It doesn’t matter what you eat. It only matters when.
It doesn’t matter how you trade. It only matters when you do it.
Welcome to my journey of intermittent trading which was inspired by my exploration of intermittent dieting.
A few weeks ago I stumbled across a TED talk on intermittent fasting - basically the art of not eating 16-18 hours each day. The speaker went through a variety of benefits including the fact that not eating for long periods of time will trigger the state of autophagy which when your body begins to eat itself. That is not nearly as terrible as it sounds because the process basically works first on destroying damaged, or abnormal proteins and other substances in the cytoplasm which in fact could help you live a longer, healthier, disease free life.
Whether this is true has yet to be conclusively established by science, but I decided to try it because one - I could eat whatever I wanted during my time window, two - I could possibly lose the extra 10 pounds I gained during COVID.
I jumped right in basically stopping all food past 2pm NY and only drinking water and coffee for the rest of the day. The first few days were tough. I became “hangry” as I went through the adjustment, but within 48 hours my body accepted the new schedule to the point where I now don’t eat anything after 12 noon and don’t start eating again until 7 am the next day.
Do I feel better? No doubt. My mind is clearer and I feel lighter in my feet. My personal “battle of the bulge” has come to a standstill and I’ve actually managed to lose a few pounds which is certainly a boon to my vanity if not my health.
The most interesting thing is how easy it's been to do this and I think I know why. Intermittent fasting in its simplest form asks the person to make one decision and one decision only - stop eating during certain hours. Want a cupcake? Go ahead. Want some bacon and eggs for breakfast? By my guest. The mind does not have to constantly sift through the myriad of possibilities of carbs versus proteins versus fats. You don’t waste precious mental energy on nutritional analytics nor do you have to engage in constant psychological warfare of restraint at eating that chocolate chip cookie. At its core intermittent fasting asks you to deny yourself just one variable - time rather than a multitude of variables - food. That is why this is the one form of dieting that works well.
I’ve been thinking about how my exploration of intermittent fasting may have helped me to radically improve the trading in my room. In my room we trade the US stock indices all day long 23 hours around the globe. Our strategy is sound and as we’ve traded it more and more we’ve refined the entry and exit techniques to be as good as they could possibly be.
None of that matters.
No matter your strategy, no matter your algo execution, no matter your novel approach to risk control, the fundamental fact of trading is that the more you trade the more mistakes you will make. This is not a moral judgment, but a statistical fact. Think about it for a second. If you traded perfectly every day for 3 years straight and made just 1% each day you would be able to turn a $10,000 account into $500 Million. Do that for a few more years and now you are into hundreds of billions. That of course is absurd and proves that the more variance you assume in a highly uncertain field such as financial speculation the greater your chance of making multiple mistakes, otherwise we would all be billionaires by Tuesday by just letting our “perfect” systems execute to spec.
All of which brings me to our new approach which I call intermittent trading. After staring at screens for thousands of hours I realized that the key to our day trading success has been right in front of our eyes. The global trading day is basically broken up into four distinct periods of activity. There is the Asia Open, the European Open, the pre-NY Open and the European Close which coincides with late morning NY trade. This of course is glaringly obvious in principle but not so easy to spot in practice. Still once we started to apply this framework to our specific entry criteria it was amazing at how quickly we reduced the number of bad trades. The reason of course is because we reduced the number of decisions. No longer did we chase every single wiggle on the chart. No longer did we try to play every minor random range. We didn’t even have to watch the price action tick by tick. We simply engaged with the market during these four key times during the global day when activity was likely to be at its heaviest and continuity had the greatest chance of success.
Does it work all the time? Of course not. But does it work better than anything else? Of course it does.
Think about how every successful trader in the world operates and you realize that this is exactly what they do. Read any chapter in Market Wizards and it basically comes down to the trader having his or her own special framework and applying that framework only under certain conditions while ignoring 90% of market noise.
With intermittent fasting it really doesn’t matter what you eat, it only matters when, so with intermittent trading it doesn’t matter how you trade, it only matters when you do it.
We are long only, continuity strategy in US equity markets and yet we are still able to make basis points almost every day in this highly volatile, s-tty bear market. Why? Because less is more in life and in the markets.