2 posts were split to a new topic: Where can I learn information about currently open positions of a darwin?
4 posts were split to a new topic: Trend and counter-trend in Fx
7 posts were split to a new topic: Suspend a Darwin when it lost -10% in the month and to put back it at 1st day of the next month
Hi Konstantin - can your provide any explanation/information regarding the recent large drawdowns which are very uncharacteristic for HFD
Hello, dear investors.
Do not worry. Everything is under control. Everything all right. Drawdown is a normal case when trading on financial markets. Earlier, I wrote that the maximum drawdown on Darwin can presumably be up to 20-25% and the maximum weekly drawdown is about 10%. Everything is within normal limits. It is necessary to take into account that it is impossible to show profit every month and it is ideal to grow up smoothly. Now there is a maximum drawdown for Darwin, but not the maximum for the underlying strategy. The worst-case scenario has occurred for most positions during the month.
Now I’ll try to describe in more detail about trading during the month. I’ll be honest with you.
In General, the system’s signals performed poorly in February and partially in January. There were a lot of stop losses, and most of the hedging profitable positions were closed at breakeven, except for the long USDJPY. The option analysis was practically not working.
At the end of January, a long EURUSD position was opened on the system (Yes, countertrend, this is normal), a small part of this position of 18% was fixed on January 31, the rest remained on the continuation of the trend until the next take profits. Since February 1, I have added another trade to the long on the system. However the expected movement ended and the asset has followed long-term downward trend, probably due to poor statistics in the Eurozone and Germany. The positive floating result of about +1.5% closed with a loss of about -1.5%, so the result for January is positive. However, in early February, the floating profit turned into a stop, according to Darwin it is about (-2-3%).
After that, on January 2, a good GBPUSD short position was opened in the medium-term market with the volume added on February 13-14. After 3 weeks of holding, I closed the entire position GBPUSD +0.7% with my hands on January 19 due to the uncertainty I expected on the asset and the squeeze between support and resistance with volumes under price. Unfortunately, after that, the asset fell sharply and part of the position could be closed by take profit, approximately + 3-6%.
About half of the loss is in gold. In the middle of the month, GOLD short positions were opened by the system, which I then closed at a loss after changing the trend by zones. Last week, on January 17-21, I had the idea to short GOLD from the historical 7-year highs using an additional filter and then, after a correction, buy it using the main signal. This was a very bad idea. I admit it. This is my biggest mistake for all the time of asset management - to short GOLD countertrend in the current situation. The deterioration of the coronavirus situation has alarmed the market. This triggered a drop in the stock market and a sharp rise in GOLD as a protective asset. On January 20-21, I re-entered the short 2 times, but I could not buy it, because there was no necessary correction in the system. Part of the position was moved through the weekend and at the opening of the market on February 24, closed at the stop of 1654 with a 50-point slip (due to the GAP), closed at 1659 with a large divergence. The only correct solution in this situation was to stay out of the market.
I am calm about the current drawdown and I do not worry about it, I understand that this is normal, everyone has drawdowns. But I am sorry for the quality of trading on some positions over the past month. I am sure that in the future there will be good profitable signals on the system and profitable periods will come.
About divergence and a little analysis.
Taking into account the large capitalization, I always tried to reduce divergence, divide one position into several orders, go for more liquid assets, do not trade oil, follow the recommendations of Darwinex support for limiting the maximum capacity and possible trades. I analyzed all this and realized that to some extent it affected my trading. I used to go more frequently on short-term positions, for example 30 take profits points (15 stop points), this is normal. The main thing is the risk from stop-loss and the risk-profit ratio. At the same time, the risk per trade could be 1%, but the volume was large in lots, since the stop loss is short. Now and for the last half of the year, I almost do not open into such trades, since this is impossible due to the large volume of each trades. This would cause even more divergence. I tried to take more distant goals with longer stops, so that the volume in lots was less, but the ratio is also. However, this reduces the probability of achieving the goal. Increased situation when a profitable position left at a loss before the take profit. Also, two other factors have a strong influence on divergence: this is the work on any commodity assets(for example, GOLD) from the words of the company’s support due to low liquidity, although it is possible to trade on gold. For gold, for example, I open the volume of 0.01 for 3000-4000$, this is a very low volume and still it caused a high divergence. Second: I open a position with several trades, it is less than 0.01 lots per 1000$, sometimes even several times. At the same time, the stop-loss is objectively single! And if a trade is closed by a stop loss, then some trades are closed with more divergence than others. There’s nothing to change, different stops are wrong.
