In the world of trading, the term ‘trading signals’ can conjure different images depending on whom you ask. A steadfast contrarian might equate a trading signal to sell stocks with the presence of a bull on the cover of Time Magazine. In contrast, a committed technical analyst may scrutinize particular stochastic figures on a 30-minute bar chart to determine the perfect time to buy a particular stock. On the other end of the spectrum, a dedicated fundamental investor might perceive specific financial metrics of the underlying company as a signal.
Establishing a Usable Definition of Trading Signals
Despite the varying interpretations, I’d like to introduce a functional and practical definition of a trading signal. Let’s explore an instance of a trading signal that I find beneficial in navigating the trading terrain.
Consider any stock and review all the daily bars for the previous 10 days. Proceed by subtracting all the highs from the corresponding lows to obtain the daily ranges for each of these 10 daily bars. Now, compute the average range for these ten days, terming it the Average Daily Range. Subsequently, divide each daily range by two to derive the midpoint for each day. Following this, find the average midpoint for these 10 days, dubbing it the Average Midpoint. Then, add 125% of the Average Daily Range to the Average Midpoint to ascertain our trading signal to buy the next day.
In essence, we have generated a signal utilizing just two variables: Average Daily Range and Average Midpoint.
Constructing a Trading Signal Exit
The ways to exit this trade are numerous, but our goal is to maintain simplicity and restrict our parameters. We might want to set a stop loss on the average low and capitalize on profits at the average high plus 150% of the Average Daily Range.
Utilizing Market Momentum Theory in Trading Signals
While the goal of this article is not to design a trading system, it is to shed light on my perspective on what constitutes a valid trading signal. In my viewpoint, a trading signal should encompass the following traits:
A trading signal must be mathematically precise and definite.
It should be programmable into a computer, enabling the computer, not the trader, to track the relevant markets and alert the trader when the trading signal has been activated. This feature permits the trader to diversify and to trade multiple markets concurrently.
Lastly, the trading signal must be versatile enough to be tested in various market types and different market environments to affirm its accuracy and validity.
When used in this context, objective trading signals become the pillar of our trading system development and evolve into indispensable tools for profitable stock trading.
Implementing Trading Signals in Real-Time Trading
To better understand the application of these trading signals, check outJORDI FUSION—a trading system I’ve used for over a decade in real time, which utilizes trading signals analogous to the hypothetical ones discussed above. The rules outlined in this article influenced the design ofJORDI FUSION. For more insight, you can download my real-time performance of JORDI FUSION from the Home Page of this site. Additionally, I post a daily video of my trading experiences using these signals on the Home Page.
Embarking on the journey of finding the right trading signals can be challenging but rewarding. Good luck with your quest!
The Evolution of Trading Terminology: Trading Systems Vs Trading Strategies
OPPOSING DEFINITIONS OF STRATEGY AND SYSTEM.
By Robert Buran
Unraveling the Difference Between a Trading System and a Trading Strategy
This engaging narrative takes us back to a time, more than three decades ago, when government regulation shifted the way we understand the terminologies of ‘trading systems’ and ‘trading strategies.’
Interestingly, the phrase ‘Automated Trading Strategies’ records almost 10,000 searches per month on Google. This curiosity prompts a chuckle because, from a knowledgeable trader’s perspective, automation and strategy don’t quite mesh together.
Diving Into the Concept of Trading Strategy
When considering a trading strategy, traders typically have a broad approach. For instance, a trading strategy might look something like this:
Example of Trading Strategy: “I will target newly issued NASDAQ stocks priced under two dollars, planning to purchase during the initial price drop following an initial surge.”
Such a strategy takes a global perspective concerning actual market prices. It is more of an overall plan than a defined set of actions.
The Impossibility of Automating a Strategy
An important point to note is that strategies can’t be automated unless they’re explicitly defined, rather than being broad or general. Automation in trading necessitates specific market prices, and trading strategies are typically too vague to lend themselves to such precision.
Let me elaborate further on this point. If we take the previously mentioned example, “I will focus on newly issued NASDAQ stocks trading under two dollars and I will buy them on the first pull back after an initial price surge,” this can be transitioned into a more precise trading statement. Here’s how:
The Precision of a Trading System: An Example
A trading system, on the other hand, could take the following form:
This robot is confused because the stock chart does not have specific programmable rules that he can understand,
Example of a Trading System: “If the market is NASDAQ, and the average closing price over the past 10 days is less than $2, then if there is a price expansion on a daily bar, where the range of the expansion bar is three times the average range of the previous 10 daily bars, and if the high of the expansion bar exceeds the lowest low of the past 10 bars plus three times the average range of those 10 bars, then I will BUY if and when the price comes back to the high of the expansion bar minus half of the average range of the past 10 bars.”
