I've been thinking about something lately that I believe holds promise for dramatically increasing trading returns.
Profit potential is highly correlated to market volatility. Markets are the most volatile when they are open, and least volatile when they are closed.
If you have a fairly robust daytrading system, or even better a mechanical daytrading system, you could trade the system in three different markets around the clock.
First Asia, then the opening half of the European market, followed by the entire US trading day.
If you had a daytrading system currently returning 50% per annum, and you then applied that system to another two markets, your annual return would jump to about 400% a year because of compounded profits.
This assumes your daytrading system yields similar results across all markets.
Now I know a lot of you are thinking that watching a screen 24 hours a day might get a little tiring, however, all you would need is one trader in each time zone to oversee the system during their session.
You would do the same amount of work each day, however at the end of the year your returns would be 800% higher.
With an IB account this is quite easy to do. Your data costs wouldn't really increase as esignal tend to throw in all the world markets anyway.
And with a little bit of work you would even backtest a series of markets in parallel, to see how your system would have traded when jumping from one to the next.
This may sound like a headache, but think of the possibilities. 100K returning 400% p.a over three years is a cool $6.4 million,
Compared to only $337,500 at a 50% annual return over three years.
I'm sure as automated trading technologies improve, more and more people will consider trading around the clock as another means of improving total annual returns.
Runningbear
Profit potential is highly correlated to market volatility. Markets are the most volatile when they are open, and least volatile when they are closed.
If you have a fairly robust daytrading system, or even better a mechanical daytrading system, you could trade the system in three different markets around the clock.
First Asia, then the opening half of the European market, followed by the entire US trading day.
If you had a daytrading system currently returning 50% per annum, and you then applied that system to another two markets, your annual return would jump to about 400% a year because of compounded profits.
This assumes your daytrading system yields similar results across all markets.
Now I know a lot of you are thinking that watching a screen 24 hours a day might get a little tiring, however, all you would need is one trader in each time zone to oversee the system during their session.
You would do the same amount of work each day, however at the end of the year your returns would be 800% higher.
With an IB account this is quite easy to do. Your data costs wouldn't really increase as esignal tend to throw in all the world markets anyway.
And with a little bit of work you would even backtest a series of markets in parallel, to see how your system would have traded when jumping from one to the next.
This may sound like a headache, but think of the possibilities. 100K returning 400% p.a over three years is a cool $6.4 million,
Compared to only $337,500 at a 50% annual return over three years.
I'm sure as automated trading technologies improve, more and more people will consider trading around the clock as another means of improving total annual returns.
Runningbear
