In my last blog I talked about how easy it is to get distracted from “THE GOAL.” As traders, our goal is not to have a high winning percentage, a low risk/reward ratio, low drawdown, or a high rate of return. Our goal is simply to make money! While there are many useful performance indicators like those just mentioned that can help us assess our progress and characterize our trading style, the bottom line is that we are in it for the money, not good performance indicators. What people often say about opinions is also true about performance indicators (no not the reference from the film Full Metal Jacket), that good performance indicators and five bucks might get you a cup of coffee.
Today I want to talk about automated traders verses manual traders and how labels can distract us from THE GOAL. I spend the majority of my time running automated strategies and if I had to characterize myself as a trader in a few words, I would say that I am an automated currency trader. I have chosen to pursue automated trading because sitting in front of a computer all day is not consistent with my lifestyle and because I enjoy coding, troubleshooting, and testing. I would consider this part of my identity as a trader. However, I do not trade for the sake of being an automated trader, I trade to strive towards THE GOAL. Things traders sometimes say about automated trading can tend to contradict THE GOAL. Things like “why don’t you just let the system work?”, “taking manual trades defeats the whole purpose”, or “why are you taking manual trades if you are an automated trader?” These quotes all hint that the speaker may be distracted from THE GOAL. I wouldn’t call those who say things like this “haters” (well maybe some of them) but notice in this previous statement that I used some soft words like “ hint” and “ maybe distracted...” This is because nothing is black and white, there are a lot of gray areas in defining your own personal trading strategy. It is entirely true that if you intervene too often in your automated trading system you will not be getting good data to assess the system’s performance. However, one should not blow up their account or even get anywhere near that point just to be true to the title of automated trader or for the purpose of getting quality data. It is not as if there is some eternal struggle between manual and automated traders and one must maintain true to the automated trading cause or the world will end in a fiery inferno. Trading isn’t about labels and living up to them, just like for any other business it is about what brings you closer to THE GOAL. If someone is running an automated system that is profitable only because they are intervening frequently, then that is not a problem at all and it is consistent with THE GOAL. This scenario is certainly better than not intervening and not being profitable or scrapping the trading system altogether because it is not purely automated. For another person, frequent intervention may be a challenge because they are unable to monitor their accounts on a frequent enough basis and thus they are not achieving THE GOAL. In that case, they might consider making changes to the system or looking for a new one that better suits their lifestyle. Let’s take a journey to fantasyland for a second. If someone really has built an automated trading system that doesn’t need human involvement, whether it be some manual trades or just tweaking of settings on a regular basis, then they have found the Holy Grail. As long as they have some money to put into it to begin multiplying, they will become wealthy. Does this sound almost too good to be true? If so, what does that say about it? While possession of the Holy Grail of trading systems would certainly make achieving THE GOAL easy, it itself is still not THE GOAL. Given the lottery-esque odds that I, one of my associates, or even someone that I sort of know will develop, purchase, or see the Holy Grail, finding it should not be my goal as I would be likely to only find disappointment. However, if my goal is making as much money as I possibly can in a legal and ethical way that involves some work, then I think I might have a chance of achieving THE GOAL. Goals should evolve. After implementing a profitable trading system, one’s goal should change, maybe to modify the system so that it doesn’t need intervention as frequently or maybe working to raise the profit factor of the system while maintaining the same frequency of intervention. In both of these instances, THE GOAL remains the same, “to make money” but the trader may change the way they are achieving it, spending less time for the same money or spending the same amount of time for more money. The path you choose to pursue THE GOAL is your choice and yours alone but THE GOAL is ultimately the same for everyone.
Recommended Further Reading: The Goal , Trading in The Zone
