Week 14 Performance
March 10, 2006 by Trader Rich
As I mentioned a couple of days ago, this week was especially hard on me. I lost $3000 to drop my 14 week earnings to +2500. There are a couple of major adjustments I’m going to make going into week 15.
1. Finish a preliminary test plan that at least details 1 trade setup
2. Stop trading multiple currency pairs. I’ve been trading and trying to study about 8 different currency pairs. I feel like this is definately too much for me to handle and most would not recommend a beginner to do this. I will try to study and trade the EUR/USD ONLY since it is considered to have the most volume. I will slowly try to incorporate some more of the major pairs into my trading plan as I get more comfortable with the EUR/USD.
3. Back test, back test, back test. A couple of months ago I was really interested in back testing trading strategies but lost interest after several attempts proved to be very unprofitable. I have since started using Metastock with esignal to backtest moving averages. Metastock has an optimizer function that will go through all combinations of moving averages and return the most profitable combinations. My goal will be to first to find the most profitable moving averages for the EUR/USD. I will try to correlate the moving average pairs to produce the most profitable 3 moving averages.
I’ve already started performing #3 and I currently have Metastock performing backtesting on over a years worth of 1 hour interval data. It’s very CPU intensive and will take about 4 hours. It’s currently half way done and so far the best EMA pair is the 7/75. The 7/75 EMA’s actually have some impressive results over the last year on the 1 hour EUR/USD chart.
Here is an exact description of the backtest:
Buys/sells when a moving average of 7 periods goes above/below a moving average of 75 periods.
I also have it factoring in the broker fee and have set the results to buy/sell 1 lot.
Here are the results:
70 profitable trades with average profit of $355.86 per trade.
Highest profit was $1020 and the most consecutive profitable trades was 12
15 unprofitable trades with average loss of $972.67 per trade.
Highest loss was $2180 and the most consecutive losing trades was only 2
Over 1 year, if you followed this trading plan by buying or selling 1 lot each trade, you would have profited $10320.00.
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Well, there is a learning curve, isn’t there? Bottom line, it sounds like you’re having a lot of fun with all this noodling.
Yes as I’m learning really quick, the learning curve is enormous… It is fun. I just hope I don’t run out of money.
Hi Rich. I also hope you don’t run out of money. You could trade in much smaller lots. You could demo trade for awhile, see if you can run 10K demo account up to 50K, etc. Greg
Your trading style seems ok, only your lotsize compared to your account equity is huge. Trading 3 standardlots with +- 15K is really too much. Don’t you think so? Indeed, you set your goal very high but I would slow down a bit because another bad week and you are down under your start balance.
Best,
Wim
Wim, I agree. I was thinking about going back down to 1 lot but now that you mention it, I think I’ll do it. I was also doing much better trading 1 lot at a time and have never made more in a week trading 3 lots as opposed to trading 1 lot. My best weeks were when I was trading 1 lot. Thanks.