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FHT - Four Hour Tour

Hi Everyone,

I’d like to indroduce my Darwin FHT and provide some details on how the underlying strategy is traded.

Personal Introduction

I’m a retail trader with about 6 years experience. As most traders I have made lots of mistakes and experimented with many different strategies (there’s a hint in my username :slight_smile: ) before finally settling on the strategy I’m using now. It has been quite the learning experience and rollercoaster of emotions, until I stopped babysitting my trades and started adopting more of a “set and forget” mindset.

Trade Strategy rules

  • FHT trades the majors and most crosses
  • Entries are based on H4 candlestick charts and patterns
  • The Underlying Strategy trades with initial risk of ~2% or less per individual opened trade
  • The Darwin should see Risks of strictly less than 2% per individual opened trade on the default Risk settings
  • Exits are based on a Profit Target set at a Risk:Reward of > 1:1, but trades can be closed sooner if there are indications we’re not going to hit the Profit Target. For trades which are opened with an expectancy of long duration, and very high R:R (> 1:5) a trailing stop will be used to lock in partial profits.
  • There is a limit of 1 simultaneous trade per pair. Hedging may occur across different currency pairs.

Investible Attributes

  • Ex: No account migration, so experience is still low, but ever increasing
  • Mc: Should remain high. There is no bias for a given currency, only technical arguments
  • Rs/Ra: Trade sizes will evolve with account size to get a consistent exposure per trade measured in %. The only variation expected here would be the number of simultaneous open trades. Entry signals for additional trades may be ignored, or may trigger the close of an already open trade on another pair, in order to limit the impact on the Rs/Ra attributes.
  • Os/Cs: The Open Strategy shows that earlier entries were better, later entries were worse. This fits the underlying strategy, which usually waits for directional confirmation rather than trying to catch tops or bottoms.
    The Close Strategy will be more random due to the different criteria for closing trades (see previous section)
  • R+/R-: R+ is not expected to have a high score. R- on the other hand should remain high. This is explained because there is a fixed ‘Risk’ exit, but not a fixed ‘Reward’ exit.
  • Dc: There are no time limits imposed on open trades, so I do not expect a high score on Dc
  • La: This attribute is expected to have a high score, again because of a fixed ‘Risk’ exit.
  • Pf: Not much to say here. Both you and I hope this score will remain high for ever
  • Cp: Since the underlying strategy trades H4 charts, there should be some divergence allowed.

My personal trading focus

  • Primary focus: keeping the Risk Aspects (Rs/Ra and R-/La) high.
  • Secondary focus: trying to improve the Reward Aspects (Os/Cs and Pf).

Communication strategy

I’m planning to provide monthly updates at the least, and reply to questions as soon as possible.
Should you have any more questions and/or suggestions on what to include in the monthly updates, please do let me know, and thank you already for taking the time to read this introduction.
Good luck to all traders and investors alike! May the fortune be with us :wink:

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October has passed, so it’s time for a monthly update.

In this topic I won’t spend much time on presenting stuff that you can easily find out yourself by checking FHT’s page, like this month’s Gain or Loss and changes in DrawDown. I would rather talk a bit more about things that are not (easily) found on Darwinex, like why some values are what they are, and the underlying strategy, otherwise known as “the trader’s edge”.

  • VaR settling at ±15% in October


    When I started trading this account in its Pre-Darwin stage, I did not consider what my Monthly VaR would become once it was calculated and I was trading at a Risk level I felt comfortable trading myself. Now that the Darwin exists, we can see that it’s settling around 15% on the underlying account. I am very satisfied with this value and there currently aren’t any plans to modify my trading behaviour specifically to impact the VaR. As a provider, I think it inspires confidence for investors, knowing that I am trading more carefully with their money compared to my own. After all, every loss will hurt me 1.5× more than it will hurt my investors, and every drawdown will be 1.5× less severe for my investors than it will be for myself.
    (Note: I was on vacation in September and entered a lot less trades that month. For reference, October is more representative of my usual trading style).

  • October’s Trading Journal


    So here we’ll dissect a bit what happened in October, and since it’s the first update post, also shed a little light on my trading style.
    First off, the yellow line: In order to keep my VaR stable, I aim to have around 5 trades open at any given time. Of course, this is not a fixed rule, since I do not forcefully look for a setup once I have less than 5 trades open, and I don’t pass up on a good setup if I already have 5 trades open, although usually when I have 6 trades on the board, I’ll be more actively looking to close one of the 6 (which you can see by the short amounts of time with 6 trades). It is also not unusual that among those 5 open trades, there are cross-pair hedges against one single currency, for example a short bet and a long bet on the euro on two different eur pairs. This serves the purpose of keeping drawdowns limited during sudden increases in volatility.
    Then, the blue circles: These show periods in the month where I wasn’t positioned on the good side. Here you can see Stop Losses being triggered, by the decrease in equity as well as number of trades. This, in combination with my La score, should act as evidence that I am trading with fixed risks per trade. The underlying strategy trades with maximum risk of ±2% per trade. Combine that with a standard situation of having 5 open trades, the maximum exposure would be around 10%, and if you couple this back to the strategy trading at 15% VaR, it should translate to the Darwin having a risk exposure of 6.67% if for some reason all my trades would simultaneously hit their Stop Losses.
    Last, the purple circles: These are the things we all love to see. These were trades that either hit their Profit Target, or were manually closed in profit territory. In my edge, it usually takes (a lot) longer for trades to be profitable than being losses, which you can see in the long stretched circle in the 2nd half of october. There were still some small draw downs there, and they were mostly caused by trades that were stopped out rather quickly after they were opened.

  • Results of the Strategy per currency
    LOG
    This is an overview of all the trades that were closed during October, so the ones that are still open now are not included. This table shows a bit my performance or accuracy on predicting the movements of currencies. In October, I was apparently not very good at interpreting what NZD. CAD and GBP are close to 0%, while AUD, CHF, EUR, JPY and USD were bringing all of the profits. The way these numbers are calculated is best explained by an example: If I close a EURUSD Long trade with €10 profit, €5 will be assigned as EUR Long, and €5 will be assigned as USD Short. This is just more of a ‘fun infographic’ and no definitive conclusions should be drawn from this (note: for November so far, NZD is the top performer :wink: )

  • Closing statement
    So that was October for FHT, but I’d like to add two more things to this month’s update.
    First, I’d like to give a huge thanks to my first two Angel Investors. October saw two people investing in FHT (the first investor was me myself and I :slight_smile: ) and during the month, they were happy enough with the performance to increase their investments. So THANK YOU very much! You two know who you are! :slight_smile:

And secondly, I have joined @Livenemaxx’s Discord server where I am available to chat in the group channels, or by Direct Message if you have any questions. I highly encourage everyone here to join as a means of interacting live with traders and investors alike.

Happy trading/investing to all, and see you early December for the next update!

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