 11.8786
08/08/2011 SELL 0.01 usdmxn 12.1198
09/06/2011 SELL 0.01 usdchf 0.82308
09/08/2012 SELL 0.01 usdchf 0.86223
09/09/2011 SELL 0.01 usdmxn 12.6103
09/16/2011 SELL 0.01 usdmxn 13.0215
09/21/2011 SELL 0.01 usdcad 0.99709

Equity Balance @ 12/31/2011: $3,799.09
Current Month Return: -5.06%
Initial 10/31/2009 balance: $2,360.46
Current Yield since inception: +60.95%
Annualized Return: +24.56%
Average monthly return: +1.85%

11/1/2009 – 7/31/2010: +89.71%
8/1/2010 – 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 – 12/31/2010: +11.94%
1/1/2011 – 1/31/2011: -7.23%
2/1/2011 – 8/31/2011: +29.80%
9/1/2011 – 9/30/2011: -20.68%
10/1/2011 – 11/30/2011: +27.34%
12/1/2011 – 12/31/2011: -5.06%

Overall 2011 Return: +15.47%

Journal Notes:
I will always have losing positions, and I will continue to hold and wait for a change in direction, or maybe at some point decide enough’s enough and I’ll close them. And while I’d love all my positions to make money within a day, week, or month I will evaluate success on cumulative account total, and I simply don’t get too concerned with certain positions that temporarily go the other way, or a month here or there that doesn’t work out.

Could the results just be a random drift with the expectation of an eventual correction? I don’t believe so for a few reasons: (1) my assumption is that retraces that get me into a position are not a 50/50 bet (ultimately) into eventually getting to a winning position; (2) these bets are not equal with respect to time, which means I can take profit as soon as I’m in profit, whereas I do not need to take profit in a losing position at all if I don’t want to. Thus, not all “bets” are equal in nature; (3) practically speaking, losses in these markets will never be infinite. Theoretically, a short could be, but realistically it will not. A long position cannot be. Third, I do reserve the right to ultimately dump a losing trade if I have reason to believe it’s a permanent loser. So, even if (1) and (2) were of no consequence, these limiting factors to the downside immediately render your expected value to be positive.

On the flip side, I do not have infinite capital, so there is the potential for a positive expected value that still results in elimination of my limited capital. I’ve never ignored that possibility. I make no guarantees that this really works at all.

The longer I sustain positive results, the more I do believe in it, but also realize that it takes a long time of consistency to actually prove anything. And some people will never get past the theoretical reasons why they think it won’t/can’t work out. Which is fine. I don’t suggest anybody trade in any way they don’t feel comfortable trading.

Forex Account Update as of 4/30/2012 [Through 11/30/2011]

Continuing my account updating:

OUTSTANDING ORDERS as of End of Day 10/31/2011 settled by End of Day 11/30/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
10/26/2011 BUY 0.01 usdtry 1.7557 11/01/2011 1.7857 +14.64
10/31/2011 SELL 0.01 usdjpy 77.189 11/18/2011 76.620 +6.89
10/31/2011 BUY 0.01 eurgbp 0.86157 11/22/2011 0.86540 +5.92

*Net profit means profit after consideration of swap fees (these can be negative or positive)