So far, my solution is to exclude or minimize work on any commodity assets, including GOLD. For the most part, I will work on the most liquid assets and more often I will work in the short term. I will also think about working on liquid cross pairs. Then it depends on Darwinex support, I hope they can divide the volume of positions between different liquidity providers or improve the system. Now this is a feature of the platform, and I am doing everything possible to reduce the divergence.
The ability of the managing trader not only to show a good stable profit, but also to correctly fix and accept losses, as well as the ability to get out of drawdowns or force majeure situations in compliance with risk management. Ability to show high-quality trading. I will demonstrate this.
Now there is only a small position on GBPUSD and AUDUSD.
I’m not worried about the current drawdown. It will not affect any further trades.
I will continue to work according to the system and I am sure there will be profitable periods. Darwin will be recover gradually over the course of a year, with no exact date. I may be able to recover within a few months, a half-year or even earlier.
I hope for your understanding. Thank you for your trust. All the best.
I’m not coming to the forum anytime soon.
Good job over the years HFD. Drawdown is a must but with a consistent strategy over the years such as yours I am sure you will rebound. Let’s look at it this way, its a good time for people to copy you now when you are on a dip and back on focus.
Keep up the good work and don’t feel too much pressure to make the money back. Patience.
I would be worried regarding the sharpness of the drawdown…
2 posts were split to a new topic: Why does Darwinex not step in to stop the losses?
Thanks for the detailed reply Konstantin. Stick to the system, as I am sure your will, that has worked for you so well in the past and don’t get distracted but some of the negative comments. Good luck!
Would you mind giving us an update the situation of your trading, this year has been really hard. I understand that market is getting really difficult but it is good if you can tell us how are you going ?
Thank you and regards
What just happened? Yesterday was looking so good and then completely collapsed?
Hi @Manucob13. This year, trading is very, very difficult. I will try to write a detailed post within a week.
Hi @phynicle, thank you for your question. I am finding these current market conditions incredibly difficult.
I was taking short positions on majors (Dollar strengthening). But once again, the trend for the dollar has turned around, the last time a similar situation was with long positions. There is no good trend movement, or movements on the technique are broken.
I understand it must be difficult times to trade. If you could please update us on what you are seeing on the market and what your feeling is about it, I would very much appreciate it. Thank you.
Well…having had a brief look through Darwinex’s ‘Hall of Fame’ I could find only one on their list with a decent year to date…SYO…which, if its any consolation, had a torrid year last year; so don’t give up just yet! Gold’s had very erratic price action with unreliable spreads - the day traders are really playing around with the price it appears…
Great introduction to yourself at the top of the thread.
I see you’ve had a difficult time since COVID, like many other traders out there. I’d like to invest in your strategy but like others (who are invested already I imagine) it’s difficult to make the leap without understanding your thoughts on the losses and changes to strategy vs risks.
I already wrote this message after the events in early June.
I will be as honest as possible with you. I’ll tell you what happened. I wasn’t trying to deceive anyone. I’m a normal guy trader. There will be no excuses.
What happened can’t be changed. I can only move into the future by learning from the mistakes of the past.
Therefore, I will tell you everything as it is, long before the events in early June.
A little over half a year ago, at the end of last year, I already realized that I do not want to devote my entire life to trading, at least as a main activity. For many reasons, trading depressed me (regardless of the result). I realized that my self-development with trading had stopped, and other people did not understand what I was doing. But I chose this path. I don’t regret it. But at some point, I gradually began to “professionally burn out” from this activity. There is no creativity in trading, it is quite monotonous and boring work.
