Amazing things are possible with unwavering commitment.
That's not a cliche.
I always told my tennis students, "If you commit to the program and show up every day, you can reach any goal you want."
The ones who showed up every day did exactly that.
Commitment solves everything. It keeps you focused when you win. It keeps you working hard when you lose.
And make no mistake, major companies spend millions of dollars each year to keep us distracted. It is the people who don't allow themselves to be distracted that end up making millions of their own.
For a committed robot trader, 2016 was a great year. If a trader picked what he liked and committed to it (no system hopping at the first sign of struggle), there were some excellent results.
Without commitment, though, a good trading year can easily be turned into a terrible trading year. Here's what I mean.
Take, for example, the trend-following robots. If you'd chosen to be an automated trend-follower, here's how my two favorite trend-following robots would have done in 2016.
If we decided to accept a max drawdown of up to 50% on a hypothetical $10k account (typical for trend-following, by the way), then we would hypothetically be sitting on a 43% gain for the year. The USDJPY is in the middle of a huge winning trade right now, but if we closed out today (late December), we would be booking a 43% gain. It's possible it could be more profitable by the end of the year.
However, if we don't like losing and tend to give up when the pain comes, here's what 2016 could have looked like.
Despite a great track record over almost two decades, the EURUSD trend-following robot did nothing but lose through the majority of 2016. It would have been easy for anyone to get sick of that and turn that robot off. If it was turned off, an $877 winning trade (on a $10k account) would have been missed toward the end of the year. That would have made 2016's returns significantly worse.
What's more, the USDJPY trend-following robot got into its current big winning trade on November 10th. If a trader couldn't stand to wait that long, then 2016 would potentially have been a massively unprofitable year rather than a year that returned at least 43% (both robots combined).
That's the power of commitment.
If we commit to our strategy, we end up riding out the hard times and reaping the benefits of the good times. In the case of the trend-following robots, commitment means the difference between a losing year and a 43% gain.
So the question becomes: what's the best way to stay committed?
One path could be to trust the numbers. Trend-following has thrived for hundreds of years, so I'm going to trust that.
Another path could be to trust the philosophy behind the system. Trends are universal and persistent, so I'm going to trust that.
Whichever path we choose, the key, as always, is to stay in the game. Finding a way to stay committed will pay off nicely in the long run.
I had a great time in 2016. Thank you for being a part of it.
I'm looking forward to an even better, even more committed, 2017.