(banner sifting through data and keeping the candy flowing, caption: “Sifting through data and keeping the Reese’s cups flowing.”)
Since I had gotten to a point where I wasn’t sure who to trust in this industry, I did my back testing the old fashioned way, just like my original fantasy baseball experience: by hand! I purchased historical stock market data, and I went through the data on my own, using Excel. The data I purchased is for every single minute of data since the beginning of the ES more than 20 years ago.
(imbedded pic in next paragraph “manual back tests”, with caption “Scrutinizing every of data!”)
The manual back testing process was incredibly time-consuming. For example, let’s say I wanted to test how I would have done if I bought the ES every time it reached a new intraday high. I had to go back through TONS of data and find every entry and exit point manually and log them to see how that strategy would have performed. It often took days to test one idea, and there were so many ideas that were duds…
It took forever, but I persevered until I found a couple strategies that I liked and knew had done well over the last 20+ years. It was great because I saw the back test data with my own eyes and knew the results were real since I did them personally by hand. Although I had a couple solid strategies, I felt that I still needed more strategies in order to ensure I had a nicely diversified portfolio.
But at that point, I decided it was way too inefficient to keep doing it by hand. So I decided to explore the idea of finding a back testing software, and my plan was to compare how the back testing software’s results looked compared to my manual back tests on the strategies I had already run.
I discovered TradeStation, and have been in love with it ever since. In TradeStation, I could write code to run a back test, and not only could I see the results, but I could then use that same code to automate my trades. And lucky for me, the back test results through TradeStation matched my own personal manual back tests, so I knew I could use Trade Station to do all future back tests.
I’ve been in back testing heaven ever since.
(maybe picture of the gates of heaven, with the word backtesting on it)
Revelations About How to Make Money in the Stock Market
These are revelations I’ve had from the seemingly countless hours of back testing I’ve done:
- There is no strategy out there that will always win. So I bundle a lot of different strategies together to diversify and lower the odds of major drawdowns.
- It’s very hard to find strategies that work on short time frames. Making a ton of money overnight is very hard to do with the ES. So I go with longer time frames because that’s where I can consistently find profitable strategies.
- In general, if you want to make more money, you have to dial up the risk. So if you want to make money faster, you better be prepared for bigger drawdowns and more risk.
After all this back testing, I finally had algorithmic trading strategies that I was ready to put my money into.
Then it dawned on me that I had built the thing that these other investing advisory services couldn’t provide, and that there might be other people out there who are interested in joining the ride with me and mirroring my trades.
That’s how Mindful Trader was born!
A major part of my life is panic.
In adulthood I had developed some social anxiety and over time this lurking sense of unease was often present when I was around people.
Then several years ago I was at home one night when all the sudden out of nowhere I had a panic attack for no apparent reason. It felt like I was going to die! I felt like I was completely losing my mind, losing control of my body, and like everything around me wasn’t real.
In reality I was not dying or losing control, but it sure felt like it to me at that time.
It was an extremely frightening experience for me, especially because there didn’t seem to be any reason for it. It’s not like I had something to panic about (such as a loved one in danger, financial security, etc). It just happened out of nowhere.
(imbedded picture “panic” in paragraph above, with caption “This is how I must have looked when co-workers walked into my office…”)
Then to make things hairier, I started panicking about having more panic attacks! The physical sensations of a panic attack were so terrifying to me that I became extremely fearful of them coming again. That fear, of course, only planted the seed for them to come back more often…
I got to the point where I had a really hard time going to work. Here I was running this auto parts business, and when someone would come into my office I’d be incredibly fearful of having those panic sensations and feeling like I was going to die or lose control.
Imagine if the boss was always scared he/she was about to lose it during meetings haha! It’s comical to me now. The panic really took over my life.
Lucky for me, my mom one day years ago pointed me in the direction of meditation (mindfulness practice). She explained that it was a practice I could do that might help me kind of separate myself from the thoughts and emotions running through my mind. I started meditating immediately thereafter and haven’t stopped since.
I still have panic woven into every single day of my life, but the meditation has definitely changed my life for the better. It has helped me cope with the panic symptoms way better than I used to.
But probably more importantly, it has changed my perspective on life. By practicing meditating all the time, I was able to watch my mind relentlessly pump out thoughts about the future and always looking ahead.
Being able to see that paved a path for me to really start focusing on the present moment and on what is in front of me right now. And by being more present and seeing how my own mind works, I have developed a love and compassion for just about everything. All people, all living beings, and everything around us.
The other upshot from all the meditation: I’m normally pretty stinking good at keeping my cool during portfolio drawdowns! I’ve seen other people get really upset and either close positions or completely abandon their trading strategy because they are being run by their emotions.
