Advance Posting

I feel compelled to make a brief entry about my tendency toward posting blog entries in advance.

At the end of the first paragraph here, I write:

> The investing world hasn’t heard from me since.

Followers of this blog had actually been reading consistent posts through Groundhog Day of this year. My regulars probably also know that over the years, I typically post twice per week: Mon / Thurs or Tues / Fri (with an occasional tweak due to market holidays). In doing five stock studies per week for most of 2023, I had more than enough posts to meet my quota of two. I therefore kept posting farther in advance even though many weeks I’d publish an additional post on what should have been a day off. My entry dated 2-2-2024 was actually written 10-26-2023.

When I post is of no real consequence as long as I get the posts done. I appreciate my loyal readers coming along for the ride but ultimately, the blog is to hold me accountable for my projects and work. The last post illustrates what critical importance it plays to that end; without the blog, I might as well be—dare I say—retired??

Were this for my readers, then it would be fair for me to charge a small fee (somewhat reminiscent of the group proposed here except as a blog subscriber you would not be required to contribute content). I have used methodology discussed in this blog to make money for myself and you could surely do the same.

My blog is not monetized, however, and never has been. Not only do I make zero money from its maintenance, I pay a pretty penny between registering the domain name, subscribing to web hosting services, etc.

This will be a shorter post as I have no more to say on the matter. I’m also giving myself a slight break since I just got off the schneid. Despite being shorter, it fulfills my quota of two per week: a huge accomplishment not realized since last October! I remain 10 posts behind, but only readers who keep up with the blog live will notice because entries made in the near future will be backdated to fill in the holes (i.e. “posting in arrears” as opposed to “advance posting”).

To coin a phrase, it’s much ado about nothing.

Getting Off the Schneid

I did an amazing thing last year with First Cut stock studies: 209 of them! Two hundred nine. The time required for data collection, completing a stock study guide and First Cut report, and blog posting averaged 3-4 hours thereby making for a substantial annual commitment. I began my journey with 55 studies between Sep – Nov 2022 before taking a 65-day break and resuming on Jan 12, 2023. I then did one study per trading day through Oct 26 before a technical glitch blocked access to the M* website through my local library. Expecting this would take days to fix, I waited. Days turned into weeks, however, and I fell off the wagon. The investing world hasn’t heard from me since.

During the interlude, my brain has been in a state of—hibernation? Unwelcomed sabbatical? I really don’t know! I’ve taken breaks before (such as the 2+ months mentioned above), but not this long. Everything else in my life has been proceeding as usual including my trading. Trading pays the bills and takes less than 30 minutes per day; thankfully no interruption has been seen there. In my mind, however, the “optional activities” discussed in these first three paragraphs are what make the difference between working and retirement. Since those optional activities have now been absent for a while, I’ve started thinking of myself as “semi-retired.”

I don’t want to be done yet, though. I feel I have at least one more act left.

First things first: write this post. Since I haven’t blogged in what seems like ages, it took a herculean effort to do basics like login to WordPress, get into my blog folder, search the title index for links, remember what to do with tags, etc. These tasks are automatic when I’m doing them multiple times per week but after four months away, a chisel is needed for newfound rust.

I can now be the last, probably, to say Happy New Year to everyone! Greetings after a long hiatus.

My plan going forward, first and foremost, is to catch up on the blog. This will involve many of the things I wish to revisit: restarting the stock study engine, backtesting option strategies, catching up on financial journals, and studying other investment ideas from my reading or personal trading. Perhaps I’ll also process some of what I have learned from the BetterInvesting volunteer program.

Today’s goal was just to get this post done—whether adequately proofread or not—thereby getting me off the schneid. Tomorrow I’ll need to follow-through but for the time being, mission accomplished!

Back from the Hack

My apologies for any “404 error” you may have gotten recently when trying to navigate my website. The site was hacked by malware. I don’t know if it was down for days, for weeks, or for months. I subscribed to a security package and have been told that everything is now restored.

2022 has been a tough time for trading: my most difficult since beginning full-time in [and including] 2008. This year has left me staggered and raw. It’s attacked my positivity and hope. I will blog more about this in coming posts.

Despite the hit, I’m not ready to give up yet. Throwing out the baby with the bathwater is never a good idea and to that end, I still have work to do.

