The FX Trader's Weekly Model Account

F

FX_Traders_Weekly

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Greetings!

I'm Scott Percival, the publisher of FX Trader's Weekly, and I very recently became a sponsor of Elite Trader. I introduced myself and FXTW over in the announcements forum last week, so check that out for more details.

Anyway, a poster in this thread had a question about my account performance, so I'm creating this Journal to document the FXTW Model Account. I update this more frequently on my Twitter account, including all events such as fills, new order placements, open order adjustments, etc. However, this Journal will give me an opportunity to do a few things I can't do in 280 characters or less. Here, I can:

  • Discuss Model Account trades in more detail,
  • Discuss the Model Account's trade management and risk management techniques
  • Present research on how to better use the features found in FXTW
  • Improve the Model Account's performance based on this research

The FX Trader's Weekly Model Account

So what is this Model Account anyway? You can read all about it here, so I'll just summarize. Oanda is the actual Forex broker for the account. The Model Account uses the Executive Summary rankings found on the front page of FX Trader's Weekly each week to determine the pending entrances and exits of positions in a mechanical way.

On the second page of each week's issue of is found an update of the FX Trader’s Weekly Model Account. Included is the account’s equity curve and a snapshot of current positions and pending entries/exits. I'll be updating those weekly in this journal, so here's the current info as of this past Saturday's issue.

equity20210714.png

positions20210714.png


These are not trading recommendations.

I know everyone says that, but in this case there's even more reason to point that out. The Model Account isn't currently set up to maximize profits as a normal trading account would be (however, that will change as I use this Journal to modify it as I mentioned above). The original intent of the Model Account was just to provide a kind of “market index” of the average performance of the main features found in each issue of FX Trader's Weekly. So it just uses a simple mechanical method of averaging out the results of these key indicators to determine trades.

However, some indicators in the FX Trader’s Weekly may work better than others at various times, so traders should use them as a tool kit, tailoring their trades based on their own experience and knowledge. By doing this, I fully expect that many readers of FX Trader's Weekly commonly beat the performance of the Model Account.

But not for long! As I said above, I'll be doing research on FXTW's indicators with an eye toward constantly improving the performance of the Model Account. And I'll be documenting all that here.

First though, in the next post, I'll provide more detail on how the Model Account manages trades and risk. So stay tuned for that, and as always, keep pipping up!
 
Happy Saturday!

Each Saturday night, once the new issue of FX Trader's Weekly is published, I've been posting the performance of the Model Account on Twitter along with updates on new and existing positions. Now that I have this journal, I'll begin doing the same here - so here's tonight's update:

The FX Trader's Weekly Model Account was up 1.06% for the week to 195% of inception value.

Short CAD/JPY, EUR/JPY, EUR/NZD
Pending closures: short AUD/JPY, GBP/CHF
Pending openings: long AUD/CAD, NZD/CAD

equity20210717.png



That pending initial entry order to buy NZD/CAD is new as of tonight, so here's a look at it on a chart.
nzdcad20210717.png


That's all for now. Until next time, keep pipping up!
 
There were a few position adjustments and fills in the Model Account today, so I'll discuss each briefly here. I know, I know - I'm supposed to post about how the account manages trades and risk. I haven't forgotten - events are just overtaking me a bit, lol. :confused:

I often don't have any trade adjustments in a given day, but today there were three! So here's what's up:

1. Short AUD/JPY: Moved trailing stop down from 83.00 to 81.25

This is a pending closure, meaning that the FXTW's fundamental outlook for the pair direction has changed. When that happens, I cancel any pending orders to add to the position, tighten the (formerly very wide) stop, and begin trailing the stop behind the price action. So in this case, FXTW's outlook on AUD/JPY is no longer short, so I'm trailing the stop. Today's adjustment was just a further movement of the stop into positive territory. This is unfortunately a very small position because it never go the chance to pyramid. The outlook for the AUD kind of turned on a dime a few weeks ago.

audjpy20210719.png




2. Short EUR/JPY: Order to add 71% @ 129.25 filled.

This trade is in the pyramiding phase, where I'm adding to the position as it moves in my direction. As each order fills, I place another pending order further along in the trade direction, usually at a break of some key level. In this case, there's a former resistance level which may act as support just above 127.00, so the next pending order is below that at 127.00, and will fill only if that level breaks.

