The Trader’s Journey

 

 

If you are like the majority of people out there then chances are that you came across day trading through a retail portal. You may have seen a programme on television which showed a trading floor buzzing with activity or read about a trader who had recently made an obscene amount of money on a trade. Perhaps you knew someone who worked for a hedge fund or investment bank. Whichever one of these it was, the end outcome was the same – a seed was sown in your mind suggesting that you could become rich through the financial markets.

 

Trading Places….

 

My first introduction to trading was watching the movie “Trading Places” with Eddie Murphy. Remember the scene at the end? Basically, the Duke brothers were buying Orange Juice futures on the expectation of a bad harvest. Billy Valentine (Eddie Murphy) and Louis Winthorpe on the other hand were short as they knew the harvest had been good so were expecting the price of orange juice to fall. Prices indeed dropped and Valentine and Winthorpe made a ton of money in the process while the Duke brothers lost everything! I was fascinated by this for a long time and kept wondering what had actually taken place. Hence a seed was born!

 

Phase 1: The Starting Point

 

The most important part of the journey is knowing why you want to be a trader. Why do you want to do this in the first place? What do you want to get out of it? Is it just a money thing? Is it a passion? Is it something that has been at the back of your mind for a while? It’s crucial that the reason why you’re doing this is much more than just money. The reality is you might not make money for some time so you need something deeper to keep you motivated during those times. The most successful traders I know are people who simply love the markets and are perpetually fascinated by trading. For them it’s not even a job but a passion which they live, breathe, and eat every day.

 

Your why…

 

Every trader will be tested and the difference between success and failure can come down to your reason why. Remember 95% of traders fail so in order for you to be in the top 5% who make money, you need to think differently and starting with a rock solid reason why you’re trading is key. If someone says “I want to do this so I can make a lot of money” I know that 12 months later this person is likely to move onto something else. If on the other hand they say something like “I am fascinated by the markets and believe I have what it takes to be a successful trader. I want to provide the highest level of income I can for myself and my family and am ready to do whatever it takes to make it happen.” then I know this person has thought things through much more seriously.

 

Phase 2: The Initial Period

 

The initial period is where bad habits are normally formed. This is the first 6-12 months where you will typically spend countless hours reading forums, trading articles, books, strategies and eventually trading. Make no mistake, trading is addictive and you could easily spend 10 hours in front of a screen without noticing it! Most people at this stage will be looking for the Holy Grail or some magic trading strategy which will make them instant millionaires. Your trading results will be mixed at best or very poor on average – you will either be losing money and not understanding why or just feeling like you don’t get it.

 

Is It All About Strategy???

 

Most traders in the Initial Period are strategy focused and spend their time searching for the perfect strategy. You get an email telling you a new strategy has been released which is giving 30% return a month and you jump on it. You soon discover that this is just a marketing gimmick and struggle to make money from it consistently. You then come across a forum where someone is describing their trading strategy for free and willing to help other newbie traders. This person sounds experienced so you drop everything to follow him/her. A few months in and you are still struggling to understand what this person does and how they do it as they apply a lot of discretion that you simply haven’t yet developed.

 

This cycle of searching for something new, finding it doesn’t quite work, then searching again and being disappointed over and over can go on for years. It only stops once you realise that you need to learn how to do this properly from a professional. It will probably involve you paying for a proven system or some training so that you can develop an edge rather than looking for shortcuts.

 

Phase 3: The Trial – Give up or Continue?…

 

The third phase is the trial period. This is where you are tested to see how badly you want this. Is it just a get rich quick scheme you’re looking for or are you willing to put in the time and effort required to master your craft? What if this takes you many years? How long and how deep are you willing to persist until you get your prize? It is at this stage that many people give up, they spend a year or so trying to figure the markets out and eventually decide they can’t do it. They then tick trading off the list of money making ideas they tried and move on to the next thing.

 

Earn Your Stripes!!!