The Python backtester is on life support. You will continue to see posts on Python work I did earlier this year. For me, the dagger was realization that the data and corresponding results were irrevocably compromised.

While I haven’t practiced Python for several months, the next time I revisit will be my fourth “tour of duty.” I got farther the second time in 2020 than I did the first (2019). The third (2021-2022) was mostly practical application in working with the backtester. Hopefully the fourth comes easier and allows me to reach greater depths. Backtester aside, I have other projects in mind for which programming may be useful. Stay tuned for additional blog posts in the Python category.

Thankfully, some new automated backtesters have come onto the market. I have taken a good look at Option Omega, which has many appealing features. I also recently learned about MesoSim, which may be more tailored to my kind of trading.

I’m not really sure whether subscribing to one of these services solves the data issue. It’s at least likely to hide data flaws because close scrutiny of the backtrade log will be required. Making matters worse, some automated backtesters don’t provide such a log with essential data like entry and exit prices. This would allow for verification especially when trade results are highly discrepant from anything seen in ONE where the complete option chain is on display.

Either way, I have not entirely given up on backtesting and still have option strategies I’d like to study with an automated product. I will blog about this in the near future.

Something I have discovered in the past several months is BetterInvesting, which focuses on technamental [see Take Stock by Ellis Traub (2010)] analysis of stocks. Most important to me in this pursuit would be a repeatable process, which BetterInvesting provides. I don’t care so much what the process is because testing/validating the process would require [backtesting] tools that I’m not even sure exist. Regardless, you can expect some future blog posts in this area under the new category tag “BetterInvesting.”

My Latest Cover Letter (Part 6)

Through a series of blog posts (Part 1, Part 2, Part 3, and Part 4), I feel I have done a pretty good job of describing what I seek, what I have done, and what I offer to a prospective financial firm. Organizing and putting all this into words has been a herculean effort for me. One thing that remains quite understated is the content presented in this blog.

In Part 5, I started to bring my writing to the fore with a sampling of blog posts.

To say this blog is extensive would be a vast understatement:

• What it Takes to Trade Full Time (2012)
• optionScam.com (2012)
• Walking it Forward with System Validation (Part 1) (2013)
• Is Independent Trading Success Possible? (Part 1) (2013)
• Portfolio Considerations of a Trading Strategy (Part 1) (2014)
• Can We Scientifically Understand the Financial Markets? (Part 1) (2014)
• The Myth of Unusual Option Activity (Part 1) (2015)
• Correlation Confound (Part 1) (2015)
• Israelsen on Diversification (Part 1) (2016)
• Am I Worthy of Self-Promotion? (Part 1) (2016)
• Professional Performance (Part 1) (2017)
• My Take on Asset Managers (2017)
• Incremental Value (Part 1) (2018)
• Automated Backtester Research Plan (Part 1) (2018)
• Testing the Noise (Part 1) (2019)
• Investment Newsletter Scam (2019)
• Black Swan Trading Systems (2020)
• What Percentage of New Traders Fail? (Part 1) (2020)
• An Insider’s View on Jobs in the Financial Industry (Part 1) (2021)
• Debunking the Williams Hedge (Part 1) (2021)

With the exception of time, this blog really is my job interview. Its entirety makes me the most transparent of candidates you will ever see with regard to motivation and any ulterior motives I could possibly have.

The current mini-series is my best attempt thus far to encapsulate everything I am in the domain of finance: trader, backtester, analyst, commentator, writer, defender, and scientist (in any order you well please).

My Latest Cover Letter (Part 5)

I maintain this blog to hold me accountable for work and related projects. It shows good insight into my activities, my trading, and my related thoughts/education over the years. If presented effectively, I think this blog could be my entire job interview.

At the risk of being repetitive, I am going to include an e-mail sent to the CFA institute in March 2021. Earlier this year, I contemplated taking CFA Level 1. I looked at the CFAI website and scrutinized the criteria to earn the charter. One thing I questioned was my work experience since I technically have not worked in the financial industry proper:

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…the reason for my contact is because I know enrolling to prepare and sit for the CFA exams will take a great deal of time, effort, and money. I hope I can pass them all and should that be the case, I would be heartbroken to be denied a charter because the Institute wouldn’t approve my self-employed work experience.

