Million Pips

Evolution of MillionPips

2007-12-31T15:54:00.000-07:00

MillionPips blogs is changing faces. MillionPips blog as you and I know is no longer! The next phase of my trading has me shifting to another blog with another name. The new blog is:

http://keelrisk.blogspot.com/

Soon you will be able to get there by the domain http://keelrisk.com/ . As of today, the last day of 2007 the new domain name is not pointing to my Blogger domain, however in a couple days it will.

The reason for the change is because it is time to turn my little trading operation into a business. As a result, I have named my business Keel Risk Group, LLC. This change will enable me to take some tax benefits as my trading progresses.

Trading Statistics

2007-12-31T11:29:00.000-07:00

I finally got my account transactions automated so I can identify strengths and weaknesses. As many know Oanda does not have a very good reporting structure for you to see a summary of your trades. They do have a monthly summary report; however, you only have access to it after the month has occurred and even then you have to wait a week or two afterwords.

I created a program in c# that will take the .csv file from Oanda and load it into a Microsoft SQL Server Express 2005 database. From that point I have an asp.net/c# website that will extract all the transaction from the database and presents all the stats. Below you will see the results of all that work! I plan on adding many more stats including some graphical charts representing trends.

The December results will probably change by and extra couple bucks because I have some carry trades going and will need to add these values into the final results. However this is pretty close to where I sit right now.

Stats	November 2007	December 2007	Cumulative
Profit/Loss (%):	1.91%	2.06%	3.98%
Profit/Loss ($):	$185.63	200.01	$385.64
Number of Trades:	32	50	82
Winning Trades:	25	40	65
Lossing Trades:	6	10	16
BreakEven Trades:	1	0	1
% Winning Trades	78.13%	80.00%	79.27%
Avg Winning Trade($):	$27.02	$15.60	$19.99
Avg Losing Trade($):	$84.49	$45.81	$60.31
Largest Gain($):	$86.00	$83.00	$86.00
Largest Loss($):	$228.97	$196.73	$228.97
Avg Trade Size:	5596	3050	4043

November Review

2007-12-03T21:03:00.000-07:00

I was hoping all my trading stats would be compiled by now as to give a full and complete monthly review. When I have more specifics about trades I will update this post. I plan on having this completed within the next week. I'm working on automating the record keeping piece so I can pull up full and complete statistics on my trading activities.

I officially started live trading on Sun., Nov, 11th, 2007. I was anxious to get started because I had been demo trading for what seemed forever. As a result, I was quick with the trigger finger and fired off a trade I should not have taken. It was the GBP/JPY pair. The Friday previous this pair dropped like a rock and when Sunday night came I tried to catch a falling knife. As a result, my first trade was a loss of around 2.4%. This all happened within the first 24 hours. Needless to say that got my blood pumping.

I made an additional mistake with not moving a profitable trade to break-even and then taking a loss. This is the one that really ticked my off. Although I'm trying not to get too worked up over the negative and for that matter the positive. It is a long road that I'm going down and I have made the decision that no matter what happens I'm going to fight like mad to make this a success. I'm going in with a Pit Bull attitude and will do what I need to do to be successful!

Back on track...monthly review. So with some negatives came some positives. One positive being I traded very very small. I don't have my stats yet but my guess is my average trade size was around 5000 -6000 lot size. As a comparison, a mini lot is 10k I was trading around 6k size. Another positive, is I always had a stop in place on my trades. And the biggest positive to this month is that I finished the month with more money than when I started! That is what I love about trading, it is so black and white. You look at the end of the month and you know if it was good or bad and this month was good. Could be better and will be in the future but you have to start somewhere.

My goal for this first month was to just get my feet wet and finish the month in the black. My starting balance this month was $9710.00. I finished +1.92% to the positive. This works out to about $186.68. The day before the end of the month I put on a trade on a new strategy that was questionable and I lost. If I did not have this one on the books that would have put me up another 1%, oh well. I guess one of the underlining themes on this month is I made a couple mistakes and I still came out to the plus side to almost 2%. I'm am VERY excited about the prospect of making some mistakes and know I can improve a lot which will hopefully pull that monthly average up to to 3, 4 or 5%.

