As mentioned in the most recent dev update, I have taken some of my strategies to the live trading stage. This was a step I have been eager to take for several month, but I was never quite as prepared as I needed to be. After hundreds of hours of development and testing I was finally ready to take the leap into the world of automated trading.
Full disclosure, I have been only trading live for two weeks at this point and am by no means an expert. I advise anyone considering this same step to strongly consider the risk of damages to their own capital. This is in no way financial advice and merely a platform for me to discuss the emotional and technical take away of my own trading experience.
Pressing Go
After nearly a month of paper trading BTC, ETH, and LTC and watching the various hypothetical trades play out within the expected results of my back testing, I was still apprehensive. In my mind I was not yet ready, even though I had checked every box on my “pre-flight” checklist, passed every software test I could think of and relentlessly back tested and verified the robustness of my strategies, I was certain there was more I could do. Completely content with my new found state of indifference I continued taking only half steps towards my goal of becoming an automated trader.
Fortunately for me and unfortunately for my co-workers, I love to talk about my trading endeavors. Early one morning I walked past a friend of mine’s desk and he stopped me and asked me how the bot stuff was going (If you are reading this now thank you). When I told him where I was in the deployment process and filled him in on all the laundry list of insignificant tweaks I wanted to make to my system before going live, he chuckled. He simply said, “Sounds like you’ve tested your software about as much as we do here. At some point your just going to have to pull the trigger.” I don’t know why but that did it, some switch in my brain flipped and I realized how much I was holding myself back. After the hundreds of hours, I had spent and the time and care I had poured into my work I really shouldn’t have been questioning myself as much as I was.
That night I want home, logged into the machine I was paper trading from opened the config.json file and change “live:false” to “live:true”. That was it. The world didn’t end but I had entered a whole new stage in my trading endeavors.
First Entry
It was still several days before one of the strategies I developed received an entry signal and let me tell you, I could not hold still. I was constantly checking the markets looking for the setups my bots were scanning for waiting and hoping something would happen. Either the system was going to function as planned or it was going to break. Either way I needed to wait for the markets to do things on their time.
After a few more days my patience paid off. One morning I woke up and noticed that the bot had placed orders while I was sleeping. After verifying in trade view that the time of order correlated with the programmed signal I could breath a sigh of relief. So far so good.
First Loss
Now the initial strategy to go long was a trend following one that, according to back testing, could take several days to weeks to exit. I wasn’t to terribly worried about the outcome of the trade as much as I was about the successful execution of the exit when the time came. Fortunately, there was a second signal on a much shorty time frame trade that ended up losing. I was ecstatic, not only did I see entries on both of my strategies work, but I saw that the exit code function flawlessly. I could not be happier and a renewed confidence in my skills as both a developer and a trader.
Losing trades are all part of the process and if my strategies continue to function within a certain threshold of winner and losers, I will continue to trade them and continue to expect both winners and losers form them. My focus is to ensure my systems are consistent and that their outcomes align with the expected results seen during back testing
First Winner
Now I have to say there was a little bit of luck on my side for things to play out as they did. My bots managed to identify and catch the run up from 4k-5k and it just so happened to occur the weekend I turned them on. Talk about a confidence booster. I'm not sure if I was as excited for the winners that produced financial gains as I was for the loser that proved that the system was working, but hey I was not disappointed with my new account balance.
I want to make sure that I don’t get to excited about the wining trades and to disappointed about the losers. The focus of my work is on the research and development of various strategies and monitoring of their performance after deployment. If I have done my work and keep a watch over my systems, then the winners and losers will come, and my account balance should continue to increase. The only thing I need to worry about is following my practices for research as well and as constantly as my algorithms execute them
Going Forward
Now I know there are absolutely losers and losing streaks in store for me, that's just how these things work. As my strategies prove them self's over the test of time, I hope to slowly increase the size of my account as well as the number of bots that I run and the pairs that they run on. Eventually I want to create a bot that manages my algorithms. Yeah you read that right, a strategy to turn strategies on and off based on their performance, seasonality and other various factors. This is something talked about in the most recent episode of Better System Trader, a favorite podcast of mine. I have listened to nearly every episode and founds them to be quite informational and entertaining.
As for now I will continue to manage risk as best I can, prepare myself to emotionally handle the drawdowns to come, and continue to grind away for a better tomorrow.