I Tried Day Trading w/ a Trading Bot Algorithm
In this video, I’m going to trade futures using an algorithm to see if this is a profitable way to make money in the stock market.
I am highly skeptical of any trading algorithm sold to retail traders. The bottom line is… why? Why would someone who can create a profitable algorithm share it with other people? You can simply scale up and make as much money as your risk tolerance allows.
Algorithmic trading sounds incredibly smart and fancy, but it’s essentially just a computer program to automate the process of buying and selling financial instruments when certain conditions are met.
Now to your average retail trader like myself, this sounds ideal. Remove the indecision, the missed setups, the uncertainty, and the emotions. You could set your program up and have it run while you sleep late. Or at least, that’s how it seems and is often marketed like that.
Again, I don’t really think there will be something like this that works for the average retail trader, but I’m willing to put real money on the line to find out.
The Algo
Alright, so the algo trading system I found through Twitter. I don’t feel comfortable promoting it… I don’t want to be seen as shilling something or encouraging people to sign up, but I also don’t want to completely tear apart someone’s business if I don’t have success with it.
This is something that isn’t widely advertised, so I don’t think it’s duping thousands of people out of their hard-earned money. It’s developed by a woman named Lauren who often posts her results and results of her members on social media. And to be honest, it all sounds too good to be true. Results of a few hundred dollars to a few thousand dollars per day seem pretty common.
Being highly skeptical, I actually tracked down a few people from the result screenshots she has posted… because it just all sounds like BS to me. I even thought that these accounts could just be fake ones that Lauren created to make it look more successful than it is.
One guy who posted his results had a unique enough name that I was able to google and find his website – he was in a completely unrelated field and his website was definitely legit. I emailed him, and he was rightfully… thrown off as to how I tracked him down. But I told him I was just looking for an unbiased review from an actual member. Here’s what he said.
“Lauren is epic, I have been part of two of her trading rooms and platforms, she has been doing it for years. She works like crazy, and is always fine tuning everything to get the most benefit for her crew. Patient with the new people, and detailed and forward thinking with the people that have been part of the crew for a while. Worth every penny. Happy to screen shot a P/L”
Alright, that sounds pretty convincing, but I decided to reach out to two more members. One guy said he hasn’t used it lately – joined in the early stages where more testing was needed. He didn’t seem to have a strong opinion either way – it sounded like he didn’t make money with it, but said Lauren is constantly testing different strategies to make them more successful.
That seems like a reasonable testimonial. The last member I asked said she definitely thought it was worth the money, and she has been having success with the algo hands off.
So that’s two random members saying yes, it was worth the money and a third who had somewhat neutral feedback – he didn’t think it was an outright scam, but it also sounded like he didn’t have great results with it.
With that, I decided to give it a shot.
Here’s the thing. It’s very expensive. A thousand bucks a month. So I’m not going to tell you to like and subscribe right now, but you know…
Also, there are several other fees you have to consider. Lots of brokerages won’t let you run automated trading strategies like this. This one only works on NinjaTrader, which is a futures-centric broker. So with a new brokerage, you need to pay for a live data feed. This is $12 per month. Then, in order to run the algo on NinjaTrader you either need to buy a lifetime license or lease it, which is $225 every 3 months.
And that’s not all. NinjaTrader runs on Windows and all my computers are Mac, so I could use something like Parallels to run it, but Lauren recommends using a VPS or a virtual private server. This means you get your own server space somewhere on a server farm with your own login to a Windows machine. Even if you have Windows, the benefit here is a more stable computer with a more reliable internet connection. You don’t want to be running the algo and have your computer go to sleep or your WIFI get interrupted. This is like $50 per month.
So all in, you’re spending $1,137 per month without placing a trade. That is pretty wild.
The bright side for me is Lauren does have an intro offer where she will give you access for three weeks for $500. So all in for this experiment, I am putting in $637… plus I am going to load my NinjaTrader account with $2,000.
