The performance of live trades in my first year of operating Mindful Trader has offered a mixed bag of results.
On one hand, I had a return on account above 60% at one point mid-year. That might speak to the potential profitability of this trading approach.
On the other hand, my live trade results so far this year are well below the average back-tested return despite the market being up overall during the same period. Futures trades are the main culprit here and have dragged down my results. I have some thoughts about why that is the case:
A big factor is that it was my first year and I learned a lot of things along the way. It pains me to say it, but my return was affected by that learning curve. I learned about what I'm capable of (in terms of administering trades for the public) and I've learned a tremendous amount about what customers need from me.
One example of how this affected my live returns is that initially it wasn't always feasible to take every single trade while also managing the needs of the business. The times of day that the trades were happening were too spread out and the quantity of trading strategies being employed were too vast. This particular issue was specifically related to my futures trades. I just couldn't execute all the trades while also catering to customer needs and to my own limitations. As a result, I missed a number of profitable trades and my live performance deviated from the back test.
I made a change to fix this in September of 2021. I adjusted my futures trades to exclusively take place during US stock market hours. (Incidentally, re-working my strategies for this time frame also revealed some new strategies that I now incorporate.) I also narrowed down the number of my futures trading strategies to just seven core strategies. Things at this point are dramatically simplified while also catering to subscribers' needs better, and I'm now successfully executing every futures trade that comes out of the back test.
The market itself went up during my first year of operation, but it wasn't a typical bull market environment. There were a lot of volatility flashes along the way. It was almost paradoxical, like a fear-filled bull market. This didn't make for the best trading conditions for my trading approach, and looking back over 20+ years, it may be because the market condition wasn't typical.
Ultimately we can't control what the market gives us, and that's part of the challenge of trading. We might have a solid and academic game plan that potentially puts the odds in our favor over time, but that doesn't mean we can control the outcome. We also can't predict what will happen next in the market. So if the market hands us turbulence that causes losses, then it ends up being a test of our ability to stay the course and stick to the plan (which can be quite tough since there is real risk involved!). The back test simulates a trading approach that has no emotion and sticks to the plan, and my goal is to follow the back-tested approach through thick and thin.
I'm being aggressive with my trades. I'm pressing on the gas in an effort to amplify my returns. In some market conditions, the rewards of that approach might be exciting. But sometimes, pressing on the gas can have the opposite effect. When being aggressive doesn't result in a profit, it can feel frustrating and like a waste of time. But that's part of the risk involved, and we have to be willing to live through times like this in order to reap any potential long term rewards that this approach might offer.
There is also a risk that the back tests aren't giving a clear indication of what future live trading results will be. The fact that I had a 60% return part way through the year gives me optimism that we have something exciting here, but there are no guarantees and this is clearly risk associated with taking this trading approach.
If you have any questions, you can contact me any time.