Every good research project has to have well defined criteria that could allow other scientists to duplicate the experiment at a later date. The appalling behavior of some scientist in recent years brought attention to flawed research and publication reviews in general. While I do believe this to be a small portion of the scientific community, it has served to remind us all of the importance of the “methods section”. This post serves to outline the methods we are going to employ for this sustainability experiment.
We hope these methods combined with posting our results here as we move forward would make even Adam Savage happy.
In addition to the training and mentorship discussed in my last post, we also evaluated the technology designed by DittoTrade that would become the backbone of this experiment. I could spend time explaining how DittoTrade works but they do a far better job that I could ever hope to accomplish here. Since Anne-Marie Baiynd is a lead trader with DittoTrade, the decision to go forward was pretty easy given our risk tolerance.
My experience with DittoTrade comes through Keith Kern and his endless stream of charts I found posted on StockTwits. Keith challenged himself last year to grow a $2,500.00 account to be $25,000.00. These were highly risky trades but it was also an incredible opportunity to evaluate the technology and I funded a personal trading account with DittoTrade following Keith as my lead trader. I was unable to see the challenge through to fruition but the last time I checked it was doing quite well. The money I used for the technology test has now been repurposed for this experiment.
We have opened an account for Rubicon with DittoTrade and followed Anne-Marie’s “Stealth Mode” service with an initial account balance of $7,500. We have defined our total risk for this experiment as that $7,500 and we will not be adding any additional funds to the account at any point during the experiment.
In order to ensure these methods are something that can be modeled by other non-profits, we will not be modifying any trades executed by Anne-Marie’s service. The only real difference is that we only intend to “ditto all” when the market has a clear direction and Anne-Marie is trading with normal position sizes. We have come up with a simple red light/ green light system that she is willing to incorporate into her service updates to signal when we should switch from “ditto all” to not follow any trades at all. Anytime that Anne-Marie advises her clients suggest the use of “smaller position sizes”, we will remove ourselves from “ditto all” and hold as cash. The signal to do this is a red light. Watch for an upcoming video from Anne-Marie describing her trading style and risk management that will be applied in this experiment.
Though we intend for this to be a long term sustainability effort, we are defining the end point for this experiment to be an account value of $500 (showing a real loss of $7,000) or a trading account value of $30,000.
As important as taking high probability trades is managing money in a fashion that limits future risk. The video below (4 minutes) provides an example of how we intend to alternate growth and “sweep” cycles.
At some point along the way one or more years may pass. Taxes are to be paid from the bank account. Sweep cycles are extended until tax amount has been replaced. At that time, the next growth cycle will continue.
We also recognize that donations may be made to Rubicon that are directed towards this sustainability effort. As we do not intend on adding money to the DittoTrade account, all donations will be applied to the sweep cycles. (Example: If we receive a $100 donation for sustainability, the next sweep will be $2,400.)
Gene Hobbs is a technical diver and founding board member of the non-profit Rubicon Foundation. Hobbs has served as medical officer for the Woodville Karst Plain Project since 2004 and was named the 2010 Divers Alert Network/ Rolex Diver of the year. Hobbs is the medical simulation coordinator for a simulation and patient safety laboratory at a major university medical center.