The usual question: how is it possible?

Quote from travis:

You see, gono, I'm part of "small minority" in general, but maybe even part of a "majority" here, in this section of Elite Trader forums.

Edbar says "the 10%/month strategy". That's exactly what I have. At a point, after 5 years of tests on TradeStation, I realized that I couldn't build a 100% a month strategy which wasn't over-optimised, so I started building a lot of 10%-a-month strategies.

This strategy of adding to losers sounds very reasonable to me. I traded a bit on the paper trading account of TWS, where they give you 1 million, and I realized that if you add to losing positions, doubling up every once in a while (e.g.: once every 3 hours), you can't lose in the span of 24 hours. There is no market that goes up/down for 24 straight hours.

With 1 million you will have enough margin for 1+2+4...255 futures. You randomly open ANY position of 1 contract in ANY market, and then:

- After 3 hours: if it's winning, you close it and take the money. If it's losing, you add 2 contracts (but 1 would be enough actually, because this is not like the roulette where you've lost your last bet money for good).
- After 6 hours: if the overall position of 3 contracts is winning, you close it. If it's losing, you add 4 more contracts. And so on.

It seems impossible to lose. Do you agree, Edbar? Then if you don't pick your initial position randomly, but pick a LONG trade on an oversold market (better if you're in a "trading range" period and not a "trend" period), then you often won't even have to double up and will be making money after the first 3 hours. But I think the same strategy could be played without doubling up (just adding 1 contract every 3 hours) and it would still make money but be safer.

So what does this mean? It means that if you have 1 million dollars you can make money every day. But I don't have a million dollars and even this strategy is too hard for me to test (doubling up, etc.). For me right now it would even be hard to automate it.

Jnbadger says "Amen Bro. Automation" and not to assume things will go as they have. Yeah, I understand and I agree.

Concerning the power of automation, I could use the example above to show how that strategy could go wrong if implemented by a human rather than being automated.

I already tried implementing it actually, when I got crazy this past year. I got crazy because I overleveraged, and yes I had +100% months, but then also had -50% months, during which I resumed my discretionary trading (trying to make up for losses) and lost everything because of it. What and why? I mentioned the 3 hours to wait. Well, I didn't even wait the 3 hours. I waited something like 15 minutes, market went against me, added 1 contract, went against me for another hour, added another contract, went against me, had no more margin, still went against me, lost everything. That happened because, being human, each time I thought "this is THE bottom" and didn't think "one contract every 3 hours" or "wait, I could be wrong".

But actually, knowing the trend cycles, I would say a better system would be to apply everything like above (the automated strategy not the reckless discretionary implementation of it), but wait 6 hours instead of 3. That way you can really double up (IF you have 1 million, and STILL I didn't test it). I would say the best market to be used is a ranging market like the EUR. Not good on OIL, BOND futures, because they tend to go straight up and down much more than the EUR.

And yes, back to what jnbadger was saying, I, too, was "inundated with stats which say it is impossible to succeed as a trader", but - even worse than that - I was inundated by relatives and friends, non-traders, telling me "if it was possible everyone would do it". I always thought "how can it not be possible? it seems so easy". Then it wasn't as easy, but now I am saying "how can it be possible?" and even "how can it be legal?". How long will it last? I am feeling a constant anxiety, too, besides the curiosity.

How do you react to making money without working? Do you feel guilty? (I mean, of course you worked non-stop for years on your systems, but now you're making money without working). Other thoughts or psychological aspects you wish to share?

P.S.:
I just read now what Topsurfi wrote, so I am editing my post. Sometimes I think that programmers (he mentions using C+) have more tools, but also more distractions. I taught myself some VBA, and I was forced to keep things very simple and basic. But programmers are going to be so ambitious with the automated platform they're creating, that may lose focus of the trading ideas, busy as they are in programming the fastest and most efficient platform. Maybe they try to make everything faster, whereas the key is be slow. I was forced to come up with slow and infrequent strategies, by commissions, platform (excel), poor programming skills, distance from the exchange. Also, yes, as you say, I am competing with banks and dumb people. Put the banks, too, with the dumb people. Because the fact is the CEO may be ignorant about trading, and may hire bright Harvard graduates who know nothing about trading, either.
More...

