Investing – Making it your own

Making it your own

We hear this all time in the investing world. Especially when completing trading or investment courses. It took me 15 years to work this one out, and personally I am not sure even the people telling us to make it your own, had made whatever they were selling their own. Mainly because most trading and investment systems if you drill right down to it, are pretty much all the same.

So here is my take on “making it your own”

For me, I spent a lot of time and money studying other peoples systems and process, looking and always searching. Learning and learning. As noted on a previous blog, it gave me the ability to be able to forecast time and price on the futures market and on some stocks. Wow, surely this is “making it your own”. However, to me it felt like I still did not know what I did not know… no matter how much I knew…

The NUMBER one rule: Make sure your Trading makes MONEY. If you do not make money, obviously, you are doing something wrong, and you are following the herd, with the blind leading the blind and you are in denial.

It took me to get ill to realize what I had been doing wrong. So upon getting back and of good health I cleared my desk, put all the books away and went through everything I had learned methodically. With one thing on my mind. How can I make the most amount of money whilst reducing risk, but also having the highest probability of profitable trades. This is where I came up with “Random Statistical Probability” Imagine I could use all that I had learned and apply it and make money regardless of the market direction…. Hmm this got me thinking….. 

For me to make it my own, I HAD to create all my own programs, systems, and robots. I had to go that far, I had to go that extra mile; I could not just follow, and implement a system someone was selling me, no, I had to take it to a completely new level. I had to lead from the front; I had to make my own programs. I needed to drafted up my plan, and then tested my theory’s, once I knew a system had legs and was going to be profitable I then created my own program using c++ and C#. 

Why use other peoples programs? That is my argument. If a moving average crossovers or MACD etc etc is so great how come nobody is making money from these…… Surely if they were as great as every single person harps on about, everybody buying any program with those lagging indicators in the program would make money… Once again, it is all sales and bullshit. So come up with your own idea and create a program to implement your ideas and make it your own.

I like to reference it to the gold mining days. The only people making money in the gold mining era was the people selling the tools for the gold miners to use. Think about it. They gave the miners the dream, imagine the possibility if you hit the payday…. Sound familiar? Why are there are so many programs out there, all with the same MACD and same MA etc etc on them?  Further, if these programs where so great why are they selling them?? Yes, I have bought a lot, all in search for that missing link to help improve my trading, some did, and some did not. Nevertheless, all of it is perspective.

Sit down, work out your strategy, don’t guess, I mean really work it out. Complete some robust testing, using maybe excel or something easy to code with to see if it holds water, and is going to be profitable, and then once you have proved to yourself it is going to make you money, if you cannot code, jump on a forum and get someone to code your program up using your brokers API. Simple… 

Make money from your trading. If you are not making money STOP following other peoples theories and stop following what works for other people.

MAKE IT YOUR OWN AND TRADE YOUR WAY

Random Statistical Probability

Random Statistical Probability.

After years of trading the futures and stock markets and having the skill set to be able to forecast weeks, months and years in advance the exact day and and price a contract will be trading at, was a skill set well learned.
Years forward - Computerized systems starting taking form and shape. I believe computers have one purpose, to massively increase performance and reduce manual labor time. Apply this to trading, to trade and do all the manual calculations one used to do with a calculator and on excel spreadsheets in a single moment. I believe that if a process can be completed manually, then it can be automated. In short how can a user apply "lean management" systems and process into trading.

I had to rethink the "old" way of trading. So i created what i call Random Statistical Probability.

Random = I use the belief that the markets are random and at any time the price can go up or down, so how do i manage the trade effectively to profit from such a perspective.....

Statistical Probability = I am not talking about opinions here, i am talking about raw data. Raw data which a user can use to prove that an event happened when a certain set of criterion are met. To me the more data the better, hence providing the trader a better reading, and a better way to make a informed decision.

Using Random Statistical Probability means it gives me the ability to enter high probability trades. This means i am not necessarily trading the trend, but rather making trades that show a history of making money, and prove to me that their is a high probability that the trades will provide a profit. This data will show me how to maximize my return on investment, without risking the arm and leg and help make informed decisions.
Once the entry criterion is met I then also to look at the flip side and manage risk in such a way that it provides either a profitable exit, should the market go against the high probability trade, or provide a reasonable rate of return should any event occur.

The use of various instruments helps achieve this goal.