My résumé outlines much of what I have done as a full-time trader since 2008. I have spent many hours watching trading videos online, attending investment and trading Meetups, attending seminars and webinars, participating in online trader forums, and communicating/collaborating with other retail traders. I have also spent many hours backtesting trading strategies and analyzing performance. I have read and taken copious notes on tens of books related to trading and quantitative finance. I log time in a spreadsheet, which totals over 21,000 hours to date. Although I trade only for myself, I have treated this as a full-time job from the very beginning. This is my passion and my business.

In 2009, I created a trading entity (LLC). My tax returns have listed me as “Trader in Securities” for at least the last 10 years.

I led an options trading group from 2013-2016. We had a handful of regular members. It’s very hard to find other full-time retail traders like myself, which is one reason I have given thought to pursuing formal employment in the industry.

I blog about my work and finance-related topics regularly at http://www.optionfanatic.com. What follows is a sampling of over 1,000 total posts I have written since May 2010:

• Can a Retail Trader Succeed at Algorithmic Trading? (Part 1) (2021)
• Attacking the Python (2020)
• Why is Curve Fitting Such a Bad Word (2020)?
• Testing the Randomized OOS (Part 1) (2019)
• The Trader Meetup Dilemma (Part 1) (2018)
• Beware Fraudulent Claims (2016)
• The Southeastern Michigan Trading Collective (2016)
• Weekly Iron Condor Trade #1 (Part 2) (2015)
• Why Options? (Part 1) (2014)
• Weekly Iron Butterfly Backtest (Part 1) (2013)
• Truth in Backtesting (Part 1) (2012)

The blog is not monetized and from what I can tell, it garners little traffic. I maintain the blog to keep me on track with trading and with related thoughts and projects. It’s a way of holding myself accountable for the work that I do.

Thank you for looking into this! Let me know if I can provide anything else.

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I will conclude next time.

Trader Teacher?

Today I present a hodgepodge on what I might be able to do with regard to teaching retail traders or IARs.

Stepping back to look at the process, I feel I’ve done this the right way. Nothing is ever guaranteed, but in the absence of better ideas people are often interested to emulate those who have had some success. To this end:

• I’m disciplined: I worked 60+ hour weeks for the first three years.
• I’m disciplined: I’m at the trading desk almost every single day before the equity market opens until after it closes.
• I don’t overtrade: actual trading takes up a fraction of my workday (see second-to-last paragraph here).
• I remain on a constant quest to learn: I read articles, I read books, and I watch webinars.
• I have worked to develop my strategy and I trade that plan regularly and often (as a “Trader in Securities”).
• I place a strong emphasis on testing.
• I continue to look for others with whom to collaborate on research projects (see third paragraph here).
• I have losing trades.
• I have losing years.
• I’m always fearful.
• I don’t brag about performance.
• I’m always grateful.
• I maintain this blog to hold me accountable for ongoing tasks.

I have accomplished my goals to date and I have few complaints (exception: second paragraph here). I can can lose it all going forward, which serves as strong motivation to look for a better alternative or supplemental approach.

I would never hold myself out as a trading service. I don’t have all the answers, but I certainly don’t think any premium service does either. Why can’t I do what they do, then? I wouldn’t feel comfortable representing myself that way.

If I knew when I left pharmacy that I could pay a fee to accomplish what I have, then I would have forked over a hefty sum ($thousands). I made good money as a full-time (plus overtime) pharmacist. That was also shaving years off my life. For the last 13 years, I have been able to replace income and save the wear and tear on my body.

I have long shied away from the idea of getting into trader education because I believe some decent mentors do this well in the face of many fly-by-night charlatans. The good ones already have the infrastructure and experience. I would be more like a makeshift math tutor trying to cobble resources together.

Good* trading mentors and educators are worth the money they get for their efforts, and I’m sure I could do the same if I applied myself. Several years ago, I surveyed a number of trader mentorship/education services. The average rate seemed to be around $300/hour. That is less than $6,000 for 18 sessions. This seems fair. I would be heavy on the disclaimers to start because I want people to have reasonable expectations. Knowledge is never a guarantee, but I could share many things from my journey that I deem critical to the endeavor.

* — Separating the wheat from the chaff is a whole other discussion.