Getting Started
Once I signed up, there was a lot to learn. First, I’ve never used NInjaTrader before, so it’s a completely new platform. Then, there’s downloading the strategies from Lauren, uploading them to NinjaTrader, and customizing the settings. She has like 4 different core strategies that you can run on any futures instrument. There are a few videos to watch about getting set up, and she has a whole spreadsheet with custom settings depending on the instrument you want to run it on. So I spent the first afternoon just getting acclimated to the platform and settings.
The next day was Friday, and I was still waiting for my server to get setup, so I didn’t try running the algo – I decided to wait until Monday.
Running It
So here’s how it works. Every night, Lauren posts which strategies she’s running on which instruments. Other members follow suit, posting what strategies they are running. It’s up to you to run whatever you want, but Lauren recommends beginners start out on her 15-minute Range strategy on the Nasdaq future contract, NQ.
Since I have a small account, I will be running these strategies on the micro contract, not the mini. The Micro is one-tenth of its mini counterpart. Oh, and none of the fees I mentioned earlier take into account commissions and fees of actually entering and exiting trades. For Micro Nasdaq futures, it’s 72 cents, so for a round-trip trade, it’s $1.44.
The range strategy is quite simple as far as I can tell. It’s essentially just an opening range break trade. After a set period of time after the market open, a trading range is established and once price moves outside of it in either direction, the algo will take a trade. There may be more minutiae involved, but I believe that is the core of it.
The settings for these strategies do get updated fairly often, which is good – Lauren is tweaking things as the market conditions change, which is something I like to see.
One other thing I’ll point out is my home screen in Ninja Trader. Like everyone else in this algo group, I have a simulation account, which is the first row. You can run different strategies on the sim account to test things out, which is great. Below that is my real money account. So I’ve got $100k of paper money, and my $2,000 real money account below.
AND, in case you are new to futures, futures are not restricted by the PDT rule. So you can take as many trades as you want with less than $25,000, as long as you meet the intraday margin requirements of your broker.
Day 1
So my first day of running the algo, there was not a trade on the NQ range strategy I was running, so the algo did not take a trade in my real money account. And that’s fine, if the setup isn’t there, there’s no trade.
Day 2
So for the next day, I wanted to run another instrument, just to make sure we get enough trades in this experiment. So I decided to run a newer Trend strategy Lauren developed on MYM which is the Dow micros. I slept in and woke up around 8am Pacific to see the algo took some trades, and I was up $72 on the day. That was a pretty cool feeling to actually make money while I slept. But what I noticed was it took a lot of trades… so I did pay about $18 in fees and commissions… and what I realized is I actually set the strategy up wrong. I had it on a one minute chart… which is why it took so many trades. Instead, it was supposed to be on a line break chart, which is something I was not familiar with, so I was glad I got away in the green despite my mistake.
Day 3
Throughout the day, other algo members will post their trading results, and I noticed a lot of people were doing really well trading oil, so I decided to add MCL – micro oil futures – to the algo. And this time, I woke up in the red. YM and NQ were losses, and oil was my only winner, but not enough to outweigh the red. Altogether, I lost about $88.
Day 4
I decided to add an ES strategy – that’s the S&P futures contract. This utilizes the range breakout strategy I’ve been running on NQ. The algo took trades on YM, ES, and CL. YM was an $11 winning trade, ES was a massive loser, dropping me $246, but luckily oil mitigated those losses with a $194 profit. So unfortunately, this was another red day, losing about $48. I wish I would’ve left ES at home.
Day 5
Today was a rough one. NQ and CL were both pretty big losers, making it a $419 red day, which is especially rough on a small account. At one point, I was in an oil trade that was green, but I really didn’t want to withstand any more losses to this account, so I manually moved my stop-loss into profit to ensure it wouldn’t go red. Throughout this experiment, I’m really not trying to make any manual adjustments and just let the algo do it’s thing, but I did make an exception here.
One thing that can be especially frustrating is when you have a red day and you see other members posting their results and… well, they’re a lot different than yours. In a situation like this, you just have to look and see what strategies they’re running… and some members will manually exit trades early or, after some green trades, will switch off their real money account and change it to simulation, but – if this is being marketed as a “make money while you sleep” type system, I want it to be profitable without having to be watching the trades, making my own adjustments, etc. Maybe that’s too much to ask, but for the cost, I think that’s what it should be like.
