MESSAGE FROM TRADERJANIE
Collin Raye once sang: “That’s my story.
Oh, that’s my story.
Well, I ain’t got a witness, and I can’t prove it,
but that’s my story and I’m stickin’ to it.”
Today I’m going to tell you my story and I’m stickin’ to it.
A story that took me from when I started day trading to today and running a very successful swing trading business called Quantitrader. It’s a story of many pitfalls, setbacks and discouragement. It’s a story of:
climbing (an enormous learning curve),
amazement (that I actually did this) and
awe (that I have found something I love to do so much).
I will not be able to give you all the gory details of the story, that would require an entire book, but I will touch on the parts that got me to where I am today.
Up until 1999, I was a help desk manager for the engineering firm- Bechtel when I decided I’d had enough of the corporate world, quit my job, and enrolled in the school of hard knocks called trading. For anyone who traded during the 1999 to early 2000 timeframe, you probably have a good idea of just how easy it was to make money. As a matter of fact, I made more money in that timeframe than I had seen in my entire lifetime.
I thought it would last forever
Alas, it didn’t and I lost it all within the next 12 months as the FED sopped up all the excess money from Y2K and the market turned downward with a vengeance. It didn’t take me long to realize I didn’t know what I was doing and the only reason I generated the kind of profits I had was because, as the saying goes, “even a monkey could have made money throwing darts at a chart during the tech bubble.”
Fortunately what I did realize was that trading was an endeavor I truly loved. It combined my love of the market with another slice of my life I was good at – computers. This made it easy to arrive at the conclusion that, in order to be a “trader,” I had to learn how to trade in all markets, not just bull markets. So I started my quest of “How to be a consistently successful trader.”
Like a hiker who wanders off the trail, I started to lose track of my pursuit when I was contracted by an online trading firm to write technical analysis articles. Then I deviated even further off-trail when I was hired to write additional articles on the intraday market.
Looking back on it now, what I find intriguing – is the entire time I was meandering in the woods with no clear direction, I knew, just knew, there was a vital piece missing, that there was a trail I needed to find. It was like an omnipresent presence following me around, always nipping at my heels yet silent and invisible.
I could not shake the feeling that most of the technical analysis and trading rhetoric I was inundated with daily was a cacophony of noise overshadowing very little substance. I began to ask questions like what does, “let your profits run and cut your losses” really mean? How much profit? At what point do you cut your losses? You cut them too short and you’ll never make it as a trader. It seemed I was increasingly being enticed by an off-beat indicator, a new and colorful way of manipulating price and volume – with the promise this one is all you’ll need for the rest of your trading career.
I remember quite clearly a webinar back in 2003 where the moderator articulated, with a straight face, you could see the bulls starting to arrive when the 7 minute MA crossed over the 13 minute MA on a 3 minute chart. What? If that is true then tell me what would the 6 minute MA crossing over the 12 minute MA tells us? What empirical evidence do you have to substantiate this nonsense? What empirical evidence do you have to be able to say that with a straight face? Hogwash!
Elusive Brass Ring
Over my trading career, I’ve seized on numerous trading philosophies that were not able to stand up to scrutiny (don’t get me started on stop losses) and signed up for countless courses all in pursuit of an elusive brass ring on which I could actually hold on. Then I read Mark Douglas’ book Trading in the Zone and knew that I had found what I had been searching for for years. I had found my trail, my brass ring.
I required a well-defined, well-thought-out plan that had been verified through thorough back testing. I also needed it automated to take the emotion out of trading. But, more than anything – a realization started to gel, all the hard work had to be put in well before I ever entered a trade. This would ensure the actual art of trading would become very, very simple. An interesting side note was that every article I had published up to this point, and they were plentiful, concluded with, Plan your Trade and Trade your Plan. Little did I know, even before I read Mark Douglas’ book, I recognized what I needed. His book just put words to it.
In the ensuing years, from when I read Trading in the Zone to 2012, I was not able to find this elusive plan and became disheartened, discouraged. I didn’t know where to search for the “Plan your Trade” part of my brass ring, let alone how to automate it. I recognized what I needed to be a successful trader but I was not able to find the tools to get me there. I was nearly ready to throw in the proverbial towel.
Fortunately, I decided to register for one more class, although I expected the same old, same old. It was a course on Algorithmic Trading and it virtually changed my life, or to be less dramatic, my working life. I truly mean this, it changed the course of my trading career.
I had found the tools I needed to “Plan your Trade and Trade your Plan.” My goodness, this was all coming together.
From this course, I got:
- The basic algorithm code from which I could learn the syntax to code my own ideas
- The software I needed
- The data I needed
- Everything I needed to springboard me into developing my own algorithms
I don’t want to bore you with all details (probably too late for that) but after hours and hours (and I mean h o u r s) of work and thousands of dollars I had all the pieces in place, or at least what I thought was all the pieces in place. Little did I know how much more there was to learn.
I was learning to write code but I quickly came to the conclusion that if I wanted to test all my ideas my basic knowledge of the software code would not allow me to achieve the level I wanted to reach. This left me with a few options; 1. Learn how code extremely well, or 2. Hire someone who did know how to code extremely well and I could move on to testing. I chose #2.
The first coder I contracted was very good but after a few months, we both acknowledged a lot of the ideas I wanted to test were more than he could handle so he put me in touch with a fellow by the name of Bruce Robinson. Now Bruce works for hedge fund managers and here comes this small potatoes individual who wants some coding done. Fortunately for me, I caught Bruce at a time when he was not too busy so he took me under his wing. We have been working together for almost three years now. Three years of a steady stream of learning where at times I thought my head would explode. (Ask my family how many times I said my head was ready to explode). Bruce taught me about Open Cross, overlaps, trade through, limit stops, 2-tier positions sizing. He gave me formulas, spreadsheets, Word documents, software add-ons. He took my scan time from 13 minutes/scan to just over a minute. He automated my process so I can actually start my scans from my iPhone and from anywhere where I have 4G. To say that my algorithmic trading would not be anywhere close to what it is today without Bruce would be a huge understatement.
I started with an almost innate knowledge of what I needed and have brought it to a full-fledged business. I’ve had many frustrations, many days were long and arduous, and many times I wondered if it was all worth it. (YA … I’ve never wondered that)
I can, with all honesty, say the journey I have taken to get to where I am now, has been worth every step, every dollar, every hour of work. I knew back in 1999 where I needed to be, and although it took me many years to get to where I am, I would do it over in a heartbeat.
AND IN CONCLUSION
“When things are going well and prices are high, investors rush to buy, forgetting all prudence. Then, when there’s chaos all around and assets are on the bargain counter, they lose all willingness to bear risk and rush to sell. And it will be ever so.” Howard Marks.
“In theory, there is no difference between theory and practice. In practice there is.” Yogi Bera
Plan Your Trade and Trade your Plan