 

What a lot of people fail to realise is this – trading takes years to master. I don’t know a single person who trades profitably who did so in a short period of time – it just isn’t realistic. Why? Because you need to understand the business you’re in. Every time you trade you are basically competing with someone else who is willing to take the opposite side of your trade and so you need to ensure you have an edge. How can you expect to take on the big banks and institutions who have more money than you and more brain power to throw at the markets without dedicating a proper amount of time to the craft yourself? Now obviously I’m not saying that you won’t make money for years and years, but I’m just highlighting the fact that you need to treat this business seriously because the big boys you are up against take it very seriously.

 

Phase 4 – Realisation – I can do this!

 

Phase 4 is make or break – it is where you start to believe that you can actually do this and start seeking professional guidance and direction for you to emulate. This can be in the form of a system like EnigmaSignal which does all the work for you, or via mentorship from another reputable organisation. You need someone to show you what to do, how to approach the markets and which strategies to use so that you can develop an edge. You also need to know how to handle profits and losses, risk management and trade management so that you can experience consistent profits. If you are in this position then it’s just a matter of applying what you learn diligently and correcting your mistakes on the path to trading mastery. You will then realise that the only thing holding you back from trading success is YOU!

 

You Don’t Have to go it Alone

 

The reason why most traders give up is because they try and do it all on their own. They don’t want to spend money learning how to do it properly and they listen to all the opinions and comments of others on forums telling them that they just need to keep applying themselves and they will eventually succeed. This is dangerous because if we study how traders become successful it is always as a result of learning from someone well experienced and never by trying to figure it out on their own. I’m not saying this to sell our software but simply stating the obvious – going it alone will lead to the highest chance of failure because you don’t know what works and what doesn’t. How do bank traders become successful? By going through a comprehensive training programme without which they wouldn’t be given a single penny to trade.

 

Phase 5 – Mastery

 

The final phase is Trading Mastery, where you are now able to confidently navigate the markets and finally able to make money consistently month on month. You are now at the point where you can take some profits out and spend it or pay bills with it or simply reward yourself! You are positive about your trading career and are happy about the future. You feel a sense of fulfilment at having achieved your dream of being able to support yourself or your family from your trading income. Even if you are not rich yet, you can see that all you need to do is trade with a larger amount of capital to get to your financial goals. Imagine what a great feeling that would be and how you would feel to be in that position!

 

Constant Dedication…

 

Trading Mastery requires constant dedication and accepting that you will be a lifelong student of the markets. You might be trading short term for income, long term for capital growth or swing trading.Whichever approach you adopt you know the type of trader you are as well as your desired short and long term outcomes. You accept that trading is a business and you take this business seriously. You look forward to trading with larger capital and may have even been approached by investors who have followed your progress and are now offering you capital to trade on their behalf. You accept that you will need to remain disciplined and stay humble in light of your increasing successes because you understand that your mindset is your most powerful weapon. You spend the majority of your time working on your psychology which is the hallmark of every seasoned trader.

 

Over to you….

 

Where are you on your journey? Which phase are you currently stuck in? Hopefully this article gave you some insights into what you need to do to progress further and advance towards your goal of successful trading! If you need any help with any aspect of your trading then simply get in touch with us as there is nothing we love more than helping other traders to become profitable! You can also find out more about our auto trading systems which are delivering consistent profits to our traders and allowing them to realise their financial trading goals stress free. Email us as info@enigmasignal.com or visit us at www.enigmasignal.com.

Trading Chart: The Dax on a Daily Basis

Artificial Intelligence based systems are often thought to be aimed only at day traders. Nothing could be further from the truth as far as we are concerned. EnigmaSignal operates just as well on DAILY charts as it does on shorter time frames. Here is a simple example. The German index, the Dax, has been a wonderful trading zone for us on a daily basis for the past three months. As you will see from the above chart we have adopted a very simple strategy here. We’ve been taking LONG trades with a CONSERVATIVE profit and a WIDE stop. Why is that? Well, just like on the hourly timeframe, the signals are likely to be correct in excess of 90% of the time, but you must give the trade “time to breathe”. What does that mean? It means EnigmaSignal will calculate a stop that is calculated to be wide enough to give the market time to reverse. Just like an oil tanker at sea, markets take time to stop and reverse.

