Hi all.
I'm quite inactive here though my account has been created since 2013. Today, I want to share some of my little experience about my trading journey. I myself had been trading since 2011 and had almost eight years of retail trading experiences. Last three months, I just found my edge in FX trading after combination of backtesting and forward testing. For anyone whom confused what an edge in trading is please read this. Hopefully, my story may inspires all of you.
Background:
I started FX trading as early as high-school, and still trading now in my early year of corporate job. I started trading after my curiosity of making money online and hooked to one of broker's advertisement in the internet. Using my mom's name, I quickly opened a real account after two months worth of demo trading. My mom deposited around $500 (that's quite significant amount in third-world country) in my brokerage account. My broker at that time allowed me to trade using nano/micro lot, so I don't have problem with risk management.
One thing that I really grateful about my trading journey is that I have researched about trading quite significantly in the internet. I figure out position sizing and money management module even before I began trading real money. So I never experienced any margin call up until now. However, I neither have any trading mentor nor anyone within my family had an experienced in trading. Imagine 15 year old boy trying to grasp market concept whlist himself still learning basic economic theory in high-school.
My early trading days
As everyone here, I trade using classical technical analysis to support my buy/sell decision. It didn't work pretty well as most systems only able to show 50/50 chance of profitability. However, due to my ability to control risk, I still end up losing but not that hard. My equity curve is always declining year after year. I almost give up in my 3rd year and 5th year and thought FX trading is impossible. But I didn't quit and keep FX trading as my part-time activity both in high-school and college.
Part-time research
I figure it out that in order to trade successfully, traders need an edge to trade profitably aside from good psychology and good money management. I also figure it out that Moving Averages and Fibonacci (and its derivatives) did not work well in current market. So I decided to stop trading altogether and focus on research and backtesting. Countless of hours I had been thrown in figuring out my edge, and turns out every little edge I had found didn't perform really well in large sample sizes or different market conditions. Many of those edges will give you 55/45 probability instead of 80/20 that I hoped for at that time.
I also tried to copy other people's algo or system and figure out that their system is trash as well. Through some hardship, I started to build real edge although at that time it is still blurry to me.
My Edge
Some time in my third year of university, I attended Finance Course that talked about market inefficiency. The professor at that time explained about momentum effect and Post Earnings Announcement Drift (PEAD) in stock market. The idea of obtaining absolute return systematically has fueled me to continue my journey finding my edge.
Shortly after, I developed mechanical system that enable me to obtain intra-week Momentum across FX major pairs. It takes me another 3 year to complete the system that gives me pertinent and consistent result across different market condition. During the process, I even found random backtesting process to avoid selection bias. I will talk random backtesting process in separate section.
In the last three months, I had completed my forward testing and had collected enough trading sample to verify my edge. I was very happy for it since my forward testing and backtesting result show similar number. With average of 1:1 Risk Reward ratio, my hit rate is around 60-70%. The good news is I can trade every major pair and cross pair every single week. Usually my system give around 5-15 number of trades per week. So I could achieve 200% - 400% ROI per annum before compounding assuming my risk per trade is 2%.
Of course my strategy is not scalable for most hedge funds or prop firms. But nevertheless I am optimistic that I can get up to $4 - 5 million per year assuming current liquidity.
Next Step. Execution, execution, execution.......
From 2020 onward, I will restart my trading journey by joining more legitimate broker with sizable initial funding. Bear in mind that throughout 8 year worth of trading experience, I only used my initial $500 account. Today, it is only around $200 after 8 year of losing trades. Not bad given most people lose more than $5,000 in their first year trading career.
Plan is merely a plan if it is not executed well. I trade Daily chart (2pm PST) and only make a new trade every Monday/Tuesday, so from execution stand-point it is not as hard as day trading. I will still keep my corporate job so my trading account may compound faster as I fund my daily expenses with my salary.