By meditating so much, it’s just more natural now for me to “watch” my emotions and thoughts when there is a loss on a transaction and anger or fear emotions bubble in me. These days those emotions hardly even bubble in me at all with losses actually unless it’s extreme, but when they come up, I just try to simply watch them and not act them out. I just sit there, silent and still, and watch.
And that gives me the presence of mind to stick to the plan. (It also helps that I back tested all these strategies personally, so I know ahead of time that there will be drawdowns and I know the key is to live through them and let them pass.)
It’s funny to me that a drawdown or loss never makes me panic. Only panic makes me panic haha!
I’m definitely not perfect at mindfulness though. It’s still a practice, and always will be for me I expect. But when you look at how I reacted to losses when I first started and how I react to them now, it’s like you’re seeing two completely different people.
So the bottom line: the panic led me to meditation, and the meditation has been absolutely crucial to my success in the market. I see so many people who do poorly in the market because their emotions override their rational thinking. So I’m definitely lucky to have this panic stuff in that respect!
Side note: if you suffer from panic or anxiety, feel free to reach out to me any time just to talk, regardless of whether you subscribe or not. I’ve had a lot of healing from being able to talk about it with others and also from being able to hear other people talk about their stories. We can help each other.
Why the Money Doesn’t Matter
After practicing mindfulness for all this time and learning to appreciate the present moment, it’s become clear to me that chasing money does not lead to true peace. It’s always chasing, chasing, chasing, and never just appreciating what you have right now. It’s always got to be more. I feel very lucky to have withdrawn from that mentality.
I spent many years being a money-crazed animal. I came out of college with dollar signs in my eyes and pumped out huge hours trying to make as much money as possible.
Most things I did in life were about trying to make more money. When I went home, I was thinking about work and money. If something went wrong at the business I was running and it cost me money, I would get furious. It was my whole identity.
I had success making money, and it still wasn’t enough. I still wanted more. If I could make a million dollars, maybe then I could make ten million dollars?? How fast could I do it?
My whole identity was based on my success at making money, and when I had setbacks I felt terrible.
What became clear as I got into my late 30s, though, was that my life was just passing me by. I was always looking forward, never satisfied with what I had accomplished, and before I knew it I was halfway through life and had spent most of that time looking ahead.
That’s about the time when the panic kicked into high gear, and it was a blessing in disguise because it helped me be able to enjoy the moment instead of focusing solely on “more, more, more”.
Today, I get a ton of pleasure from the basic stuff. Eating an orange. Having a glass of water. I just don’t need a huge amount of money to enjoy life.
I feel like life is already heavenly just how it is, right in this moment. That’s why in actuality I am thankful for my panic: because it led me to meditation, and meditation has completely changed my life. I get to enjoy “now” instead of relentlessly trying to make tomorrow better.
Why did I even chase money for all those years? I think at the root of it, it’s because I thought it would bring me peace and happiness. But I can see now that money is not what will give me peace.
If you get the money, but have spent your whole life always “trying to get more”, then after you get the money you might feel like “what’s next, I need to get more of something” because that’s what you’ve been doing your whole life.
So once that money comes, it might feel like a void (“now what?”) or like it’s not enough and so you still need more. Neither of those sounds like inner peace to me. I realized that for me, the peace comes from within, not from money.
So why would I have a business that helps people make a bunch of money if I’m saying having a bunch of money is not important? A few reasons.
First, it’s just plain old fun for me. Each of us gets pleasure from different things. To me, there is something fun about trying to earn victory in the stock market. The numbers, the math, the competitors: it’s my favorite game in the world.
It’s truly not because I want to get enough money to go buy a yacht or a mansion. Those things don’t suit my personality or interests.
I do want to make sure I have enough money for my family to have the essentials covered and I enjoy traveling, but outside of that, it’s just because it’s fun.
I feel excited about this work every day when I wake up. It’s fun to find strategies that work, it’s fun to figure out how to put a portfolio of strategies together, and it’s fun to try to help other people.
Second, I love the idea of helping more people learn about the benefits of mindfulness. It’s had a tremendous impact on my life, and I want to do my part to pass it along to anyone else who’s interested.
If initially you come here hungry to make a million bucks, but then you decide to try out mindfulness practice to make sure you can stick it out through the portfolio drawdown periods, then who knows, maybe you can walk away a double winner: a million bucks in your pocket and, perhaps more importantly, the tools to enjoy the present moment and maybe a taste of some inner peace.
The last reason is that I really crave connection with others. I spent a number of years closing myself off from people due to panic, and I don’t want that anymore. I want to approach the world and my fellow humans with love and curiosity, and I get really excited about the idea of connecting with others and maybe learning each person’s unique story.
If you have any questions about me or about anything else, contact me any time.