Having put a tremendous effort into the development of my timers and relevant ETF trading systems, I can relate to some of the insights provided by expert traders interviewed by Jack Schwager and discussed in “The New Market Wizards – Conversations With America’s Top Traders“. In a summary of his findings, Schwager notes the importance of finding a trading system that matches your personality. I should note that the traders interviewed for the book are professional traders who spend their days sitting in front of their computers. That isn’t for me and I don’t think many reading this post are interested in that type trading. If you have been reading my posts for a period of time you will recognize that I am a medium-term swing trader. There are investors who call themselves swing traders even though the typical holding period of their trades is less than ten days. The average holding period for my ETF timing models is around seventy-five days.
Schwager notes that one of the market wizards stated that “virtually every successful trader I know ultimately ended up with a trading style suited to his personality”. In a number of interviews, market wizards stated that if they gave Schwager their trading systems which have proved to be very successful for them, the system would probably not be profitable for Schwager due to his personality differing from the wizard’s. For example, as there is no such thing as a mechanical trading system that produces stellar returns in all market conditions – there will inevitably be periods for which a given system has lack luster returns. An investor who lacks the conviction required for a particular system would probably give up on it after a year of underperformance, for example.
Even though my leveraged ETF systems are aggressive, I am comfortable investing by them. Have you developed or found a trading system that suits your personality?