#030: JONAS M.: +14,000 USD PROFIT IN THE FIRST 74 TRADES

A couple of weeks ago I received a very nice email from one of the students of my VIP course that I have in the Czech Republic. His name is Jonas and he is one of the most serious and most enthusiast students I have ever met. Here, you can see his equity of the first 74 live ATS trades:

Since Jonas is doing really great job, I have decided to ask him for a short interview as an inspiration for other traders. Ready? Ok, let’s start:

Jonas, can you tell us something about yourself?

I am 24 years, I live in a quiet area about 40 minutes from Prague. My first trading experience goes back to 2005 when I registered to financnik.cz (a website for traders in the Czech Republic; Tomas is a co-founder). At that time I was still naive, 13-year old boy, so trading has instantly become my dream job. At the age of 20, I started working as a key account manager in an advertising agency. I was saving most of my salary and two years later, I was able to fund my first trading account for spread trading. Ever since I was a kid I was fascinated by an idea that the only limiting factor in this business is the trader himself.

Why have you chosen automated trading? How do you perceive the psychological aspects of this trading approach?

After two years of trading spreads I came to the conclusion that I can reach average profit 36% per year, however, the distribution of profits was too inconsistent for me. This would prevent me from using external capital and my way to full-time trading would be very, very long. Besides, when I was trading spreads, I had experienced 50% drawdown - without breaking my trading system or money management rules - and it took me 8 months to get back into profits. After this drawdown, I had always been struggling with fear, every time I clicked on the “buy” button again. There are some drawdowns in ATS, too. But the statistic keeps me calm, seeing the approximate maximum drawdown I can expect.And the buying and selling is done by the bravest trader - the computer. I really enjoy both these psychological aspects very much.

Your really great ATS start proves that you must have spent really a lot of time and work by preparation. Can you reveal any details about your current portfolio? How many markets do you trade, what markets, timeframes, some details about your systems?

Since 80 % of my ATS trading capital is external, I have tried, since the beginning, to get the maximum diversification of my portfolio. My core is 6 intraday systems for index markets TF, ES, EMD, YM, and NQ. All of them are for 15 to 30-minute timeframe. Besides that I have two swing systems for soybean market (S), with 45-minute main timeframe, and one excellent intraday system for crude oil (CL). In total 9 systems.

What are your most interesting findings from the ATS world?

I am still at the beginning, so I have dozens of findings every day that catch my attention and I want to spend more time investigating them. One of the most significant is the possibility to search systems for my portfolio with parameters specified in advance. It is like assembling the watch gears so that the whole machine works as I want. The last couple of weeks I spent with the application of various filters and market internals.

What do you focus on during the ATS development? What are the most important points?

In the ATS development process, I focus on the Cluster Analysis robustness, Out Of Sample results and high System Quality Number of the system (after deducting real transaction costs). At the same time, the system has to have consistent equity curve that comes from Monte Carlo Analysis, with acceptable DrawDown/NetProfit ratio on 95% confidence level. I also monitor other specifics of given market like volatility, slippage, and other aspects. When I find during the early design stages a system that looks promising after the Cluster Analysis, I try to analyze key obstacles that the given market has for all ATS. It can be too high drawdown, low average trade, and so on. During the design & prototype run, I pick only those candidates that have the potential to eliminate the key obstacles after the application of filters.

What part of the ATS trading do you spend the most time with?

In the beginning, I spent the most of the time with finding systems using the workflow you have taught me in your courses in the Czech Republic. The first system I got for the Russell 2000 (TF) market I selected among 24 candidates. For Soybean market (S) I had 36 candidates. Now I have the first live portfolio, and I can see a lot of imperfections. There are still lots of things that I don’t know. But I try to implement, as fast as I can, all new knowledge I get from books and other sources.

What are your long-term targets, and what improvements do you plan to make with your portfolio?

Until January 2017 I have to prepare myself for an increase of my trading capital by 200%, which entails the challenge to find the right money-management system and also work on the portfolio diversification. I want to expand my portfolio to GC, DAX, FESX markets and also solve that my portfolio is mostly long-biased. For index markets, I want to reduce the drawdown and decrease the correlation of the systems using market internals. There is still a lot of work to be done, but I am looking forward to it.

What would you recommend to ATS beginners?

I would recommend to them 2 things. The first one is a recommendation not to take any shortcuts and not to take the easiest way. Instead, you should give yourself challenging goals and enjoy the gradual and deserved overcoming of them.My second advice is to learn from real professionals and not to listen to the advice of other beginners, including myself.

Here you can see overall statistics of Jonas’ first 74 live trades: