This is the first time since trading with Tom that I have had two losers in a row. It’s going to happen and it has happened. In fact I explored this mathematically last year in this post where I work out how many losers I should expect in a row over a sample trade number and the strike rate. The formula is

WinRate% to the power of [numLosersInARow] multiplied by NumberOfTrades.

Anyway, even with a 95% strike rate, over 1000 trades you should expect to get 2 losers in a row 3 times! I’m not saying I have a 95% strike rate, all I’m saying is consecutive losses should be expected and not something to get emotional about (can you see how I’m talking to myself here?). My strike rate currently is 65%, which isn’t great and something I am going to work hard to improve, so assuming my strike rate doesn’t improve, then over 1000 trades I should expect 2 losers in a row 123 times! With my current strike rate over 1000 trades I should expect to have one losing streak of seven losers in a row! I’ve only taken 24 trades so far. So plugging in those numbers, I should have had 2 losers in a row 3 times by now, and it’s only happened once. So I am due another couple of losers in a row given my current strike rate. I should have had 3 losers in a row according to the formula, but that hasn’t happened yet, but it WILL HAPPEN. And I should expect it.

Anyway, onto my trade. I shorted cable not long before my crude oil trade was filled. Unfortunately I was exposed to the same USD weakness in both trades. The GBP and Crude Oil both moved higher not because of inherent strength in those instruments but a temporary collapse in value of the USD, possibly caused by the USD/JPY moving to all-time record lows. Anyway, I’m not going to concern myself too much with the fundamentals as I’m a technical trader. Here’s my cable trade entry:

Entry

I went in profit by 21 ticks, and I thought to myself, “Here we go off to the target for yet another winner.” And that’s when the USD collapsed and cable moved higher and at the same time filling my Crude Oil offer. This trade cost me 4.7% of the account, which combined with the 11% crude oil loss is quite a hefty loss to take. I’m still up 3% on the month, but my performance is not as impressive as last month. Well, we’ve still got another week to go yet, so let’s see what next week brings. Here’s the exit:

Exit -4.7%

Even though I’ve taken a loss on it, I feel a bit more comfortable than leaving it open over the weekend (it’s Friday today). If this market gaps up past the stop loss, then the account could lose a lot more than I would have intended.

I took a trade on the GBPUSD today, the setup looked good in my mind, even in hindsight. Stronger than expected news for the GBP pushed it higher and I was short. I lost 2.4% of the account on this trade.

Cable short (click to enlarge)

I have just closed my first live trade with the MAX. It was open for 1 Day, 11 Hours, 54 Minutes and 12 seconds (according to MooDB). The trade was a losing trade, but a well-managed trade in my humble opinion. I lost 0.26% of the account with an initial risk of 3% of the account, so pretty good in terms of managing my risk and reducing the loss (i.e. cutting losses early).

For MAX readers, I will post the entire chart with MAX indicators in the forum, but I won’t be posting charts of trades taken with the MAX on the blog because it might upset the MAX people, and I don’t want to upset them.

So, you might be thinking how I am feeling at this moment. Well, I am feeling pretty good. I am feeling confident, and I executed my trade flawlessly in accordance with the MAX rules. I have been re-reading Trading in the Zone by Mark Douglas (my third reading) and I think I am at the stage where I can execute trades with total control of my emotions. In the book, the author talks about what the market is and what we should expect from it. He says

1. Every moment in the market is unique
2. You don’t need to know what happens next to make money in the market.

So, I am quite happy to take my small loss because I know that I have an edge. I have thoroughly tested my edge and if I continue to execute my live trades on my live account like I did today then I will achieve a steadily rising equity curve.

I also realise that I absolutely love trading the markets, it is so challenging and thrilling and tests your wits to the limit. It is so much fun, and I am waiting patiently, but eagerly for the next trade signal to come along.