Happy St. Portfolio's Day

Yep, it's March 17th.

Finally got the MT4 Robot today and now have a 12 pair portfolio loaded up. While I was watching both the TradeStation and MetaTrader platform simultaneously, the USD/JPY pair took a short trade and made a winner on both platforms. So that was nice to watch.

The new Robot is lacking some features that the TradeStation version had, but I suppose that's okay. The strange news is that the Robot isn't account locked at all... which means I can move it from account to account. For $3,000 that's a seriously great thing, because I wouldn't want to have to pay once more just to have it moved to another account. It's very trusting, and I hope no one abuses it by selling it to other people for personal gain. Here is a pic of both platforms. It's rather large.

Time to go for a ride before I potentially get my cast off tomorrow... If I go to a boot I don't know if I'll be able to go riding at all. I'll ask the Doc if I'm good enough to go riding. Sucks you need permission to do what you love... But, I am injured, it's a tiny bit different haha!

First Update On Robotic Trading Portfolio

On January 1st I started my 10 robot portfolio and ran it until midnight the 31st. 

I started with no experience on the Tradestation platform and came across a few hiccups during my month of learning, which cost my simulated account a substantial negative impact.

I started with $10,000 and ended the month down $242.33 to finish at $9757.67
Now, that's only a 2.4% loss for the month, which is't bad at all really, but when compared to the results that it should have been, the discrepancy is a little unsettling. 

If you look at the far right totals for both the real and reported month end, you'll see that the strategy that was actually running produced a profit of $42.69 while the backtest result (performed at the end of the month) reported a $36.92 loss.

How did the actual performance have me losing $242.33 when the live running strategy actually reported a $42.69 gain? Let me introduce you to TradeStation's quirks.

For whatever reason (perhaps the performance capabilities of the computer I'm running things on, mixed with internet instability) at one point the strategy was giving trade signals that the platform was not executing... So that generates trades on the chart that never happen in real life. There were also problems that kept the strategy from generating trades that it should have as well. Those are the two reasons for the discrepancies. 

One quirk I have noticed on my dedicated desktop is that when I load up TradeStation portfolio, there are almost always problems with the strategies initializing. I will have indicators not load on the chart, so I will have to disable and re-enable them before the platform recognizes the Robot. This problem has not cropped up on my more powerful desktop in the office, but I use that for many other things (Such as testing) and don't want to run the portfolio on that machine. 

I do have a handy method in place for helping me keep track of the platforms performance. I have text messages setup to tell me when the strategy fills an order, and I know to expect another text immediately that says TradeStation filled the order as well. If I don't get that text, something is wrong and I need to go check the platform. 

Anyways, my present conclusion is that the robots do perform as described and advertised in execution terms, give or take a few dollars here and there. I will more than likely be running these robots on a small live account soon with 10 times smaller positions just to see if live money execution is drastically different than simulated positions. 

In the mean time, I have also decided to optimize these robots in accordance to the previous 5 years of market conditions. These robots were developed from roughly 2003 to 2007 to perform in this time period. I'd like to optimize them for the last 5 years and see how they do in earlier years. 

I can understand ones apprehension to fiddle with something that works, but I think a lot of that has to do with a lack of confidence or ability in ones own mind. These robots do very simple things: They use Moving averages to determine trend, and then use Relative Strength of the current market to identify a good time to enter and sometimes exit. There are many useful variables in the programming to take advantage of, but my point is they arrived at their current profitability through the same work I am going to be doing to modernize them for the current time period: 

Hours and hours of testing and paying close attention to the response of inputs tested. So far I have about 4 of the robots producing more profit with the same or less drawdown. It's something I will continue to work on for a very long time and perhaps as long as I am a robotic trader. I love data, and this beats manual testing any day. 

As far as my non-trading life goes, I am now rocking a pink cast which will be removed in 6 weeks, No surgery required thankfully. My new tail section is arriving on the 10th and I'm dying to get back on the bike. I'll have to rig my cast up somehow to make sure it will not slip off the right peg. My new left side peg is here and ready to be installed. I'm going to the cinema-pub for valentines day to watch Zoolander 2! I will be back in the gym rocking it very very soon! Turns out the bus isn't so bad at all :)

The Beginning of My Robotic Trading Career?

Made it back yesterday afternoon. I didn't take my good camera on this trip because I didn't want to deal with carrying it around everywhere, but I wish I had taken it. Chicago was pretty awesome. Frankenmuth (Michigan) was pretty nice as well, and I just would have taken some grand pictures as usual. 

Remember how I said the number 7 seems to like me? Well, I was in row 7 again on the flight home, and during a White Elephant ornament exchange my number was 7 as well. I laughed pretty hard when I unraveled the folded up scrap to see that number! By the way I got a purple stiletto ornament, which is fine by me!

On the flight home I watched a documentary called Billions In Change. I had downloaded it from YouTube months ago and was glad to finally watch it! Another great one, no depressing stuff at all so I highly recommend it!

Anyways, I have some news to announce. After months of effort and researching and emailing, I finally got a portfolio of robots. I have a funded TradeStation account to run them on as well. The offer being made is 5-9 robots for $3,000... So when I was emailed one file of code which had only one file to attach to a chart, I was a bit confused and feeling a little aggravated. Turns out the code is actually just one robot that has tweakable variables. You attach that same robot to every chart and tweak it into profitability. What you are really paying for is one robot and the hundreds (Reportedly) of hours Scott has spent tweaking these setting per each individual currency pair so you don't have to do it yourself. The good news out of all of this is, is that if you have the one File (Robot) you can attach it to any chart you want and tweak away until you discover a way to make it profitable at no further cost! That is something I may do in the future, but for now I have other problems. 