New Orders since End of Day 10/31/2011, settled by end of day 11/30/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
11/01/2011 SELL 0.01 gbpchf 1.41966 11/02/2011 1.41255 +7.93
11/01/2011 BUY 0.01 eurusd 1.36521 11/02/2011 1.37767 +12.46
11/01/2011 SELL 0.01 usdchf 0.89501 11/02/2011 0.88341 +13.07
11/01/2011 SELL 0.01 usdmxn 13.7486 11/01/2011 13.5950 +11.30
11/04/2011 SELL 0.01 usdcad 1.02211 11/11/2011 1.01348 +8.60
11/07/2011 SELL 0.02 gbpchf 1.44243 11/21/2011 1.43480 +14.97
11/15/2011 SELL 0.02 usdchf 0.91496 11/30/2011 0.90998 +10.18
11/16/2011 BUY 0.01 audusd 1.01114 11/16/2011 1.01625 +5.11
11/16/2011 BUY 0.01 gbpusd 1.57850 11/18/2011 1.58407 +5.57
11/16/2011 BUY 0.01 audcad 1.03449 11/30/2011 1.04354 +9.97
11/17/2011 BUY 0.02 eurusd 1.34279 11/17/2011 1.35112 +16.66
11/17/2011 SELL 0.02 usdmxn 13.7290 11/18/2011 +13.6425 +12.72
11/17/2011 SELL 0.01 euraud 1.34825 11/29/2011 1.33338 +16.29
11/23/2011 SELL 0.02 usdmxn 14.0945 11/29/2011 13.9595 +19.76
11/23/2011 SELL 0.02 usdcad 1.04595 11/28/2011 1.03276 +26.68
11/25/2011 BUY 0.02 eurusd 1.32475 11/28/2011 1.33431 +19.12
11/29/2011 SELL 0.02 usdjpy 78.230 11/29/2011 77.799 +11.08

New Orders Since end of day 10/31/2011, still outstanding as of end of day 11/30/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
11/07/2011 SELL 0.01 eurchf 1.22875
11/30/2011 SELL 0.01 gbpjpy 122.416

Carried Orders Since before end of day 10/31/2011, still outstanding as of end of day 11/30/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
08/04/2011 SELL 0.01 usdcad 0.96454
08/04/2011 SELL 0.01 usdmxn 11.8786
08/08/2011 SELL 0.01 usdmxn 12.1198
09/06/2011 SELL 0.01 usdchf 0.82308
09/08/2012 SELL 0.01 usdchf 0.86223
09/09/2011 SELL 0.01 usdmxn 12.6103
09/16/2011 SELL 0.01 usdmxn 13.0215
09/21/2011 SELL 0.01 usdcad 0.99709

Equity Balance @ 11/30/2011: $4,002.51
Current Month Return: +1.89%
Initial 10/31/2009 balance: $2,360.46
Current Yield since inception: +69.56%
Annualized Return: +28.87%
Average monthly return: +2.13%

11/1/2009 – 7/31/2010: +89.71%
8/1/2010 – 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 – 12/31/2010: +11.94%
1/1/2011 – 1/31/2011: -7.23%
2/1/2011 – 8/31/2011: +29.80%
9/1/2011 – 9/30/2011: -20.68%
10/1/2011 – 11/30/2011:+27.34%

Journal Notes:

Forex Account Update as of 4/30/2012 [Through 10/31/2011]

Continuing my account updating:

OUTSTANDING ORDERS as of End of Day 09/30/2011 settled by End of Day 10/31/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
09/02/2011 BUY 0.01 eurgbp 0.87695 10/27/2011 0.88034 +5.44
09/09/2011 BUY 0.02 eurusd 1.38658 10/24/2011 1.39348 +14.06
09/09/2011 BUY 0.01 audusd 1.04806 10/27/2011 1.06241 +19.98
09/12/2011 BUY 0.02 audcad 1.02912 10/12/2011 1.03376 +14.33
09/21/2011 SELL 0.01 usdchf 0.89256 10/21/2011 0.88409 +8.38
09/21/2011 BUY 0.01 audusd 1.01684 10/14/2011 1.02404 +10.17
09/23/2011 BUY 0.01 xauusd 1676.42 10/11/2011 1680.93 +4.38

*Net profit means profit after consideration of swap fees (these can be negative or positive)

