my journal

Watching movies and automated trading, movies and life... the two things are so different. Money doesn't grow just because I am feeling good today. Maybe that works with discretionary trading. With automated trading systems can make money on a day you're depressed, and can lose money on a day you're feeling good. I've lived my whole life expecting to be in a movie, and yet it's different. Unless I am doing everything right profit doesn't come, and even if I am, I could still incur in a drawdown. Some discretionary traders make money every day. I guess for them it's different. It could lead them to think they were chosen by god to have a happy life. I think it's the case with some people: they have the right mind for discretionary trading: they don't need much training. And for others like me, there's no training or knowledge that will enable them to make money. I just have the tendency to do a series of wrong things, and I can't fix it, just like I can't become an extrovert if I am an introvert or viceversa.

Ok, finally some action. I've been watching another comedy "almost heroes", with Perry and Farley, which is not famous nor successful, nor extremely funny, but it's original and puts you in a good mood. And in the meanwhile my systems made two trades. LONG on the GBP and SHORT on the JPY. Let's hope to finally see some profit, after losing 5000 in my last three trading days. Today is a half trading day (only intraday), due to the modifications made after reviewing the time zones to restrict trading to.

Ok, after just a few minutes the situation is reversed, and the GBP is the profitable one. These two are positively correlated and yet their positions are reversed, so this should lead me to expect that I will break even, except the JPY has much more leverage, and except that despite the positive correlation they rarely behave symmetrically or as I expect them to. My predictions are usually wrong. So I can just let them run and watch as a spectator - which I should have understood a year and a half ago. Anyway, today is my 26th day without making a discretionary trade. Let's celebrate: good job, travis.

Ok, they are going further into the direction of the previous snapshot. As I said leverage of the two futures is different, and they are positively correlated and have reversed positions, so the GBP should rise in profit and the JPY should fall in profit. It's happening, and what's also happening as expected is that the JPY position is losing more than what the GBP position is making.

So today is my fourth day of losses in a row, but I am ok, first, because I am used to losing a few hundreds, second, because it's not finished yet, and I've seen big changes. However, it's not looking too good, either. So I am not that happy of course. I have seen my capital go from 14k to 9k, and now it's dropping to 8k. Not too good. But I am following my system, entirely, so I know that's good in itself. And certainly I don't have that strong feeling of guilt that's associated with discretionary trading losses. I feel ok. I've lost 5300 so far in the past 4 days, but I feel ok.

That's the beauty of automated trading. With discretionary trading, I felt guilty when I lost money, because I felt it was entirely my fault. With automated trading, I feel guilty for making money because I don't feel I worked for it. This feeling of guilt would be dangerous, but since I don't have to trade, it will not be transformed into losses.

Wanna know how I am doing now? Click on the thumbnail, as usual. Now I am losing on both... this shouldn't last. That I can definitely be positive about. Not 100%, but highly confident that I won't lose on both. We will see the end of these two trades in many hours anyway (time-based exit). Now I'll go back to watching "Almost Heroes", just in time before the dumb maid comes, so I can pretend I am sleeping and she doesn't get me involved into doing damage to my own house. Rule #1: stay as far as possible from dumb people.

There you go, another update. Amazingly, as usual, it went where I'd never expect it to go. Now the JPY is losing less, and the GBP is making more. Given the settings, one would expect, with the GBP increasing profit, the JPY to lose even more, but it's not happening. There are forces at play that I ignore. But statistics know what's convenient, and my systems incorporate 10 years of statistics. I could never keep in my mind and weigh properly what statistics say, but systems can.

Look, now I am actually making money again. Isn't that amazing? Half an hour ago, with these same two positions, reversed, I was losing 400 dollars, and now I am at breakeven. And yet they are inversely correlated (since one is long and one is short). So this means that even though the two futures consist of JPY and GBP against the dollar, they don't move exactly together, and that of course we knew, but we didn't know exactly how much. This knowledge should make me build more systems on JPY vs EUR, and EUR vs GBP, etc., but the problem of those futures is that they are not liquid enough. Explaining these things here may seem like a repetition, and useless, but it forces me to double check everything I do, repeating and reasoning out loud, explaining to myself and others what I do, and, as you saw yesterday, sometimes I find out I am doing something wrong. So it is useful. Even posting pictures of these ongoing trades is useful. I will be asked questions, and answering them will force me to reason more. Reasoning that I would not otherwise do.

I wouldn't be surprised if at the end of the day, when these two positions get closed, I'll be making money on both. Statistically I have a lot on my side, as much as possible. Yes, with these statistics on my side I lost 5000 last week. But in the long run it should work out. All automated traders agree that the past repeats itself. And discretionary traders do, too, whether they admit it or not.