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Systems Trading: One Trade Per Week

Uncategorized Nov 04, 2019

What would happen if you only allowed yourself 1 trade per week?

A thought experiment for you

Here’s the rules:

  • You have $100k account of my money
  • You can only do 1 round trip trade per week, but you don’t have to exit that week
  • You don’t have to do 1 trade per week
  • You can only risk 1%
  • You get to keep 90% of all profits

You can only trade the following assets:

$DIA/$YM, $QQQ/$NQ, $IWM/$RTY, $GLD/$QO, $USO/$QM, $TLT/$ZB/$ZN

$BTCUSD, $EURUSD, $GBPUSD, $USDCAD, $USDCHF, $USDJPY, $AUDUSD, $NZDUSD 

Every time you close the month >1 penny higher than the previous month, I will increase your account by 10%

Any month that the balance ends less than $100,000, you have to pay me the difference to bring the account back to 100k

If you lose more than 5% in one month you are on 3 month probation, no live trading and we spend time together restructuring your system

There is no limit to how much money I will give you to trade with, if you follow these rules

What would...

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Trading Mistakes

Uncategorized Nov 04, 2019

What are trading mistakes?

Mistake:

Enter the wrong position size

Enter the wrong direction

Account is live and you thought it was demo

Enter the wrong symbol

Enter the trade based on a hunch vs trading plan

Enter off of someone else’s idea

Not a mistake:

Getting Stopped out

 

If I don't follow this list perfectly, it's a mistake

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How To Become A Consistently Profitable Trader

Uncategorized Nov 01, 2019

First let’s define what a consistently profitable trader is…

 

A consistently profitable trader makes money consistently

That’s about as broad and narrow as I will make it. 

Notice I didn’t say “makes money on every trade”

 

I leave it broad for swing traders, day traders and long term position traders


Consistently profitable could mean you have a 20-30% win rate, but you happen to make big money on the winners and cut your losers short

 

Or you have a high win rate, 60-75% and you only make a little bit more than you lose, but you end up profitable

 

A consistently profitable trader has a really good idea how much money they will harvest from trading each day month & year

A struggling trader doesn’t know if they are going to be profitable on the next 10 trades

A struggling trader doesn’t know how to size their positions

A struggling trader doesn’t know if they are having a normal drawdown or if...

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Bear Markets Are "Easy"

Uncategorized Oct 26, 2019

Being able to identify the current market regime is a very important part to trading. As a systems trader I have a very quantitative approach to things, in fact testing typical Wall Street “known” wisdom against itself is a common hobby of mine. Not to be Señor Snarkypants on Twitter but because there is all sorts of opportunity in finding flaws in areas that gets constantly repeated in financial news, or the aforementioned FinTwit.

The common Wall Street accepted requirement for a Bear Market is down 20%, which did not officially happen but we got within a few ticks of it on a closing basis, and currently down a bit over 14% from the highs.

This is more for a record keeping sense than it is for any trading advantage but I constantly hear people quoting that, we aren’t in a bear market yet because of that mystical 20% number.

There is another saying about bear markets and that Bear Market rally’s are the most violent. That certainly seems to be the...

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Days After The Bottom

Uncategorized Oct 26, 2019

As the new year, 2019, has come amidst a rather angry global selloff in 2018 I had some time to contemplate the two biggest angry markets that I’ve participated in directly, the 2000-2003 Dot Com Recession and the 2007-2009 Global Financial Crisis or the Great Recession. Within the 20 years, or so, that I’ve been an active participant in markets, those two were the most painful for nearly everyone whether you were a market player or not. They effected everyone.

On this first day of 2019 all global markets, with the exception of Brazil, Russia and India (3/4 of the BRIC’s) are down since Jan 1, 2018. The S&P 500 for its part is only down 6% on the year, but that doesn’t tell the whole picture of the carnage, from top to bottom the S&P was down 26% at December’s low and currently down 16%. Look here to see the carnage.

As a systems trader, none of this really matters to me to inform my trading, however when market regimes change and we get...

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Trading During The 9/11 Attacks

Uncategorized Oct 26, 2019

The S&P 500 was down, really down, down hard, and then I heard the news on CNBC behind me.

“Another plane just crashed into the World Trade Center.”

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I was short the S&P 500 E-mini futures, my systemhad me short, my analysis. I had no idea what was causing the S&P to fall so much up to that point, and it had been falling since the may highs of 1320 but more importantly to me, I had really aggressively been short selling since $1209 on August 8th, 2001.

The market had been selling off since March of 2000, the dot com bubble had burst, we were generally in a bear market, trending lower and lower. By summer of 2001 we had already sold off about 30% from the highs, thus officially entering bear market territory. But the buzz from the roaring tech bubble bull market was still a star in everyone’s eye, we all wanted that big dip buying momentum to return.

Spoiler it didn’t.

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When the news hit CNBC, and we started to have an idea what was actually...

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Nomadic Trader: A Day In The Life

Uncategorized Jul 02, 2019

Trading for a living is a very glamorous lifestyle, from the outside.

Working from anywhere with an internet connection.

No boss to answer to.

No dress code.

Buying and selling at a moments notice.

Staring at all those beautiful charts on big monitors.

Reading news voraciously.

Discussing global issues over martini’s with world leaders in Davos.

All those things can be true, but the real day to day of a trader is more about doing less, eliminating the noise, finding where your advantage is and exploiting that advantage to its greatest effect…at least for me!

The real life of this trader is actually a pretty enjoyable life. I’ve developed habits that help me eliminates much of the clutter, the drama and noise and let’s me focus on exploiting those beautiful trade setups that I just sit back and wait to show up.

Warren Buffet talks about waiting for the perfect pitch. He considers himself a batter at the plate and each investment idea he see’s is a...

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