New Orders since End of Day 09/30/2011, settled by end of day 10/31/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
10/12/2011 SELL 0.01 gbpjpy 120.825 10/18/2011 120.225 +7.50
10/12/2011 SELL 0.01 eurjpy 106.969 10/13/2011 105.569 +18.07
10/14/2011 SELL 0.01 eurchf 1.23859 10/20/2011 1.23021 +8.95
10/14/2011 SELL 0.01 eurjpy 106.935 10/17/2011 106.540 +5.06
10/20/2011 SELL 0.01 gbpchf 1.42603 10/20/2011 1.40925 +18.76
10/20/2011 SELL 0.01 usdmxn 13.6283 10/24/2011 13.4643 +12.40
10/31/2011 SELL 0.01 cadjpy 78.813 10/31/2011 78.280 +6.84

New Orders Since end of day 09/30/2011, still outstanding as of end of day 10/31/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
10/26/2011 BUY 0.01 usdtry 1.7557
10/31/2011 SELL 0.01 usdjpy 77.189
10/31/2011 BUY 0.01 eurgbp 0.86157

Carried Orders Since before end of day 09/30/2011, still outstanding as of end of day 10/31/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
08/04/2011 SELL 0.01 usdcad 0.96454
08/04/2011 SELL 0.01 usdmxn 11.8786
08/08/2011 SELL 0.01 usdmxn 12.1198
09/06/2011 SELL 0.01 usdchf 0.82308
09/08/2012 SELL 0.01 usdchf 0.86223
09/09/2011 SELL 0.01 usdmxn 12.6103
09/16/2011 SELL 0.01 usdmxn 13.0215
09/21/2011 SELL 0.01 usdcad 0.99709

Equity Balance @ 10/31/2011: $3,928.31
Current Month Return: +24.98%
Initial 10/31/2009 balance: $2,360.46
Current Yield since inception: +66.42%
Annualized Return: +29.00%
Average monthly return: +2.14%

11/1/2009 – 7/31/2010: +89.71%
8/1/2010 – 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 – 12/31/2010: +11.94%
1/1/2011 – 1/31/2011: -7.23%
2/1/2011 – 8/31/2011: +29.80%
9/1/2011 – 9/30/2011: -20.68%
10/1/2011 – 10/31/2011: +24.98%

Journal Notes:
Well, I confirmed it. I actually had received an e-mail (I get account balance e-mails every day, so I probably just missed that it was something else).

Dear Trader,

As a result of the Dodd-Frank Wall Street Reform Act, new regulations will be coming into effect on July 16, 2011. All U.S. based retail forex dealers such as FXDD will be prohibited from offering leveraged trading in precious metals to retail clients after Friday, July 15, 2011. As a U.S. based trader, FXDD will no longer be able to offer you leverage based trading of Gold and Silver as of 4 P.M. EDT July 15, 2011.

It is FXDD’s current plan to continue to offer our U.S. based traders the opportunity to trade Gold and Silver, however, on a 1:1 non-leveraged basis, which will require substantially more margin. If you do not have sufficient margin to cover your open metal positions on a 1:1 basis, you will need to reduce your exposure before 4 P.M. on July 15, or risk all remaining open positions in Gold or Silver being closed out automatically and the remaining balances deposited back into your trading account.

The new regulations will not affect other Forex pairs and as always, FXDD remains committed to bringing new and innovative products to our clients.

We appreciate your understanding and loyalty. We look forward to your continued business now and into the future.
Sincerely,

FXDD

So, looks like that’s what happened. Damn, now I’ve got a bunch of money tied up in a non-leveraged asset currently at a loss. I’ll wait it out a bit and see what happens over the next week or two, but this is clearly not the best use of my money.

Well, thank God the government is protecting me from myself. Wouldn’t want to go bankrupt by leveraging a bunch of gold.

My fault, though. Missed the message they sent on it.

Oh, well. So much for that whole thing.

OK, I’m back to my strategy. Looked at the charts and my spreadsheets and now have a number of pending orders at target entry points. Will continue to watch the total number of positions I’m in but now that the margin’s freed up I can get back to things as planned.