This made the situation even worse in January. When many people invited me to meet. All this remained in my mind. Initially, my goal was to demonstrate that it is possible to earn money on the financial markets at a distance, contrary to many myths. And after all this, the signal came to the brain that the goal was completed. But I continued to trade, as there were very good perspective for earnings. But at the same time, I was constantly depressed by the lack of self-development and creativity. And also sometimes just wasted time. Overtrading, sleepless nights. Periodic stress and anxiety.
Yes, this is all inherent in humans, since we are emotional beings. But for the last six months, I clearly felt that trading literally interferes with my life, my other activities, my self-development, and etc… Since I had been in trading for more than 6 years, I was gradually “burned out”, I was gradually losing my motivation to take a responsible approach to business.
To all of the above is added the situation with the COVID this year, the pandemic. Markets are stormy, there is a lot of uncertainty. Trading conditions are becoming extremely difficult. The situation is aggravated by the prolonged drawdown since February.
Since June 1, almost from the opening of the markets, a strong long trend in major pairs has started. I didn’t have any trades after the weekend and couldn’t join. The first week of June is the expiration week (for options) for many major pairs. I tried to enter the countertrend for AUD, GBP and later for other assets. At the same time, there was a large volume and a wide stop. Most of the positions were closed at a loss or at a stop. I am not a fundamental trader, so I rarely take into account any fundamental data. But unfortunately, the situation was compounded by very good statistics from China on Monday after the market opened. That sent the stock market and AUD surging despite strong option levels.
Previously, for 2 years in a row, I opened such positions periodically, but with less risk and worked out everything normally according to statistics. Now, unfortunately, nothing works. I also overestimated the risks. In this case, it was necessary to expect a good confirmation.
I understand that on this trend, I could get a good profit purely on margin zones. But, unfortunately, I was affected by “emotional burnout” which accumulated gradually. And many other factors weighed on me.
There can be no excuses.
I found a setup where I can maintain divergence at a minimum level, which is exactly what I’m trying to do. This is trading on the main currency pairs (the most liquid) and some crosses (the most liquid.) A fixed volume per order, usually different for each asset. For example, EURUSD is not more than 0.01 lot for $ 1500 at the current capitalization of Darwin.
Unfortunately, when fighting for the least divergence, there is an element of randomness that I can’t influence. For example, this is the closing of stop or take trades at the next day’s market opening. Most often, the divergence is large for these transactions. As well as closing deals in a very volatile market, such as a sharp impulse.
Plans for Darwin and further trading:
I’m not dropping trading and the Darwin.
I will smoothly return to work with a new approach. I understand that more automation is needed in this process. I need to spend less time at the terminal and computer. Now the principle is to withdraw the account from the drawdown and reach new peaks in profitability. Without specific dates and figures.
I plan to minimize or eliminate trading in any indices. They are not suitable for my trading method and style.
I decided to focus more on trading the main currency pairs. (EURUSD, GBPUSD, AUDUSD, NZDUSD USDJPY, USDCAD).
In a very small part, I decided to add the main cross pairs. The strategy remains the same. Analysis based on major pairs is also used. Cross trades can also be used to add volume for a specific currency and diversify away from the dollar.
At the moment, since June 15, all my accounts have automated software. Which I used for a long time only on personal accounts. Fully automated work. Rare entries on strong impulses with hard filters in trend direction and only after certain events. The system is multi-currency. Strict risk management with stop losses. No martingale or other toxic methods. In the long term it is a profitable trading system. Under my full control, with the ability to shut down.
I am currently testing semi-automatic software on the old trading system of margin zones. As soon as I check and test everything, I will install it on all major accounts. In about a few weeks. These are trend entries after pullbacks, using margin zones of the futures market participants. Some entrances and exits will be automated. Or a set of positions in the specified range.
This will allow me to spend much less time behind the terminal. And I will have the opportunity to do other things, for example, to be creative.
I apologize to everyone I’ve let down. I understand that trust can’t be restored.
At the moment, since June 15, I have left for another city 2,000 kilometers away until the end of the summer of 2020. It’s a matter of life. For moral rest. To find inspiration in creativity. To know other life and personal values and also creativity.
I’ll be back to work smoothly in July.
I will gradually return to trading with a new approach. The Darwin will be recovery in time.
Thank you, everyone.