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Frey invertebrate stake …

I am not trading right now because I don’t trust my system to trade completely on its own. I also have other things to do, like get my book done. When I was trading I was watching the system like a hawk to make sure that I would not have my account cleaned out or have the system hang at the wrong time. Right now I am optimizing strategies and optimizing the application.

Of course people talk about pullbacks and such. I can’t 100% say that it will not happen. But what says to me that I don’t think it will happen is because the model and real life are reasonable. My model accounts for slippage, execution costs, etc, etc. It took me quite a bit of time to figure out correct model costs.

Though I have learned several things:

1) You need two strategies: market and execution. Most trading software and people focus on market strategies. And I have learned that market strategies will cause you to loose money if improperly implemented. Execution strategies are strategies where once you figured out the market, what do you do? People often forget about execution strategies and consider it as part of the market strategy.

2) Anybody who sells trading systems is selling you snake oil. If the trading system or software does so well why are they not using it themselves? The market is the only place where you don’t need to sell shovels to make money. If you have developed the magic shovel then you can make more money using that magic shovel than selling it to somebody.

3) Whenever you create a strategy you need to include the costs of the market. I found that by not including the costs of the market you will find a trading strategy that is not profitable. The thinking that you want to find the most profitable trading strategy and then take lumps in real life is misguided. I found that the market is not about factoring in costs, but having your simulation as close as possible to real life. Once I figured out a trading strategy with no costs, and one with costs. They were two completely different strategies that had nothing in common.

Am I happy? Yeah. Am I nervous as heck? Damm straight because as much as it seems to be working I have to keep pinching myself that it is real. I am right now nervous as heck because I keep getting the feeling, “Haha gotcha ya fooled ya!”

;)

Have to say I am impressed that you made 0.85% though - you only need a few of those days a year and you will be retired soon enough.

Have you been trading for a full year yet? What is your annualised figure? How does the system hold up over the longer term?

Cheers,

Phil