2010 didn’t begin well for me. I experienced my biggest drawdown so far at -3.95% (see Figure 1 for my account balance graph) in my demo account. Given that I only risk 0.2% per trade, this is a relatively substantial setback.
Ironically, I was in the process of filling paper work to open a live account when this performance setback hit me. Change of plan. Now I’ll have to postpone live trading until I can at least recover my demo account balance.
To do that, I tightened up my risk exposure and focused on playing only my best setup. By the close of the month, my demo account is sitting at -1.2% for January. At least I have made it some way from the bottom with a few good trades. This is also the first negative month for me since beginning trading forex in September, just 4 months ago.
January 2010 Demo Account Balance
Aside from my performance, a notable change this month for my trading is the fact that I’ve been barred from trading during the day. This forced me to trade less, which is a good thing. On the other hand, I’m not able to manage my stops as often as I would have liked. As such, I’ve been helpless at times and watched some profitable positions turn sour. Whereas before, I would have at least moved my stops to breakeven when the price moved away enough. Obviously, this calls for a drastic change to my current trading strategy. For one, I’m looking at higher timeframes for my trading now to catch slower moves. Secondly, my top priority for the next few months is to develop some trading bots to manage my risks while I’m away.
Performance Statistics
Monthly Metric January (December)
Sarting Fund $5,617.44
End of Month Fund $5,550.02
Total Net Profit -$67.42 ($148.33)
Gross Profit $375 ($591)
Gross Loss -$442 (-$443)
Profit Factor 0.85 (1.34)
Net Profit % -1.20% (2.71%)
Max. Drawdown % 3.95% (1.91%)
Sterling Ratio -0.15 (0.41)
Excess Return -1.26% (2.66%)
SDev Return per Trade 0.11% (0.12%)
Kurtosis 1.85 (17.38)
Skewness 1.01 (3.30)
95th Percentile P&L $12.23 ($11.97)
5th Percentile P&L -$8.43 (-$5.73)
Net Profit Mid 90% Only -$117.84 (-$46.96)
Total # of Trades 186 (276)
Percent Profitable 41.45% (40.77%)
# of Winning Trades 63 (95)
# of Losing Trades 89 (138)
# of Break-even Trades 34 (43)
Average Trade Profit % -0.01% (0.01%)
Average Winning % 0.11% (0.11%)
Average Losing % -0.09% (-0.06%)
Ratio Win% / Loss% 1.20 (1.94)
Max. Conseq. Winners 8 (9)
Max. Conseq. Losers 20 (18)
Largest Winning Trade $22.66 ($47.44)
Largest Losing Trade -$14.30 (-$11.64)
Avg. Time Held [hrs] 0.73 (0.26)
Goal for February
My goal from the previous month is to think more and trade less. Well, I managed the latter part but the former still requires work as evident by my negative return this month. For February, my strategy is to keep trading with half the risk exposure (i.e. 0.1% per trade) to recover my account back to its all-time high in beginning of January. I’m just about 2% away at this moment.
My goal for February is to get acquinted with MQL4 so that I can begin to develop expert advisors to manage my risks during the day and overnight.
Related posts:
My name is Paul and I am a full-time engineer, part-time trader. Back in 2000, I deposited my $5000 interest-free student loan with an online broker. Since then, my interest in trading has become an obsession.
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[...] You can’t estimate your expectation if you don’t know what you did (otherwise it would just be a haphazard guess). When I dipped my hands in trading forex the first time. I started by paper trading a demo account for a few months. As I was unfamiliar with trading forex, that provided me with a risk-free opportunity to learn. Equally more importantly, it serves as a Monte Carlo experiment (perhaps more on this another time) to figure out my expected performance statistics in this particular market (for example, here’s my January 2010 review). [...]
[...] is the end of the second quarter, I will do a quarterly statistical report. I couldn’t do a monthly review like I used to because I trade much less frequently [...]