But look at the profits made. 98 days, 3 trades, 0 losses… 756 points in the bag. At only $10 a point that’s $7650 profits banked, or put it another way on this one simple strategy alone… a 150% payback on an annual EnigmaSignal license. And that’s on ONE trade. Simple. Why is it simple? Because there is nothing for you to do as an end of day trader other than placing your orders for the next day and move a stop. Time taken? 5 minutes per day. If we add up all the moves made in these trades we have a total of 15 moves. At 5 minutes per move that’s75 minutes or put another way $6000 per hour worked. By anyone’s standard that’s great money. Nothing complex to learn. Simple. Effective.

What’s not to like about AI trading the EnigmaSignal way?

Ready to give it a try for yourself? We’re offering a 30 day trial for USD $99.

The Quants are Coming!!

Recently, a report was pushed that stated that Goldman Sachs has replaced 70% of their day traders with Artificial Intelligence based systems and is now recruiting more programmers than traders for its day trading offices. Wow! Let that sink in for a moment – if such an established institution is doing that, then the rest are not far behind! What will this mean for day traders going forward and how do we compete?

Day trading is under threat from technological advancements just like any other profession. We have seen how the technological revolution has replaced countless jobs in traditional sectors such as Manufacturing, Retail, and Services. This meant that low skilled jobs began to be replaced by robots while many medium skilled jobs became semi-automated. This led to layoffs in these two categories, however, highly skilled roles remained unaffected as they were too complex for machines to replicate. That was until now!

A Highly Skilled Profession

Trading is a highly skilled profession that requires multiple qualitative and quantitative informational inputs to make a single trading decision. Information is analysed, interpreted and reacted to by traders in different ways which leads to widely differing outcomes. This is further compounded by which market a trader actually trades as well as their risk profile and trade management method. Two traders can get the same information, react to it in the same way, even put on the same trade but get totally different results because their personalities are different and therefore how they manage their trades will be different. One trader may risk more than the other, another may exit the trade at a different price than the other and so on.

The above complexity is what traditionally made it difficult for machines to compete with humans. Mastering this complexity would require machines that could think for themselves, be self-aware of their own performance, and be adaptive to changing market conditions.

Enter Artificial Intelligence…

The last decade has seen massive strides forward in Artificial Intelligence and Machine Learning. We are able to build more sophisticated computers than ever before, with capabilities that were once thought impossible. We can now create machines that literally think for themselves. It is possible to create algorithms that self-learn so that their performance improves over time without any human input. Traditionally quant trading systems were focussed on speed of execution, beating other market orders and placing their orders first. This was powerful when combined with identifying large orders. For example, a large buy order might enter an exchange, such as NYSE, for a particular stock. A Quant might detect this large buy order and proceed to identify the stock and sell it to the large order buyer for a small profit – all within a split second.

Another Quant might use speed to enter an order ahead of anyone else, especially if they expect an imminent change in price. For example, let’s say there is a major economic announcement which is expected to send the markets crashing. While regular traders are busy pressing sell buttons, a Quant system could identify this bearish sentiment and enter a short trade faster than anyone else, thus benefiting from that extra point of movement by getting in early.

It’s All About Speed

Goldman Sachs until recently was a master of the speed game – otherwise known as Latency. Now, however, they have the ability to perform more sophisticated forms of trading thanks to their investment in Artificial Intelligence and algorithmic trading starting to pay off with everything from commodity trading to currency trading and futures trading to day trading stocks. Being endowed with very deep pockets means they can recruit the smartest PHD mathematicians and Quant developers to create more sophisticated trading systems. While these certainly beat retail traders in terms of speed of execution, it is difficult to say the extent to which they outperform traders in normal trading as the details of what they do is kept highly secret. We can make an educated guess, based on their past strength in Latency, but they will dominate the lower time frames such as sub 1 minute to 15-minute time frame charts.