I was asked the question as to the average capital tied up on each trade. At 50:1 leverage, my average capital tied up per microlot is a bit light of $35. So, when I target a $5 profit per microlot it is a 14-15% return on actual utilized captial. However, I never have all my capital tied up in margin, so actual returns on total account is far less.

Forex Account Update as of 4/30/2012 [Through 09/30/2011]

Continuing my account updating:

OUTSTANDING ORDERS as of End of Day 08/31/2011 settled by End of Day 09/30/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
08/24/2011 SELL 0.01 usdmxn 12.4326 09/01/2011 12.3730 +5.60

*Net profit means profit after consideration of swap fees (these can be negative or positive)

New Orders since End of Day 08/31/2011, settled by end of day 09/30/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
09/02/2011 BUY 0.01 eurusd 1.42110 09/02/2011 1.42752 +6.42
09/05/2011 SELL 0.01 usdmxn 12.5700 09/07/2011 12.4400 +10.61
09/05/2011 SELL 0.01 usdcad 0.99248 09/07/2011 0.98629 +6.30
09/06/2011 SELL 0.02 usdjpy 77.479 09/12/2011 77.068 +10.36
09/06/2011 BUY 0.02 eurusd 1.40018 09/07/2011 1.40661 +12.87
09/09/2011 SELL 0.01 usdcad 0.99634 09/13/2011 0.99098 +5.43
09/12/2011 BUY 0.01 eurgbp 0.85950 09/12/2011 0.86287 +5.34
09/12/2011 SELL 0.01 usdmxn 12.8792 09/13/2011 12.8007 +6.21
09/13/2011 BUY 0.01 audnzd 1.25341 09/23/2011 1.25895 +4.85
09/14/2011 BUY 0.01 audusd 1.02539 09/15/2011 1.03112 +6.10
09/14/2011 SELL 0.01 usdmxn 12.9929 09/15/2011 12.8712 +9.69
09/19/2011 SELL 0.01 usdchf 0.88542 09/20/2011 0.88076 +5.25
09/19/2011 BUY 0.01 audusd 1.01758 09/20/2011 1.02734 +9.88
09/19/2011 Swap Revision +0.40
09/21/2011 SELL 0.01 usdmxn 13.4487 09/27/2011 13.3390 +8.67
09/21/2011 BUY 0.02 eurusd 1.35926 09/27/2011 +6.57
09/22/2011 BUY 0.01 chfjpy 84.768 09/23/2011 84.845 +0.96
09/22/2011 SELL 0.01 euraud 1.36828 09/27/2011 1.36804 +0.68
09/22/2011 BUY 0.01 audcad 1.00790 09/27/2011 1.01418 +6.44

New Orders Since end of day 08/31/2011, still outstanding as of end of day 09/30/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
09/02/2011 BUY 0.01 eurgbp 0.87695
09/06/2011 SELL 0.01 usdchf 0.82308
09/08/2012 SELL 0.01 usdchf 0.86223
09/09/2011 BUY 0.02 eurusd 1.38658
09/09/2011 SELL 0.01 usdmxn 12.6103
09/09/2011 BUY 0.01 audusd 1.04806
09/12/2011 BUY 0.02 audcad 1.02912
09/16/2011 SELL 0.01 usdmxn 13.0215
09/21/2011 SELL 0.01 usdchf 0.89256
09/21/2011 SELL 0.01 usdcad 0.99709
09/21/2011 BUY 0.01 audusd 1.01684
09/23/2011 BUY 0.01 xauusd 1676.42

Carried Orders Since before end of day 08/31/2011, still outstanding as of end of day 09/30/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
08/04/2011 SELL 0.01 usdcad 0.96454
08/04/2011 SELL 0.01 usdmxn 11.8786
08/08/2011 SELL 0.01 usdmxn 12.1198

Equity Balance @ 09/30/2011: $3,143.11
Current Month Return: -20.68%
Initial 10/31/2009 balance: $2,360.46
Current Yield since inception: +33.16%
Annualized Return: +16.91%
Average monthly return: +1.25%