So, let me explain TradeStation to you a bit. It's a relatively sophisticated trading platform designed to robotic trading, but also has in depth features outside of that as well. It is very complex and I think I will be trying to get used to it for awhile. The good news so far, is that my dedicated computer that is already running 3 instances of MetaTrader 4 can also run TradeStation with the 10 robots as well. It has no problem so far. My main issue is that with all the the charts set up and trading, there seems to be a problem I can't figure out yet. The Strategy is taking analyzing the markets and all that correctly, but it's not actually executing trades in the simulated account for some reason. I'll need to fix that for sure. 

One other problem, or issue I'll need to address, is that my backtesting results aren't lining up with the results I was given. Naturally the thought arises that I got scammed somehow, but I haven't been convinced of that just yet. I think there may be some setting that got lost along the way...

Either way, to keep this short I'll say this: My goal is to get everything running smoothly and lining up with the info I was given, and then run the portfolio on the simulated account for at least a month or more, and see profitability. Then, I will go live with small position sizes to see if live trades execute in a manner that lines up with the simulated account. I will keep you posted on all of that as it happens, but I plan to be pretty busy with it and may not be posting about anything else for awhile. We'll see. 

Flying Metal Tubes, Black Sholes and Pissing People Off.

Ok, so my flight was interesting. At the last second the departure gate was changed from gate D11 to C7 and my seat was changed from 13E to 7E. I swear that number is intrinsically woven into my life. I'm not superstitious, so to me it's really just a number, but I've had so many directly awesome things revolve around it.

So, later on in the evening after landing and getting the rental car, there was an error in google searching the hotel address. It routed me all the way out of the city and then I realized the hotel was actually very close to the rental car place. By the time I got back the Odometer was 3,777 miles LOL.

Anyways, I found myself later that night at a local bar sitting across the table from a guy who had already had way too much to drink and we had started talking about trading. The conversation started off interestingly enough, but at one point things turned and He straight up declared that it's mandatory that I know what the black sholes model is if I'm going to be trading.

A little back story though, when I told him I was getting into algorithmic trading he said he used to be a day trader, and that He "had a good run", but is now doing some "real estate thing". I have met several people in my years who have "Been" a trader at one point or another and I could tell by the way he spoke about his "Good run" that he more than likely got his ass handed to him like most people. The way he was so bitter in the conversation about trading was just more evidence. If you are actually successful in the worlds most amazing business, you don't just walk away from it after being one of the 5% that actually make a good profit. You don't go from the fully liquid equities market,  to illiquid assets like real estate. And furthermore, you don't refer to trading as "Gambling" in a bitter demeanor, that really doesn't make your former success believable. (Although yes, I do consider trading a form of gambling, that doesn't mean there aren't self controlled professional gamblers that make a comfortable living at it.)

Anyways, when I told him I had heard of the Black Sholes model before but didn't ever take the time to learn what it was, his drunk eyes turned black (like that shark in Finding Nemo) and he hunched over the table and told me (As if I'd just spit on his mother's grave) "You have to know what the Black Sholes model is if you're going to trade. Period"

And that's when the conversation really turned sour on the inside, but I could tell he was trying hard not to let it spill over to the outside. I asked him what the Black Sholes model was, because I was partly pandering to his insistence and partly deeply curious about it.  All he could say was basically "It's a formula for analyzing options to arrive at a stocks true value" and I knew right then and there it didn't apply to me. Why? Because he was talking specifically about stock options, and I don't have anything to do with that. I found it hilarious that he insisted I needed to know this, yet didn't actually explain to me what it was... He tried to explain what options were to me, because he must not have believed me when I told him I knew, and yet somehow I ended up finishing his sentences ;)

I am a pretty clear speaking man, so I told him what I truly thought. I told him that I think people that don't truly grasp trading tend to think religiously about a method; like there is only one way to make money and that if you aren't doing it their way you're going to fail, or that it just doesn't work. I told him that the age old CTFC warning of "Past results are not indicative of future performance" is total bullshit, and that all we have to go by in this world is past performance to mold our expectancy around. I told him I don't give a shit about the method, over the data, and that to me data is all that matters. He even tried to tell me that trading is a "Zero-Sum" game (Meaning that for every loser there is an equal winner) and I'm pretty sure I stepped on his feelings when I corrected him that it was a "Minus-Sum" game because of slippage and commissions, to which he laughed as if that somehow doesn't make it what it is. And yet one of peoples biggest concerns is trading costs...

Anyways, after a heated discussion about trading he ended with the usual "Well I wish you the best of luck" Which is really meant as "I can't wait to hear that you failed, because if I couldn't do it, I know you can't do it!"

Well... I don't need luck. I need a winning strategy backed up by loads of viable data, and the discipline to enact that strategy with immovable belief even in the face of inevitable draw down.

I'm not for one moment claiming I'm going to make it, but hell, in the six months I have been home I've already out-traded 95% of people simply by still having almost 100% of my capital. I've done leaps and bounds better than I have in the past. I've had the discipline to not tamper with my trading robot, and I've not taken any giant losses in my discretionary account like I have in the past.

I still have room to improve and always will. I don't think I'll ever permanently get "There" because growth is a constant battle and the road is circular. Habits are constantly in the making. And if at the end of the day I can't get profitable, I'll have to come to accept that. But for now, it's still too early to call it, and too early to give up, no matter who thinks I can't make it.

How can I honestly take someone's negativity personally when I know they are part of the masses who often never hold any disciplines that require the true hard work of inner development? Of course they are going to be negative, it's the easiest thing in the world to do. Especially when the best examples they get of human triumph are from the movies instead of their own lives? And when the truths they get about trading are from the twisted media and stories of failure from a "Friend of a friend who knew a guy".