There is an apocryphal story about the famous american bank robber and jail breaker William Sutton being asked why he was robbing banks. His genius answer was “That`s where the money is”.
There is a second famous quote of William Sutton, asked why he used a machine gun for robbing a bank: “You can’t rob a bank on charm and personality,” Both quotes come up to my mind when I am asked about the key things in trading.
Sutton’s law #1: Go where the money is
I am a trend follower, just because it is easier to do than picking tops or bottoms. Robbing a bank might not be a good idea, but going where the big money is, certainly is. Big money is invested over a long time, markets are just not liquid enough so that pension funds and other big players could switch their position every day, so once a trend, or call it bullish market environment, is established, chances are great that people come in, stay in and fuel the further movements. It becomes a self fulfilling prophecy. That`s where the money is, that`s where I can do my day-to-day small scale market robbery.
Sutton’s law #2: You can’t rob a bank on charm and personality
Sutton’s law #2 is my reason for being an algorithmic traders. The market basically is a fight of everybody against everybody, all weapons and tricks allowed (well, there have been some regulations introduced..) It would be suicide to risk your money on just your charm or personal beliefs. If there is big data available, use it. If you got an algorithmic trading software available, use it. If you lose, don`t blame the market, blame yourself for not being prepared.
Trading the markets and robbing a bank has always been a tricky business, but using the right approach, using the right means and methods, both things can be profitable.
But before you fear about my professional future, I will stay with trading and rob my counterparts at the market. I got great software which gives me some aces up the sleeve, so no need for machine guns.
William Sutton always denied to have created Sutton’s law, he blamed a journalist who needed to fill his pages. The real answer of Sutton on why he robbed banks was: “Because I enjoyed it. I loved it. I was more alive when I was inside a bank, robbing it, than at any other time in my life. I enjoyed everything about it so much that one or two weeks later I’d be out looking for the next job. But to me the money was the chips, that’s all”. Shouldn’t this be right the motivation of all men dedicated to their job?
Willie Sutton, R.I.P.