Wow, time does fly. It’s already been two weeks since my last blog post. It’s continued to be a case of running back-testing using historical futures data, testing strategy refinements, as well as monitoring the automated strategy trading in the live market. Here’s some thoughts to share:
Team – It’s great to be working as part of a team – they pressure and thus help you progress but they are also supportive and constructive.
MS Excel – I continue finding that my skills in Excel are coming in more useful than I had previously expected. I am also finding that I am able to test more strategy parameters that I had initially expected. Finally I am finding that my models are actually very useful – when I run them over the price data of the time period that we actually traded live, there has been a strong correlation between the entries and exits that the Excel took and the trades we actually took in the live market. Thus, definitely a good sign.
What did I learn? Looking back over the last 2-3 months I am realising that I have progressed quite a lot in my overall trading competence, even though I have not really been trading live (well, other than monitoring an automated strategy). My confidence has increased, my skill set has increased and my approach to trading has also changed.
Change in my approach to trading – Certainly if the Aussie team were to tell me that they were to pack up our little project tomorrow, my attitude and method for going about my trading would be significantly different to what it was in say September. How would it change? The role of testing would become an important one. And I would try to introduce more automation in my execution. Both of these change should also significantly decrease potential negative psychological impacts. Note I said “decrease”, not “eliminate”.
Back-testing & Data Analysis – Recall at the beginning of October I had said that it would be necessary for me to step back and test K7 in order to bolster my trading confidence. Well, since I have gotten a lot more than I had asked for, even though the journey to getting this extra confidence may have been very different than anticipated.
I’ve also realised that rigorously back-testing strategy, for me at least, does a huge job towards trading it with less emotion, and for handling losing streaks. It’s also important to continue to compare theoretical performance and live performance over the live trading periods. Surely I have to conclude that, on average, emotional influences will have a negative/adverse impact on my trading performance. Thus I should try to minimise it. Thanks to my trading coach, I did complete a discipline exercise in 2013, but it’s seems with a real-life trading strategy, discipline is slightly more difficult.
Automated Execution – I am also coming to think that in the future I will make a bigger effort at automating the execution of strategies, rather than trading everything manually. Concentration and judgement can wane significantly throughout a session. Regardless whether it’s trend-following, mean-reversion, strength & weakness, round numbers or momentum.
All that said, I leave you with this quote from yours truly – which seemed to indicate a good progression and milestone: