My last trading week was quite loaded with a large number of Economic News. And also Trades on my account.
There were plenty of Economic news through the whole week. It started in Monday with RBA Meeting Minutes, continued with German ZEW Economic Sentiment, Interest Rate Decisions and also one of the most important, the FOMC statement. According to this events, markets were quite nimble.
That is an Advantage for daytraders like me, but can be a bit risky for Position traders, who holds the position a few days. However for the purpose of daytrading, this wild market sentiment is something, that can earn a lot of money.
This is the reason, why I decided to test a new money management strategy on my daytrading systems.
I am currently focusing on positive Win ratio of my intraday trades.
The way I am doing it, is making more trades than usually, but with lower Risk Reward Ratio (RRR). It means, that I have higher frequency of trades, but I am not targeting to high amount of return. I usually use 1:1 RRR or 1:1.5 and trying to reach the Win ratio at least 65%. How could it influence the trading results? Take a look at my equity curve from this week.
As you can see, the equity curve grows smoothly. This is caused by the same ratio of risk and win amount and also by the positive win ratio.
Start of my trading week wasn’t as good, it’s because of positions, which were open during the weekend and were closed on Monday morning. However, the final Win ratio is respectable 74%. In other words, every fourth trade wasn’t successful.
And that is not bad at all.
The equity curve is stable enough, so the emotional aspect of trading is also positive (or neutral). This is the example, how the equity curve of Full Time trader should look like. Stable growth without significant decline of the equity curve.
For demonstration, I am enclosing some of the trades that I made this week.
Two easy trades made on British Pound with US Dollar (GBP/USD).
First one was quite fast, I was entering on 5minute timeframe. I set the target to 1:1 ratio and a few pips above a strong support, which you can see worked well. The market immediately bounced off and went up for a while.
The second trade was a little bit risky. My position was opened during FOMC News, which carries significant risk of loss. However, according to my opinion and analysis, I decided to take the risk and let the market breathe.
And I did well.
Very nice trade I made on Gold (XAU/USD) this week. The trade duration was about 6 minutes. This trade I didn’t make with 1:1 Risk Reward Ratio, it was 1:2 (1 for Risk and 2 for Reward).
The reason, why I decided to put my Target 2x further was, that Gold was about to break strong resistance, which you can see in the picture. I expected fast and larger movement after the breakout and again, I did well.
The point of this post is to show you, that even with 1:1 RRR is possible to reach a smooth equity curve. And make regularly money in the markets. And in my opinion, it is easier than try to hold the position as long as possible. Let’s see, how the progress will continue.