Message From TraderJanie
I’ve been trading since 1999 and have met a plethora (my big word for the day) of traders from all over the world. Some of them trade forex, some trade options, and some trade futures. Some are young and some not so young. Some are male and some not so male, (in other words female). It doesn’t matter where they are from or what they trade (I used to say I would trade toothpicks if there was a market for them), they all have one thing in common – reigning in trading emotions when trading.
I’ve written many articles discussing this issue and I’m sure you’ve encountered many more articles lecturing you on how to handle your emotions when trading. I’m going out on a huge branch here with an assumption that at some point in your trading career you have experienced a boot in the gut when you just put on a trade and it turned against you. Or I will wager my first born male child (well maybe not) you have felt the sweat beading on your forehead ready to drip into your eyes when the realization hits you that you’ve just lost 50% of your account on one trade.
Last week, I received an email from a former QiT member who has recognized how emotions have hobbled his trading and who is now taking the steps to do something about it. He has pronounced that he is going to take control and take responsibility for his trading.
I would like to share his email with you, of course, with his gracious approval.
First, I apologize for the length of my email for I’m compelled to share with you my deepest frustration – not about you, dear writer & creator, but rather about myself.
Second, please know how appreciative I am to receive your weekly email messages and how important their content has been to me. THANK YOU for sharing & writing in a wonderfully personal style and offering links and other trading information. And no, afraid not, I have yet to read “Trading in the Zone.” Shame on me…
After reading your most recent email message, introspective thoughts & memories filled my mind. I remember signing up for your service as a charter member, pretty darn near your start date those few years ago; however, I canceled shortly thereafter since I didn’t trust the system you created. Since I didn’t trust the system you created? HUH?? Well, naturally, this is what I’d like to convince myself of, but the truth is, and more honestly stated, I didn’t trust myself to follow the discipline required to follow the system no matter the Market direction or trading results. In hindsight, and from looking at the charts provided in your Sunday’s email message, it’s very obvious where my brokerage account balance would be today had I remained with your service. Oh my…
Since leaving your service, I have spent thousands of dollars for other trading services (ultimately too good to be true, of course) AND personal coaching, constantly looking for the Holy Grail trading system. Although my overall trading results have improved, the cumulative profits have yet to exceed my accumulated training expenses.
Although I can easily share with you boatloads more personal trials & tribulations, not unlike hundreds of other frustrated traders, I believe it best to stop offloading my personal history and to now ask you one simple question before I would feel comfortable clicking on the link in your email below:
How did the ULTRA and the S&P 500 Margin algorithms perform from January 2000 to January 2010?
I admit, my greatest fear is losing additional principle during the next Market crash (or severe correction) and, seeing the above 10-year chart will help us both see the 1,000 words of proof. Of course, I expect both algorithms to hit their respective circuit breakers, something I’d like to see.
Thank you so much for listening and answering my question!
This fellow spoke about trust and, if you don’t trust the system how can you stick with it through the drawdowns (which you’re in 75% of the time)? If you’re like me and have spent years developing the algorithms, your trust is built in. If you’ve been with QiT for years and have seen what it can do through all types of trading environments, you have established that trust. But what do you do if you are new to QiT and have no history with us? How do you build that trust?
First of all, you need to have a very good understanding of what algo trading is. I think I’ve done a pretty good job of covering all the facets of it on the website so I encourage you to grab a glass of wine and start reading.
You will need to understand data providers and why QiT uses the one we do. You will need to understand the process of back testing and why back testing is probably one of the most important aspects of trading. You need to understand how we place trades and why we do it that way.
Look at the profit tables and find the months that correspond to the drawdowns and be very realistic with yourself in answering the question, “Can I live through a multi-month drawdown?”
Without this deep understanding of what we do and how we do it, you will probably never establish the kind of trust needed to carry you through the tough times.
Another point this fellow mentioned that I want to talk about is back test results from 2000 to 2010, however, this newsletter is already too long so I will leave it until my next newsletter, which will be June 5th because I’m on vacation next week.
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