Failure Won’t Ruin You. But Not Doing This Will…
- The sting of defeat
- On your marks, get set, go!
- Success, 30 years in the making
Kris Sayce is taking the day off, so today I’m bringing you a piece from Jason McIntosh.
You may be familiar with Jason already. He’s the brains behind Quant Trader, one of our most successful trading services.
I’ll be honest. Trading’s not for everyone. That’s why only about 10% of our paid subscribers choose to invest in one of our trading services. Moving in and out of the market is a lot easier said than done. And it’s not a path you want to go down alone.
One of the hardest aspects of trading — for me at least — is keeping emotions out of the picture. Specifically fear and greed. One can see you get out of a trade too soon to ‘lock in gains’. The other can see you ride a trade down all the way to the bottom, waiting for a rebound that never comes.
Jason takes that emotion out of the picture with Quant Trader. Daily signals — both long and short — tell you when to buy and when to sell. Trailing stop-losses help lock in your gains and minimise any losses. And these are set wide enough to keep you from getting stopped out from day to day market volatility, of which we’ve seen plenty of late.
Of course, as with any investment service, the bottom line is, does it make money? I can’t foresee the future, but I can tell you that, since launching in late 2014, the system has worked as promised. And that promise was a pretty tall order.
I’ll hand over to Jason in a moment. But first, a quick look at the markets.
The Dow Jones continued its slide yesterday, losing 0.56%. Tech stocks fared slightly worse with the NASDAQ shedding 0.68%.
It was the same story over in Europe. The FTSE 100 lost 1.19% and the German DAX dropped 0.99%.
Not the kind of results you want to see. Although those numbers will look pretty good to Japanese investors. The Nikkei 225 plunged 3.11% on Monday before — mercifully perhaps — closing for a series of holidays: Constitution Memorial Day, Greenery Day, and Children’s Day (today). That brings the index down 12.48% since the beginning of January.
And that makes the performance of the ASX 200 look pretty good in comparison. At time of writing (3:00pm AEST) the index is down 0.01% for the day, leaving it up 0.01% for the year. You can see the stellar performance for 2016 below.
Source: Yahoo Finance
Click to enlarge
With results like that, you also get an idea why trading can have its advantages over simply tracking an index, or buying and holding a basket of blue chips stocks.
Which brings us back to our very own trading guru, Jason McIntosh. One of the things I like about Jason is his honesty. He’ll be the first to tell you that not all of the trades his algorithms signal are winners.
Below he explains why you shouldn’t let a few setbacks keep you out of the game. A rule that’s just as important in trading as in any sports. As he puts it,‘What matters most is your next move. It’s the people who keep going that eventually break through.’
Failure Won’t Ruin You. But Not Doing This Will…
By Jason McIntosh, Editor, Quant Trader
You have an idea. You plan. You strategize. Then you execute.
But you don’t always win.
There’ll be times when things don’t work out. It doesn’t matter how strong your desire, or how hard you try. Sometimes, success just isn’t yours for the taking.
This happens to all of us — and in many different ways. It could be in business, sport, relationships…the list goes on. Failure is one of life’s realities.
I recently felt the sting of defeat. No, it wasn’t a trade gone wrong — these rarely trouble me nowadays. This loss was more personal. It took place on the sporting field.
One of my favourite pastimes is running. I’ve been lacing up the joggers for years. It keeps me fit and active. I also enjoy the challenges that racing brings.
12 months ago I set myself a big goal. I wanted to win a medal at the National Masters Athletics Championships. And not just any medal — my eyes were firmly set on the Gold.
Masters is a social event. It attracts a community of runners from around the country. But it’s also highly competitive. Some of the performances are simply amazing.
This year’s meet was in Adelaide. I was there to race the 1,500 metres — three and three quarter laps around the athletics track.
I’ve been racing since I was a schoolboy. But I still get nervous before a big race. It feels a bit like opening your school grades. You’re about to get a judgement on many months’ worth of work.
On your marks, get set, go!
Let me give you a brief description of the race.
The first 100 metres is a scamper. It’s a blur of elbows and feet. The race then settles into a tactical battle to outlast each other. Split second decisions can make or break your season.
This is what a Masters middle distance race looks like…
Source: Quant Trader
That’s me in front. It’s hardly a clash of athletic greats like Herb Elliott, Sebastian Coe, and John Landy. But we’re still moving along at a decent clip.
The picture shows a breakaway group of six. We had about 550 metres to go. This is the hardest lap of the race. It’s a long way from the start…but too far from home to sprint.
I remember seeing the photographer. I was giving myself a mental pep talk at the time. Mostly lies about how good I was feeling. I was trying to trick my body into pushing harder.
I held the lead for another 200 metres. Then, with 350 metres to go, a runner passed me. I should have quickened my step, but I hesitated. I didn’t want to begin my final surge just yet.
In an instant, four more runners were in front of me. My hesitation had cost me valuable seconds. I was now chasing at precisely the wrong time. I told myself I could still do it.
But it was a bridge too far. I finished fifth — just 3.5 seconds behind the winner. I could almost touch the Bronze medal. It was only 1.2 seconds ahead. How close I’d come.
My secondary goal was still in play. I wanted to complete the distance in less than four minutes and 30 seconds. That’s something I hadn’t done since I was a teenager.
There was nothing in it. I saw the clock tick over as I hit the line. I was painfully short. My finishing time was four minutes and 31 seconds. I’d missed the mark by a heartbeat.
My 12-month plan was now at an end. I was full of disappointment.
A coach came up to me a little after the race. I’ve known him for years, and value his opinion. He said ‘Jason, we all get more practice at losing than winning. So it’s important we learn to bounce back.’
And he’s right.
I often tell myself that setbacks are temporary — be it running, or anything else. What matters most is your next move. It’s the people who keep going that eventually break through.
Success, 30 years in the making
Quant Trader members send me some terrific emails each week. Some ask questions about the service or trading in general. Others tell me their stories of finally making money after years of struggle.
I value both types of email. But it’s the stories about finding success — often after many failures — that inspire me. These remind me what’s possible when we really want something.
Let me give you a short example.
A member called Warwick emailed me a few months back. He’s been trading for 30 years without success. Warwick said his losses this decade are around $2 million.
Now, that’s a lot of negative feedback — Warwick certainly knows how to lose. But he also knows how to bounce back. This gave success a chance to catch him.
Warwick has been with Quant Trader since day one. And he generously credits the service as helping him transform his trading.
At the time of his email, Warwick had a $600,000 portfolio with 161 positions. He now takes many small trades — not a few big ones. He’s also cutting losses early, and giving winners room to run.
And the best bit…a healthy profit.
Warwick reported a gain (including open trades) of $69,000. As Frank Sinatra once said: ‘There’s something to be said for keeping at a thing, isn’t there?’
Trading can be hard. I know — I’ve had many soul-searching moments. There have been times when nothing went right…times when I’d question if I was going to make it.
But, like Warwick, I found that sticking at it can work wonders. It also helped that I found trend following early in my career. Having a solid strategic framework made a huge difference.
None of us enjoy failing. Missing your expectations can be demoralising.
But do you know what? It’s okay. Failing is a by-product of having a go. And it’s these people — the ones who chase big goals — that eventually win.
End of day market data
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52-week highs: 17 stocks, including Altium Limited [ASX:ALU], CBL Corp [ASX:CBL], Over The Wire Holdings Ltd [ASX:OTW], and WiseTech Global Ltd [ASX:WTC].
52-week lows: 5 stocks, including Ardent Resources [ASX:IOT], MyState Ltd [ASX:MYS], and Virgin Australia Holdings Ltd [ASX:VAH].