The latter statement, albeit dense, brings with it precision. It is programmable and testable in any market. With the right software and a computer, one could theoretically test this system using millennia of daily bar data.
Understanding the Distinction: Trading System vs. Trading Strategy
This precise statement, however, no longer remains a strategy; it evolves into a TRADING SYSTEM. (For a more detailed analysis of this concept, please refer to my article, “Trading Signals.”)
In the typical sense, the term ‘trading strategy’ doesn’t apply to purchases at a specific price, and hence, it CANNOT BE AUTOMATED. This brings us to the puzzling question of what people expect when they search for “automated trading strategy” on Google.
When a trading approach has set rules defining the exact price at which a market should be bought or sold, it is called a TRADING SYSTEM and not a TRADING STRATEGY.
The Transition from ‘Trading System’ to ‘Trading Strategy’: The Influence of Government Regulation
Using Regulation and Control the Government forced a software company to abandon the words “Trading System” and use the word “Strategy” instead.
The evolution of the phrase ‘TRADING SYSTEM’ into ‘TRADING STRATEGY’ is an intriguing tale of how government regulations subtly altered the English language. In the early 1990s, regulatory bodies sought to expand their influence by mandating individuals offering market advice to register with the government. This process involved taking tests, paying fees, and submitting to government reviews and audits, subtly implying the censorship of ideas.
I chose not to register with the government and faced consequences around 1999 for publishing trading articles online. An arduous journey to Los Angeles, hours of testifying under oath, and $25,000 in attorney fees later, I managed to elude the grasp of government registration, regulation, and censorship.
A Shift in Terminology: Government Regulation and its Impact
Initially, government attempts at regulating the Internet, software, and newsletters containing market and trading information were noticeable. But legal challenges spearheaded by free speech advocates made the government retract and redefine ‘market advice.’ The new definition only included specific recommendations about the exact buying or selling price of a market.
To circumvent potential issues with governmental registration and regulation, the phrase TRADING STRATEGY became more prevalent than TRADING SYSTEM. Omega Research, now TradeStation Securities, one of the largest trading software developers based in Miami, played a significant role in this change. Around 1985, Omega introduced their first system development software called ‘SYSTEM WRITER.’ However, when the government began scrutinizing Omega, the company quickly removed any mention of ‘SYSTEM’ from its software, replacing it with ‘STRATEGY.’
Trading System or Trading Strategy: Understanding the Difference
The Robot cannot understand the strategy being read to him by the human because the strategy is too ambiguous.
Thus, ‘Trading System’ transitioned into ‘Trading Strategy.’ Most started using the term TRADING STRATEGY even when they were actually referring to TRADING SYSTEMS. I firmly believe that the phrase ‘trading strategy’ was essentially coined by Omega Research, serving as a practical euphemism for ‘trading system.’
This new terminology has stuck around and is now commonly used among traders. By 2023, the term ‘trading system’ has fallen out of common use, and many newer entrants in the field may not even grasp my critique’s essence.
In my opinion, using ‘strategy,’ especially in conjunction with ‘automated,’ is improper. You cannot automate a ‘trading strategy.’ Automation applies only to a ‘trading system.’
While our country and its government hold merit, this narrative remains a cautionary, somewhat amusing tale of the potency of government regulation. It shows how government power can not only change our language use but also enforce an improper use of language.
To reiterate, ‘Trading System’ and ‘Trading Strategy’ are distinct concepts. However, government regulation has blurred this difference in many minds, causing them to be used synonymously.
Harnessing the Power of In and Out Trading: Unveiling the Profit Boosting Strategy through Margin Efficiency
Thinking Outside the Box
By Robert Buran
A Deep Dive into In and Out Trading
In and Out Trading
In and out trading, a well-known strategy in the stock market, typically refers to a trading style where a stock or security is bought and sold within a notably short period. However, it’s important to clarify that ‘In and Out Trading’ isn’t synonymous with day trading. The definition of ‘short period’ can indeed extend beyond a single day. A trader leveraging this approach aims to pocket a profit within this brief time frame and promptly exits the position, implying more frequent trading actions compared to traditional buy-and-hold strategies.