11/1/2009 – 7/31/2010: +89.71%
8/1/2010 – 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 – 12/31/2010: +11.94%
1/1/2011 – 1/31/2011: -7.23%
2/1/2011 – 8/31/2011: +29.80%
9/1/2011 – 9/30/2011: -20.68%

Journal Notes:
Interesting market right now. Apparently, people believe the Fed actions will make the dollar stronger, and not just relative to other currencies, but to other metals. My read on this is it’s a short-term perspective. Since I am trading small lot sizes with a longer-term view that the trends will ultimately continue, I continue to trade according to that mindset. I haven’t budged on that. Unfortunatley what that means at the moment is that I am getting FRIGGIN’ HAMMERED on an unrealized basis. If I’m wrong and this is a long-term new trend, then I will have a difficult time recovering. If I’m right, then the positions I am loading up on will yield a lot of upside potential that will manifest itself at some point in the future.

Getting a lot of exposure on carried trades (all at a current loss). Due to the various position sizes, I’d like to actually trim that back a bit, so I’ll probably take quicker profits than normal on a couple positions, when available.

I have also deleted all pending orders, so I will just be letting these trades ride for the moment.

I’d need quite a swing yet to threaten capital reserves, but I don’t want to be overly stupid here and get into that situation by continuing to trade. If the market stabilizes, then I can reassess when to enter new limit orders.

While I hate seeing negative dollars on my carried trades, these are the weeks that make the market fun. It’s volatile and somewhat random. In my case, I look at it in a “need to spend money to make money” sort of way. I’m buying/selling retraces, and ultimately expect the prevailing long-term trends to continue. Whenever that happens, the account jump will more than offset the decline.

Of course, I could be completely wrong…

In my backtesting before doing this, I did see similar swings occur. This is a stay-the-course strategy that does, of course, carry the risk that it doesn’t bounce back. It is what it is. If and when price bounces back to execution levels, I will recoup the entire 20% I’m down and make additional profit as well. If it doesn’t, I won’t. So don’t be overly surprised if there are very high returns in a month or two at some point, or higher than average returns over a number of months. I guess, by the same token, I shouldn’t be shocked if current trends continue and I lose even more.

I believe the reason I ran into margin issues is that you can no longer buy gold on margin. A few months ago it was posted that Gold would no longer be available for trading via Forex. I was ticked off, and then the date passed, and Gold was still available on my account. So I didn’t really look into it, figuring that the article was overblown or inaccurate or something. In the meantime price shot up and I waited all this time for it to fall. I finally had gold meet my target price and I bought and it executed, so I didn’t think much about it.

When I tried to buy a second position it didn’t let me, which seemed odd. Then I saw my margin, and realized that the difference between equity and margin must have been less than avialable margin requirements allowed. Only later did I start doing the math to realzie that the margin was really, really high. I think what happened is that Gold can now be purchased, but only at full price. So now, for every ounce of gold I buy, it’s tying up $1600-$1700 in margin.

So now I’ve needed to limit my positions so as to not get a margin call, but I’ve pretty much decided that if I need to, I’ll just close my gold position at a loss rather than add additional capital, and then I’m done with trading the metals on Forex, which pretty much sucks. But, I can still trade the currencies at the 50:1 leverage and my required margin will be much lower and allow more flexibility.

I think what happened here is that as part of the Dodd-Frank bill (you know, the one that solves all our financial problems) the ability to trade gold on the Forex market was “eliminated.” I’m guessing that has to do with the leverage, so it appears that my broker still allows trading of the metal, but it’s essentially at full value. Without having done additional research, I’m surmising that this gets around Dodd-Frank, but also pretty much means that it removes a lot of the incentive to trade Gold.

For someone just wanting to trade in and out of gold without carrying the asset, it’s a low-cost way of doing it. But without the leverage, you really need a lot of capital to carry any sizeable positions and you can probably just do better playing the currencies.

