End of the month and quarter: confidence reigns

It is hard to believe that 2009 is half over today!  For those of us who have been “the glass is half empty” because of the recession/depression/economy gone bad, maybe the second half will be better.  But for intraday forex traders, this market has actually been quite nice for making consistent pips, especially this second quarter.  Typically I pull in about +200 pips per week, but my average has actually increased to almost +250 per week in the past few weeks.  The thing with forex trading, as soon as you start to celebrate your wins, you may get knocked down a few notches with some losses, but so far so good.  In June my average weekly winning percentage actually decreased from 82% to 79% winning trades, but my losses have been lower, therefore my overall pip intakes has increased.  Pretty cool.  I guess I am quite a geek for being so interested in the statistics of forex trading, but truly it is just as important to track all of that each and every week, as it is to actually do the trading.  The reason:  it will improve your confidence immensely in order to properly act at each trade opportunity rather than second guess yourself.   I “feel” better about entering a trade when I have my trade entry confirmation when I know that they past 4 weeks I have seen 80% of these exact trades do win.  It makes me sweat less.  Along with the confidence of consistent trading, tracking the stats week in and week out will help you determine best days of the week to trade, best times of the month and year to trade.  These markets are so cyclical.  I have mentioned before in another post that during different times of the year the New York session is good and easy trading, while other times the Asia and/or London are much better and smoother.   One way to track your weekly/monthly/yearly trading performance is to track your profit factor.  Profit factor is your Gross Profit divided by your Gross Losses.  For example:  if you make 10 trades in June and 7 are profitable for $15,500, and 3 are losers for $4,100, your profit factor is $15,500/$4,100 or 3.78.  The goal is to keep your profit factor consistently about the same, and definitely above a 1.0 profit factor, which is break even.  It will make you feel pretty good when you master your trading strategy each month with a consistent profit factor, and the cash you made will make you feel pretty good too.  July here we come!