Short-Term Stock Trading: A Proven Approach Over Four Decades
In my terminology, In and Out Trading is essentially short-term stock trading, a strategy I’ve employed successfully for over 40 years. My typical approach involves holding trades for two to three days, without resorting to day trading. It’s conventional wisdom to label in and out trading as risky, but my experience begs to differ. I firmly believe that In and Out Trading mitigates risk by restricting the time a trader is exposed to potential adverse market movements.
Margin Efficiency: A Groundbreaking Concept for Trading Stock Markets
This article explores the In and Out Trading strategy, comparing the relative effectiveness of long-term versus short-term strategies for trading stock markets. Furthermore, it introduces an innovative concept I’ve coined as “margin efficiency.” This principle unravels how relatively straightforward short-term, in and out trading systems can attain impressive profit levels while concurrently reducing risk.
My Journey Through the Trading Landscape
My trading journey started in 1984. Much like many beginners, my initial ventures resulted in a loss of a few thousand dollars. However, by 1985, I had begun to grasp the nuances and managed to make a few hundred dollars in my second year of trading. By 1986, my earnings were close to the six-figure mark. From that point onward, there was no looking back. I’ve handled accounts as small as $3,000 and as substantial as $6,000,000 (refer to my article ‘Journey to Big Trading: Scaling from $6000 to Multi-Million Dollar Trade’). The common thread across these accounts was my use of short-term trading strategies.
The Unraveling of a Surprising Success
Surprising Success
Interestingly, I found my success somewhat puzzling. I was working in the public schools then and had no formal academic background in finance, mathematics, statistics, or computer programming. I implemented a straightforward breakout system that had me entering one day and exiting the next, bypassing day trading. Although this system is far from rocket science, with several published variations available, it proved to be incredibly effective. This strategy didn’t seem overly risky, but it led to annualized gains surpassing 100% year after year. Astonishingly, I was outperforming top professionals using a system built with arithmetic skills acquired in 5th grade. This kind of performance was a direct contradiction to conventional beliefs surrounding performance and risk.
The Genesis of the Margin Efficiency Theory
Over time, my experiences with in and out trading led me to develop theories about market behavior and money management. I aimed to understand why this simple short-term breakout approach to trading was performing so well. In this article, I am going to discuss one of the most crucial of these theories, my theory of ‘margin efficiency’.
Illustrating Margin Efficiency Theory: A Simple Study
Illustrating Margin Efficiency Theory: A Simple Study
To elucidate my theory of margin efficiency, I will refer to a straightforward study I conducted on a single market over a 34-day period. I’m revisiting data from 14 years back in 2023 because that’s when I began to solidify these concepts. I must stress that studying just one market for only 34 days doesn’t yield statistically significant findings; this study serves purely for demonstration purposes to explain my theory. The study itself doesn’t prove anything but is used to illustrate my theory of margin efficiency.
For the study, I compared two systems I will simply call LONG TERM BREAK OUT SYSTEM and SHORT TERM BREAK OUT SYSTEM. I chose the NASDAQ market SEED, which represents Origin Agritech Limited, as the subject of this study. The test period spanned over 34 trading days, from 11/24/09 to 01/12/10. Following my money management strategy, both systems bought and sold 80 shares for all trades, designed to limit the cash margin requirement to approximately $1,000 per trade. During this period, SEED fluctuated between approximately $6 and $14.50 per share, making it a highly volatile market and thus suitable for my trading strategies.
Here are some numbers that emerged from this study:
Long Term break out system
Short Term break out system
The study duration was from 11/24/09 to 1/12/10 (34 trading or “Study” days).
The LONG TERM SYSTEM made one trade lasting 34 days: It bought 80 shares of SEED on 11/24/09 at $11.74 (cash margin requirement $939). It sold the 80 shares on 1/12/10 at $14.14.
Unveiling Margin Efficiency: Profits and Calculations
The LONG TERM SYSTEM achieved a net profit of $192. After deducting $10 for transaction costs, the ACTUAL NET PROFIT becomes $182.
On the other hand, the SHORT TERM SYSTEM completed six trades, buying and selling 80 shares each time. Each trade lasted two days, buying at an average price of $12.00 (average cash margin requirement was $960). There were three winning trades totaling $451 and three losing trades costing $259.
The net profit was $192. Subtracting $60 in transaction costs gives an ACTUAL NET PROFIT of $132.