Forex Account Update as of 4/30/2012 [Through 08/31/2011]

Continuing my account updating:

OUTSTANDING ORDERS as of End of Day 07/31/2011 settled by End of Day 08/31/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
None.

*Net profit means profit after consideration of swap fees (these can be negative or positive)

New Orders since End of Day 07/31/2011, settled by end of day 08/31/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
08/01/2011 BUY 0.01a audnzd 1.24874 08/15/2011 1.25591 +6.51
08/04/2011 SELL 0.01 gbpjpy 130.270 08/05/2011 128.384 +23.89
08/04/2011 SELL 0.01 usdjpy 79.849 08/05/2011 78.825 +12.97
08/04/2011 BUY 0.01 audusd 1.06070 08/30/2011 1.06502 +7.14
08/05/2011 SELL 0.01 usdcad 0.98412 08/17/2011 0.97923 +5.10
08/05/2011 BUY 0.01 audusd 1.03959 08/15/2011 1.04379 +5.09
08/08/2011 BUY 0.01 audcad 1.01349 08/08/2011 1.02087 +7.49
08/09/2011 BUY 0.01 audusd 1.01540 08/15/2011 1.04147 +26.74
08/09/2011 SELL 0.01 usdmxn 12.3980 08/09/2011 12.0980 +24.80
08/18/2011 SELL 0.01 usdmxn 12.3998 08/19/2011 12.2911 +8.92
08/23/2011 SELL 0.01 eurjpy 110.978 08/23/2011 110.136 +11.00
08/25/2011 BUY 0.01 eurusd 1.43529 08/26/2011 1.44854 +13.25
08/26/2011 SELL 0.01 usdcad 0.99204 08/26/2011 0.98400 +8.17
08/26/2011 SELL 0.01 usdchf 0.80760 08/31/2011 0.80089 +8.29

New Orders Since end of day 07/31/2011, still outstanding as of end of day 08/31/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
08/04/2011 SELL 0.01 usdcad 0.96454
08/04/2011 SELL 0.01 usdmxn 11.8786
08/08/2011 SELL 0.01 usdmxn 12.1198
08/24/2011 SELL 0.01 usdmxn 12.4326

Carried Orders Since before end of day 07/31/2011, still outstanding as of end of day 08/31/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
None.

Equity Balance @ 08/31/2011: $3,962.78
Current Month Return: +3.08%
Initial 10/31/2009 balance: $2,360.46
Current Yield since inception: +67.88%
Annualized Return: +34.44%
Average monthly return: +2.38%

11/1/2009 – 7/31/2010: +89.71%
8/1/2010 – 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 – 12/31/2010: +11.94%
1/1/2011 – 1/31/2011: -7.23%
2/1/2011 – 8/31/2011: +29.80%

Journal Notes:
Erratic markets are fun.

I know the percentage of contribution from gold versus currencies, but since they use the same pool of supporting dollars, it would be a bit difficult to isolate actual return from each. Gold has, ironically, slowed waaaaay down under this strategy with the nearly continuous run-up in price. This strategy is much better with a trend up, but entries occur on pullbacks in price, so when a quick trend has occurred, you take a vacation and wait for gravity to pull it back down.

The nice thing about implementing the strategy with currencies is that, when there is a lull in one spot, there are opportunities in other places. Risks, too, of course.

Simplifying the strategy has served to lessen the exposure to gold. I have not tracked how much I’d have made under the old strategy, but it would be quite a bit more. But there is the potential for substantial loss on a major pullback.

I moved more to a much slower move on the pending buy limit order on a run-up in price. I also limit my transactions to one per day, so if price just bottoms out completely in a short period of time, I don’t load up on buy orders at 1% intervals.

Currently, a 30% drop would put me in a few positions, but it depends on how quickly it drops, since I now limit orders to one per day. My lot sizes are very, very low, and I could withstand a very sharp drop with a lot of positions, but I don’t have an updated calculation at my fingertips.

