Turning a Trading Weakness Into a Strength

March 19, 2019

This story for me begins back in my futures trading days.

Back then, I embarked on a journey to learn how to be a trend following commodities trader, inspired by the famous Turtle Traders story. I fully immersed myself in the philosophies of trend following and the nuts-n-bolts of how to execute as faithfully to the original core strategy as I could.

I devoured every book, article, interview, and video that I could find on anyone and anything connected to the Turtles or trend following. Naturally, I came across Michael Covel’s work on the subject and he became a tremendous resource for me. It was an exciting time in my trading career. It was as if a light bulb went off in my head and I was seeing things clearly for the very first time.

After building, testing, revising, then paper trading my strategies for some time, I then launched a small hedge fund to put my money where my mouth was. And it went very well! In fact, I returned 58% to my investors AFTER MY PERFORMANCE FEES in just 18 months before closing the fund down due to external forces. Needless to say, I was hooked on the idea of being a strategy and system-based trader versus the shoot-from-the-hip day trader I was in the equities market in years previous.

However, what happened next I wouldn’t wish on anyone.

I jumped deep down the rabbit hole of devising and developing new strategies on short and intraday timeframes. I was convinced I can come up with world beating trading plans.

Due to the fact that I’ve never been very computer savvy beyond the basics, I brainstormed trading strategies and then backtested them by hand — tick-by-agonizing-tick — as far back as I could until my eyeballs bled. And then I forward-tested a bit. At this point I either went back to the drawing board and started over with a small tweak, scrapped the whole plan and started over from scratch, or went forward and committed real capital to the strategy. And if I was lucky, the strategy would work for a while… until it didn’t.

And then I was back to square one.

Smarter people than me call this circle of insanity “Style-” or “Strategy Drift.”

This process has in one form another repeated itself over and over for the rest of my career.

I don’t know where I continually found the resolve to get back up off the floor after being kicked in the mouth by Mr. Market time and time again. There were numerous times I looked into the abyss and said to myself: “It’s over. It’s time to give up.” Yet, for some reason I kept dusting myself off and headed back into the salt mine for another round of punishment. Am I a masochist? To this day, I still ask myself this question. And I don’t have a good answer other than blind stubbornness.

I wanted to lay all this out there as a backdrop for why I’m very excited for what’s coming…

On the eve of Trade Ideas’ upcoming release of auto-trading for our AI engine HOLLY, it is a good time to reflect on why HOLLY is a powerful game-changer for both Pro and novice traders, and anyone who has gone through a similar trajectory as me.

HOLLY is an engine powered by approximately 70 base strategies developed by the trading experts at Trade Ideas, LLC. These strategies cover scenarios for all types of market environments: bullish, bearish, trending, choppy, volatile, docile, etc. And these strategies are continually being tweaked and optimized not by humans, but by powerful computers that are continually “learning” the market and adapting to the current environment.

Trade Ideas servers, on a nightly basis, are going through the same motions I used to go through — only without the emotions, baggage, biases, physical limitations, and exhaustion this human was constantly bringing to the process. And it’s being accomplished thousands or millions of times faster than I ever could’ve done by hand!

Not only is HOLLY tweaking nearly 70 strategies nightly, but the system is analyzing market conditions and only setting a handful of all her strategies to be active on the next trading day. This arms the trader with only the strategies that should match up best with today’s market action.

An unemotional, statistically driven trading assistant serving you only the best of the best each trading day. How much would you pay to have such a person working for you?

Imagine all the pain and anguish I could’ve avoided if I had this available to me early in my trading career? I shudder to think.

The team at Trade Ideas is very proud of the HOLLY AI system that is now over three years old. And in coming days, Trade Ideas customers will have the ability to remove yet another constraint from their process — execution.

Instead of manually entering and exiting positions and calculating position sizing on the fly, customers will now have the option to automate this entire process, exact to our own custom risk-management specifications. And while we certainly won’t encourage users to just turn it on and leave the office for the rest of the day, it will be an absolute game-changer to be able to watch the system execute with our best intentions — efficiently and un-emotionally — while we stand by to take discretionary action wherever necessary.

The future is exciting. I wish I could have my lost years back…

~ @chicagosean

If you’d like to learn more about Trade Ideas HOLLY AI, head here.