Mr. System Developer, Ms. Fund Manager, Members of the trading community, my fellow Americans and non-Americans:
Several questions have come to my attention (and Inbox) over the past few weeks, and I felt this was an appropriate time to examine those questions more thoroughly. In addition, it is good to look back and review what has come to pass, so we can plot a profitable path going forward.
[How come no one is clapping? Aren't people supposed to be clapping?]
Anyway, here are some items I'd like to address:
1. What size accounts should be traded with robots? Here are screenshots of two of my trading accounts. I've gotten a lot of questions about what size accounts are suitable for trading robots. Here is the biggest account on which I trade robots (and only robots, nothing else):
Here is the medium-sized account that I trade:
I also have a small account (around $2,000) that I trade aggressively. As I've said, I think you can trade any account size you like with robots. You just have to make sure you're ready to handle the increased trade sizes that come with bigger accounts.
2. Does focus work? As I've said many times, I believe in the concept of diversification. I also believe in the numbers behind diversification. I just don't like to use diversification in my personal trading. And it took me a long time to realize that.
In September, I moved away from a diversified portfolio and moved into a focused one. In my coaching, my biggest successes came from coaching one person (or a small group) with intense focus.
In my trading, my biggest successes also came from trading one instrument (or a very small group of instruments) with intense focus.
So, in September that's what I did. I increased my trade size appropriately and focused.
How has that turned out so far?
In the big account, here are the results from September, 2016through today (starting when I got rid of my big portfolio):
You can see the profit in the bottom left hand corner ($2,372.75).
In the medium account, here are the results from the same period:
It was also profitable, which is expected because they take the same trades.
That doesn't mean that it's going to be profitable every month. Of course it's not. But it's funny how good decisions based on what you like tend to pay off pretty quickly.
3. Hypothetically speaking. I get this email often, and it's an important topic.
When I show results from any of my robots, those results are HYPOTHETICAL. They're not real. They're what would have happened if you traded it live.
None of the data I talk about is from actual trading, unless, of course, I say it's the data from my actual trading (like I did in Issue #2). If I don't say it's from my accounts, then it's hypothetical. The data doesn't promise anything. It's not a guarantee. It's hypothetical.
Does that mean you should ignore it? For me, absolutely not. I am perfectly fine basing my trading decisions on hypothetical data. It's hypothetically accepted by millions of people that the stock market will go up over time. Yet no one has taken all the trades in the stock market since 1900. That's ridiculous and impossible.
But when you look at data from what might have happened if you had traded from 1900 till now, it's pretty compelling. I'd be just fine looking at hypothetical numbers (when properly generated in a trustworthy manner) and investing my IRA in a long-term value stock portfolio.
Furthermore, let's do a quick comparison. In Issue #2, I showed the profit of my medium account. Here is what Tradestation's hypothetical numbers would have shown after the fact:
My medium account profit (before rollover credit): $670.48
Tradestation Hypothetical profit (before rollover credit: $677.87
Almost identical. In fact, my actual account was ahead of the hypothetical numbers until yesterday's trade.
So, are hypothetical numbers something to consider? That's up to you.
4. Setup is everything. If you're going to trade robots, I can't stress enough how important it is to make sure you're set up properly. Getting the server wrong, for example, will ruin everything.
My robots run on MT4 using the "GMT-5" server. If you sign in to your MT4 account and accidentally choose, say, the "GMT-2" server, all of the results from your daytrading robots will be dramatically off.
Do not trade robots live until you're sure you're set up correctly. Check, double-check, and then triple-check the double-check. This is extremely important.
5. Will the upcoming U.S. election have a dramatic effect on trading? I hear a lot of people talk about this.
Personally, I believe the people who say that trading is going to be horrifyingly bad after the elections.
I believe those people until I hear other experts say trading is going to be the best it's been since 2009. Then I believe them.
And then I get really confused when other pundits say the election won't change anything.
Is there any way to have an informed, logical idea on what might happen after the election?
Tune in to my weekly Thursday 2 pm EST webinar to find out.
Last, I believe in trading because I believe in you, the American and non-American people. My sincerest thanks go out to you all.