January 2010 Zen Trading Results

Written by Hugh, on February 17th, 2010

Well, I hit the reset button last month on Zen Trading. And no, I didn’t accidentally trip over the power cord or kick the power strip with my foot under the desk. I intentionally closed ALL my Zen Trades and started over.

Why did I do that?

Although I was making money, the way I was trading Zen involved carrying losses over a long period of time. In addition I made a couple of mistakes and got caught on the wrong side of an NFP announcement. I had a hedge in place, but I cut the winners short and let the losers run.

My hedging technique works and I could have traded my way out of it, but I found out an important thing about myself. I do not like to trade this way. Intellectually, I knew that I could come back and squeeze out some small daily profits while I unwound the big losers, but it was not fun to me.

A Matter of Personality

I felt very discouraged sitting down at the computer when I was riding even a couple losing positions. If I had two losing trades and lost the same amount of money on each of them, but one where I had a stop loss and one where I had to carry a loss while I rolled off parts of the position at a time, I would prefer the one with the stop loss.

For me, there is a lot to be said of starting fresh every trading day. It is just a matter of personality. Some traders might like the challenge of trading out of a losing position.

Now What?

The good news however is that I ended up breaking even over the last three months that I have been trading Zen. But now what? Give it up altogether?

No way.

I did learn one thing that was huge though. Rob Booker was right, I really got to know the EURUSD very well.

My New BFF

Because I have really learned how the EURUSD works from a ton of time in front of the screens, I can still put this to work. So from now on, this isn’t going to be Zen Trading anymore but just plain old day trading. Don’t get me wrong, in my opinion (whatever that is worth) Zen Trading works.

However, just like any other trading technique, it has to match the personality of the trader and from what I have learned, it does not match my personality.

What The EURUSD Does For A Living

So what I have I learned about the EURUSD so far? Don’t take my word for it, but here is what I think:

Levels – the EURUSD really seems to respect the 00 round numbers, the 80s and the 20s.
The big moves usually happen during the US session.
It moves slow enough to day trade. It is a good pair to day trade because it will move enough to make some money, but not as much as the GBP pairs.
I love the spread and execution on Oanda.
I thought watching the 10 second chart was a little ridiculous, but it really does help me get a feel for price action.
-20 pips seems like a good place to put a stop loss.

My Goals

So going forward, I am going to close out all my positions at the end of the trading day. I still want to target a minimum of 10% a month growth in the account and I want to be net profitable every day. I am still going to keep the long and short accounts because it does provide some advantages, in my opinion.

I am also going to start testing some simple indicators to see if I can time my entries and exits better. I have been trading this new technique for the past few days and I have managed to make a small profit most of the time, so I think it is just a matter of fine tuning the technique.

That is it for now, see what happens next month!

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