Interviews Member Profile: robster970

My Background
So my real name is Rob but you don’t have to be a brain surgeon to figure that one out. Also, if you are feeling particularly ‘Miss Marple’, you may have concluded from my handle that I was born in 1970, therefore making me fairly middle aged. Married, 2 children, dog, some chickens, living in a semi-rural location. Work wise I am lucky as I get to choose what I want to do. I do management consultancy/interim management work in my specialist subject of Internet/Telecommunications/Software when I feel like it. I trade when I feel like it. I tend to do one or the other and not both at the same time.

Currently I am on a (roughly) one year assignment somewhere in Europe running a business unit in a turnaround situation for a multinational corporation. Probably when that finishes, I’ll return back to full time trading for a year or so until I get bored again and somebody rings me up for some help. Or maybe I won’t. I stopped trying to predict the future a few years ago. Nevertheless, this lifestyle solves a problem for me: the solitude of trading vs the human contact I crave as a relatively social individual. I also love working in technology. I always have done and will always continue to do so. I have played a part in many developments which are central to 100’s of millions of people’s lives and that is a great buzz and something I can tell my kids and grandkids about with pride. Also, if I am frank, I am better at building businesses and selling them than I am at trading but I will come onto that shortly. Outside of that, no more clues on my real identity. I value my privacy.

Trading - the early years
I am lucky. I have friends that work in the finance industry who have helped me. It started one evening in February 2009 in earnest in a pub just off Bishopsgate. My friend had been in New York during the Lehman Brothers collapse working for another of the IB’s, trying to stop them from getting taken out too. He seemed happy to be the other side of the main trouble but slightly burnt out and I asked him what the previous nine months had been like. He recounted some of the pressures he had faced and they seemed absurdly huge. It was the first time I got a sense of the enormity of his job. I then asked him towards the end of the night whether I could code something up which would trade automatically. He looked at me and said, “You? Yeah, easy. Just stay within a 3 month timeframe as it all gets very macro outside this”. And that was it.

I wrote a basic trend following system specifically to trade UK equities. It did well for about four months and I thought this was easy. The market then traded sideways and I got chewed up. Not so easy eh? I then concluded the only way I was going to be able to code something up was by learning to trade myself and, since then, I have realised that automated trading is not for me. It took me some time to find the market for me. My market is the S&P500 E-Mini. It suits my personality and I have a healthy respect for what it can do to people.

I have made every mistake in the book. Twice. Sometimes more. I have blown an account. I have traded way too big for my head to handle. I have
Martingaled, held losers and cut winners. I have had some spectacular single trade losses; the kind that just make you question whether you should even be allowed near a market ever again.

Eventually I iterated towards intraday trading and realised I was ok at it. I had a good feel for it but lacked patience and would often bail on good trades too early. Eventually it settled down to maybe one or two trades per intraday session. I have been profitable for a few years now but stability in returns has only really come in over the last two years or so. I think it is maturity as a trader rather than as an individual that facilitated this – there is a difference. Someone sage told me you need about six years apprenticeship in this game. I can see that now. At the time it sounded absurd.


Trading now
Essentially I am looking for one of two things on an intraday basis on ES:


  1. Auction rotations that are strong tests for value and then fading them when it gets sticky in a high value area (where lots of people have already traded). These usually result in big return moves.

  1. Movement from one value area to another on a more sedate basis.

It is usually done with a Depth of Market price ladder (DOM), Time & Sales (T&S) and charts with plenty of volume profiles/market delta on screen. All naked. A few MAs to see where the trend followers come in but often that is coincidental with S&R too. No surprises there.

I also augment the above with some quantitative analysis where I pipe in the data feed directly into ‘R’ (programming language) and do some real time processing on auction rotation sizes, volatility, etc. to look at how it is distributed. This also helps filter out some trades which might look attractive but aren’t really. These are my early attempts at automating some aspects of my trading.

Some days I get a couple of trades, other days nothing happens. Average is about one trade per day per session. Basically I am a lot more selective now than I used to be and prepared to hold for longer periods. I am reminded of the phrase, “What gets you in, gets you out” which resonates strongly for me.

Future plans
I am conscious of two things and the conflict they cause in my mind:


  1. Methods are likely to change as market structure changes over time. This means I am always looking for things that will be phased in as my current methods become less effective. Always work in progress.

  1. Solid methods stand the test of time.

As a discretionary trader I generally believe that what I do will flow with the market over time. Maybe I make small imperceptible changes every day that keep me in the game. I’m not sure how it works but I do know that continued effort, dedication and analysis pays dividends. Even now, whilst I am on secondment fixing somebody else’s problems, I take a look every day at what is going on. I always have an opinion. I am always ready to participate. It’s like learning to ride a bike – I don’t think you can unlearn it.

So I feel relaxed about the future and the uncertainty it may hold for me.


Tips to pass on
I would probably summarise this in a rather simple way:


  1. Don’t do this unless you really are dedicated to it. This is not a get rich quick scheme. I think I’m a smart guy but my god, this was hard.

