There's something about going to work every day.
On one hand, it feels good. It feels responsible. An honest day's work for an honest day's pay.
Along those lines, going to work each day feels like what we're supposed to do. What would society say about a roommate who didn't have a job and just sat around all the time? What would we lecture to a child who did nothing but play video games all summer? What would we say to our boyfriend or girlfriend if we had a job and they didn't? Okay, we might not say anything (for risk of personal harm), but we'd think it.
Not going to work every day feels like we're on the wrong path--the loser path--whether it's our thoughts or society's thoughts. And it can make us feel disconnected and sad. Or disconnected and bored. Or all of those.
Tim Ferriss is worth $100 million. Why is he worth $100 million? Mostly because he wrote The 4-Hour Workweek. And what was that book about? Not working.
Ferriss' international best seller details the exact opposite of the go-to-work-each-day mentality that's been drilled into all of our skulls.
And I can honestly say that there aren't many books that have fired me up more than The 4-Hour Workweek. It set me on a totally different course with a totally different mentality. The idea of being rich and NOT working was a revolution for me, and it was for millions of other people, too.
So which is it? Do the right thing and work hard every day? Or sell supplements online (like Ferriss did) and get rich while sitting on the beach?
It sure seems like the second one.
But how does that apply to trading?
My first experience in trading was trading stocks on Daily charts using mostly fundamentals. I'd be in trades for weeks or months and try to take profits when my account was way up. This helped me average 30% per year in my first three years and earn my first trading stake. I researched a ton (because I liked it) but I rarely traded. I never tried to go to work and make money trading every session.
But later when I knew I wanted to switch to robots, I did the opposite. I wanted to trade every day.
Every robot I built was designed with the idea of going to work daily in the markets. I felt like there's no way I could trade-for-a-living if I took 5 trades a year. How can I quit my job if I'm not taking trades? If I don't trade, I won't make money--and then where am I? So daytrading robots are what I built for a long time.
Then, in the past year or so, I decided to look at things a little differently. What if I looked at the total amount of money I need to make, and then tried to take as few trades as possible to hit that mark? Instead of trying to rack up wins every day or week, what if I took only 1-5 trades a year and made my money that way?
It was the same old battle of working-for-a-living versus living-and-barely-working. The book on this subject would be titled, The 4-Trade Trading Year.
But unlike The 4-Hour Workweek, nobody would buy that book. Why? Traders want to trade. They don't want to sit around and live life.
Every time I've talked about trading systems that hardly ever trade, no one emails me expressing interest. Or if they do, it's to say that it's an interesting concept but not something they could do.
On one hand, we've made Tim Ferriss a multi-millionaire because we only want to work four hours a week. On the other hand, we want trading systems that make us work every day and never take a break.
Nonetheless, one of my long-term robots has actually taken a few trades this year, so I thought I'd bring it up once again. At least I know my Inbox won't get filled up!
I've talked previously about the British Pound futures contract (@BP). I don't trade futures, but I want to someday. The reason I've done a lot of testing on futures is because the leverage on futures is phenomenal. You get so much more bang for your buck. With futures, you get the trading patterns of stocks (at least for this system) while making a lot more money. But what I'm talking about works for stocks and Forex also.
This system is based on the exact same principles that are found in the Fair Value Course. This system waits for price to move far away from Fair Value and then trades back to what the instrument is actually worth.
The difference here is that I'm trying to make one trade pay off all of my hypothetical expenses for the whole year. We're looking at potentially eleven months of nothing and then everything being paid for at one fell swoop.
Sound crazy? I agree.
But here are the results. On a hypothetical $10,000 account, the @BP Fair Value robot produced $47,881 of profit from 2004-2017. It won every series of trades (taking multiple positions if price went the wrong way).
With no compounding, that's a hypothetical average of $3,600 per year, or 36% per year. Yes, we'd have to weather a scary drawdown in 2015 that went against us about 70%, but that was a one-time occurrence.
If that's too much drawdown, cut the numbers in half. That leaves us with a 35% max drawdown and 18% per year. That still beats just about everyone in the world.
And it only trades an average of 5 times a year (both Long and Short).
That means a discretionary trader would have very little work to do all year and a robot trader would do practically nothing and have practically nothing to look at.
No work, and yet it makes the same returns a lot of daytrading systems make.
So it comes down to this: two systems walk into a bar. One works every day and one hardly works at all. Both make money.
Which one are you going home with?
Get the Heron Course here.
Note: The summer session of Thursday webinars start this week. Register here: https://attendee.gotowebinar.com/register/586982361387971587
My new website is here: https://www.scottwelsh.me/
My new eBook, The Inevitability of Becoming Rich: An Interview with a Master, is available on Amazon, and you can get it here.
For information on all my trading courses, go here: https://www.scottwelsh.me/courses/
The recordings of the Thursday webinars go on my YouTube channel. You can Subscribe by going here: https://www.youtube.com/channel/UCxAWDDaTLVy_diMVJCkGl3A
If you'd like a copy of my free eBook, go to https://www.scottwelsh.me/free-ebook/ and just fill out the form.
Follow me on Twitter @swelsh66.