To evaluate the effectiveness of these strategies, I devised a formula for calculating margin efficiency (ME):
Margin Efficiency (ME) = ((Study Days / Days in Market) * (Actual Net Profit/ Cash Margin)) * 100
Reliable Profits from Short term Stock Trading
This should be read as the number of Study Days DIVIDED BY the number of days the trade is in the market, TIMES the Actual Net Profit DIVIDED BY the required cash margin (price times the number of shares), TIMES 100.
Plugging in the numbers for each system, we get:
LONG TERM SYSTEM: ME = ((34/34) * ($182/$939)) * 100 = 19.38
SHORT TERM SYSTEM: ME = ((34/12) * ($132/$960)) * 100 = 38.91
Interestingly, the ME for the SHORT TERM SYSTEM is twice what it is for the LONG TERM SYSTEM. Theoretically, this implies that a portfolio with an ME of 39 should generate twice as much profit as a portfolio with an ME of 19.
To grasp this better, let’s return to our study. The LONG TERM SYSTEM made $182 in 34 days with no idle days. For those 34 days, a trader could only engage with ONE market using the allocated cash margin.
In contrast, the SHORT TERM SYSTEM made a slightly lower profit of $132 but was only active in the market for 12 days. Therefore, within the 34-day study period, there were 22 days where the system was idle, allowing other markets to use those free days without increasing the margin requirement.
Capitalizing on ‘Blank Days’: Short-Term vs Long-Term Systems
With the SHORT TERM SYSTEM, those blank days can be filled with short-term trades from other markets. This approach can potentially generate much higher profits within the same timeframe, compared to the LONG TERM SYSTEM, without the need to increase our margin requirement. So, how much more can we earn?
If the LONG TERM SYSTEM generates $182 in 34 days, it’s making about $5.36 per day. On the other hand, if the SHORT TERM SYSTEM makes $132 in 12 days, it’s making approximately $11.00 per day.
Should we fill in those 22 blank days with trades from other markets that also yield $11 per day, we could add $242 (22 days * $11 per day) to our net profit of $132. This would total net profits for the SHORT TERM SYSTEM to $374. As a comparison, the LONG TERM SYSTEM only made $182. It’s important to remember, however, that these figures are theoretical, as market conditions seldom perfectly align to fill in these blanks.
Another way to compute a theoretical value is by utilizing the ME numbers we already calculated. If we divide the SHORT TERM SYSTEM ME of 38.91 by the LONG TERM SYSTEM ME of 19.38, we get 2.01. By multiplying our original SHORT TERM SYSTEM profit of $132 by 2.01, we arrive at $265.
Therefore, we now have two theoretical projections for the SHORT TERM SYSTEM’s profits over a 34-day period: $265 and $374. The actual result likely falls somewhere in between, as it’s improbable that all blank days will be filled by markets as volatile and high-performing as SEED.
Implementing Short-Term Trades into Multiple Markets
This system effectively utilizes the power of in and out trading and leveraging margin efficiency to boost profits and reduce risks.
How then do we fill in these blank days with trades from other markets? This question starts to delve into the theory of money management, which is too extensive and complex to cover in this one article. Nevertheless, the straightforward answer is that I engage in trading across a wide array of markets. As of 2023, I’m active in over 50 markets, ensuring all the ‘blank’ days are utilized. Moreover, with a SHORT TERM SYSTEM, I can trade in far more markets using the same amount of capital than I could with a LONG TERM SYSTEM. This approach not only maximizes my returns but also reduces risk via market diversification.
To put it simply, this is the essence of in and out trading. The short-term in and out approach works because it is margin efficient. My theory of margin efficiency partly elucidates why these uncomplicated, short-term breakout trading systems can deliver high returns with limited risk.
When devising a trading strategy, you should seriously consider adopting a short-term trading approach, which I simply refer to as Short Term Stock Trading. By combining this with high margin efficiency, you can mitigate your risk while reaping significant returns on your investment.
As of 2023, I’ve incorporated these concepts I developed many years ago into my current trading system, JORDI FUSION. This system effectively utilizes the power of in and out trading, leveraging margin efficiency to boost profits and reduce risks.
Welcome fellow stock traders! E-MAIL ME AT: bobburan@juno.com with questions. Download nine years of trading performance at the very bottom of this page. I am Robert Buran and I update Today Stock Market every trading day. I utilize Short Term Stock Trading strategies along with automated stock trading software and short term stock trading systems to take trades everyday in the U.S. stock market including the NYSE, NASDAQ, and AMEX. I post my trading positions here along with images and charts. I include a video of my stock market report on this page every day.
