Slow Trader Fund, We’re Ready for Action

Thank you for your patience while I’ve performed a complete overhaul of my short-term trading strategy. Readers will notice the amount of work involved in the ‘how I trade’ page. This has been a great exercise, and one of which I’m confident will be well worth the wait.

A reason for taking so long is that our strategy, I believe, can only truly be devised under live trading conditions. The way we react to probability trades under live conditions is significantly different to what would otherwise be developed under benign back-testing conditions.

To that end, I’ve traded and worked on the strategy these last few months with my own account and traded small. The fund has remained in waiting.

Now I’m at the other end of the strategy development, we will see a gradual build-up to normal fund trade amounts.

My thoughts on how I see the fund going forward from today:

Slow Trader allows investors the opportunity to access a short-term trading fund.

Why an opportunity, and why short-term trading is not possible for most people:

  • Firstly, short-term traded funds are not readily available. Moreover, expert (and hopefully successful) short-term traders charge a lot – up to 50% of profits and large participation fees.
  • Secondly,  short-term trading is a difficult skill to master. It takes several years for a trader to graduate from the ‘beginner’ level, through ‘intermediate’, to ‘expert’. And, expert is where all the capitalised reward is found. In other words, short-term trading, in contradiction to its name, takes a long time to learn.
  • Finally, learning the short-term trading skill is often, through the beginner and intermediate stages, financially penalizing.

From the 4-hour chart the fund trades:

  1. Nick’s qualifying UK shares – long only.
  2. Currency pairings GBP/USD, EUR/USD, AUD/USD, USD/JPY – long and short.
  3. Commodities Gold and Oil – long and short.

For each of these I’m looking for an edge:

  1. Nick’s qualifying UK shares already have the fundamentals. And, although fundamentals are normally not a factor for a trade of less than 9-months duration, we nevertheless have them on our side. The principal trading advantages that I use, however, are probability, context and price action.
  2. In our currency pairings we again bring probability, context and price action to the fore.
  3. Commodities also use probability, context and price action but are also traded inline with the COT report.

The 4-hour chart is used in preference as this provides at least two trading opportunities per day. This means that trades can be open from several hours to several days.

The page ‘how I trade’ is written with the 5-minute chart in mind but applies equally to the 4-hour chart and is the essence of how I approach probability, context and price action. Nick’s qualifying UK shares are published quarterly through this blog and guidance on the COT will also be given as the COT occasion provides – the COT cycle for each commodity coming round independently a few times a year.

I provide an annual detailed report on the fund and a semi-annual ‘how goes it’ review.

The goals of the fund are:

  1. Not to lose money (and this defines our risk level)
  2. Increase the fund by 30% (as a minimum year on year)
  3. Compound the fund year on year
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