My thinking now going into month 2 is this:

1) Keep focused and disciplined because I don't want the first month to be an anomaly.
2) Go to bed earlier and wake up around 5:00am to make trades/analyze. This will be well into the London session and I can hopefully better tell trends that are setting up.
3) I need to be less emotional about my trades and I think within time this will occur because I hope to have more confidence in each of my trading strategies. I know this month I did not sleep as much as I should have and I'm paying for it because I'm sick.

All for now...I'll probably be adding another post in the next week or so with the gory stats about this months' trading. I feel that analyzing these monthly stats in major detail will help me gain that extra edge.

Disciplined Trading,
MillionPips

Live Trading

2007-11-21T21:59:00.000-07:00

As of Sunday, Nov. 11th, 2007 I'm trading a live account. I can tell you it has been a rough week and a half since I started. My first trade went against me pretty hard within the first 24 hours and I ended up closing out the trade for a little over 2% loss.

After that first trade, I gained some traction in my trading and right now sit up over 1%. When time permits I will go into the details of my first month of live trading.

October Summary (Demo)

2007-10-30T19:17:00.000-06:00

I'm closing out the month one day early. I don't currently have any trades open and I do not plan on opening any before the start of next month. I've been working a lot of hours as of late and I'm tired so I planning on getting some rest. I didn't think I was going to be able to pull off a positive month; however, as you can see from the image below I was able to make a couple positive trades. This will probably be the last demo update as I'm going live starting sometime in November. I will update in the near future about my live trading.

Recommendation

2007-10-26T23:51:00.001-06:00

I have started going to PFXGlobal website on a daily basis. They have some great instructional and daily videos detailing what is going on in the currency market. Check it out I'm guessing it will be worth your time.

http://www.pfxglobal.com

Live trading

2007-10-26T23:26:00.000-06:00

I haven't made the final decision, but I'm probably going to start live trading within the next month. I realize I don't have the holy grail of trading strategies; however, I have a couple strategies that are showing promise. I figure if at least two of my strategies can perform well for the next month that I will be ready to move to real-money trading.

So at this point I'm going start getting my accounts in order. I will have broker accounts at Oanda and InterbankFx. Oanda will be my primary trading account where 75% of trades will be placed. To choose Oanda was a no-brainer in my opinion. I chose InterbankFx because they have the Metatrader software. I really like this platform and need it to implement my strategies. Besides I'm not trading with enough money to shell out $50-$100 a month for a trading platform. If I have any problems what so ever with InterbankFx I will switch to EFX Group. I have traded with Oanda and know the kind of operation they run so there will be no surprises.

Strategy Update

2007-10-26T22:36:00.001-06:00

The first image below is a progress report from the beginning, starting in August. I'm sitting on 4.46% gain with limited drawdown. I've had two straight positive months. The third month, October, is going to be close. As seen in the next image down is the month to date. It is going to be tough to pull out a positive October but it can be done.

From Beginning

October Month to Date

Above is a picture in time of where my account sits as of 10/26/2007 for month to date. Not quite the month I had planned. I had high hopes of pulling out 3+%, however I don't think that is going to happen. I do have 2 trades currently on, of which one is profitable. Despite the limited results for this month, I am happy that I have followed my trading plan. That really has been key and the focus this month. In addition, as you can see I have 5 current strategies in demo mode with one more comming on any day. I will sit on these 6 strategies until they get promoted to 'live' trading or knock back down to be revised.

Demo Status

2007-10-07T20:09:00.000-06:00

I removed my live cumulative demo trading stats on the right margin. If you think about it, it was actually worthless. The reason being is because demo strategies should be evaluated individually in order to make a determination to move the strategy into 'real money' mode. I plan on keeping the demo monthly trading stats and I will update occasionally on each strategy within the blog.

In addition, I'm changing the name of my strategies. I currently have the PinHead1 and Carry1 strategies. My goal this week is to implement 2 more strategies. At this point, neither demo strategy has enough trades to make the decision to move anything into 'real-money' mode. Only time will tell when this will happen. I am getting anxious to trading live; however, I do not want to trade with real money until I'm ready with one or more profitable strategies.

Strategy 'PinHead1' (demo):

Strategy 'Carry1' (demo):

Blog Recommendation

2007-10-02T21:21:00.000-06:00

I highly recommend a blog at http://www.forexspirit.com. The author, Colin McGinley has some insightful entries in his blog that would serve any level of trader well. In addition, he has documented his performance going back over a year.

