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Welcome to Return on Effort!
By Fat Cat Trader
Welcome to Return on Effort, a newsletter for part-time systematic traders and investors to find actionable insights.
Systematic trading isn't a get-rich-quick scheme. But it can approximate wealth-building on autopilot when done right. Put in the work, learn the skills, and enjoy the "return on effort" for a lifetime.
If this resonates with you, you’ll enjoy this newsletter.
What awaits you
Our primary aspiration with this newsletter is to share and build trading processes whose strength lie in the balance of three factors: simplicity, realism and ease of use.
By subscribing to Return on Effort, you can expect:
In-depth articles on versatile tools and advanced techniques for systematic trading
Reviews of books and academic papers (with nerdspeak-to-english translations) extracting actionable insights
Simple explanations of trading strategies
Access to community discussions so you can learn from fellow traders.
Our philosophy
Financial trading is a brutally competitive field. We think a logical starting point is carefully studying the common pitfalls that are causing most to underperform or fail. After all, the last thing we want to do is mimic the abysmal returns of the average trader 👇
Annualised return by asset class from 2001 - 2020. An average trader gained 2.9% vs the S&P 500 at 7.5%
Our thesis on why most traders’ returns are so poor is very simple: they are guided by emotion because they lack a clear rule based system they have tested, have conviction in and can execute.
Coming from engineering backgrounds, we naturally have a strong preference for quantifiable and testable heuristics. One of our cardinal beliefs is that any strategy employed is only as good as the process that forged it and executed it in the first place. Only with a process you trust can you navigate the complexities of the market and randomness of short-term results.
These are the four core pillars of our process:
1. Logical yet creative hypotheses
2. Statistically sound backtesting
3. Sensible diversification and risk management
4. Automated execution
A few observations and much reasoning lead to error; many observations and a little reasoning to truth.
When it comes to trading, the watchword we live by is “systematise”. This is the whole point of systematic, evidence-based trading: devising methods that systematically achieve outperformance while minimising discretionary decision-making that is most susceptible to emotions.
Join our community
We want this newsletter to lead to a community of like-minded individuals united by a desire to build wealth through part-time systematic trading.
We encourage you all to join our community discussions, share insights and experiences and pose questions. Side by side, we shall forge a united front—a nurturing bastion of wisdom and camaraderie. Together, we will embark on an odyssey towards trading greatness!
Disclaimer
If you are here you probably don’t need to be told this but coz legal …
All material presented in this newsletter is not to be regarded as investment advice, but for educational and entertainment purposes only. Trading involves risk, so caution must always be utilised. We cannot guarantee profits or freedom from loss. You assume the entire cost and risk of any trading you choose to undertake. You are solely responsible for making your own investment decisions. Owners of this newsletter, its representatives, its principals, its moderators, and its members, are NOT registered as securities broker-dealers or investment advisors either with the U.S. Securities and Exchange Commission or with any securities regulatory authority. We recommend consulting with a registered investment advisor, broker-dealer, and/or financial advisor. If you choose to invest with or without seeking advice from such an advisor or entity, then any consequences resulting from your investments are your sole responsibility. Reading and using this newsletter, you are indicating your consent and agreement to our disclaimer.