Interview With the Heron Robot

I'm super excited about this week's newsletter.

After weeks of negotiating and trying to sync up schedules, I was finally able to get the Heron robot to agree to an interview.

As background, the Heron robot is a daytrading robot that attempts to go with the short-term trend and take small winners at high rates of success. It trades only a certain portion of the day and trades about 14 times per month.

I've got high hopes for this robot, so I want to get right into the interview. Without further ado, I bring you my conversation with the Heron.

Scott Welsh: Good morning, Heron! Welcome to the show.

Heron: As a robot, sir, I have no concept of morning, so classifying it as "good" is impossible.

SW: Okay, let's be clear. DO NOT START WITH ME. This is an important interview so don't give me that stupid robot logic.

Heron: I am at your service, sir.

SW: Fine. So, Heron, tell me a little about your background. How long have you been trading?

Heron: I believe you created me within the last twelve months, sir. Previous to that, it is my understanding that you have been trading daytrading robots similar to me since 2013.

SW: Interesting. I want to get deep into your current trading, but can you let the audience know a little more about yourself? What are some hobbies you like to do outside of trading?

Heron: Hobbies, sir?

SW: HOBBIES! You know, fun things you do that don't have anything to do with trading.

Heron: I do not do "fun" things, sir. I exist only to take trades.

SW: Wow, you're a fountain of fascinating information.

Heron: I am not a fountain, sir. I am a robot.

SW: Just...Listen, I will turn off the recorder and come over there and slap you in the face for an hour. Understand? Answer the &%#$ questions or I will end you.

Heron: I understand, sir.

SW: Great! So let's get into what you're doing presently. I understand you've been trading live in the Forex markets since around May of this year?

Heron: Yes, sir.

SW: And how has that been going?

Heron: Well, sir, it has been going exactly as it should. I have executed the trades properly according to the guidelines you have set forth.

SW: I don't care about that. I care about money. How much money have you made??

Heron: I am currently down 1.8% from where I started.

SW: You suck.

Heron: Sir?

SW: I thought you were supposed to make much more than that.

Heron: I have done everything I was designed to do.

SW: Really, is that a fact? How about the missed winning trade that occurred on May 16th?

Heron: Sir, I was not connected to the platform on that date.

SW: And why not?

Heron: Because your VPS wasn't working properly and I could not take that winning trade.

SW: I don't want to hear your excuses. And what about that trade on Sunday, May 28th? Isn't it true that that trade should have been a winning trade and instead was a substantial loser?

Heron: Yes, sir. But I closed the trade per my rules at the open of Sunday's session and the spread happened to be really large at that time.

SW: So you failed. And isn't it true that you would currently be profitable if you had done your job properly on those two occasions--even considering your generally miserable performance to date?

Heron: That is correct, sir.

SW: Ha! That's what I thought. So how else would you explain your poor performance?

Heron: Sir, I was not designed to win every trade or every series of trades. I was designed with a stoploss. This means, of course, that I will have losing periods.

SW: That was not my understanding.

Heron: I think it was, sir. If you look at my historical results, I have many losing months. I also have periods where I am not profitable for up to four months at a time.

SW: You lose four months in a row?!?

Heron: No, sir. I said I might not be profitable for a four-month period. That means, of course, if you add up the profits and losses for four consecutive months, I will not be profitable overall, even if I have winning months during that time.

SW: Don't patronize me, robot.

Heron: My apologies, sir.

SW: So what you're trying to say is that you are performing in line with historical testing and that you'd be profitable overall if not for a bad Sunday spread and a VPS disconnect?

Heron: Yes, sir.

SW: Pitiful. You know something? I just got you officially coded into Tradestation. Paid money for it and everything. I'm going to review all your numbers, and I swear on my life, if you're lying to me about your performance--even a little bit-- I will switch your Inputs so fast it will make your head spin.

Heron: As you wish, sir. As I said, I am currently performing just as you designed. And a 1.8% deficit is not anywhere close to my maximum drawdown number.

SW: You make me angry. Anyway, that's all the time we have for now. I'll give you another month or so, and then we may have you back on the show. That sound okay with you?

Heron: It does, sir.

SW: Nobody cares what you think. See you next time, everyone. Happy trading!

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