Are We There Yet?
On the one hand I like to tell myself I’ve ‘made it’ — my trading system is up and running and it is broadly speaking, successful. It generates around 1% of invested capital as profit each week. Meaning over the course of a year it will increase the size of my portfolio by 50%.
But there is always the chance that it could all go wrong. I’ve been trying to create a system like this for five years and I can’t count on two hands the number of algorithms and ideas which have failed (including the current one — when I tried it briefly years ago without any of the fine tuning I have today).
My system can go wrong. Here’s what it would take to break the bank as per my current system. All the currencies I’m invested in (there are four so far with more coming in the future — strength through diversification) would need to suddenly shoot either upwards or downwards in price without hovering up and down. Just a straight plunge or a raise. And they would need to shoot up by roughly the amount of price movement they do in a whole year or more. And then they would need to keep on shooting up (or down) and not stop.
Anything is possible in forex but I have one trump card; these are the currencies of actual nations. Countries and states like the USA, the UK and the EU. And they have a vested interest in not having their currency explode upwards or sink like the Titanic. So I have the central banks of those countries on my side to make sure I don’t get my Armageddon.
At present, if I do an emergency exit and close all positions — take the money and run — I would be left with a profit of approximately 7.5% my initial investment. My current portfolio balance has a profit of 22% my initial investment. So those numbers are… quite good. And that’s in six months. But I’m not sure if there is a level of success where I can say my algorithm is ‘good’ and ‘I’ve made it’.
For me, I take my comfort from those profit safety windows. My 22% profit in my balance. My 7.5% profit if I cut and run. That makes me feel safe. But I’d love to see it grow further in the coming months; which I’m sure it will.
