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+9% in less than a month is not too shabby at all. Keep up the good work and I'll be checking in to see how your system works. I've been taking some pretty significant losses this month so my all in method is failing.

Hello Mark, I strongly share your thoughts about Rationales and the effort to create them. I think every trader here should read what you have to say about them.



Before Covestor launched the Rationales feature, I actually made a case against doing so, because it invites incorporating ones own biases into a trade, which is one of the Behavioral Finance deadly sins, and in the process gives the impression that those biases are somehow relevant. From time to time, this has caused my trading to deteriorate. By the way, my current performance here doesn’t include my options trades. My chart doesn’t look like the top performers, but I’ve been in the black most of the time here, and am currently up 5.2% from when I joined.



My listing of the pieces that I do mention are just a snapshot at the moment that I enter a trade, but as I’ve mentioned elsewhere here, once I’m in a trade, I consider all prior conditions to be ancient history and therefore irrelevant. I enter a trade because the Voices (my system signals) tell me to, and exit for the same reason.



I make an effort never to read any story about a given company, but do occasionally slip, and that generally costs me! I do, however, read a great deal about trading concepts, and think this is the one area where a purely technical trader such as yourself has a lot to offer.



I came to this Covestor experience with an effort, in principle, to be a purely technical trader, or perhaps more strictly speaking, purely automatic, since I give a nod as a precondition to fundamentals, especially low value ratios, and secondarily, to growth criteria. But since those have already been sliced and diced by every website out there, I don’t really see the point in my own in depth analysis of any company’s fundamentals.



And I can understand any trader wanting to keep their own particular algorithms to themselves. I’m also keeping the details of my system to myself. But apart from the specific details of my program, I think there are some broad areas that are worth commenting on about trading in general. As you go along here, any ideas that you care to share would be of interest. Thanks!



Don

Hey Don,



Thanks for writing. Little did I know last weekend when I wrote that comment that my “9% gain” since inception was about to become a 9% LOSS – in a matter of days! So I’m nursing my wounds, hiding from all rationales or commentary altogether (yes reneged on my promise to post even a weekly summary), and have gone back into the testing lab. Interesting that my paradigm over the last 4 years – (1) breakthrough discovery of another “Holy Grail” algorithm thru backtesting; (2) initial, exciting success; (3) nosedive, losing all profits and then some – played out to a T at Covester.com as well.



The good thing about Covestor is that when you lose, it means you’ve actually lost real cash in our own brokerage account. I don’t mean it’s good that you lost money, but it’s good that the real losses keep you honest. At Collective2, where you can actually get subscribers who pay for your signals, you can be as reckless as you want because the company isn’t verifying the vendor’s equity. Winning is only on paper, and so is losing. But for the subscribers, everything is very, very real.



My equity line is going to look quite flat for a period of time while I test new theories. I’m thinking a lot about that paradigm I sketched out above, how THAT has been the only consistent thing about my trading. Well, perhaps I can stand the paradigm on its head? It’s kind of a contrarian strategy, but not contrarian as the trading business defines it. I’m experimenting with being contrarian about my own inclinations. About my own backtested Holy Grails. Whenever I come up with my group of trades based upon a favorite algorithm, I’ll just stand everything on its head and do the complete opposite. Maybe this will lead to the same results, maybe not. Maybe it’ll counteract some impulses that enter into my decisions a split second before I put the trades to bed. It’s the one thing I haven’t experimented with. For now, I’m trying things out in my Thinkorswim paper account.



You still believe in the technical approach and write eloquently about it. I also know that that is the only way for me. I don’t have the time or level of trust to do the research and make discretionary calls. Someone like Retire48 whom I’m tracking is an absolutely gifted stock picker – when I see his consistent results, I know that it’s possible to be that kind of trader. But the closest I’ll ever get to Retire48’s methodology is to become his subscriber someday, if that’s what it takes to make money in this game.



Thanks again for your thoughts and I’ll be watching your progress.



- Mark