To reduce risk. This is a conservatively managed account that only uses 3.30% order size (Oanda user preferences) per trade. The drawdown you see was in the first month of trading when the account balance started at only $900. Since then, more money has been deposited and the profits have grown which in turn raises the unit size traded. Now you will rarely see a drawdown larger than 2%... ...although today I almost got hit hard, I was long EUR/USD toward the end of the London session and got caught in what I believed to be a long 'squeeze' which saw the price drop, stabilize, then repeat a couple of times and all along the way I kept adding to my long positions waiting for the correction. My drawdown potential was getting close to about 6% but if I had been over-leveraged, I would have been stopped out with huge losses. I believe most people that were long like me probably were stopped out because of larger leveraged positions, which I believe is the purpose of the squeeze (by the market makers). I don't like to average up or down like that but... On a side note I have a personal trading account which I use a lot more leverage/risk and this is how I have been learning throughout the years. I view this managed fund as a better and higher yielding option than equities, bonds, savings, CD's, etc... and it is so far... :)
<i>On a side note I have a personal trading account which I use a lot more leverage/risk and this is how I have been learning throughout the years. I view this managed fund as a better and higher yielding option than equities, bonds, savings, CD's, etc... and it is so far... :) </i> Ok, that makes a lot of sense.
I'm curious how your personal account is doing though 😄
<i>today I almost got hit hard, I was long EUR/USD toward the end of the London session and got caught in what I believed to be a long 'squeeze'</i> Yes, normally this would be the case. Daily EU trend has been up , so a move like that would have been a 'long squeeze' any day so far this September and October.
However as you saw during today's New York session, the market has finally turned. USD pairs have broken long held daily trendlines, and we could see a long term reversal.
I normally focus my energy on other projects after the London session due to the drop off in volume so I shut everything down, but now I see that you are probably right about the long term trend reversal. Also thanks for the informative article.
About my personal trading account I can say that I do fairly well overall. I've made a lot on a continuous monthly basis only to gamble and over-leverage due to greed, arrogance, or whatever and lose a lot. So I've learned. Now I am trying to balance trading both accounts from different brokers so the personal account has become secondary. I also opened up a third account to trade my first EA like you. I forward tested for a while and it is in the second week of live trading. It is private now because I am making sure the live trading is as consistent as the demo was, but so far so good. I do actively monitor and make adjustments as neccessary and plan to make it public soon. The plan is to have this replace my personal account trading as long as it brings in enough money.
...and one more thing. Sounds like you know what's going on, so why don't you put more money in your account to trade with?
Your system is worrying me a little, because your losing trades are being held for long periods... Maybe it would be healthier in the long run to not worry so much about maintaining such a pretty upwards slope.
Very observant 😄. Actually I have only had 2 days this month that I had problems like that. Oct 19 & 20th. My risk increased. On Oct 20th, I had the most exposure and stuck to my gut that my short EUR/USD positions would correct. I was right and took a small profit but I had to watch the prices all night. I normally have no problem taking losses but I just decided to stick to my feelings about the rhythm of price movements. When you say my system is worrying you, best believe it was worrying me more, so you will notice I also did not trade for the rest of the week. Prices were just too erratic so I had to step back and stop trading.
Even though you see a lot of scalping, I only trade like this due to market conditions. I normally prefer to hold my positions for longer periods of time. I probably will continue to get in and get out at least until we see what is going to happen with the Feds QE 2 plans. After that you may see more positions held longer, but then maybe not. Just depends I guess.
...and I don't worry tooooo much about the curve at the point where it will affect my trading decisions, but I am working that out in my head. Always learning and changing to conditions. ... and today I just have my eye on price movement but didn't plan to trade... focused on other things.
Thanks for the look and insight. I see you are up today! Good luck & Happy Trading! Be careful.
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