Based on back testing, this strategy can withstand a trend down as long as it is not a precipitious one. Under the worst case scenario, a very, very prolonged drop could theoretically wipe a person out. But if it is not precipitious, then there are many places along the way, under typical conditions, where you could be profiting from lower buys even as you carry a loss on other buys. Also, one has to have a bit of common sense. Since it’s a trend-trading strategy, if it appears that the long-term trend has reversed then either you need to pull out and cut your losses or trade the other way.

It’s not riskless. I plan on reviewing charts on a quarterly basis just to see if my opinion has changed on trend direction. But it’s really a long-term trend strategy. I’m basically prepared to carry losses for very long periods of time, while more than compensating for that by profiting on others.

Forex Account Update as of 4/30/2012 [Through 07/31/2011]

Continuing my account updating:

OUTSTANDING ORDERS as of End of Day 06/30/2011 settled by End of Day 07/31/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
06/23/2011 BUY 0.02 xauusd 1524.66 07/06/2011 +12.50

*Net profit means profit after consideration of swap fees (these can be negative or positive)

New Orders since End of Day 06/30/2011, settled by end of day 07/31/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
07/01/2011 BUY 0.02 xauusd 1491.63 07/05/2011 1507.88 +32.48
07/07/2011 SELL 0.01 usdjpy 81.304 07/08/2011 80.615 +8.53
07/08/2011 BUY 0.01 audnzd 1.28413 07/12/2011 1.29412 +8.27
07/21/2011 SWAP ADJUSTMENT -0.24

New Orders Since end of day 06/30/2011, still outstanding as of end of day 07/31/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
None.

Carried Orders Since before end of day 06/30/2011, still outstanding as of end of day 07/31/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
None.

Equity Balance @ 07/31/2011: $3,844.47
Current Month Return: +2.04%
Initial 10/31/2009 balance: $2,360.46
Current Yield since inception: +62.87%
Annualized Return: +34.02%
Average monthly return: +2.35%

11/1/2009 – 7/31/2010: +89.71%
8/1/2010 – 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 – 12/31/2010: +11.94%
1/1/2011 – 1/31/2011: -7.23%
2/1/2011 – 7/31/2011: +25.93%

Journal Notes:
The swap is not the trading fee. The spread is the fee that’s charged upon entering a trade. The entry/exit price I show already incorporates those fees.

The swap can incur in your favor or be incurred against you, depending on the currency pair and the direction of the position you hold (long or short). It’s the rollover fee for carrying the position over to a new contract. Kind of like a holding fee might be. The longer you hold a position, the larger that swap fee gets (for or against). In the vast majority of cases, even after holding a position for a while, it’s pennies, and pales in comparison to the market swings, so I don’t really consider it in entering a position. All fees are considered in the profit disclosure.

Forex Account Update as of 4/30/2012 [Through 06/30/2011]

Continuing my account updating:

OUTSTANDING ORDERS as of End of Day 05/31/2011 settled by End of Day 06/30/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
05/17/2011 SELL 0.01 usdjpy 81.196 06/02/2011 80.764 +4.99

*Net profit means profit after consideration of swap fees (these can be negative or positive)

New Orders since End of Day 05/31/2011, settled by end of day 06/30/2011
Date of entry / Type of Entry / Lot size / Currency Pair / Entry Price / Date of Settlement / Exit Price / Net Profit
06/03/2011 SELL 0.01 usdcad 0.98501 06/06/2011 0.97983 +5.30
06/13/2011 BUY 0.02 xauusd 1524.73 06/16/2011 1529.93 +10.35
06/16/2011 BUY 0.01 audusd 1.05217 06/17/2011 1.06187 +9.81
06/16/2011 SELL 0.01 usdcad 0.98659 06/17/2011 0.98053 +6.22
06/24/2011 BUY 0.02 xauusd 1503.17 06/29/2011 1508.58 +10.79
06/27/2011 SELL 0.01 usdcad 0.98968 06/29/2011 0.97054 +19.74
06/27/2011 BUY 0.01 audusd 1.04369 06/28/2011 1.04878 +5.20
06/29/2011 SELL 0.01 eurjpy 116.855 06/30/2011 116.251 +7.35