There is so much value in this post.
 
Quote from travis:

Regarding Ken (now on my ignore list):

Yeah yeah... I'm doing everything wrong and he's doing everything right. I even believe that his one system is better than my 33 combined. His contribution? "You need to FOCUS". The real sense of his post? "Give up because you're not as good as me".

Instead, I'll keep going at my own pace, and still make money.
More...

You're not making money because your methods are stupid.
 
travis, you lost me when you said out of 33 systems you had 25 that were profitable.

it took me 4+ years to develop a single automated system that makes consistent $ (sample size of 9000 real$ trades) .. & here you are saying you've got 25 of 'em.

in any case, it sounds like you've got it all figured out, so what is there to say? keep doing your thing
 
As my automated trading keeps on producing money, the same question keeps on popping up in my mind: how can it be possible? How can I, from home, with my very limited means, limited knowledge, limited capital, make money, pretty consistently, and without doing anything?

I am sure there are plenty of people here who are doing the same thing, and there must be some of them who have asked themselves the same question.

I have worked at it for 10 years. During all these years, despite what others around me were saying, I thought I would ultimately make it and find a way to make money trading. Yet now that it's happening I still wonder, often - how can it be possible?

What's the answer? Tell me.
___________________________________________________

Travis,
Let me give you an musical analogy.
One can be a very good composer/songwriter without being the best at playing an instrument.
Beethoven wasn't the best pianist, and Lennon/McCartney were not the best guitarists out there.
All you need is some know how on music theory, write notes and have an average capacity at playing an instrument.
The rest is your own creativity, and the amount of hours you are willing to put into your work.

I see developing models as very much the same thing.
You don't have to be the best trader, but you have to have a notion on charts, some technicals and where to look.
Then you don't have to be the best programmer, basic knowledge will be enough.
The rest is your own creativity, which in this case is what you pick up when you look at charts and how you process the information gained.

And by the way, I've never heard a composer asking himself "how is this possible?" after he has written a string of hits.
This shows a certain humility about how you go about things, which I believe is a big, big plus when doing what we do.

Cheers
Max
 
Thanks, I understand what you are saying. Also, your post is quite poetic - that's how I wanted this thread to be: poetic, psychological, and so on. I am glad that some of us still managed to remember the original question and, despite the negative posts, to speak their minds sincerely.
 
Get a room. :D

I see the original post as passively pompous, self-congratulatory and attention seeking -- anything but humble.
 
The thread was dying so I will answer even a hostile remark to revive it, but I will put you back into my ignore list afterwards.

You say I am not modest. I am sorry if I disgusted people by "self-glorifying" - I would rather say that I am conscious of my efforts and achievements. The truth is that I have been paying compliments to myself for a while about this system I've been building, since nobody else would. I had to do it, to keep myself working. Also, I came here from time to time to get some advice and support. I think that if I felt content, I wouldn't have posted. Just like others wouldn't interfere with this thread if they felt content.

On the other hand, if you set out to build a money-making machine, a machine that turns historical data into money, you can't be that modest to begin with. I mean, you can't be thinking "I am just as good as everyone else" or else you would be one of those guys saying "if it were possible, then everyone would do it, so it can't be possible". So, instead, what I thought was "I am better, so I must find a way to do it". When I say "better", of course I don't mean better than that scientist, your fellow ignore list member, who told me "you need to FOCUS" (thanks, you changed my life) - I just mean better than average people.
 
Quote from Ken More:



If I trade all day I know I will make 10 pts in the S&P per contract (because that's what I've done for 7 years).

More...

Since you "know" you will make 10 pts in the S&P, why don't you trade all day?

oh, you just answered that: "that's what I've done for 7 years."
 
You must log in or register to reply here.
Back
Top