Having owned several businesses, I can also say that trading is even more liberating than being self-employed. If your small business requires interaction with customers (and whose don't?) or if you hired some employees to help with the work, then you've now got that "burden" which does not exist when you are trading.
So, why is it that many traders want to take this incredibly desirable job and put it on auto-pilot? Yes, I am referring to automated strategies. I believe that most people looking to automated strategies for success are doing it for all the wrong reasons.
- Can't watch every setup, miss some setups because I was afraid to pull the trigger
- Program my strategy to follow my own rules precisely, because I can't be trusted to it discretionary
First, why do you care about missing some setups? How greedy are you? Or maybe more accurately, you missed good setups because you didn't pull the trigger and now you require more setups or maybe more excuses to trade. You need to be honest with yourself. Do you want to make $500 a day? $1000 a day? Fine, no problem. Those are my goals as well and they are completely realistic and can be accomplished with only a very small number of trades each day, usually just 2 or 3, for a couple points each. Don't be afraid to trade more contracts once you have a proven system. Usually people are only afraid to trade higher numbers of contracts because they have a pattern of losing. If you can't make money with 2 contracts then you aren't going to make it with 10.
Don't concern yourself with missing trades because really there are plenty of trades out there. Focus on being consistently profitable with two to three trades a day. Usually these trades can be had before lunch time, so you don't need to be glued in front of your computer the entire day, just 3 hours of it. If that is too much trouble then I think you are in the wrong profession, but please stay and keep trading so I can be on the other end of your trades.
Second, automation has the appeal of being able to follow strict rules you set forth in your strategy. Most people go down this road because they couldn't be trusted to follow their own rules in live trading. Sure, their rules work fantastic when they look at a historical chart. But when they sat down at their desk and started to trade, all those rules vanished into thin air. At least they've come far enough down the road to realize the problem is looking them squarely in the mirror, and they stopped blaming it on the market.
Automated strategies are great at following rules. But they introduce a whole set of new problems which are nearly impossible to overcome. We know that 90% of traders lose money, and 10% take all 90% of the losers money. Now when you automate those odds are even more against you. Take it from someone who spent over a year, 8-12 hours a day, working on incredibly complex strategies.
Instead of focusing all of your energy on automating, why not focus on correcting the reasons you can't follow your own rules? I think it is fair to say most people who develop automated strategies already have a very strict idea in mind, a strict set of rules and principles to follow. They just can't follow them. So that is the real problem here, and that problem is far simpler to solve than making an automated strategy work.
Do automated strategies exist that make money? Of course. In fact, each year more and more of the market is traded with automated strategies. But should that really surprise you? Each year, are there more people in this world or less? Each year, are more individuals trading the markets or less? So just because more automation exists in the market doesn't mean that overall these strategies are making money. They fall into the same 90% losers, 10% winners as the rest of the market.
My advice is simple. Seek out other ways to tackle what you perceive as obstacles in your trading, whether they are emotional, lack of time, or greed.
What's your opinion? Let me know.