August 2021 Trading Review

Sep 2, 2021

My first month of trading with CTI has finished. During this month I have traded Infinite Prosperity's day trading strategies on a real money account. I have also traded Infinite Prosperity's swing trading strategies on a demo account.

Day trading (live)

I am currently at evaluation phase for the $70K account. In evaluation phase CTI gave me a $17.5K real money account with two targets: 30 active trading days and 7% profit. Deadline to achieve the targets is 12 months (August 2022).

By the end of the month, I had 9 active trading days (30% achieved) when my strategy was signalling an entry and I was placing trades. The month started nicely with 4 consecutive wins. However, at the end of month my account balance was $17465 - a 0.2% loss.

I have placed 12 trades - 6 of them were profitable trades, while the other 6 were losing trades. My weekly self review showed that 11 of these trades were valid (placed according to my strategy and trading plan), while 1 of them was an invalid trade - resulting in a 0.25% loss.

The first month's target of learning to execute the strategy with military grade accuracy was achieved with only 1 mistake, as the self-review indicated. I am happy with that.

However, I am not happy with my DDP (daily direction prediction) strike rate. During training on historical data I could achieve a 70%+ strike rate, however, for the last month of trading my actual DDP strike rate was just 34%. It is not possible to trade these strategies profitably without at least 55% DDP strike rate. I understood that over time my DDPs got increasingly vague and based on a "gut feeling", as this was the only area where I didn't have written rules in place. I went on fixing this immediately.

The focus for September 2021 day trading will be on improving my DDPs. For September I will continue trading with reduced risk per trade (0.25%) because the target DDP was not reached. It means that my equity curve projection is now negative and there's no point in increasing risk as of yet. I will be looking to increase risk per trade no sooner than October 2021.

Swing trading (demo)

I understood that I will never be able to increase risk per trade with my swing strategies. It is a high risk/reward, low strike rate type of trading where results are dependent on market cycle (opposite of day trading). When I combined my historical swing trading journal with last month's journal, I saw that I cannot reasonably expect a strike rate higher than 35%. What this means that statistically at some point in the future I can expect to have 20 consecutively losing trades.

That would be OK when trading with my own capital, however at CTI I have a 5% maximum drawdown limit. 0.25% x 20 = 5%. It means that I will never be able to increase risk above 0.25%. And with such risk per trade, I can expect to make only 0.5-1% maximum profit per month. Since capital advancement levels are calculated at each 10% profit achieved, it could take up to 10 years to achieve a sizeable account level. It is too long for me and not worth my time. So starting from today I will be discontinuing swing trading on the demo account.

This, however, doesn't mean that swing trading is not doable on CTI. It is just about my strategy. If I had a strategy with, say, 6:1 average R/R and a 33% strike rate, that would be a game changer. Something to keep an eye on.

Decisions for September 2021

  • As already mentioned, on my day trading (live) account I will be continuing to trade as usual, with 0.25% reduced risk per trade, while focusing on improving my DDP strike rate.
  • I will be discontinuing my swing trading strategy because I can't use it with CTI's requirements.
  • I will be looking to learn and forward test a 2nd day trading system on a demo account (have a potential candidate). If I see good results, I can open a 2nd live account with CTI and grow both accounts simultaneously.
  • It would be nice to start trading with my own capital as well. That would allow to trade strategies where large drawdowns are usual part of business (like swing trading). Over the next month I want to define a strategy for a positive sum business which would allow me to accumulate capital and transfer it forex trading.
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