Monday, May 12, 2008

Imaginary Wealth

Over the last few weeks I've had this idea for a trading strategy. Basically a set of rules which describe when to buy or sell currencies. I input those rules into my PC which makes decisions for me really quickly.

The difference with programming a trading strategy and a potentially marketable piece of software, is that you know that you can get instant gratification once you have a trading algorithm. You don't need to market or distribute a trading algorithm or have a fancy front end, iron out the bugs and it's (hopefully) making you money from the word go!

Well that's the theory, I can always hope, eh?

Amazing how my psychology changed once I could see theoretical profits being computed in front of my eyes (based on data since 1999). The morning after, I went to work, and I was convinced I had this trading business licked. I was think about setting up my own hedge fund, living by a beach in Manado, maybe doing one or two trades a day and then devoting the rest of my time to teaching programming to kids in the local pesentren (for me programming is like mental kung fu, a bit like the kung fu in Shaolin Soccer).

Talk about getting carried away! Once I got home, I spotted two serious mistakes. I would now have made large losses over the last 9 years with the strategy. I could see my decades stuck in offices in front of me. Drudgery! But then I tweaked the strategy a little and was back into dreamland! :)

Everyday has been like that, I just hope on the final day of tweaking and poking, I'll have a strategy that'll reap me large returns on paper as well as in reality.

At the moment, I need new market data and have to nix a particularly dodgy assumption I made on price movements. But until I do that, the strategy is showing profits of around €200k with €1k initial investment over around 9 years.

I think I'll choose to live in ignorance a while longer, feels good to be imaginary rich :)


tere616 said...

Hm ... I remember my friend, who resigned from his job (a good position though) and start with all that trading stuff.

Seems that he got his gain, especially with his techy software for trader ..

One thing that I learn from him is discipline, he will sit in front of his laptop start from stock exchange start the trading till close, except during lunch time.

I think you should be like him, I'll bet you'll become the richest guy in the newspaper.

BTW, Manado ?
I've been there once, it's my province where my parents came from. The worst thing, I even have my grave yard there (am still a live) :-)

rimafauzi said...

when you are tired of living in ignorance and have discovered a painless way to being wealthy, do let me know. sooner rather than later.. :)

johnorford said...

tere, u got a grave already? hahaha :)

manado is a beautiful place, i really like it.