Tuesday, 5 October 2010

I'm not Muhammad Ali

I neither float like a butterfly nor sting like a bee, but with the markets I do like to think that I can stay on my feet.

Trading is all about making money by buying and selling or selling and buying. That's it. Period! Neither the market nor I care how my trading accounts increase. All I care about is that it does.

The characteristics of my discretionary trading include: high win rate, medium amount of trades, lots of time in front of the workstation, continual training and practice, adapting to market conditions, and small drawdowns.

The characteristics of the Flobot's trading include: average win rate, larger amount of trades, almost no time in front of the workstation (I can remote control my trading PC via an iPad and am able to go anywhere there is a mobile signal), no training required, Flo adapts to the market although I have to re-optimise monthly (this is a big contentious subject worthy of a book on it's own), larger drawdowns than a discretionary trader.

The two have one main common feature: they both make money almost every month.

As someone who trades as both as a discretionary trader as well as an automated trader, I can see that many people will not want to do both. Becoming a discretionary trader requires an enormous amount of work to be profitable, but for most of us it is a passion and a pleasure. There are some who will not put in the effort for many reasons, both good and not so good.

Why do I trade both algos and discretionary? So I can be several places at once. I just want to leverage the skills I have developed over the years and trade more markets at the same time.  Not just for the diversification, but because I have reached a comfortable trade size and while I am pushing it further, Flo is still making my capital work. I see this as a continuous process. Also, it's a pretty good feeling to only work a couple of hours in the morning, yet have Flo (My middleweight champ) still earning me money all day. And, she doesn't get tired.

With the fantastic advance of technology, trading futures as a source of income is available to anyone with the capital, even though they don't have the skills. As Mr. Ali said "... your hands can't hit what your eyes don't see", so with a pair of discretionary eyes and a set of electronic eyes. It's a TKO for the markets.


1 comment:

  1. My experience trading automated has been mixed. Some months it's been great - others not so. YOumust have a strategy that uses Market Orders for entry (or often you won't get filled). Trading using a BUY (or sell) STOP which converts to market order accomplishes this... but gives up some slippage. Looking at Flo's trades, it is clear to me that "she" stops and reverses quite a bit - adding to the commission expense. All I can tell you is every time I have tried to develop a similar strategy it does'nt pay the bills. Hats off to you for getting it to work.