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How I Lost Money Even Though I Was Right
By
rxs0005, in General Trading
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I'm pretty sure that a Russian resident would say that recessions are real today. Their prime interest rate is 21%, their corporate military contractors are threatening to file bankruptcy, and sticks of butter are kept under lock and key in their grocery stores because shoplifters are stealing it in bulk so they can resell it on the black market. A downturn is cyclical until it turns into a collapse. I really don't think anyone will be buying-into this mess.😬 -
Well said. This principle is highly analogous to trading. Any human can easily click buy or sell when they "feel" that price is about to go up or down. The problem with feeling, commonly referred to as "instinctive" trading, is that it cannot be quantified. And because it cannot be quantified, it cannot be empirically tested. Instinctive trading has the lowest barrier to entry and therefore returns the lowest reward. As this is true for most things in life, this comes as no surprise. Unfortunately, the lowest barrier to entry is attractive to new traders for obvious reasons. This actually applied to me decades ago.🤭 It's only human nature to seek the highest amount of reward in exchange for the lowest amount of work. In fact, I often say that there is massive gray area between efficiency and laziness. Fortunately, losing for a living inspired me to investigate the work of Wall Street quants who refer to us as "fishfood" or "cannonfodder." Although I knew that we as retail traders cannot exploit execution rebates or queues like quants do, I learned that we can engage in automated scalp, swing, and trend trading. The thermonuclear caveat here, is that I had no idea how to write code (or program) trading algorithms. So I gravitated toward interface-based algorithm builders that required no coding knowledge (see human nature, aforementioned). In retrospect, I should never have traded code written by builder software because it's buggy and inefficient. However, my paid subscription to the builder software allowed me to view the underlying source code of the generated trading algo--which was written in MQL language. Due to a lack of customization in the builder software, I inevitably found myself editing the code. This led me to coding research which, in turn, led me to abandoning the builder software and coding custom algo's from scratch. Fast forward to the present, I can now code several trading strategies per day across 2 different platforms. Considering how inefficient manual backtesting is, coding is a huge advantage. When a new trading concept hits me, I can write the algo, backtest it, and optimize it within an hour or so--across multiple exchanges and symbols, and cycle through hundreds of different settings for each input. And then I get pages upon pages of performance metrics with the best settings pre-highlighted. Having said all of this, I am by no means an advanced programmer. IMHO, advanced programmers write API gateways, construct their own custom trading platforms, use high end computers with field programmable gateway array chips, and set up shop in close proximity to the exchanges. In any event, a considerable amount of work is required just to get toward the top of the "fishfood"/"cannonfodder" pool. Another advantage of coding is that it forces me to write trade entry and exit conditions (triggers) in black & white, thereby causing me to think microscopically about my precise trade trigger conditions. For example, I have to decide whether the algo should track the slope, angle, and level of each bar price and indicator to be used. Typing a hard number like 50 degrees of angle into code is a lot different than merely looking at a chart myself and saying, that's close enough. Code doesn't acknowledge "maybe" nor "feelings." Either the math (code) works (is profitable) or doesn't work (is a loser). It doesn't get angry, sad, nor overly optimistic. And it can trade virtually 24 hours per day, 5 days per week. If you learn to code, you'll eventually reach a point where coding an algo that trades as you intended provides its own sense of accomplishment. Soon after, making money in the market merely becomes a side effect of your new job--coding. This is how I compete, at least for now, in this wide world of trading. I highly recommend it.
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