Next week I will be starting a new regular post summarising the week of my trades.
I’ll show you my percentage results of my live account, where and why I took trades and where improvements could be made.
There are nuances to day trading the Asian session that you don’t find in other more liquid sessions. It might be of interest to show others what full-time trading looks like, and how simple in method it can be.
While this is not officially the start of these reviews, I thought three things were worth noting this week that I hope you can all get tattooed somewhere visible. Patience, discipline and time.
This week (ending 3rd of March, 2012) was a slow week for my pairs in the Asian session. It wasn’t until the gold drop took hold in force that we saw any good Asian session movement on my favourite pair of AUDUSD.
Despite this there were some nice setups, but some awful follow through that seemed intent on breaking me down.
As a day trader, the most expensive thing you can lose is time
Below are the trades I took on my live account this week. I took 15 trades, 3 of which were winners, 7 were break even trades and the remaining 5 were losers.
To clarify, for reporting purposes, I view a winner as anything above 1% gain, and a loser anything below -0.5%. In between those levels are break even trades.
Here is the full run down:
Live results for week ending 3rd March, 2012
So, 3 winners, 5 losers and 6 break even trades. In other words well below 50% win/loss record again, yet a positive week. How so?
Look at the results above, I risk 2% a trade when working out lot size, but not one trade went the full distance, a couple went close at -1.8% and -1.9%, the rest were -0.6%, -0.6%, -1.6%.
It is so important you don’t get attached to trade by trade results. As a day trader, the most expensive thing you can lose is time.
Hanging on to trades in the hope of a recovery not only risks your account, but closes the opportunity window for the rest of the day.
Losing that time, especially in the Asian market which has fewer swings of value is much worse than a controlled losing trade.
Worst still, if you don’t cut and run, and the trade still loses, you have not only made a much larger loss than intended, but you have given up multiple trades you could have taken that would have provided more than enough to cover a small loss.
You must cut and run to day trade the Asian session.
Notice anything about the winning trades? There was only 2 of value, a gain of 4.0% on Monday, and a trade of 5.4% on Friday. Monday, then Friday!
The rest of the week was me treading water, cutting losses, getting profitable trades reversing but stopping out at break even, and desperately hanging on to my discipline.
In truth the week was frustrating as hell, but if I lost patience and diverged from my normal methods and routines, or went and played golf on Friday because things were quiet, I would have missed my last trades of the week, which in the end, brought the week into positive territory.
If you want to be a full-time day trader, you have to turn up every day your method requires you to. Trading full-time is not about how many hours you trade.
It’s about turning up each and every time you are required, regardless of past results.
You must turn up.
The last thing to note is the relative time taken on for a winning vs a losing trade. If I remove the break even trades (which have value in their analysis as well), the total time taken on a winning trade was 12 hours, 48 minutes. The total time for a losing trade however was 4 hours, 45 minutes.
Remember there were 5 losing trades, and only 3 winning trades, yet the time spent gaining these winning trades took 3 times longer than the 5 losing trades.
Averaged out that is 57 minutes per losing trade and 4 hours, 16 minutes per winning trade. As a side note the break even trades totalled 28 hours, or an average of 4 hours.
There are two things to learn from this. Firstly, the saying of “let your winners run”, can relate to time as well as price.
You must give trades time to work, as long as your trade idea remains valid. Secondly, a loser is a loser, so cut the bugger and move on. If it walks like a duck, quacks like a duck, it is a duck.
Friday was a good example of this. I started the day with a loser and a break even trade. The loser I cut at 11:50am.
The next trade which ended up gaining 5.4% was opened 27 minutes later. Without maintain discipline and cutting a loser, I would not have opened the opportunity window to get into a winning trade.
Give your trades time.