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“My testing has revealed to me that longer trades are safer and with less drawdown…”

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Good day Mr. Covel and thank you for taking the time. I recently listened to The Little Book of Trading, and at the end you encouraged people to contact you. So I thought I’d do just that. But first a vignette. In 2017 I got my first taste of trading when Bitcoin was booming. It was amazing. I’d be in bed with my iPad and be making a month’s salary before I had coffee. Then I changed exchanges, got leverage, and started trading a derivative and not spot, which means I could go short, and went on holiday. I felt like a champ. After the holiday the market started to tank. I still tried trading it like before, but something was different. Long story short, I lost the entire $40k I made the previous year, but not before I made a huge winning short trade of $16k when the market was crashing, the proceeds of which I then went on to lose! It was an experience I will never forget. Then came the taxes. I was gutted, because I lost all my winnings but still had to pay taxes on it, which I didn’t prepare for. I barely survived the year. I licked my wounds with Jim Paul’s book, then for the next three years I tried to figure out how to trade properly. I figured out how to get OHLC info for the exchange, and taught myself Java to build a bot that could trade for me, because I was still in PTSD. I spent thousands of hours and wrote thousands of lines of code trying to build a good trading system. Somewhere along the way I found Jack Schwager’s audiobook, with Ed Seykota in it, and listened to his interview over and over again trying to parse the wisdom. Nassim Taleb and Mark Spitznagel’s works also came under my eyes, and my knowledge of how market dynamics work slowly improved. In The Little Book of Trading you mentioned Babcock’s book. I got it, and I found it explains exactly what I’ve been doing vehemently for the last three years. I’m not alone! Even though the most recent bitcoin market was booming I didn’t make that much, because my system wasn’t tested on a very volatile market and I often made big losses. So I focused on perfecting the system that doesn’t depend on a bull market but also doesn’t get wiped out by it. After listening to your book I made one change off of it, basing the stop loss off of the ATR, and boom, the performance of my system went from 6,000% to just under 20,000% for the year on 3.2x leverage (before adjusting for slippage, bid/ask spread, and power failures!). Although I’ve tried so many things, this was surprising, and in hindsight makes perfect sense. Btw, I trade with the 3 minute because of the speed with which bitcoin moves. My exchange dropped $5k in literally a second during a recent correction! Why am I contacting you? I am in the market for mentorship and perhaps a set of rules or two. There are very few people with whom I can talk to about this, and buying a good set of rules will surely save me a lot of time when I start to wade into the world of proper long term trend following and creating a system that can trade basically any market. My testing has revealed to me that longer trades are safer and with less drawdown, although 20,000% a year is difficult to achieve. But I’ve been testing only one market, with small positions, and with computer power, so if I want to go bigger I would have to do more markets, longer term, sans the computer, eventually. Ed Seykota said that one’s success as a trader is directly proportional to one’s commitment to being a trader. That quote has sustained me through numerous failures, and will sustain me still. I haven’t yet reached huge success, but it cannot evade me forever. Any comments or advice from you will be greatly appreciated. By the way, I’m a South African expat living in Japan. Thank you kindly,

M. B.

I can help. See my faqs. But I caution: support and resistance doesn’t work. At all.

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