Higher Time Frames

Where traders can compete with the Quants is on higher time frames such as 60 min charts and above, particularly the daily timeframe. The reason for this is that the higher time frames do not require speed as an advantage and so allow enough time for a human trader to analyse the markets, identify a trading opportunity, and execute a trade on par with a machine. It may take a machine a fraction of the time to follow this process, but nonetheless, a human trader can achieve the same results since time is not critical. By contrast, speed is critical when trading the lower time frames as it impacts more measurably on the profit and loss of a trade. This tells us that we can have a chance to compete against the Quants by working on higher time frames.

Up Your Game

Another way we can compete with the Quants is to gain access to very sophisticated trading systems which use Artificial Intelligence and day trading rules at their core, just like the big boys do. Although this can be expensive and more suited to the serious trader, computing power and program sophistication have made quantum leaps in the last decade making it more accessible than ever before. Companies who develop these AI trading systems build a team of PHD level mathematicians to create trading models and strategies, Machine Learning specialists who can add Deep Learning to the trading models, and experienced traders to fine tune and monitor the application of theory to practice.

Development takes a lot of time… at least 12 months of continuous development before a system will begin to start to work. The next 12 months will then be spent fine tuning and training the AI. This sounds like a lot of work, and you’re right, it is. This is why you find large teams of PHD mathematicians and programmers working together in multiple teams in large investment banks. This is exactly what we have at EnigmaSignal, as it truly takes a team to develop something that works.

Artificial Intelligence in Practice

The screenshot below is a screen capture of our system in action. It was set to auto trade the S&P 500 long on the 24th of August, 2018. It took 4 trades and won 2. The interesting thing is that it ended up with a profit of 64 ticks over the 4 trades despite 2 of them being losers! It entered a long trade on a break out of an identified resistance zone and trailed the stop loss until it got stopped out later in the day. Our Machine Learning is now starting to suggest better entry and exit points for future trades as a result of the many trades that it has taken and analysed. What this means is that we will be getting increasingly tighter entries and exits resulting in gaining more profits per trade just by listening to its real time suggestions – very clever stuff indeed.

Trading chart August 24 2018

Conclusion

As more and more Algorithms are used to trade the markets we will only have one of two choices; join them or beat them. Ideally, we want to do both – join them by building our own highly sophisticated algorithms and Quant trading systems and beat them by trading on higher time frames. This trend will only continue its pace, so retail traders need to adapt or die. If you wish to have access to cutting edge algorithms then get in touch with us here at info@enigmasignal.com. You can also visit our site to book a demo at enigmasignal.com/webinars and download valuable resources that are normally reserved for students of our online trading academy, for free today.

EnigmaSignal Trading Chart September 3 – 7, 2018

EnigmaSignal is a unique artificial intelligence based trading software. It works on all timeframes for just about anything you can trade. In this example trade, the time frame traded is hourly and we are trading the S&P 500 US Index. This is a timeframe that we see being used by many of our members who work full-time and use EnigmaSignal to generate a really nice second income.

What we have here is the chart for the last week.

Five days trading and four trades selected by EnigmaSignal AI and then traded automatically. That’s the beauty of the AI approach. It will trade like a human trader, but more reliably – without you having to spend all your time in front of a screen. All of these trades were made in my account whilst I was in Costa Coffee. Now of course, you don’t have to let EnigmaSignal trade automatically and in fact, we have many people that prefer to use it for high probability signals that they can then choose to trade themselves. Why does that work so well? Simple. There is no interpretation of the signals. The Artificial intelligence will interpret them for you, and simply show you the results.

This series of trades generates a superb 1938 ticks of profit. That’s a pretty amazing return for someone risking only £1 / tick. £1938. And the time taken? No more than 15 minutes per day to check the strategy and make sure that everything is set for the next 24 hours. EnigmaSignal is simple to use, and our complete training package covers everything you need to know to make EnigmaSignal trade according to your rules. Most of the complexities of trading are taken care of by the Artificial Intelligence software, which controls your risk and “thinks” about trades hundreds of times per second so that you don’t have to.

Ready to try EnigmaSignal for yourself? Get started today with our 30 Day Trial for USD $99!