Currency Pairs Traded
I am dropping one of the six pairs found under ‘Recommend Currencies’ in the rules of the Conquer V2 system, the AUD/JPY. I looked into replacing it with either the EUR/GBP or USD/CAD which both seemed like viable options and also not replacing it but instead doubling the position sizes of one of the other five pairs; the EUR/USD.
I decided to replace the AUD/JPY with the EUR/GBP for the time being (this means at least three months) and then reevaluate.
The six recommend pairs for trading are now: GBP/JPY, EUR/USD, GPB/USD, EUR/JPY, AUD/USD, EUR/GBP
Advanced Money Management
This is also now appears in the rules of the CV2 section on the member area. Before each year begins I expect to have at least up to a 10% draw down during the course of that year. When creating the system I set the position sizes so that the max expected draw down was to be 10% knowing that if things turn out worse I will still be under a 15% draw down. A 15% is considered to be an acceptable draw down by serious investors. To be honest, it’s tough trading through any draw down for any trader, especially aspiring traders. A 5% draw down takes on average with the CV2 roughly a month and that is a mentally tough period to be trading through. A week of no to little gains is tough for newbie traders nevertheless a real dry period of up to two months. The markets continually goes through periods of expansion and consolidation and when using a trend following system you have to be prepared to withstand and trade through the sideway and counter trend periods.
A Solution to Recover from Draw Downs on the CV2 Quicker
I know from my experience that the expected draw down is 10%. Those who have been trading the Conquer V2 will remember this, I believe it was in 2009 and we were going through a draw down that was close to the max level, it was roughly close to 9%, and it took only three days to recover fully back to new account highs! How is it possible it could take four to six weeks or longer to have such a draw down and recover in just three days? Our risk to reward ratios. They range from 1 to 3 on the 1st order, to 1 to 6 on the second order, and then 1 to 13 on the 3rd order. The risk to reward ratio is actually greater since we lock in gains at 1/2 atr, and then after the 1st and 2nd take profit levels are reached.
I have come up with a way to recover quicker. This is not for everyone, until you have the confidence in the system you can trade it as it is. This is for traders who have the confidence in the system that comes from having traded it through all market conditions in the past. When the system goes into a 4.5% draw down I am doubling the position sizes.
Now I expect from past performance, and knowing performance is not indicative of future results, that once I have a 5% draw down I can double my position size to recover quicker and if I obtain the an additional 5% draw down brining me to the expected draw down of 10% (which is an additional 10% now since the position size is x2), that I still will maintain the acceptable 15% account draw down from highs. In other words -5% + an additional -5%x2 (-10%) = -15%.
Wrap up: when the account reaches 5% draw dow, the position size is doubled.
When would I go back to normal position size? I don’t know. We will see how the market is behaving.
Weekend Links
With the EUR being so in play recently this review of the Week in FX Europe Jan 15-20 is a good read. By the way, even with the counter trend rally this week the EUR Shorts Hit New Record. Good news for US Traders, even though there has been a huge drop in traders there has been a increase in profitability. Would you believe the highest percentage of profitable traders trade with Oanda? You heard it hear first! 
I follow several rss feeds which together posts hundreds of news stories daily and I select the most relevant articles that I enjoy and post them in blog posts and on Twitter. If you use Twitter let me do the sorting through all of these forex news stories for you by following me @jordanclindsey on Twitter. When you do follow me make sure to send me a tweet so that I know to follow you back.
Conquer V2 EA
Working Conquer EA? YES! Works 100%, exactly as it should, perfect. This weekend, if I am able I plan on writing up some details for release and releasing it on Monday. My thinking is to offer it at first to existing members for $180 so it can be traded on their own computers and then to only make it available for others to be traded through a trade copier for $30 monthly taking the EA off of the market.
“Click the link below to let me help you figure out what you should read and do first…”
