Jul 15, 20225 min read

Systematic trading is the key to success 1/12

Systematic Trading

I will never forget countless wasted evenings after work. I was sitting in front of the screen, looking at a chart with price data, watching the CCI ( Commodity Channel Index) indicator combined with a moving average.

I had opened Excel on the second screen, into which I recorded both entry and exit signals applied to the historical data of the E-mini SP 500 market. You know, I thought I had a great strategy because I trusted my trading “guru.” Of course, I had already paid for his training, so I believed him because I wanted to. Seeing things retrospectively, it was a very primitive and incredibly naive activity.

I may have spent hundreds of hours with a good feeling that I am finally doing something that will bear fruit in the form of consistent and incredible profits. I was around 25 years old, it was 2010, and my motivation to prove something in my life was at its maximum. My ego starved for success. But I had no idea how long and difficult the journey will be. Classical beginner syndrome, right?

When I went through the same data and did the manual backtest again, to my concern, I found that I was writing down completely different entry and exit prices of individual trades than in the first case. I felt so desperate. If I cannot reproduce a backtest with obviously the same trades, how can I perform any relevant backtest at all?

Admitting that I threw money from a window for paid training and I lost countless hours over something that I cannot reproduce wasn’t really a good feeling. It was hard to realize that I screwed up. Fortunately, I didn’t have any saved capital for trading at that time, so I did not lose it. If I have had money, I would have lost it all.

Trading platform

Luckily, I did not give up and became interested in the TradeStation platform, which has the EasyLanguage programming language. I downloaded a two-month trial version of the software from the Internet, bought the first books on the basics of EasyLanguage (TradeStation proprietary trading programming language).

Within a few weeks, I programmed the trading guru strategy presented to me as a money machine. To my dismay, I found that it doesn’t work in basically any market. It took me many months to write trades to the spreadsheet manually. But suddenly, I was able to verify if a strategy works not in one but many markets in a matter of seconds. I was facing the truth, and my motivation to trade has multiplied. But with one addition: To start focusing on algorithmic trading.

It is 2020. It’s October, and we have a typical autumn day, the sun shining through the window, and the coronavirus is raging around the world, especially in the Czech Republic where I live. The strategies that I have worked hard to build over the years of practice have offered incredible returns this year.

The reason is that they can take advantage of market volatility. The world is in the worst crisis since 1929, and you feel a little weird because your strategies are the winning ones. I am writing the introductory words of this book, and I am captivated by nostalgia. How hard was it to get to this point?

From the first steps and studies in trading, I have come through a long thorny path, from live algorithmic trading since 2013 to the establishment of a hedge fund, the management of millions of dollars, and the execution of thousands of trades in the form of programmed codes.

My motivation to write this is clear. I want to show people engaged in algorithmic trading, or are yet only thinking about this field, how unique it is, and what possibilities, compared to discretionary trading, it offers. I focus on topics from your inner motivation, through the right choice of markets, programming language, backtest, stress tests, strategy robustness to the concept of portfolio diversification, trading of several strategies, which algorithmic trading allows.

It is not a book about codes, specific strategies, miraculous indicators (which, by the way, do not exist). Not that. No cheap talk about guaranteed strategies. I come up with my perspective and methodologies that are based on facts and a scientific approach. I come here with concepts that can open your eyes. And if only one of you decides that discretionary trading is the past for you, I have fulfilled my task.

At tradewithscience.com, we will continue by sharing more and more concepts, ideas, and practices with you. Our mission is clear: To show you the way and give you a clear direction for the way you choose to go. Either you want to stay in the uncertain waters of discretionary trading, where you will always lack relevant evidence and facts that the given “guaranteed strategies” work.

Or you want to take the path of uncompromising and fact-based algorithmic trading. There is no room for doubt, you are forced to face the reality of backtesting and live trading results every day. You can fool the mind. But not the code. It is given, and no mind, ego, or illusion of easily acquired wealth can change it.

I will leave the decision entirely to you. But before you do, please read this book. Maybe it will help you go in the right direction. After all, the “right direction” can also be that algorithmic trading does not appeal to you. We each have our free will. I would only be grateful at the beginning of my trading journey if someone provided me this book.

Then I certainly wouldn’t play with my primitive and naive signals trying to defeat Goliath. David and Goliath is a fairy tale. But the world of trading is a cruel reality. If the best of the best (hedge funds), which have a team of Goliaths, use the machine precision and implacable algorithmic trading, you should pay attention to that as well.

You should make a relevant decision and face reality. I truly believe that this book is here for your basic need: your motivation to keep going with the best of what currently the world of trading offers us. If that’s the case…

Grab our Ultimate Guide To Algorithmic Trading Book here and have a nice reading! 12 chapters, 112 pages: all in one place and completely FREE of charge!

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Systematic trading is the key to success 1/12