Ignoring Advice

Jan. 6, 2021

For me, 2020 had good times and rough times.

Work-wise, trading was more fun than ever.

Personally, I lost my mom last year and my mother-in-law is very sick.

Like it’s been for many others, there’s been a vacillating mix of happy and sad.

The goal has been to try to focus on the happy.

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Not knowing what was coming, of course, back in January 2020 I entered a real-money World Trading Contest (as you probably know). There were a few reasons I did that.

One, I miss competition. I thought I didn’t miss competing, but doing the Contest has been a revelation. My goal was to be on the leaderboard (top 5). My ultimate goal was to be in the top 3.

Two, I wanted a way to verify results. There’s a lot of lying out there, and I don’t care much for that. By doing a real-money Contest, the results are automatically verified by a neutral 3rd party, and good results go into my real trading account. There’s no fudging involved.

Three, I have an angry axe to grind. I don’t like bullies and people who tell other people what can’t be done. Bullies and know-it-alls cost innocent people money. If I can succeed, then regular people can, too.

Let’s be clear: for this Contest, I did many things “wrong”.

Real traders only buy index funds. Nope.

Real traders don’t optimize. I optimized.

Real traders risk the same percent on each trade. I didn’t.

Real traders use the same variables for Long & Short. I used different settings.

Real traders know testing is always better than real-life. I disagree.

Real traders are diversified. My portfolio was not.

As you can see, before I even began the Contest, I had no chance of success.

How could I break all those rules of expert professional traders and make money? It was a stupid and impossible thing to attempt.

But I did it anyway, and here are the final standings (as of this writing):

Here’s what I believe.

I believe regular people can make good money trading simple, automated systems.

I believe some optimizing is important.

I believe that Longs & Short are completely different markets and deserve different considerations.

I believe a trader’s testing should should be similar to real-life.

And I believe in stars. I believe that diversification is a celebration of mediocrity. I believe in concentrated portfolios.

Do I have a case? Do my one-year results make my beliefs valid? Could the experts be wrong?

Last, here’s an interesting fact.

According to my testing, my portfolio SHOULD HAVE made 64.8% in 2020.

That would have been good enough to finish in the top 3. But real-life did better than that.

Live results beat the testing by 14%.

Who knew?

In our next email, we’ll talk about how to possibly make your testing show up in real-life.

Looking forward to 2021.

Talk to you soon.

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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.