Week 1
After the first week, my account is down to $1,518 for a $482 net loss. Meanwhile, my simulation account is up about $500 to add a little insult to injury. It’s a bit frustrating given the cost of running this algo on top of the losses, so hopefully the next two weeks are a little better.
Day 6 - 9
Unfortunately, the next week did not get off to a better start. The algo took some trades on NQ for a loss of $74. The next day, it took a trade on NQ that was a loss of $22. The following day, more of the same: a $105 loss with NQ. Then a $40 loss. And then thankfully Friday was a holiday, so no trades.
Week 2
The 2nd week, I lost about $240, taking my account under $1300. I’m certainly a bit discouraged. Lauren messaged me saying it was not a good week for the range strategy in this market – which, yeah, I noticed. She said she kinda, sorta recommends running the trend strategy on Dow or Russell Futures, so I might try that.
I am certainly losing any faith I had in this trading system, but I have a few more trading days left before my three week access expires, so let’s get it over with.
Day 10
I decided to run a strategy with the Russell… but I just ran the mini, not the micro, so it was a bit risky to do with a small account. I did get my first green day in awhile, locking in $44 of profit.
Day 11
And then, what do you know, but the impact of the mini Russel came back to bite me. I lost $325 with RTY. At least NQ finally had a winning trade making me $65 back, but I still ended the day in the hole $261.
Day 12
Today was interesting. I woke up to a margin call dialog box in Ninja Trader. Apparently I did not have the required cash to take the trade on RTY, which is strange because the margin requirement is $500, and I have over one thousand. But this one especially sucks, because the Russel went on a nice run, and it would’ve been a really solid trade. You can see Ninja shows an unrealized gain of almost $4,000 – but that’s not really accurate. It essentially recorded me as entering the trade, but since I didn’t have enough margin, the trade was never live and thus, my take profit and stop-loss levels that the algo normally enters weren’t there. But it does look like it would’ve been a terrific trade… I’m just not sure why the margin requirement was more than $500.
NQ made me about $65 in profit… but Ninja charges a $25 fee for not having enough margin… which is rude… so after all of that, I was left with $40 in profit.
Day 13
So for my last day of trading, I ditched the Russell and went back to only NQ, making $65 in profit.
Final Results
Alright, so after 14 days of running the algo, it took 137 trades with a roughly 55% win rate. But my average winning trade was $36 and my average loser was $63. The average trade time was 20 minutes. And I don’t think commissions are calculated correctly on the platform, so going off of my last broker statement, I have $1,164 left in my account, resulting in a loss of $836.
Given the cost of everything I mentioned at the beginning, this experiment cost me a total of $1,473.
But, here’s where things get interesting…
I used Ninja Trader’s Strategy Analyzer feature, which allows you to easily backtest whatever strategies you want. So while the main strategy I ran with NQ wasn’t profitable, running the newer trend-based strategy with the micro NQ contracts would’ve resulted in a net profit of over $9,000. And again, it’s not taking into account commissions, but you could just take the number of trades $237 - and multiply it by the commission cost – so in this instance, it’s still extremely profitable. I do believe the Strategy Analyzer usually gives an overly optimistic result than trading live, but even if it’s even remotely correct, this is intriguing.
So if you want me to give this a shot for one more month, let me know in the comments below. I think there is a bit of a learning curve to take into account and of course, being more conservative with your risk by not trading minis when you should be in micros.
Final Thoughts
While this wasn’t profitable for me, I’m not sure I’m ready to throw in the towel.
I do think Lauren is trying her best to test and develop strategies that work as market conditions change. I wish it was a little bit more affordable. It’s a lot of money to put at risk for something that may not work out – as you saw here with my experiment.
It seems the majority of members are having success with it, so maybe it just takes some time to figure that out. I also thought it’d be interesting to use a funded account with the algos, so once you find strategies that work, you can amplify your results. I don’t know, just something to consider.
Anyways, I hope you enjoyed this video. I’ll see you in the next one.