There's nothing really mysterious about the percentages that I add to the position at various points. Due to Oanda's FIFO accounting, it's just easier to make each order a unique size. So each order is slightly larger than the next by a fixed amount. The percentages are just the pending order size divided by the existing position size (which should be obvious, lol)
.
eurjpy20210719.png



3. Long NZD/CAD: Initial buy order filled @ 0.8875

So here's the initial stage of a new position with a pending buy order above a former high filled. Now the trade enters the pyramiding phase, so I look for a spot to place the next buy order. In this case, I arbitrarily placed it at 0.9050, about halfway between today's fill and some weekly chart resistance around 0.9340 (the white lines). The next order will be above all that, at around 0.9350.

Note that the pending order will more than double the position size. This isn't crazy. It's because I start out with extremely wide stops which cause my initial position size to be very small. So that order will be doubling a very small position into a more meaningful size. As the position gets larger, it means the trade is going in my direction, so I tighten the stop as it progresses.

When I say the initial stop is extremely wide, I mean it. I use the extremes of the weekly chart, so in this case for example, the stop is currently way down at 0.7500.

nzdcad20210719.png


K, that's it for now. I'll try to get that post on trade management and risk on here soon, but hopefully these three trades will provide some of the flavor of how the Model Account trades.

As always...keep pipping up!
 
Trailing stop hit on short AUD/JPY position @ 81.25 for a gain of 0.07R or 0.20% of account equity.

This is the position shown in that first chart in the last post. As I mentioned then, "This is unfortunately a very small position because it never got the chance to pyramid. The outlook for the AUD kind of turned on a dime a few weeks ago."

This is a good illustration why it's a good idea to report trading gains and losses in terms of %R and/or %Equity as I do here. This trade had a gain of 225 pips (!!) which sounds awesome. But it was basically a wash for the Model Account because of the small size.
 
Greetings!

This week's issue of FX Trader's Weekly is out and available on the subscribers page. If you opted into email delivery, it should be in your inbox.

So let's look at the Model account which had a loss of 0.70% of equity this week, bringing the equity to 194% of inception value.
equity20210724.png

positions20210724.png


I'll be posting the positions table from pg-2 each week since it's easier to visualize how the outlook is changing for each currency. So there are a few changes in the positions since last time:

  1. The long NZD/CAD order filled a few days ago so the position is now active.
  2. The pending long AUD/CAD position is gone. - It's unusual to remove a pending opening before it fills, but the fundamentals changed, and so there you go.
  3. The short CAD/JPY position is now a pending closure. This is related to #2 above in that the outlook for CAD is less bearish now.
  4. The short AUD/JPY pending closure hit its trailing stop and is now gone.
  5. There is a new pending opening - long GBP/USD.

I already posted about the NZD/CAD fill and the AUD/JPY exit earlier in the week, so here's the new stuff:

1. CAD/JPY Pending Closure

As with any pending closure, I cancel all pending orders to add to the position and tighten up the stop. in this case I brought the stop all the way into the profitable zone just behind a level where support from earlier in the month has turned into resistance (purple lines). That area looks to be under pressure, but we'll see if we can squeeze any more out of this one.

cadjpy20210724.png


2. Pending Opening: Long GBP/USD

The USD is now the most bearish currency in the FXTW stack, while the Pound is the most bullish. This pending entry order is just above a level where earlier support has turned to resistance. If it fills, the next buy will be above that recent resistance area around 1.3900+ or so. Note that as usual, the initial entry has an extremely wide stop, making the order size very small. As I add to the trade, I'll tighten the trailing stop.

gbpusd20210724.png




That's all for now. Until next time...keep pipping up!
 
Greetings!

The initial buy order for GBP/USD that I showed in the last post has filled @ 1.3825. As I mentioned then, I've placed an order to add 150% at 1.3925. This trade is now in the pyramiding stage.

gbpusd20210726.png


In other news, I'm working on a research project regarding the performance of the Buying Power Reversal Potential (BPRP) indicator found in the "Beyond the Big Mac" section of FXTW each week. I'll be reporting on that here sometime in the next week or so.

Until then...keep pipping up!
 
Another fill on the long GBP/USD trade. Next pending buy @ 1.4300, so we probably won't see another update on this one for a while.
gbpusd20210728.png


Still chipping away at my research project, and getting some interesting (and a bit unexpected) preliminary results.

Stay tuned, and as always...keep pipping up!
 
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