Final words
Hopefully my story is useful to you. I have not succeed yet in terms of material wealth, but my trading just got traction after 8 year of learning curve. I glad that I trade forex as early as 15 y.o. Although I believe that trading success can be found regardless of your age/gender/race/etc. Happy trading and keep grinding
I'm quite inactive here though my account has been created since 2013. Today, I want to share some of my little experience about my trading journey. I myself had been trading since 2011 and had almost eight years of retail trading experiences. Last three months, I just found my edge in FX trading after combination of backtesting and forward testing. For anyone whom confused what an edge in trading is please read this. Hopefully, my story may inspires all of you.
Background:
I started FX trading as early as high-school, and still trading now in my early year of corporate job. I started trading after my curiosity of making money online and hooked to one of broker's advertisement in the internet. Using my mom's name, I quickly opened a real account after two months worth of demo trading. My mom deposited around $500 (that's quite significant amount in third-world country) in my brokerage account. My broker at that time allowed me to trade using nano/micro lot, so I don't have problem with risk management.
One thing that I really grateful about my trading journey is that I have researched about trading quite significantly in the internet. I figure out position sizing and money management module even before I began trading real money. So I never experienced any margin call up until now. However, I neither have any trading mentor nor anyone within my family had an experienced in trading. Imagine 15 year old boy trying to grasp market concept whlist himself still learning basic economic theory in high-school.
My early trading days
As everyone here, I trade using classical technical analysis to support my buy/sell decision. It didn't work pretty well as most systems only able to show 50/50 chance of profitability. However, due to my ability to control risk, I still end up losing but not that hard. My equity curve is always declining year after year. I almost give up in my 3rd year and 5th year and thought FX trading is impossible. But I didn't quit and keep FX trading as my part-time activity both in high-school and college.
Part-time research
I figure it out that in order to trade successfully, traders need an edge to trade profitably aside from good psychology and good money management. I also figure it out that Moving Averages and Fibonacci (and its derivatives) did not work well in current market. So I decided to stop trading altogether and focus on research and backtesting. Countless of hours I had been thrown in figuring out my edge, and turns out every little edge I had found didn't perform really well in large sample sizes or different market conditions. Many of those edges will give you 55/45 probability instead of 80/20 that I hoped for at that time.
I also tried to copy other people's algo or system and figure out that their system is trash as well. Through some hardship, I started to build real edge although at that time it is still blurry to me.
My Edge
Some time in my third year of university, I attended Finance Course that talked about market inefficiency. The professor at that time explained about momentum effect and Post Earnings Announcement Drift (PEAD) in stock market. The idea of obtaining absolute return systematically has fueled me to continue my journey finding my edge.
Shortly after, I developed mechanical system that enable me to obtain intra-week Momentum across FX major pairs. It takes me another 3 year to complete the system that gives me pertinent and consistent result across different market condition. During the process, I even found random backtesting process to avoid selection bias. I will talk random backtesting process in separate section.
In the last three months, I had completed my forward testing and had collected enough trading sample to verify my edge. I was very happy for it since my forward testing and backtesting result show similar number. With average of 1:1 Risk Reward ratio, my hit rate is around 60-70%. The good news is I can trade every major pair and cross pair every single week. Usually my system give around 5-15 number of trades per week. So I could achieve 200% - 400% ROI per annum before compounding assuming my risk per trade is 2%.
Of course my strategy is not scalable for most hedge funds or prop firms. But nevertheless I am optimistic that I can get up to $4 - 5 million per year assuming current liquidity.
Next Step. Execution, execution, execution.......
From 2020 onward, I will restart my trading journey by joining more legitimate broker with sizable initial funding. Bear in mind that throughout 8 year worth of trading experience, I only used my initial $500 account. Today, it is only around $200 after 8 year of losing trades. Not bad given most people lose more than $5,000 in their first year trading career.
Plan is merely a plan if it is not executed well. I trade Daily chart (2pm PST) and only make a new trade every Monday/Tuesday, so from execution stand-point it is not as hard as day trading. I will still keep my corporate job so my trading account may compound faster as I fund my daily expenses with my salary.
Final words
Hopefully my story is useful to you. I have not succeed yet in terms of material wealth, but my trading just got traction after 8 year of learning curve. I glad that I trade forex as early as 15 y.o. Although I believe that trading success can be found regardless of your age/gender/race/etc. Happy trading and keep grinding