New Orders Since end of day 05/31/2011, still outstanding as of end of day 06/30/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
06/23/2011 BUY 0.02 xauusd 1518.35

Carried Orders Since before end of day 05/31/2011, still outstanding as of end of day 06/30/2011
Date of entry / Type of entry / Currency Pair / Lot size / Entry price
None.

Equity Balance @ 06/30/2011: $3,767.47
Current Month Return: +1.29%
Initial 10/31/2009 balance: $2,360.46
Current Yield since inception: +59.61%
Annualized Return: +34.42%
Average monthly return: +2.37%

11/1/2009 – 7/31/2010: +89.71%
8/1/2010 – 10/17/2010 (the date at which point I ceased the short strategy and liquidated positions): -34.35%
10/18/2010 – 12/31/2010: +11.94%
1/1/2011 – 1/31/2011: -7.23%
2/1/2011 – 6/30/2011: +23.79%

Journal Notes:
I have a lot of limit orders set on various currencies right now at various pullback points. I evaluate these every day. Strictly trading with the trend line at this point, not countertrading against it. I’d rather wait for pullbacks to trade with the trend line than try to anticipate the pullbacks by buying/selling against the trend. Been there, done that.

A logical question that I’m still trying to work out is when to assume the trend is over and a trend in the opposite direction has occurred. It’s a good question. Admittedly, it’s a judgment call, and some trends are easier to discern than others. The most conservative route is to only trade a currency pair where the trend is the same on Weekly, daily, and 4 hour charts. Good strong corroboration of the trend there. And no, I don’t fit trend lines. I just look at the chart. If it looks like it goes up from left to right, it’s an uptrend. If it looks like it goes down, it’s a downtrend. I don’t determine entry points by trend lines or anything. occasionally I’ll fit a line if I think a break of that line might have meaning, but normally that is a secondary consideration.

Currently, USDJPY Weekly is a strong downtrend, daily is a strong downtrend, and 4 hour is a weak downtrend. I continue to trade that as a downtrend. An interesting set of charts is EURGBP. The Weekly is a strong uptrend from left to right, but the majority of that move occurred September 2007 – December 2008. The Daily chart actually shows a slight downtrend, but the 4 hour chart is a clear uptrend. I am considering this an uptrend, but being cautious about entering, so it’s more on my “watch” list to see if the 4 hour trend continues.

Anyway, I’ve mainly traded gold until now, but I’ve been watching the other charts all along and have developed what I think is a very similar strategy on currencies. I’m starting off with minimal positions on these so that if I screw up it isn’t too costly (on the flip side, my gains are also minimal, but that’s OK). I’m also more cautious about entering multiple positions – I’m spacing my trades at twice the distance I space my gold trades. Part of that is caution, but part of it is an understanding that Gold – while driven by supply/demand factors globally, primarily adjusts in the short-term to the USD when priced in USD. Other currency pairs can be more volatile due to opposing forces or actions in the two different economies, so there’s a bit more risk of undesirable swings there.

I only do this in the direction of the long-term trend. At some point a trend may reverse, so there may be a need in the future to “cut bait” on an individual trade here and there. It will happen, and I don’t have a specific criteria for doing that. One mitigating factor is that, by focusing on the regional highs and lows, it is possible for the trend to reverse, but the strategy will still work as long as the reversal has enough variability within it. The need to cut bait would occur after a sharp reversal that doesn’t rebound to previous profit levels.

I’m totally bummed right now, thanks to friggin’ Dodd-Frank. Looks like soon we’ll be able to trade Gold/Silver with leverage.