The usual question: how is it possible?

Arthur Deco · Jul 19, 2009

Travis, I think you miss the whole point. You are winning because you DESERVE to. You are special, wonderful, chosen, destined, marked, blessed, become, smiled upon, loved, even. Just don't mess it up. If you need therapy I have a slot available Tuesdays at 4PM CT. I share your pain because I have a system than makes 2% a day.

travis · Jul 19, 2009

"Destined" doesn't make sense to me. I am atheist. God didn't help me with programming, which was the hardest part. Who "destined" me to anything? The closest thing to God that I can see is money, and the things that helped me out: IB, Excel, my bank account, computers in general. Human progress in other words. Mankind and its progress is the closest thing to God.

Let's get back to the point. How is it possible for retail traders to make money and beat the banks? Also, do you feel guilty about making money without working for it?

I realize now that you gave me an answer. I suppose you share the same painful doubts and questions ("pain") because you've also been making money. And you're actually telling yourself the things you're telling me: "special, wonderful, chosen, destined, marked, blessed, become, smiled upon, loved, even". Sometimes I felt the same as you. But now I am a full atheist, and only believe in chaos and randomness (no purpose in life). Some of these adjectives imply that you believe in God: "blessed", "destined".

The way I was brought up (Catholic), God thinks money is bad, so if he existed he would destine me for punishment for trying to make money (on top of it without work or rather without producing anything for society). But thank God I am atheist, so I don't have to deal with this problem. But I still feel guilty, and I still cannot believe it will last.

I hope it will, and I will try to make it last. And to deal with the side effects I will come to therapy next tuesday.

quant168 · Jul 19, 2009

A Martingale betting system always gives people a nice curve for most of time. But it has its own limitation. It is not an edge.

edbar · Jul 19, 2009

Thanks Travis. No offense taken.

What is nice about using an ATS is that you don't have to work at it every day. The ATS never forgets the rules, once entered. Then, as you learn more you can tweak the rules, and/or add additional rules.

I'm not a slave to the stock market. If I want to take 6 months off I can, and still be fully leveraged in the stock market, as my ATS' don't need me to do anything. IF a manually trader takes 6 months off, he's out of the market. Then when he wants to get back in, it's back to the grindstone.

Without an ATS, that follows your rules to the letter, you will have to REALLY WORK. There is no way I would waste my life manually picking stocks to trade, figuring out when to open the position, when to add to the positions, when to close the position, manually calculating profit goals and stop losses, etc.

Hang in there. You're on the right track.

Ed

travis · Jul 19, 2009

Thanks. Also, consider that for some people like me, manual trading is impossible, because their emotions make them do the wrong things.

When I make a trade and it goes my way, I exit really quickly, because that's a "victory" to me and I want to seize it. No matter how much I trade, I keep on making the mistake of not "letting my winners run".

As for "cutting my losses", when I make a trade and it goes against me, I hang on to that trade hoping that it will turn from negative to positive. If necessary, I'll keep the position open for a month or longer, until one of these 3 things happen: 1) the future contract expires, 2) the red turns into green (then as soon as I can break even or make 1 dollar, I exit, as usual), or 3) I lose everything. That's how I lost everything twice this year. E.g.: I got home, and the system was losing 500 dollars. I got upset, and tried to make up for that loss by trading discretionary. That way, during those reckless months (now I've stopped doing it), I made a lot of discretionary trades that (sooner or later) went my way, and only 2 that NEVER went my way and blew out my account. And if I had enough money, as I said earlier, I even added to my losing position (and carry all contracts to either expiration, profit, or to blowing out the account).

Discretionary trading is not for me. I cannot make any money with it.

And the above describes my recent performance of automated + discretionary. When I traded only discretionary, from 1997 to 2007, I lost my entire capital every month, practically. Every month I lost at least 50% of my capital (but I always had a capital that ranged from 500 to a few thousand dollars).

henderson · Jul 20, 2009

Quote from travis:

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.
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I've been asking myself these things ever since I read "Fooled by Randomness" by Taleb. I don't recommend it if you worry too much already nor do I recommend Black Swan in that case.

ProfLogic · Jul 20, 2009

Quote from travis:

Thanks. Also, consider that for some people like me, manual trading is impossible, because their emotions make them do the wrong things.

When I make a trade and it goes my way, I exit really quickly, because that's a "victory" to me and I want to seize it. No matter how much I trade, I keep on making the mistake of not "letting my winners run".

As for "cutting my losses", when I make a trade and it goes against me, I hang on to that trade hoping that it will turn from negative to positive. If necessary, I'll keep the position open for a month or longer, until one of these 3 things happen: 1) the future contract expires, 2) the red turns into green (then as soon as I can break even or make 1 dollar, I exit, as usual), or 3) I lose everything. That's how I lost everything twice this year. E.g.: I got home, and the system was losing 500 dollars. I got upset, and tried to make up for that loss by trading discretionary. That way, during those reckless months (now I've stopped doing it), I made a lot of discretionary trades that (sooner or later) went my way, and only 2 that NEVER went my way and blew out my account. And if I had enough money, as I said earlier, I even added to my losing position (and carry all contracts to either expiration, profit, or to blowing out the account).

Discretionary trading is not for me. I cannot make any money with it.

And the above describes my recent performance of automated + discretionary. When I traded only discretionary, from 1997 to 2007, I lost my entire capital every month, practically. Every month I lost at least 50% of my capital (but I always had a capital that ranged from 500 to a few thousand dollars).
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Words of advice . . .

Don't feel the need to share.
All the thugs on here that aren't consistently profitable will start stalking you and posting that you are crazy.
By the way, I commend your persistence, progession of your goal and your attention to detail!

asiaprop · Jul 20, 2009

when is the post coming where you guys offer your wares? I am desperately waiting.

Sorry to be the ass that spoils the fun but there is no way in hell that a guy with 10 years trading experience utters doubling-up BS in the way you did. So you have found the holy grail and tell us at the same time markets cannot lose in a span of 24 hours? Are you stupid or are you just looking for guys dumber than yourself?

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.
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Scataphagos · Jul 20, 2009

Things "work for a while, then they don't".... market has a way of changing gears.

Not many are adaptive enough to continue to do well after market makes a shift.

Many years of positive results necessary before proclaiming "success"..

ProfLogic · Jul 20, 2009

Quote from asiaprop:

when is the post coming where you guys offer your wares? I am desperately waiting.

Sorry to be the ass that spoils the fun but there is no way in hell that a guy with 10 years trading experience utters doubling-up BS in the way you did. So you have found the holy grail and tell us at the same time markets cannot lose in a span of 24 hours? Are you stupid or are you just looking for guys dumber than yourself?
More...

It's started.
Sorry.