Monday July 3, 2023
Dow opens -78 and our open trade improves (click to enlarge)
20 minutes in (click to enlarge)The Dow closes +11 and this is what we closed out: LTCH +2400, RCUS +1425, ADES -2550, NAUT +1567, YEXT -200, TMPO +1300, RXT +5550, CXAI -2396, AI -1980, AAOI -1710TOTAL = + $3,406This is what we are holding (click to enlarge)
Investment Strategies: Understanding the Psychology of Successful Stock Investors
The Psychology of Successful investment.
By Robert Buran
A Diverse Spectrum of Stock Investors
A Diverse Spectrum of Stock Investors
Stock investors embody a rich tapestry of different personalities, backgrounds, and approaches to trading. Some are extraordinarily successful, while others struggle to find their footing. The question then arises: how does the psychological profile of these disparate groups distinguish between the winners and the losers?
Before I ventured into the world of professional trading, my background was rooted in psychology. Naturally, I found myself intrigued not only by the explicit characteristics of stock investors but also by the underlying psychology that motivates their investment decisions. I yearned to delve deeper, to decipher what separates successful stock investors from their less successful counterparts.
A Case Study: The Rise and Fall of John MacAfee
Even among wealthy stock investors, the road to success is fraught with potential pitfalls. A notable example is John MacAfee, the pioneering mind behind the MacAfee anti-virus Software Company. A brilliant entrepreneur, MacAfee seemed to have the Midas touch in his business endeavors. However, about 15 years ago, his fortunes took a turn for the worse.
Eager for more autonomy, MacAfee sold his company, amassing a net worth of roughly 100 million dollars. With this sizable fortune, he set his sights on the world of investing. Unfortunately, his investments turned sour.
The Common Pitfall of Delegating Investments
MacAfee’s downfall underscores a common misstep that many wealthy individuals make. Although he demonstrated a fierce independence in his business endeavors, he relinquished control when it came to investing his hard-earned millions. Rather than embracing “do it yourself” investing, he entrusted his fortune to so-called “financial experts”, brokers, and financial advisors. In MacAfee’s case, one piece of advice led him to invest millions into bonds linked to Lehman Brothers.
As most people are aware, Lehman Brothers was one of the first casualties of the 2008 financial crisis. Its collapse sent shock waves through the global economy, and even after 13 years, many individuals, MacAfee included, were still grappling with the repercussions. The “expert opinion” had failed him, highlighting the dangers of turning over investment decisions to others.
A Misstep in Real Estate Investment
MacAfee’s financial woes did not end with ill-fated stock investments. He was also caught in the whirlwind of the 2008 real estate crash. Much like stock investors, real estate investors of the era were assured their investments were unassailable. They were led to believe that property prices were destined only to rise, a fallacy perpetuated by financial advisors, brokers, and government officials. Countless Americans, including MacAfee, fell prey to this misconception.
On June 23, 2021, MacAfee was found lifeless in a Spanish jail, having reportedly taken his own life. His unexpected demise ignited a flurry of speculations, with some speculating foul play.
Irrespective of the circumstances, MacAfee’s end was an unfortunate one. At the time of his death, his net worth was estimated at four million dollars, a significant decrease from the $100 million he held at his peak. This marked financial decline was largely a consequence of his decision to outsource his financial decisions.
While it is conjecture, one can’t help but question whether his drastic financial losses played a part in his tragic end. Moreover, would the course of his life have been different had he taken charge of his own finances?
The Psychology Behind Investment Decisions
So what psychological aspects of investment strategy contributed to John MacAfee’s decline, and the similar fate of countless others during the 2008 financial crash?
Making My First Half Million
One potential factor is independent thinking. I delved into this concept in my book, “How I Quit My Job and turned $6,000 into a Half Million Trading.” I started with a meager $6,000, borrowed through a chattel mortgage from my bank, against everything I owned. This decision ran counter to conventional wisdom and almost all financial advice I had received.
Through approximately 10,000 individual trades, I managed to achieve nearly 200% annual returns for six consecutive years. Despite needing to withdraw money for living expenses, I ended up amassing half a million dollars in six years, from an initial investment of just $6,000. The story of this journey, backed by my broker statements, caught people’s attention.
I’m not sharing this to boast, but to illustrate how this journey made me contemplate the psychology of investment, risk, return, and the often misguided “expert opinion”.
I was far from an expert. My investment strategy was born on a yellow legal pad during a ski trip, requiring nothing more than a fifth-grade level of math to comprehend. I wasn’t an expert, but in many ways, I was miles ahead of those who claimed to be.
Four Key Strategies for Stock Investors to Enhance Returns and Performance
I won’t attempt to recapitulate my book in this article, but I can share four vital strategies that fueled my success as an investor:
Develop your own strategies: I disregarded nearly all advice from others and charted my own course. My methods frequently contradicted the entrenched principles of financial trading.
Embrace short-term investments: I never held onto an investment for more than three days. This approach insulated me from severe losses; if a particular stock took a nosedive, I was able to exit while I still had funds left. There’s significant safety in short-term trading.
Diversify your portfolio: I traded across numerous markets, understanding the importance of diversification. While one or two investments may falter, it’s unlikely that all will stumble simultaneously. I can vividly recall a day when I lost $18,000 in bonds, but simultaneously earned $24,000 in stocks. Diversification was my safeguard.
Be a self-reliant investor: I conceptualized my strategies, executed my trades, and accounted for my finances independently.
Among these, the most crucial strategy is self-reliance. There’s an inherent “lone wolf” nature required for successful stock investing. While contrarians might not excel as employees or partners, they’re typically superior investors. Stock investment often rewards those with contrarian mindsets, while punishing those who follow the crowd.
Adjusting Strategies and Continuing to Grow
Today, my investment journey is less thrill-inducing. I don’t leverage my investments as heavily as I once did, and I exclusively buy stocks, avoiding short-selling altogether. As of 2023, the odds still favor rising prices. However, diversification remains a staple in my strategy, and I currently take trading signals from over 50 diverse stock markets.
My trading systems, though honed through continuous programming, don’t differ significantly from what I devised on a yellow legal pad during a ski trip a quarter-century ago. The old tactics continue to serve me well. I still adhere to the three-day holding period rule.
Climbing to Greater Profits.
Sharing my daily trades on this website has become an enjoyable routine. I maintain a low-profile approach, catering to small investors. While I don’t profit daily, I generate earnings most months. This website is my retort to the misguided advice that ensnared John MacAfee.
To attain success, stock investors need to tune out the noise and sidestep the investment snares that often come from heeding others’ advice. Successful stock investing calls for a do-it-yourself mindset. Simplicity and logic are still powerful tools in crafting investment strategies. “Lone wolves” continue to profit. Diversification is a real safeguard. Short-term trading can boost profitability while minimizing risk. If you want to succeed as a stock investor, design your own strategy, disregard the ‘experts,’ and take charge. DO IT YOURSELF!
Welcome fellow stock traders! E-MAIL ME AT: bobburan@juno.com with questions. Download nine years of trading performance at the very bottom of this page. I am Robert Buran and I update Today Stock Market every trading day. I utilize Short Term Stock Trading strategies along with automated stock trading software and short term stock trading systems to take trades everyday in the U.S. stock market including the NYSE, NASDAQ, and AMEX. I post my trading positions here along with images and charts. I include a video of my stock market report on this page every day.
Friday June 30, 2023
Dow opens + 178 and our open trade is only about half as bad as yesterday (click to enlarge)
RXT (click to enlarge)RXT (click to enlarge)Fading Markets again (click to enlarge)The Dow closes +289 and this is what we closed out: MEDS -6220, IMTX -160, SDA +337, AGBA -2100, NAUT +2970, PLAY +60, AFRM -1185, TLS -577TOTAL = – $6,875This is what we are holding (click to enlarge)
High Returns and High Yawn: The Unexpected Monotony of Making 50 to 100 percent Returns on Your Investments
Unexpected Monotony of Trading for a Living
The thrill and lure of trading often lead traders astray. Successful trading and high return investing, contrary to popular belief, are often less about excitement and more about enduring long stretches of monotony. Indeed, boredom becomes an occupational hazard, an inevitable part of the journey towards high returns.
Embracing Boredom as Part of the Trading Process
The experience of sitting in front of the computer, observing market movements for hours on end can feel like a kind of sensory deprivation. The process can be equated to the description by a police officer about his late-night shift in a big city – eight hours of pure boredom punctuated by a minute of sheer terror. Just as his eyes were always peeled for signs of danger, a trader’s eyes are always peeled for signs of profitable opportunity.
