I know this is way after you asked. I started it initially and put in draft only to re-visit it tonight. No excuses, just didn’t get to it. Hope you are well!
Answers to your questions:
1. What methods or principles were you applying before?
I was applying everything other than trend following. Technical analysis (head-and-shoulders, wedge, etc.), trading too big, trading too often/much, using no data to back up any decision – just trading from the hip.
2. What changed you? Why did you switch?
I have a science background (bio major in college then grad school as a Physician Assistant) so I like to have data to back up arguments, reasons to take action or change behavior, etc. My first intro to Trend Following was “The Complete TurtleTrader“. I loved the idea that I could be taught and/or learn the mechanics of trading. I then really dug in and read “Trend Following” which allowed me to really see the way this type of system could work. There is centuries of data to backup the systems validity and many currently operating managers who are successful in its application (Salem Abraham, Dunn, Henry, Bruce, etc.). These reasons were more than enough for me to commit to learning the technique.
3. How did I help you?
After blowing up my first trading account I changed to trend following. I employed a channel breakout system based on daily closes. I was doing this in a manual way by scanning the markets I was trading every night and placing trades when the system indicated. I struggled with my rules during this period. How EXACTLY did you employ good risk management? What EXACTLY was a good breakout time period (20 days, 30 days, 50 days, 100 days?)? I had a hundred questions that needed more clarity. I then decided to buy your package of information/CDs to really get things dialed in.
I implemented a very comprehensive trading system using your CB system outlined in the material from 2013-2017 when my broker was shut down in the US (FXCM) and I needed to close all my trades down and transfer my account. I took that time to find some way to automate the system with a “robot”, software, whatever you want to call it. The reason for the automation is that I felt like my performance suffered from missing trades. I was not getting hurt by the losing trades because I was using good risk management based on ATR. I was getting hurt by MISSING the good trades, which I F’ing hate! That is the thing that I couldn’t deal with the most was missing a trade because I was on a business trip, or family vacation or I was just being human and not checking it for any number of a hundred reasons.
I have automated my system which answers all the important questions: when to buy, how much to buy, when to get out. My major roll now is just monitoring the system and letting it take and close trades.
Other ways you have helped me:
1. Trend following becomes a way of life… I’ve started looking at everything with the question, “what’s my risk” or “what’s the worst case scenario here” and “what am I willing to lose on taking this chance or bet”. This can be asked of ourselves in relationships, raising kids, sports, etc.
2. You have introduced me to so many amazing thinkers and ideas through your podcast. These have been life changing in some cases. One example: You interviewed a guy named Jason Calacanis who is an Angel investor (I had no clue you could do this!). I bought his book, joined his syndicate and now I’ve invested in 3 startup companies and I’m going out to his “Angel University” this summer to learn more about the trade of Angel Investing. Pretty amazing stuff!
3. You’ve given me advice about travel and were kind enough to give me some ideas when I visited Tokyo.
4. You remind me all the time that you can have a successful business and be “location independent” by living in Vietnam for the past several years.
5. You used an idea that I sent to you as the subject of one of your podcasts (Bezos is a trend follower)… pretty cool!
I’m looking forward to making it to Vietnam and sharing a beer with you!
Thanks for everything. I continue to listen to every episode of the podcast even if it’s a month late. They all have something to offer to the person willing to really listen. In fact, I think the ones that I’ve gone into thinking I wasn’t going to like are the ones I’ve gotten the most out of!
Keep kicking ass,
Great feedback. More on how to trade the system here.