A Solution to Trading Failure

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I've said in various interviews and presentations that I once spent 2,500 hours on a trading system.

It's true.

And I did it happily.

For me, there is real joy in system research and, of course, joy when I win a trade or make 100% in a year.

But there are major problems with trading. Here are a few.

One, it's a never-ending sinkhole of costs. To be a trader we have to:

• Buy these new and improved courses. (I have.)
• Purchase these books. (I have so many.)
• Rent this expensive VPS (Did it for years and it didn't work properly at the end.)
• Upgrade the data. (Felt compelled to.)
• Buy super fast, super expensive trading computers. (I have two.)

While I'll never regret my trading journey...yikes. That's a lot of money that might have been (gulp) wasted? And the costs will never stop.

A trader will always have to pay more and more money.

Two, there's the obsolescence problem.

We've all heard it: every trading system eventually stops working.

Why?

Because every trading system is based only on the data it's tested on. Test for only a year, the system might work for a few months before breaking down.

Test for a decade? The system might last longer.

Test for multiple decades? That's the best way to prolong trading profits...but it's still a system based on a finite amount of data. And, unless you're super careful, even a system with tons of data can go bye-bye.

But there's more.

Even if we have tons of data, timeless principles, and have used those two things to fend off total failure, a trading system can still suddenly tank.

Fun!

Here's an example.

Many months ago, I did a YouTube video on a Futures system on the E-Mini S&P. I loved that system then and love it now. It uses RSI, which I love, and is based on buying pullbacks.

And it's done well for a while.

But check out how 2025 has treated it:

What would a trader do now?

This great system is now tanking.

Is it because of all the headline nonsense? Will it bounce back when the strange volatility goes away?

Or do I need to re-optimize? If so, how much? How many years back do I go? And if I do, have I ruined the entire premise it was built on?

None of those are fun questions.

And meanwhile my account would be losing money.

It's a real problem.

That, for a trader, will never go away.

Yikes again.

So, is there a solution?

Maybe.

And that solution is simply not to play that game.

What if we went for income instead?

Would we have to ever re-optimize? Buy more computers? Get more data?

No, no, and no.

Will income ever go away?

If that income is produced by an indexed ETF, probably not. The income will only go away if the stock market goes away.

And what would that look like?

Here's a simple, tax-advantaged portfolio that we've been tracking in the Dividend Income Program (DIP) for many months now.

And here's how it's done since November 2024:

It's beaten the market handily if we reinvested (unlike my ES system). And it's produced about a 20% yield, which is what these ETFs were built to do. On a million dollar account, that's $200k per year:

And setting this up would take three minutes on the Schwab or Robinhood app.

Once that's done, theoretically we'd never have to do anything again (if we put DRIP on).

Will my trading system come back?

Probably. I like the system and it was built in a simple, sensical way.

But maybe not.

The fear that the system is now broken forever is real, unfortunately.

So, is that what we want? Do we want this looming fear?

Or do we want a monthly salary?

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