Navigating Through Stormy Market Days
Persisting Through Market Volatility
Take, for instance, the harrowing month of March 2023. Having found myself in 16 unfavorable positions, I witnessed the Dow Jones plunge over 400 points the next day. The plummeting figures were a massacre to my open trades, causing a very nasty loss of nearly $24,000. While it was a relief to be rid of these dreadful positions, the free-falling market offered little solace. I was acutely aware that the rest of the day held little promise for further profitable positions.
Persisting Through Market Volatility
Despite the bleak outlook, I ventured into two trades – one with 3D Systems Corp (DDD), the other with Callon Petroleum Company (CPE). DDD’s price seemed too steep to climb further, and as CPE’s value dipped into a negative $3,000, I braced myself for another day of disappointment. The markets seemed dismal, and I sought distraction in YouTube videos, only occasionally casting a glance at the plummeting figures.
The Thrilling Turn of Dull Days
This Sleepy and Bored Lion Patiently waits for an Opportunity to Chase an Antelope; much like a trader waiting for a good trade.
My attention was brought back to the screen from my YouTube distraction when DDD exploded and CPE swung from a negative $3,000 to a positive $2,000. As CPE soared over $7,000 in profits, I was captivated. The dreary, monotonous day took an unexpected turn and injected a dose of excitement and renewed hope. Although I still recorded a loss for the day, the successful trades were morale boosters.
Trading Amidst Monotony: The Path to High Returns
Considering my trading performance from January to March 2023, I was still ahead of some top fund managers. Aiming for a 50% to 100% annual return was still within reach. However, maintaining focus during the mundane stretches was crucial.
Gleaning Insights from Hours of Screen Time
Gleaning Insights from Hours of Screen Time
Scanning the stock markets isn’t always thrilling, but after clocking in two or three thousand hours, I’ve gained invaluable insights into market dynamics. My article, The Subtle Art of Manual Trading, delves into this further. Interestingly, about 70% of my profits come from just 5% of my trades, indicating that 95% of my trades—and my time—are rather dull.
The Highs Amid the Lows: The Reality of Successful Trading
It’s essential not to let the monotony lull me into complacency. Trading opportunities are fleeting, often requiring swift action within seconds. Despite the occasional boredom, staying alert during my 6.5-hour trading window is non-negotiable. This routine may get tiresome, but the reward—annual returns ranging from 50% to 100%—is substantial. No job surpasses trading in this aspect. To reap substantial profits, one must endure the lengthy periods of boredom punctuated by fleeting moments of intense action.
Building Wealth Through Consistent High Returns
My first trip to a half million dollars.
Achieving 50% to 100% annual returns over five years can significantly increase your wealth—irrespective of your starting capital. Years ago, I authored a book titled “How I Quit My Job and turned $6,000 into a Half Million Trading”. (CLICK THE IMAGE TO THE LEFT TO ENLARGE) As an unknown entity in the market then, I provided broker statements as proof that I had successfully made close to 200% annual returns for six consecutive years. Moreover, I had to rely on some of this income for living expenses, and so I was unable to leverage the full potential of compounding.
Many may perceive this as a stroke of luck, a flash in the pan when market conditions were different, or a feat only achievable with a small capital that would diminish with larger sums. But is that really the case?
Achieving High Returns Regardless of Capital Size
While managing portfolios for several years, I executed thousands of trades and pushed close to two billions of dollars through the market place. Details of my journey are shared on my website,Journey to Big Trading: Scaling from $6000 to Multi-Million Dollar Trades . Interestingly, despite managing vast sums, I still achieved over 100% returns.
The significant revelation I want to highlight is that, irrespective of the market conditions or the trading capital involved, most trading days were monotonous. Trading, for the most part, is a dull affair.
Trading Insights from Decades of Market Observation
After examining various markets for nearly forty years, I’ve reached two significant conclusions:
Markets move sideways 85% of the time rather than in an upward or downward direction.
Applying my trading strategies, about 70% of my profits arise from just 5% of my trades.
By extrapolating these figures, one can infer that about nine out of ten trading days will be uneventful and monotonous.
The Grind of Successful Trading
Graph of my six year journey to my first half million dollars.
A proficient trader is one who consistently adheres to their trading rules day in and day out. When I share with aspiring traders the real potential for an average individual to build wealth from a modest beginning, their interest piques— the concept seems straightforward.
