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Monkeys or
After working with thousands of traders, I have seen many problems they encounter. The problem I have seen so often is 2 traders sitting beside each other trading the same strategy on the same market, at the same time with the same understanding,
and they will have different results. Now, you may ask how that can be. It comes down to EXECUTION. They execute their trading differently. One may enter early, while another waits and enters later.
I have been asked so many times why someone waited to take the trade. I usually get something like; I just wanted to make sure this trade was a good one. They don’t see the fact which is, by the time they realize it is a winning trade, it’s all over. You can’t go back and enter where you should have.
Reasons are many for this hesitation. Fear is one reason, along with apprehension, uncertainty, lack of confidence and the list goes on. That’s why I came up with the Monkeys.
Yes, the Monkeys. I was moderating one time and mentioned how easy trading was and that it was so easy, a Monkey could do it. The name stuck. Today, the Monkeys are a computer program that execute the strategies for you. The Monkeys run automated trading strategies for you while you watch. You let the Monkey deal with the stress of executing the strategy to near perfection
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Monkeys don’t realize what is at stake. They don’t listen to news, and they don’t talk themselves out of trades that should be taken or make up trades they should not be taking. They only execute the strategy to near perfection.
Now you can also hire someone. You can teach them the strategy, and let them execute the strategy for you. Now, they can to a great extent, execute better than you if you have issues. But, they still have other problems. They get sick, distracted, fatigued, take breaks, and more which all lead to missing trades. Every missed trade means you are trading that strategy differently. Also how long will they stay before they go on to trade for themselves? How much do you have to pay someone who is trading your money? And can you really trust them?
We as humans have this deep desire to fix things until they stop working. We always think we can make it better or even perfect. The problem is we are in an environment that doesn’t allow for perfection. There in lies the dichotomy. We are trying to fit a square peg into a round hole that is too small.
Meet Ned Noggin Knocker. Does he look familiar? He may remind you of your trading style. I know
him & I picture him when I moderate to the many traders who need a trade so bad since they haven’t traded for almost 15 minutes. Now, Ned here could have just missed a trade because he wasn’t paying attention, or he could have just jumped in on a trade he shouldn’t have because he just needed that fix. But this time, it was different. He used tighter stops because he was making up the trades. There is always an excuse. But, we can plainly see the results of his not following the plan.
Ned will eventually hire a Monkey if he doesn’t run out of money before hand. So, who do you want to be trading your money?
Ned Noggin Knocker or Mellow Monkey?
Decisions, decisions, decisions...
Mellow Monkey or Ned Noggin Knocker?
It's your money...
When it comes to strategy performance, we don’t know how anything will work in the future. We can only see how it has done so far in the past. Now, some of these Monkeys have a record for a few years, and some go back decades. If you can’t beat them, then you may need to join them. Do you have numbers as good as they do? If traders continue to jump from strategy to strategy as soon as the strategy drops off a little, then you may be condemning yourself to draining your account until it is depleted. You will not be around for the winning periods but only for the draw downs.
Over the years, traders have modified strategies in hopes of improving performance. No matter what you do to a strategy, it still changes the end result. It is not certain whether it will do better or worse, but the final outcome must be different. Sometimes the outcome is by accident and other times intentional, but there is always an impact on the result.
Some have come up with waiting for a few losses before trading. Some have used a moving average on the equity curve to help decide which trades to use. This changes what you are trading. The results have to be different. It could be better or worse. Have the biggest losers & miss the biggest winners. Wins & losses are not linear, and you can be getting big losers & small winners. So what is a winning strategy on a controlled basis is now manipulated into a losing strategy through an attempt to improve it.
The stop and go of trading strategies can also be a costly mistake. As you can see, some have flat spots that can run for months or even years. But over the long haul, they seem to come through. Traders today are too quick to drop a strategy after a few losses. If you are looking at the long term benefits, then you need to stay with a strategy through the tough times.
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