September Review

2007-09-30T20:54:00.000-06:00

September is my second straight month which has been profitable. Considering I was on vacation for 2 weeks out of the month, I'm happy with 1.67%. That puts me up over +390 pips over the last 2 months. Considering I officially started near the end of August and September has been a partial month, I'm very happy at the results.

I think there are a couple areas I can improve. First I have been risking only .5% on each trade. This can and should be bumped up to 1-2% risk per trade. With a statistically proven trading system it will be beneficial to risk more per trade. Secondly, I need to get my 3rd trading strategy going. I have only made 9 trades and that is not enough to prove or disprove a system. So I'm looking to get significantly more trades in the books.

October is going to be the first full month of trading so I'm expecting good things. I currently have 2 trading strategies and I'm looking to implement a 3rd any day now. I just have some final research on this 3rd strategy. I'm guessing adding this 3rd strategy is going add some needed profits to my monthly results. I'm looking to get my monthly profits up in the 3-4% range.

A little day dreaming, ok a lot!

2007-09-25T21:27:00.000-06:00

Just imagine if you could produce 300 pips a month. Let me say that one more time...imagine if you could produce 300 pips a month! Do you realize the power of that statement, it should blow your mind if you really think about it. If you can do that one thing, average 300 pips a month, your life can change dramatically. I know my life would have some dramatic changes for the better. The thing is, I think 300 pips a month is possible. Let's see what 300pips a month can do for you.

I think of the following spreadsheet as a series of steps. Of course I'm not even on step 1 yet but I'm fighting like mad to at least get on the board. The thing is, once you can do 300 pips a month consistently, the battle becomes a psychological war. As far as the market absorbing 10, 15 or 20 full size lots in the currency market, that is a drop in the bucket.

Check back through the days, months and years to see how many of these 'steps' I can get past.

Trading Strategy

2007-09-25T20:56:00.000-06:00

So you say you need a profitable trading strategy! Last night I came across a great strategy at ForexFactory.com. By the way if you are a forex trader and haven't been to ForexFactory.com then you are missing out. Back to the trading strategy...the following link is the entire post on the strategy along with documentation. It is amazing there are people out there giving good strategies and research on the web for anyone to implement. The post is by a senior member of ForexFactory by the name of Phillip Nel. I have to give credit where credit is due.

Here is the link: http://www.forexfactory.com/showthread.php?t=14630

This strategy is a perfect fit for the MillionPips thinking. First it is based on 4 hour bars. A swing trading type of strategy that appears to have a high percentage probability for success. I'm currently researching the details and will be implementing this strategy very soon, of course in demo mode.

In the meantime, I've got a MP_PIN1 trade going on with locked in profit. I'm thinking it might continue to run so it will get some serious pips. Only time will tell. I also have my first MP_CARRY1 trade. It is getting close to where I can move my 'stop' to break-even. Boy does it feel good to have a trade going and a 'stop-loss' at break-even or better.

Back to more research on the strategy mentioned above.

MillionPips

Update

2007-09-23T16:30:00.000-06:00

I've been out for the last week on vacaction so not much activity. All my vaction is done for the time being so back to reality. My plan is to get more aggresive as far as getting some profitable strategies into 'live' trading mode. As for updates, I have one more trade on the books for the MP_PIN1 strategy, as seen below. In addition, I'm finalizing a carry trade strategy that I hope to have completed tonight. That strategy is in demo mode and is named MP_CARRY1.

MP_PIN1 Strategy:

Demo Trading

2007-09-11T20:51:00.000-06:00

Here is the status with my MP_PIN1 demo strategy. I'm trying to be patient on my setups thus I don't have many trades. I did just put in a limit order to buy GBP/USD. It will be interesting if my limit hits because this is a perfect setup. A very high likelihood of it being successful if makes it to the limit. We will see. Right now this is my only strategy going. I hoping to get another strategy in the next 2-3 weeks. I out on vacation again, and will not be around a computer for most of next week so that will limit research time.

Vacation

2007-09-05T21:35:00.000-06:00

I haven't been doing much trading or research because I'm on vacation. I'll probably get back to it next week.

Trade: Update

2007-08-29T23:04:00.000-06:00

My Step2 NZD/USD trade got stopped out in the last few minutes for a +$73.50 gain. I haven't decided how much I'm going to post about individual trades because it is labor intensive. Not to mention, I plan on analyzing each trade myself to see what I could have done better. I will get this figured out as the blog progresses.

MillionPips

Ready Set Go

2007-08-29T21:17:00.000-06:00

Yesterday was the offical launch of my trading, I made 2 trades with a Step2 system. Yes it is demo; however, everything I trade from Step2 (demo) through Step4 will be recorded on the MillionPips blog. If it is demo, then you will know it is demo and if live it will be kept separate. If you want any details on performance just check out the right margin. My first strategy will be called MP_PIN1.

Trade1: AUD/JPY, Long, 10K, +197pips, $170.83
Trade2: NZD/USD, Long, 10K, open trade

Trading Plan: Risk Management

2007-08-29T20:49:00.000-06:00

Risk management is the most important issue in my opinion. With that below are some risk management guildlines that I will follow. As time goes by, I'm sure more will be added

A 9% drawdown, realized or unrealized, will require me to close all open orders and stop trading for 5 business days.
A 14% drawdown, realized or unrealized, will require me to close all open orders and stop trading for 10 business days.
A 25% drawdown, realized or unrealized, will require me to close all open orders and stop trading indefinitely, minimum 25 business days. A full re-evaluation will need to occur.
50% of available trading funds will be kept in an ING FDIC insured saving account earning 4-5% interest
2 broker accounts will be used to distribute the risk one going off-line or out of business.
Hard stops WILL ALWAYS be placed on every trade and never increased!
No more than 2% of available funds will be risked on any one trade.
No more than 6% of available funds will be risked at any one time.

Trading Plan: Trade Strategy Management

2007-08-29T20:28:00.000-06:00

Trade Strategy Management is how I'm going to find, research and develop winning trading strategies. Originally, I was of the conviction that I needed to develop 100% technical trading systems. After much reading, I have changed my views slightly. Don't get me wrong, I will have a rules based system but there will be some discretion involved. Following will be the way I promote and introduce new systems.

STEP 1: Read, research and build systems. This includes gaining as much information about the currency market as possible. Including reading books, blogs and trading forums. In addition, this includes testing/modifying systems using software (Amibroker) to develop and enhance trading performance. Once a system comes out of the reasearch that I think is decent it will move to step 2.

STEP 2: Involves forward testing a system on a demo account. The specific amount of time will vary. The main criteria here will be the number of trades that I believe tells me this system can be successfully traded in a live account. Once proven on a demo account it moves onto step 3.

STEP 3: This step involves trading the system on a live account. I will not be trading full lots on this system at this point. It will be traded on a micro lots. This is one reason I choose Oanda so I can trade very small amounts. Once proven it can make money in a live account it goes onto step 4.

STEP 4: This step is trading the system in a live account with full gearing. If for any reason there are problems with this trading system it will go back to step 1.

Intermission

2007-08-27T00:06:00.000-06:00

My next posts will continue with the Trading Plan theme. I have more to cover. As of now I need to get to bed for the day gig. Yikes how did it get to be past midnight. In the meantime, I highly recommend this thread at ForexFactory, it is a good one! As a matter of fact there are a lot of great reads at ForexFactory. I still have a lot to read there myself.

http://www.forexfactory.com/showthread.php?t=2331&highlight=james16

MillionPips

Trading Plan: Brokers

2007-08-26T23:47:00.000-06:00

I chose two brokers in order to diversify my risk. If anyone knows what happened to Refco years ago, knows what can happen to any money you deposit into these brokers. It is one risk I really worry about, because it can screw up the entire plan. One of the main things I'm going to do to reduce my risk is limit how much money I keep in my broker accounts. For example, I will probably keep around $5000 of my startup capital in an ING interest bearing account. This yields appox 4-5% a year. The rest of the money will be distributed to the two brokers. Why keep extra in there when there is a risk of them going out of business. The brokers I'm going with are:

Oanda: In my opinion one of the best. Certainly the best spreads. They allow any trade size you want so risk management is optimized. They have been around for a while and have a decent capitalization, so hopefully they won't be going out of business anytime soon. They will be my primary broker and will be where 80% of my trades are placed. I traded with them years ago and had no complaints. One complaint you will hear about Oanda is the spread widens significantly during news announcements. I'm fine with this because none of my strategies include news driven trading.