However, the routine nature of trading often leads to a high dropout rate among these hopefuls. They expect a thrilling journey, but what they encounter is a mundane activity. I regularly remind them of the critical importance of maintaining accurate records (see Stock Market Record Keeping). Every trading day ends with at least 60 minutes of spreadsheet work for me. This isn’t thrilling, but without diligent record-keeping, one cannot hope to excel in trading.
The Dangers of Chasing Excitement in Trading
Dangers of Chasing Excitement in Trading
One of the biggest mistakes bored aspiring traders make is seeking excitement by deviating from their trading rules. They try to force trades where none exist. From the countless stories I’ve encountered, I can assert that this approach is the fastest route to financial ruin.
A common myth circulated by financial advisors and brokers is the association of high returns with high risk and low returns with low risk.
Demystifying the Risk-Return Relationship
My research has led me to an important understanding: risk and returns are not statistically intertwined. High-return investing doesn’t need to be synonymous with high risk. What does correlate with risk and returns is the number of trades made and the duration for which these trades are held.
For years, I’ve managed to secure high returns with minimal risk, across various market environments. However, achieving this requires me to trade intensely and consistently: day after day, week after week, month after month, year after year. I’ve provided proof of this on my website, where I post my trades multiple times a day. It’s all there for anyone to see – it’s impossible to fake, and it’s incontrovertible.
Finding Fulfillment in Repetitive Success
Financial rewards beyond your wildest dreams.
Despite these accomplishments, most days are indeed monotonous. Even achieving high-return investing and making 100% returns annually can be tedious.
If you’re seeking excitement, try skydiving. However, if you want to accumulate wealth and become an exceptional trader, you must commit to years of repeating the same processes over and over again.
But believe me, if you can embrace this pattern, you’ll reap financial rewards beyond your wildest dreams.
Welcome fellow stock traders! E-MAIL ME AT: bobburan@juno.com with questions. Download nine years of trading performance at the very bottom of this page. I am Robert Buran and I update Today Stock Market every trading day. I utilize Short Term Stock Trading strategies along with automated stock trading software and short term stock trading systems to take trades everyday in the U.S. stock market including the NYSE, NASDAQ, and AMEX. I post my trading positions here along with images and charts. I include a video of my stock market report on this page every day.
Thursday June 29, 2023
Dow opens – 120 and our open trade jumps to nearly +22 K (click to enlarge)
ACHR (click to enlarge)
Fading Markets again (click to enlarge)The Dow closes +271 and this is what we closed out: SEEL -900, MMMB +1402, EDIT -570, QBTS -5100, AMC +90, UCAR -369, RGTI -1830, AAOI +360, ROOT +4080, AI -217, MPAA -300, CXAI -990, ACHR +12210TOTAL = + $7,866This is what we are holding (click to enlarge)
Welcome fellow stock traders! E-MAIL ME AT: bobburan@juno.com with questions. Download nine years of trading performance at the very bottom of this page. I am Robert Buran and I update Today Stock Market every trading day. I utilize Short Term Stock Trading strategies along with automated stock trading software and short term stock trading systems to take trades everyday in the U.S. stock market including the NYSE, NASDAQ, and AMEX. I post my trading positions here along with images and charts. I include a video of my stock market report on this page every day.
Wednesday June 28, 2023
Dow opens – 120 and our open trade jumps to positive (click to enlarge)
15 minutes in (click to enlarge)Two and a half hours in (click to enlarge)ACHR (click to enlarge)ROOT (click to enlarge)The Dow closes -135 and this is what we closed out: RXT -750, LNZA -2700, MRVL +1045, PLAY +255TOTAL = – $1,460This is what we are holding (click to enlarge)
Welcome fellow stock traders! E-MAIL ME AT: bobburan@juno.com with questions. Download nine years of trading performance at the very bottom of this page. I am Robert Buran and I update Today Stock Market every trading day. I utilize Short Term Stock Trading strategies along with automated stock trading software and short term stock trading systems to take trades everyday in the U.S. stock market including the NYSE, NASDAQ, and AMEX. I post my trading positions here along with images and charts. I include a video of my stock market report on this page every day.
Tuesday June 27, 2023
Dow opens + 112 and our open trade remains very negative (click to enlarge)
Terrible Open (click to enlarge)The Dow closes +211 and this is what we closed out: QBTS -390, LUMN +450, MMMB -1732, MTEK -1050, SFIX -3465, VCIG -11250, MEDS +3300, AFRM -2924TOTAL = – $17,061This is what we are holding (click to enlarge)
