Closed EUR/CHF and GBP/CHF Shorts: Best. Trade. Ever.

By Paul | Published: January 22, 2010

As I was saying earlier this week, I have been stockpiling in EUR/CHF short in my demo account (Fig. 1).  Aside from that, I’ve also stocked up some GBP/CHF shorts this week (Fig. 2).  Both positions are now closed because of my adjusted stops.  These positions have single-handedly lifted me half way out of a deep drawdown in my demo account.  These trades netted me about 1.5% in my demo funds.  Yes, you read that right, a meager 1.5% gain and I’m calling these my best trades.  No, it’s not like I haven’t had good trades in terms of the money made or the fastest pips.  These shorts aren’t even close from just looking at the numbers.  Heck, it would have been a lot more profitable if I shorted Euro and Pound with a Dollar or Yen counter this week.  So why?

If you read my post on measuring trading performance, you may recall that I don’t measure success by profit alone.  It is performance in terms of amount risked that matters in trading.

These shorts in EUR/CHF and GBP/CHF are my best forex trades ever (in my 4 months of fx trading so far) simply because I risked no more than 0.2% at any given time (most of the time there were no explicit risk as my stops have locked in profits) to make that 1.5%.  1.5% gained by risking maximum of 0.2% gives a Reward/Risk ratio of 1.5/0.2 = 7.5!

There were several occasions when I had doubts to add to my position or were pondering about taking profits to settle my worries.  Despite all of that, I soldiered on, managed my stops like they were my babies, and piled more into the position according to my plan and trading setup (Fig. 1).  By the time I started scaling out, I have built my biggest (non-scalp) position.  That gave me a lot of freedom in scaling out as you can see on my exits shown in Figure 1 (red dots).

This Reward/Risk ratio is the highest I have achieved in recent memory.  I have always read about 10x or even 20x trades at the SMB Capital blog.   Those guys can achieve this type of reward/risk ratio day in and day out (I’m not affiliated with them).  I guess that’s the difference between the pros and me.  This is definitely something I am strifing to do myself.  Executing consistently high reward/risk trades.

How I might do that?  By continuing to improve on my trading skills and my understanding of the forex markets.

EUR/CHF, 3-hour

GBP/CHF, 3-hour

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This entry was posted in European Crosses, Self Assessment and tagged CHF, EUR, exit, FTC, GBP, good trade, paper trade. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

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