06 Jan 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.
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%.
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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