I’ve done all kinds of trading and traded all kinds of systems but for the last four years I’ve been trading the same mechanical end of day futures system, taking around 500 trades a year on average.
I designed the systems myself, and trading system design is my “special area of expertise” I have 3 systems, one trend following, one mean reversion and one system designed to take advantage of short squeezes.
I mostly travel around the world working from my laptop, though I seem to have put down some tentative roots in Bangkok (married a truly wonderful Thai lady) This year we did a month in Japan, a month in Italy, two months in Australia, the rest of the time in Bangkok.
To execute my system the orders, have to be placed in the 1hr after NYSE session closes. I wake up (in Thailand that’s 4:40am alarm) and make coffee.
My kitten Somchai hovers underfoot until I feed the little terrorist. Then he helps me with work.
To a significant degree, professional trading is about mistake free execution of a system with an edge. I make my work mistake free by firstly making every aspect of trading into a repeatable system, like a pilot’s preflight checklist. Secondly by logging every mistake and monitoring my own performance as well as the system performance.
Here’s how my day goes down…
Once adequately caffeinated I log the change in equity in my google docs spreadsheet.
Then I check all the futures markets in a specific order, scanning for setups that follow a very precise series of rules. There is no grey area or subjective opinions involved.
Fuck thinking, predicting, analyzing, “am I a bull or a bear?” That way lies madness.
For me it is as simple as see setup > take setup > wash > rinse > repeat
As I scan the markets, I check the setups from the previous day to see if they were executed. My orders are stop entries which only get me into a position if the market crosses a certain point. I prefer to buy into strength and sell into weakness by waiting for a break of the daily bar high. So as a result, many of my potential setups are not ever entered. When I notice those, I change the color of the row in google sheets. If my order has been filled and I have a position I note it in the spreadsheet. The biggest part of my job as a trader is making sure my records are always up to date. I do my job.
I have the spreadsheet do things like work out position sizes, calculate slippage and equity curves, etc. The more automation I have the less scope for me to fuck things up. The less I fuck things up the better I am at my job.
The last thing I do is enter all the orders for the day, and double check that stops and targets are in the correct places. It’s all over inside 30 minutes, and then I can get on with my day.
The only possible discretion in my system is when I get a setup in a related market, or when a whole pile of USD correlated currency setups are available.
For instance, if I see a day where I have short setups in AUDUSD, NZDUSD, long in USDCAD, long DX futures, short EURUSD… all those would in reality be the same trade, so if I take all of them, I’m fooling myself.
In that situation I apply simple logic. I buy the strongest market, or sell the weakest market. Simple solutions reduce my scope to fuck myself up.
I need regular breaks from trading to stay sane, but I haven’t missed a market close since August 2014. I did this by teaching my systems to a friend (who also trades them) and we both take holidays.
When I come back from a week away, my friend trades the systems EXACTLY like I would have. In fact, any deviation from following the rules would be way out of line.
My systems aren’t the best systems in the world, their metrics are by any measure right in the middle of “ordinary but tradeable”. I’ve traded systems with better Sharpe ratios and SQN’s, but I prefer this. I’m trading an average system with zero discretion perfectly, rather than trying to keep at the absolute peak of mental performance which is necessary when you trade systems with discretion.
It’s way easier to trade successfully when you know you are doing it right. When objectively you are trading at a black belt level, day after day.
I feel like a stone-cold pro, because I AM. When I checked my spreadsheet a moment ago, I have made 13 mistakes (listed below) in the 450 trades I’ve taken this year. I set a benchmark of one mistake in 20 trades to consider myself professional and I’m happy. with one mistake in 34 trades.