I don’t know about you, but I have never just rocked up to a random business owner and asked them to prove to me whether their venture is profitable.
it simply never crosses my mind – and quite frankly it’s none of my business, so even if I was immensely interested good manners would probably prevent me from asking.
So it astounds me a little when strangers are perfectly happy and comfortable asking me whether I’m consistently profitable, and more than that, asking me to show my stats which are essentially my personal business books.
Now I’m an open book kind of girl, and am happy to share my trading endeavors but to ask if I’m consistently profitable is pointless and a waste of time, and here’s why.
What looks consistent to you is not consistent to me.
For example, I’m experimenting with short timeframes at the moment, but on the whole am a medium term equity trader.
And it’s quite possible, as my recent testing showed, to have a losing year in a daily system yet be consistently profitable overall.
But if you are a day trader, and I told you I was consistently profitable yet had a losing year, you would think I’m mental and a liar – not about the losing year, I’m sure everyone would believe that, but about being consistently profitable.
For a daily or weekly trend following system in a predominantly sideways market it would not be inconceivable to have consistently lost money over 2 years or more, even though the system is profitable over time and everything has been implemented correctly.
Consider this, which I stole from Ivanhoff’s piece on some cool Hedge Fund Wizard quotes.
I consider my pattern of taking quick profits in 2009 a dreadful error that I think came about because I had lost a degree of confidence due to experiencing my first down year in 2008.
Now I haven’t read the book yet and don’t know who the trader is, or what his timeframe is but would you have the nerve to write him off as a non-consistently profitable trader because he had a losing year?
So what the heck constitutes consistent profitability? 6 months? A year? 10 years?
For me, it’s way longer. I think of consistent profitability as the ability to earn some kind of reward from trading over a really long period of time. It involves being flexible enough to change with the market, and try new things when the need arises. It involves being able to trade through major bear markets and come out the other side relatively unscathed at a minimum.
When I think of consistently profitable traders, I think of people like Peter L. Brandt, people who have years of experience, an established track record and longevity in the markets.
If you’re asking a daily chart trader if they’ve been consistently profitable after 3 years, I’m sorry but you’re delusional. Rather than asking a trader with sub 3 years full-time experience about their profitability, try asking them about their trading consistency instead. Because without the ability to consistently implement their plan, profitability will never get a look in.
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