Digital Diatribes

A presentation of data on climate and other stuff

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

Posted by The Diatribe Guy on May 4, 2012

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.

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