My Latest Cover Letter (Part 4)

Today I will conclude this blog mini-series with some leftover, miscellaneous remarks.

If I haven’t made it clear thus far, then let me say: I WANT TO GET INVOLVED!

I want to remain on a similar course with my quant-related work: trading strategy development, backtesting, and analysis.

I want to work with other people, though, and I want to do big things.

I would like to make a difference. I helped people as a pharmacist and I believe I can help people with their investing.

To be completely honest, I probably want some recognition for what I can do to help, too. I am grateful in being able to say I have done what few others have as a full-time, independent retail trader as evidenced by the fact that I have unsuccessfully looked high and low to find others doing what I do. Since my performance is not verified, benchmarked, or authenticated, though, none of this really matters. My business does not even qualify to meet the work experience requirement for the CFA Institute. Somehow, I feel my trading experience should serve as a springboard to helping others but so far, I have not been able to make that connection (see this post, fourth-to-last paragraph here, and second paragraph here).

I need to stick with my trading; I expect this to continue as my primary source of income.

I can probably teach as well as any professional trading “mentor” or educator, and I have the trade experience to back that up. I can teach trading fundamentals. I can teach risk management. I can teach how options work. I can write. I cannot teach discipline. I cannot teach proper position sizing. I cannot guarantee that anybody will make money. Nobody else can either.

I could always come heavy with the disclaimers, such as:

• Everything here is for educational purposes only.
• Nothing here is to be construed as financial advice.
• I am not a financial advisor and I know nothing about your specific individual situation.
• Trade results are hypothetical.
• Past performance is no guarantee of future results.
• Investing involves risk and you must be willing to experience losses.
• Transaction fees (including slippage and commissions) are a reality of investing.

I would like to get paid something, but it doesn’t need to be as much as long-time Wall Street veterans. Benefits seem attractive—namely health insurance, a retirement plan, maybe food/refreshments, tech support, additional support to study for licensure/credential exams… or if that is too complicated, then we can just agree to a flat salary since a benefits package translates to dollars anyway. As long as I can pursue my passion, the importance of compensation is assuaged.

Look at what I’ve done. Scrutinize my blog. See my thought process and analytical skills.

Hire me as some sort of consultant/analyst/trader.

Let’s get to work!

My Latest Cover Letter (Part 3)

I have some additional thoughts on the subject of My Latest Cover Letter.

While initially inspired, I probably will not apply for the Research Analyst job as posted. I really want to advance my own agenda, which I believe can benefit a [hedge] fund as well. I am willing to be trained to do said job if the fund is willing to explore my approach for possible inclusion at a later date.

I suppose I am therefore looking for a hybrid position: be trained as a research analyst, gain further education, do further development of my own strategy, and implement that into something investible for a fund.

Doubt seeps in when I start to wonder why they would hire me for all this. They would have to be sold on what I have to offer; doesn’t this circle me back to authenticating myself with a track record, which I don’t have (see third-to-last paragraph here)? Maybe they could set me up with a monitored paper account and let me do my thing for a while.

What I really want is for someone to see what I have done with regard to research, to my remaining projects, to my overall analytical/trading approach, and then to hire me for it. Hire me for my experience and provide me with additional tools and more advanced expertise needed to get the rest done. Make me a consultant of sorts.

I feel I could work as a junior financial analyst because I do exactly that. I apply analysis to strategy development and to all of my blog topics. Give me support to get the CFA charter and/or Series 3 license. In working for you, I hope to sharpen my analytical skills with respect to statistics, programming, performance computation, and risk metrics. I look forward to teaming with competent people to realize synergy in our thinking and our experience.

I would ultimately like the opportunity to trade with discretion (automated option trading is challenging because contingent orders are not as reliable as alerts/mental stops coupled with manual order entry). I have been successful as a retail trader for the last 12+ years. Give me a small account with additional capital to follow if you like what you see.

In terms of compensation, I am not expecting a huge Wall Street payday. I would like a decent, respectable salary that makes it worth my while to come into an office. I would also like the freedom to work occasionally from home if my remote productivity is acceptable. Decent health insurance would be a bonus.

Managing my own account averages less than 30 minutes per day, and I want the freedom to do this since I anticipate personal trading to continue as my primary source of income.

I will conclude next time.