Hello, SimpleMeLike, This post raises a few more questions... 1. How can algorithmic trading be a waste of time if you're making 105% per year? And how is it more stressful? 2. What discretionary trading style have you adopted that's making you such good returns? Last I remember you were into Al Brooks which you seemed to discard at some point because you couldn't make it work? Thank you.
Good Morning Laissez Faire, I will explain in more detail shortly in about 2 hours. Question: If I thoroughly type alot and be detailed, will you read it all? Because I do not want to waste time explaining my thoughts, if you will not read it. Thanks,
Hello Laissez, 1. How can algorithmic trading be a waste of time if you're making 105% per year? And how is it more stressful? Four words: Effort, Time, Money, complexity and Lack of Trading Ideas. Effort: It takes a tremendous amount of effort programming, optimizing, walk forward, and back testing to find an Edge with the machine/computer. For one person. Time: It takes a tremendous amount of time programming, optimizing, walk forward, and back testing to find an Edge with the machine/computer. For one person. To find that one edge I found, it took nearly 1 years to trust the algo and the Edge. I work full time job as well and was doing coding and back testing during the spare time. I invested $5000 in the algo now the balance is like $11,000. Everyone thinks algo trading is simple, it is Not. It takes a quality high performance server to optimize and back test. My optimizations take nearly 7 hours because my server is not the best. 1 year of testing to find 1 algo with Edge. Complexity Algo development does require finding and validating trading ideas. For me,, that is tuff. Not only do you need 1 algo, you need more to stay diversified as well. And you have to hope the diversification comes close to beating the SP 500 index Lack of Trading Ideas I only know price action trading setups and refuse to go study books seeking trading ideas. If I see an idea on the chart while starring, I write it down program and test. Algo trading requires constantly searching for ideas to program and test Money 1 algo is maybe not enough. Need alot for diversification. I only have about $10K. Imagine 10 algo requiring $10K , that means a trader needs $100K and you better hope that diversification beats the SP500 or its a waste of time. Algo trading takes money, unless go to micro futures. For me, and my situation, I am not seeing favorable rewards with algo trading. The retail trader is too handicap, it will take a team of traders and programmers around the clock and lots of hours to get some Edge. Discretionary trading cures all that: I can trade 1 NQ contract as much as I want, however, I want, whenever I want, make good guesses/gambling, and trade my price action experience with low leverage starting with about $3000. Aim at my $200-$400 per day, and I hit that in about 1 hour and DONE. After 1 hour of trading I am done for the day and I go enjoy my life or practice some more in SIM to get better. I think discretionary trading is better than algo trading. I discovered I am good at guessing and gambling with my current trading experience and be content with that and just do the best I can and stay out of drawdown. get my account up and start redrawing cash out every month to pay a bill or 2 or get some debt reduce. Best to keep it simple. Not to be funny, but I basically read the price action every morning for 2 hours and take a guess for scalps. Stop when I get about $200-$400 and stay out of drawdown. I am just guessing (call it gambling if you like too) based on my trading experience. I am just trading my trading skills I have learned so far. Starring at price, and guessing. Al Brooks - yeah we have a love and hate relationship. But as my buddy @volpri have said over and over, I am not sure what else a retail trader can do besides buy his course and practice and hope for the best. Also, @speedo is correct, mastering price movements is the best chance to consistent profit at a low cost for learning. So I just had to do what was best with what I have and i am still making it work. Brooks course is fine with me, I perfectly understand the objective of the course, the objective is learn price behavior and trade any market condition the market show you, any time of day, and day of the week and take money from it. The course is not about selling an verified setup with proven Edge. So it what it is. I choose price to try and make money consistent. Comes a point and time, where you just have shut up and get your hands dirty. LOL Well that is my 10 cent.
between 2 and 3. Ken Fisher is...interesting, but I wouldn't really call them a legit investment management firm, they are closer to wealth management. Most good managers are walled off from retail except through Fund of funds. There are a handful of great mutual fund PMs, and to find them, you'd want to look at their 3-5 year sharpe vs. their benchmark. You should expect slight underperformance in a banner year for equities, with high outperformance during normal years.
And those 10 cents are much appreciated. I'll have to reply to you later as I'm quite busy tonight, but I will later.
I guess for the guys I hired my expectations were too much. Wouldn't you expect a professional to out perform the market.
Hello Laissez Faire, Thank you for reading. Yes, please reply when you can. I can tell you this, there is one thing I am learning on this journey of trading and that is one thing...Never forget the end goal of trading: Making Money.
No...by definition 50% of investors will underperform their benchmark. There are lots of "professional" managers out there, but the ones with skill typically have organizational edges, which translates into recurring outperformance. So a skilled professional will outperform more frequently than not (look for 60% outperformance), and when they underperform, it'll typically be because of +2std event...which typically are banner years (when the market rallies extremely high). Because of their skill, they will outperform in a crash.