EFXGroup.com: My second broker was a tough decision. I chose EFXGroup, the parent of MB Trading because of their spreads, ecn style trading and customer service. I have seen one of the reps respond to concerns in forums and it seems they care. I wish they were a little bigger of a company to make me feel more secure for my funds.

Trading Plan: Goals

2007-08-26T23:16:00.000-06:00

Click on the image below for projections of my trading results for the next 3 years(36 months).
Here is an explanation of each column:
Start Balance: I will be staring with approx $10,650
Est. Gain %: The percent gain I am planning on obtaining.
Est Gain $: The dollars gained from trading (i.e. gross profits)
Borrowing Cost: This is approx how much the loan will cost me each month
Principle Payment: This is appox how much the loan principle will be paid each month
Net Profit $: Is the Est. Gain $ column minus the Borrowing Cost.
Cash Balance: This is the cash I will have on-hand each month. As you will notice it goes down for the first 12 months. This is because I'm going to be paying out almost as much as I make. This is ok because I'm paying almost 300 a month in principle. As long as I'm making more than the Borrowing Cost column each month..that is the key
Added Cash: After goals are met I plan on adding cash every 12 months. Personal funds, not from a loan.

One thing to note. The loan for the startup capital will be paid off on month 36.

Trading Plan: Starting Capital

2007-08-26T22:26:00.000-06:00

Warning: do not do this at home. This is performed on an enclosed track by professionals and is NOT to be advised. Seriously, not the professional thing but the rest of it.

I'm going to defy what all the experts say to do in regards trading capital. I'm going to be obtaining a loan to fund my trading account. There are a couple reason for this. First, I'm a lot more cautious than the average bear. In addition, I'm going to be very prudent about how I go about trading to increase the odds of making money. In addition, I could probably scrounge up enough money to pay this loan off within about 6 months if needed. So in other words, it is not a big stretch or risk that I'm taking.

To be honest it doesn't quite feel right to borrow money to fund a trading account. However, I'm justifying it by the following logic. I'm making a decent amount of money from my job and the amount I'm going to borrow will not put me in the poor house if something goes bad. Secondly, I have extremely good credit and will be able to borrow this money at very good interest rate. This will keep my monthly costs low and will hopefully be self-sustaining with this loan. In other words, if I make my projections, trading profits should be able to pay off the loan. If I do not make my projections and loss every cent from day one I can easily make the payments. If I could not pay this off easily with my day job I would not borrow money, the risk would be too high. After all, this is a calculation of risk.

I see this venture as nothing more than a calculated business move. With that lets look at a typical business. As with most businesses, you have to obtain a loan and go all-in. In other words, borrow a couple hundred grand, quit your job and work your ass off hoping your business succeeds. By the way the business loan you get is backed by you and if your business goes down you go down. Banks will NOT let you borrow for a new business without personal equity for if the loan goes bad they can take your house or 401k or whatever you used for equity. If I'm not mistaken, 9 out of 10 business fail within 5 years!! Now is this is a big risk, you bet it is.

Now lets look at this business venture. I'm going to be getting a loan between $9000 - $11000. The interest rate will be between 7%-8%, I have close to an 800 FICO score. I'm not going to be quiting my job. So, my 80K a year job plus benefits will remain in tack. I can work as many hours as I want. I can take a vacation whenever I want. The upside limits are tremendous and the downside risk is limited to my determined risk tolerance. Now don't get me wrong, I'm not going to be making 50k a year on my staring bank roll; however, it will get me started.

So with all that said I will probably be taking a loan out for $11,000. My monthly payments will be around $344 per month for 3 years. As I will discuss in detail later, my estimated trading income should cover this cost.

The Trading Plan

2007-08-26T21:37:00.000-06:00

For the last 2 weeks I have been working on my trading plan. First and foremost this will be treated like a business. My plan is to be very detail oriented, in order to discover what I'm doing right and what I'm doing wrong. In following posts, I will be covering these topics concerning my trading plan:

Starting capital
Goals
Brokers
Trade strategy management
Risk management