  2. Make sure you have money to lose. You will lose it. It is the cost of your education.

  3. Only do this if you get rock solid support from your partner.

  4. Everything you need to know to trade is right in front of your eyes. Fade the herd. Do the opposite of what they are doing on T2W. Learn your market and understand why it is there, who is in it and why they are in it.

  5. You are providing a service to other traders in your market and if you are successful, you will be rewarded for it. What service do you provide in your market? Once you know this, then you have something to work with.

  6. Learning to trade = learning about yourself and your limitations. Be prepared to put work into yourself as well.

Finally . . .
Money does not buy you happiness. It does buy you choices though. Not all choices are good. You learn that with experience too.
 
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Great read and thank you for your article. Certainly can relate to the 6 years and cost of education learning about trading and top tips and advice.
I'm not sure if it is mellow out with age or cost of education that makes one a better trader. Little bit of both perhaps. Certainly not a quick road to riches.

:)
 
luvly jubly
 

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Very illuminating article.
And very insightful.
Can relate to many of the sentiments expressed about the effort needed to get consistent.
(y)
 
A great article with some top tips from a very bright guy - Good Luck with what ever you carry on doing - I am trying to work out who you are now via my "vulture capitalist" contacts ;-) but if I do - I will keep it a secret ;-)

Regards

F
 
Hard work, but it pays off..

Nice story. I agree, trading requires lot's of hard work and dedication. You must constantly keep learning to improve your skills. But if you have the passion, discipline and the capital to invest, there is nothing better else out there.
 
Lovely insights, funny but I sort of saw the six years interval as well from the start to finish. I wish I met that sage a few years earlier. And I second the thought that support from the partner is another key as well. Make or break truly.

Best of luck
 
I take me hat off to you sir. I find it tough enough staying ahead of the game being in it year in year out. I'm pretty sure I'd lose me touch if I took time out to follow other projects. But that's me. You're made of finer stuff for sure. Good story and well told. Good luck with your current venture.
 
Top stuff, Rob, so as you might say yourself...................
 

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Many of the observations also resonate with me, particularly regarding the mistakes made and also the last paragraph. Cheers John
 
Disappointed

I haven't been reading here lately and I received an email about this interview. Since Rob is a programmer (I am, too) I thought I might get some real insight about programming a winning system. I didn't. In the end it appears that Rob tried and couldn't make it work either. I have been programming for 17 years and I was a CPA for 15 years before that, so if anyone should be able to program a winning system I would give myself a good shot. It can't be done. I won't argue it if others disagree. If you want to believe it, go ahead. If you say it has worked for you, I can't disprove it, but almost everyone who says they have a system that can beat the market has something they want to sell. I have tried to program different markets with all types of systems imaginable over the last 15 years. All come back to zero given enough time. You can have a winning system for a few months, but if you want to make a living trading won't work. If you have been beating the market trading you are on borrowed time. As so many academics have proved, and I did not want to believe, the market is a random walk. Get out before you lose all your money.
 
Thank you for all the nice feedback folks - appreciate it and I sincerely hope you found the little essay useful.

I take me hat off to you sir. I find it tough enough staying ahead of the game being in it year in year out. I'm pretty sure I'd lose me touch if I took time out to follow other projects.

TBH Pat, I am not sure if I am ahead of the game. I will know when I get back on the horse. I've traded intermittently this year and it does not seem to have affected anything by the looks of it but the honest answer is I just don't know yet.

I haven't been reading here lately and I received an email about this interview. Since Rob is a programmer (I am, too) I thought I might get some real insight about programming a winning system. I didn't. In the end it appears that Rob tried and couldn't make it work either.

There are only two people I came across on these boards who I think made it work: Liquid Validity and Random12345. My assessment is the same as yours if you do not have a quantitative background.
 
I thought I might get some real insight about programming a winning system

It depends on what you mean by a "winning system". Some of us here were fortunate enough to see a former member of T2W trade live at his home using an automated apporach that had an astonishingly high profit. It was not used to trade a single instrument but basket traded a whole series at the same time. I remember seeing it in action and pointed out that some of the instruments traded had gone into loss immediately to which he said it doesn't matter because it is the overall net position that mattered and he was right. He made over $2K in profit on that day alone and it was not uncommon for him to have 15 profitable days in a row. Of course although we knew the key elements of how he did it but not how it actually worked.
 
It depends on what you mean by a "winning system". Some of us here were fortunate enough to see a former member of T2W trade live at his home using an automated apporach that had an astonishingly high profit. It was not used to trade a single instrument but basket traded a whole series at the same time. I remember seeing it in action and pointed out that some of the instruments traded had gone into loss immediately to which he said it doesn't matter because it is the overall net position that mattered and he was right. He made over $2K in profit on that day alone and it was not uncommon for him to have 15 profitable days in a row. Of course although we knew the key elements of how he did it but not how it actually worked.

Yes that's right. For numerous reasons I came to the conclusion long ago that multiple instruments was the way to go. It's more complex to do though, which is probably the reason why most shy away.
 
You would need either programming skills or access to someone who has them to implement this in my view. In the above case there were around 10 simultaneous trades placed at exactly the same time which is just not possible as a lone trader and all trades were closed automatically as well.
 
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