SCOTT WELSH TRADING BLOG

Nick Saban Loves The Robot

Nick Saban Loves The Robot

Nov. 3, 2013

If you haven’t heard of Nick Saban, good for you.  This country is way too obsessed with football.

If you have heard of him, you know that Nick Saban, while not the most honest person in the world, is enjoying a good bit of fame these days. For one, he is the football coach at the University of Alabama, and Alabama has won the national championship three times in the past four years. For another, Nick Saban is considered the best coach in America, and his success is due to the fact that he believes religiously in The Process. Saban explains (emphasis mine):

“Well, the process is really what you have to do day in and day out to be successful,” he said. “We try to define the standard that we want everybody to sort of work toward, adhere to, and do it on a consistent basis. And the things that I talked about before, being responsible for your own self-determination, having a positive attitude, having great work ethic, having discipline to be able to execute on a consistent basis, whatever it is you’re trying to do, those are the things that we try to focus on, and we don’t try to focus as much on the outcomes as we do on being all that you can be.”

We’ll come back to that. Let’s talk first about why traders fail.

Traders don’t fail because trading is impossible. Traders fail because they aren’t consistent. Here’s an example of a typical trading journey that ends badly.

First, a trader thinks about the lifestyle that trading can provide and gets excited. Then a trader reads a book or attends a seminar and learns a trading system. Now he’s doubly excited. He practices for a few days and then dives head-first into live trading. He gets up at 8 am sharp and takes his first trade, which is a winner (I’m a genius!). Then he takes another and wins again (double genius!). Feeling giddy, he decides to rest and passes on a third winning trade (geniuses don’t have to work all day).

The next day he’s up again at 8:00, but this time the first trade is a loser (no worries). Then the next trade loses (that’s not good). The third day he’s up at 8:00 again and the first trade is a loser again (uh, this sucks). He decides that there will be no more trading that day.

The fourth day, there is news coming out, so there’s no need to get up at 8:00. Around 8:51 he takes a trade but it starts going the wrong way so he cuts it off before it hits his stop loss (gotta stop losing so much). Of course, that trade immediately turns around starts going to the target (son of a &^%$#!!), so he gets back in right as the trade pauses and goes sideways (are you kidding me?!!). Tired of sideways, he gets out at break-even only to watch it go to his target ten minutes later (sound of keyboard crashing). Having had enough, the trader takes the next two days off, only to see that he missed six winning trades. Totally desperate, the trader gets back in the following day and suffers two more losers (soft whimpering noises while curled up in a fetal position in the corner).

Later, upon further investigation, the trader realizes that if he had just gotten up at 8:00 every day and traded the system exactly as it was supposed to be traded, he would have made 5% for the week. If he had possessed the discipline to execute on a consistent basis and didn’t focus on the outcome, he would have been profitable.

In other words, he needed to listen to Nick Saban.

So the question is: If success only comes through adhering to The Process, how hard is it to achieve that ultimate level of discipline? Let’s take a look.

If your system says one needs to trade from 8 am to 3 pm, can the trader do that and never miss a minute? Probably not.  If the system mandates  never cutting  a loss off early, can the trader do that every single time? Probably not. If the system says that every winning trade needs to make exactly 3%, will the trader never, ever take a winning trade out early? Probably not. And will the trader never miss a day, not for sickness, vacation, emergencies, fatigue, or anything else? Probably not.

It appears we have a problem.  A trader can’t be successful without following The Process, but it’s highly improbable that a trader will be able to actually follow the process. Is it any wonder why so few traders succeed?

But there is a solution: The Robot can do it. The Robot gets up on time, executes every stop loss, runs to every target, is available all day/every day, and is never, ever sick at sea.  The Robot is The Process.

And it can make you a successful trader.

I couldn’t agree more, sir.

Nobody asked you, Robot.

 

Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.