Let’s start with the results for the year, and then we will layer how the market behaved on top of it. First, let’s clarify that the trading system that we teach in our courses is something that you can apply and use to develop many more trades than just the ones that we call each day. Using the system, we try to target 50-60% winning trades, and we keep our losses very tight (25 pips max) with no exceptions. The system works better when the pairs are trading good average daily ranges, and we certainly saw a drop off in ranges in 2012, especially in the second half of the year. In the prior year, 2011, we netted almost 3100 pips for the year with about a 51% win rate. 2012 was not that year, but it was still respectable, and certainly, I’d take the average of the two years each year and be happy.
In 2012, we had 337 triggers off of our main trade calls (again, if you have taken the courses, you can find much more to do, including trading some of the pairs beyond the EURUSD and GBPUSD, using Value Areas, etc.). 160 were winners. That’s at 47.5% win ratio, which is slightly below our targeted range of 50-60%, but if there was going to be a year where that happened, it would be 2012 with the bad ranges. I haven’t seen anything like that since 2007.
Separately, these results don’t account for the fact that we told our subscribers to go half size late in the summer as range dropped. This is something that we typically do around August if the summer doldrums present themselves, but we move back to full size shortly after when ranges resume. This year, since ranges didn’t resume, we are still half size at the end of the year. The net pip gains for the calls was exactly 700 pips, and again, that doesn’t account for the fact that the last four months of the year were half size. Three of those months gave us negative results (although December was a return to gains with 185 pips locked in).
If you take the 12 months in order, here were the pip gains or losses: +330, +70, +100, +125, +10, +275, +150, +100, -130, -100, -45, and +185.
Every year has one losing month with our system, often during the summer doldrums. The Tradesight Forex service launched in 2005. A couple of the years since (including 2007, which was really slow), we saw two losing months, although never back to back. We had 3 months in a row here with net losses in 2012. That’s how bad the market got.
Keep in mind, however, that even with those months, we had net gains for the year, and our system prevented major harm from being done as we keep our losses very tight. If you adjust the last four months to half size, the net gain was really +785 (might have been even bigger exception December was a decent month).
One other way to look at it, and I’m happy to see this because it fits with the “system” that we want, is that most of those 700 pips were locked in during the first six months of the year, and then the last six months, which were as narrow as I’ve seen, were basically a wash. It’s hard to have a problem with a trading system that essentially gives you no gain or loss when the worst environment for the system presents itself.
You can browse the net results of each month by clicking here and scrolling down.
So let’s put the year into perspective with some charts, but we will keep it to a few as we also have a separate end of year report for all markets.
Let’s start by taking a look at the most commonly traded pair out there, the EURUSD. I’ve drawn a flat black line on each of these charts from the start of the year so you can see if we net gained or lost:
What you’ll notice in that chart is that even though it traded 1400 pips from high to low, which sounds like a lot, most of the moves were in the boxes that I’ve drawn, where we made good money. Too much of the year was spent in flat action, and we only ended up 200 pips higher than we started the year. I should also point out the the prior year saw 2000 pips of range in the EURUSD, but we saw a full move up the 2000 pips and then back, which is a lot more movement.
Here’s the GBPUSD, which has a nice cup and handle formed for a potential breakout in 2013:
Here we saw only 1000 pips of range, and it still had the same few months with the best action. Note that ALL THREE Seeker 13 signals during the year (1 buy, 2 sells) were very timely. But here, the net gain for the year was 650 pips.
Keep in mind that both the EURUSD and GBPUSD rose during the year, which is negative for the US Dollar. However, the USDJPY told the opposite tale, breaking out of a nice cup formation:
So against the JPY, the US Dollar got much stronger. Unfortunately, even with that action, the daily ranges in the USDJPY have been crippling from a trading perspective since the nuclear incident in 2011.
So the net of all of that is that the US Dollar itself barely changed for the whole year of 2012. Here’s the index:
Notice that we did move up mid-year, then came back a bit and went flat as the Fiscal Cliff situation approached. The election had little to no impact.
I’ve drawn three boxes, however, that show just how stuck and boring the US Dollar was for big sections of the year.
In the end, it wasn’t the type of year that we’ve seen in the past, but you can’t expect every year to be exciting. No, it doesn’t mean that the Forex market is dying. Too many people blame regulation for killing the Forex market, but my opinion is that that plays a tiny sliver of a role. We saw ranges dip in 2007 for a while, but they were ridiculously big in 2008 with the banking collapse and great in the years after (until 2012). With Japan’s currency seemingly being controlled post-nuclear incident, Europe in trouble, the world in a SPENDING recession (which aren’t helped by austerity moves), and the US creating a useless (I’ll go ahead and say it…complete stupid and unnecessary) amount of uncertainty with the Fiscal Cliff, there just wasn’t a lot of currency moving. It will move again, but our system is designed to protect you in the slow periods (obviously, if they last for years, it would be bad), which it did. Here’s to 2013.