Progress Update 7

    It has been a few days since posting an update on my progress because I was cramming for the sake of cramming. My personal goal that I put on myself was that I wanted to complete Codecademy's Python 3 course in 1 week. As of yesterday, I have completed that goal and basically have learned a whole new programming language in 7 days. 

 

    It sounds impressive, but in the grand scheme of things, It doesn't really matter how fast I completed it. It matters how much of it I comprehended. But since this isn't my first programming language (Java was), I understand all of the programming concepts that Codecademy gave me in that course. I just wanted to push myself to learn it quick so I can get back on track to coding and implementing my trading strategy. Completing these courses is a small detour in this process of learning how to create a trading bot since I should have learned it before, but it is still part of the learning process.

    As of writing this, I have started the "Analyze Financial Data with Python" Codecademy skill. But what is cool about that is the skill course is comprised of lessons from the general Python 3 course that I just completed. So I am already a cool 44 percent done with it.

    The beginning of this new skill course is comprised of basic risk and finance calculations that I already understand like calculating correlation, variance, standard deviation, etc. but translating the concepts into Python code. Looking at the syllabus for this course, I can already see what information I need to learn to move forward with my trading bot, but going through the entire thing gives me a certificate I can put on my LinkedIn. So that's cool. The main section in this course that is the bread and butter for anything related to deploying automated trading strategies is learning how to interact with financial APIs (Application Programming Interfaces).

    Learning how to interact with financial APIs will also teach me how to generally interact with most APIs to solve my own problems with any software that supplies their own API. For example, if you were a technical analyst (not naming names but you know who you are) who uses charting software that doesn't have certain indicators like DSI (Daily Sentiment Index) and has to manually import that data every morning through an excel spreadsheet. I would be able to solve this with interacting with a financial data provider's API who does have this indicator, and putting it into the perpetually updating excel spreadsheet.

    Anyways, besides all the coding I did this week, I also read a lot more on great trend followers in chapter 2 of Michael Covel's Trend Following. A few people I read about include Richard Dennis, Richard Donchian, Jesse Livermore, and Dickson Watts.

    A few key points that I learned from reading about these great trend follower traders is that:

1. "When you have a position, you put it on for a reason, and you've got to keep it until the reason no longer exists." -Dennis
2. "Don't take profits for the sake of trading profits. You have to have a strategy to trade, know how it works, and follow through on it." -Dennis
3. Beware of acting immediately on a widespread public opinion. Even if correct, it will usually delay the move. -Donchian
4. Limit losses and ride profits, irrespective of all other rules. -Donchian (this is a general condition for all trend followers but Donchian is considered the "first" trend follower)
5. Trend followers are not lucky. They are prepared for the unexpected.
6. Trend followers take what the market offers in the moment. They don't predict the future
7. Making money requires that you be able to live with and accept volatility.

    After finishing chapter 2 about "Great Trend Followers", I started chapter 3 on "Performance Data". A few key points that I have taken away from reading this chapter are:

1. Don't confuse "risk" with volatility. Most people fear volatility and get out before the big money-making moves happen. If you are on the right side of the volatility, you can anyone who treats it like their worst enemy.
2. All highly-disciplined trading systems have extended periods of losses (called draw-downs). Most investors pull their money from funds who are experiencing draw-downs when historically, other investors or the owners of the funds actually put more money in the fund during a draw-down due to the incoming period of higher volatility.

    I learned quite a bit from all this reading this week and now have a new programming language under my belt. I expect similar strides of progress to be made in the next 7 days.

-Jamie