Share this

I intend to keep the candlestick study close to my hip until it has around 100 trades recorded. At that point I will have a sample size that is starting to become statistically significant. In the meantime I need a little self motivation and something to talk about, so I will periodically post information about it. Today I want to take a look at the profit curve of the 6 closed trades on the books. I have it set up so I can input any % risk per trade, to get an overall % P&L curve. For now I am keeping the % risk model at 1%.

Below is the profit curve of the current trades in my study. As I said before, I will normally risk 0.1% – 0.5%. This is all in percent terms because I am not trying to count dollars to know how many steak dinners my wife and I can have, but rather absolute performance. If I want to count theoretical steak dinners I can figure that out pretty easily from this chart and my account size.

Trade Details

Starting with the most recently closed trade which was also my first loss of the study, I closed an XLE bear call spread for a loss of 0.3x maximum risk (0.1% loss in real terms). I would normally not subjectively close a trade out like this, especially in a trade that is technically still valid and in play, but I had to stick a fork in this one for a number of reasons. The most important reason is that I made a hasty, dumb decision on my entry and pretty much violated how I would normally enter a trade. Because of that I got one of the most sub-optimal entries possible and sat on a loss all week long. In reality, if I would have stuck to my rules, which generally involves a 50% or greater price retracement of the entry signal, I could have actually closed this out for a profit. The sub optimal entry had both negative psychological effects as well as greatly increasing the risk I had to take for this trade. There were some other lesser reasons such as I placed too much % risk in this trade, especially considering this was a counter trend trade (which I very seldomly do unless the stars align). Overall it was a big mistake of a trade and not surprisingly the first loss out of the 6 trades of this study. I properly chewed myself out for it and I am fairly certain it is not going to happen again.

Moving on then, I have 4 trades currently open: short AUDUSD, two short NZDUSD, and short EURUSD. I entered the 2 NZDUSD shorts at different price levels using 2 different entry techniques. The technique I use to enter a trade and the aggregate performance of each technique is a metric I am tracking with this study, and why I am tracking these as separate trades.

I haven’t checked my charts yet to see if there are any new setups that have formed today. If not I expect to continue to hold these into next week until they are either stopped out or hit their targets.