|Readers Say||Ed Says|
Austin Workshop Follow-Up: System Designing
Dear Chief & good friends of my support group, I write with my progress of the Austin Workshop commitments.
1) Asking for help. I have an AHA moment as I sit down to write this. The commitment that lies beneath this, waiting to bubble up is taking responsibility; taking responsibility for my situation, goals, progress, results and for nurturing intimacy-centric relationships. I feel empowered by this realization and therefore re-state my first commitment as taking responsibility.
2) Building a clear, rules-based trading system.
To translate my system ideas into computer code for TradeStation, I decide to contract an experienced programmer to get a system completed and then learn programming myself, over time. A member of my support group generously puts me in contact with a guy who codes for him.
I gain the insight that my rules are not adequately comprehensive as I list them to email to the system writer. My background is discretionary trading and determining hard & fast rules feels foreign. Moreover, thinking deeply about what I do is novel; I see that gut feel and emotion play a large part in how I respond to market action. Emails are fired back & forth between the developer & I as I clarify the system & iron out bugs. This process takes about two months.
I feel disappointment when I back test the system for the first time and the performance report prints a loss for the Y-T-D period to June. Further investigation reveals market conditions were unfavorable for the system during the test period. My real-life trading and observations during this time dovetail with the results too.
I learn more about the nature of the system as I back test it over varying conditions. Tweaking system parameters to better suit the conditions of the window make it profitable. I feel myself becoming less emotionally attached to the system's outright profitability and more interested in price action and system characteristics the more I delve. I am reminded of my childhood when I used to spend many happy hours in the shed or garage de-constructing and building mechanical and electronic devices.
Next step I run the system fully-automated in simulation mode. This feels a little uncomfortable even though the trades are not real; the system trades during my night time & I worry it may do something crazy while I'm asleep. I find it interesting that I worry even though I have no money at risk and think about how to control the possibility of the system punching out crazy orders. I progress in sim-mode for two weeks when a bug emerges. The system does not adjust the trailing stop the way I want.
Time passes while I think about modifying the system code and the market has two great moves which the system takes in sim-mode. I feel mixed emotions; glad the the system picked them, frustrated that I have not taken them in the real-world. I recall a self-observation that I have a tendency to rush into something prior to doing adequate recon. I now appreciate this comes back to bite me and often pushes away the very thing I seek. I try to pace myself and enjoy the journey.
Collecting my thoughts and writing this email has been difficult. Now that it's done I feel happy that I got 'round tuit.
My thanks to my Tribe.
Thank you for sharing your process.
July 12, 2011
I am currently writing an article about psychiatric drugs and the destruction of youth. I just started it and my writing skills are fair at best.
Would you be willing to proof read and verify my logic?
July 13, 2011
I am a Derivative Analyst at a Stock Brokerage firm. I have two questions on my mind which I have asked many people but could not get satisfactory answers. I read your interview in Market Wizard and I was really very impressed by your trading style and performance. I thought you will be the best person to clear my doubts which have been on my mind since two years.. here it goes...
Is rule based trading (not investment which has a holding period of more than 1 year) is same as Gambling..??? Warren Buffet says " derivatives are financial weapons of mass destruction". Your view on this...?????
Thanks & Regards,
"Investment" means, literally, to put something in a vest or to clothe it; you invest a new enterprise with capital, skill, manpower, etc.
"Speculation" comes from the Latin [Speculare] meaning to observe.
People may approach all of these with various types of "rules."
July 15, 2011
Today is Guru Purnima.
I am thinking of you - Thank you for everything!
Thank you for remembering me.
July 18, 2011
Workshop in Europe
I read you might consider a Workshop in Europe. I live in
north Italy, but I would travel as necessary to join the workshop. England or
Switzerland would be a good compromise.
I suppose we could use some participants as well.
July 19, 2011
Leaving Drugs and Alcohol Behind
We work 8-9 hour days removing old paneling, tearing out old
windows and frames; and replace with new, hand-fresh sheetrock, siding, paint,
clean up—and I learn I can do these things. My son learns he can fix things and
be valuable. This has to be the Intimacy Model Ed speaks about. We are learning
together, we pray and eat together. We work and after a long day in the heat, we
cool down at a local river for a swim.
Unlike Ed, I am not an engineer by training, and my math, while good, is not as developed as that of an engineer. I am teaching myself psychology and philosophy. I took only an introductory course in logic in college, no psychology at all. I explore NLP. I act on it. I feel compelled to explore fundamental building blocks. I am given to distraction. This drives me crazy sometimes. I celebrate my feelings of craziness! Wow. Can I do this? I am not smart enough to know why I can’t!
If Ed turns common sense on its head
in The Trading Tribe, and thank God he does, I am really enjoying eddies and
currents, vortices in this river! Though barely trained in science, I love
learning it, thinking about it, and kayaking across it in the river. For so very
long I was trapped in the frequent medication of alcohol. To emerge from this
behavior into something else as a completely changed person, I think this is
physically impossible, but psychically completely possible! My fear of leaping
into the water from a bluff, knowing others were doing it safely, exposed a
k-not, a judge within me, a vulnerability. Is this the same judge keeping me
from a single trade in a commodity? I am pretty sure it is the same guy.
Thank you for sharing your process and for inspiring others.
July 19, 2011
|Thank you for sharing your process.|
July 20, 2011
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