Better System Trader

Michael Himmel is a Founding Partner, Portfolio Manager and Director of AI Research for Essex Asset Management. He has been actively trading and designing systems since the 1980s, managing the No.1 Global Macro Hedge fund in the world in 1999. He now uses large doses of AI and Machine Learning in his current practice. In this week’s episode we discuss Artificial Intelligence, the challenges and applications of AI in trading, criticisms of Machine Learning, event studies and the importance of selecting datasets. He also shares insights from starting out as a runner for some of the biggest players in the 1980s, to managing the no. 1 global macro hedge fund in 1999 to using AI in his practise today. Even if you’re not into AI and machine learning, the stories and insights Michael shares are invaluable. Topics discussed Lessons from running orders for some of the big players in the 1980s Transitioning from discretionary to systematic trading The challenges of applying Artificial Intelligence (AI) and Machi

Robert Bubalovski is the Managing Director and Head Trader at TradeView investments, a privately held proprietary trading firm located in Melbourne, Australia. Since 1996 Robert has been actively involved in the financial markets and trading, in 2012 he decided to set up his own Proprietary Trading Firm to concentrate on his own trading strategies. His team of professional proprietary traders specialize in the trading of Equities, Futures, Options, FX and Money Markets across multiple exchanges around the globe and around the clock. In this weeks episode we discuss prop trading, the challenges and lessons from beginner trader to starting an investment firm and what it takes to be a successful trader. We also discuss arbitrage and pairs trading strategies, statistical rather than indicator-based trading and the importance of simplicity. Topics discussed The pros and cons of prop trading The progress of a prop trader How long it takes to become a successful prop trader The attributes of successful traders

Tim Rea is a proprietary trader, trading his own money with well over 100 automated systems across 25 different Futures contracts. He is a past winner of the World Cup trading championship, along with being a CTA and broker but gave that away to focus on trading his own money. In this weeks episode we discuss various aspects of trading multiple strategies, including monitoring performance, money management, correlation, technology and trading in markets not in your timezone. We also discuss the impacts of the MFGlobal and PFG collapses and how Tim overcame the heavy losses to continue trading. Topics discussed How poor experiences investing with others drove Tim to figure it out for himself Becoming a systems vendor, CTA and broker and why he then left it all behind to just trade his own money How shorter term trading can increase confidence in a system How many strategies he’s currently trading (hint: its more than 100!) Keeping track of the performance of multiple strategies Why you shouldn't just st

In this weeks episode Larry Williams talks about conditional trading, understanding what drives prices, the misuse of indicators and how to apply them correctly. We also discuss cycles, forecasting markets, what to look for in market tops plus loads of listener questions where Larry shares tips and insights from 50 years of trading. Topics discussed What it means to be a conditional trader Why buy and sell signals need to be analysed in the context of market conditions Fundamental factors that drives markets Interpreting the COT reports correctly The buying differences between retail and commercial traders and how it can indicate future market direction Why you should approach trading like a combination lock Coming up with unique indicator ideas The mis-use of indicators and how to use them correctly Trading styles of successful traders Forecasting markets based on technical factors Characteristics of stock market tops and bottoms The fundamentals to watch during market tops Listener questions Issues wit

Scott Andrews 'The Gap Guy' shares his expertise in gaps, why they work, what factors to take into account when trading gaps and what to avoid. We also discuss gap zones, when to fade and when to follow and calculating stops and targets. PLUS, for those that aren't into Gap trading, we cover some important concepts that can impact all styles of trading, include one concept called 'Ensemble Systems' which may just change the way you look at trading strategies. Topics discussed Why it’s important to trade a style that matches your own strengths rather than follow someone else Why gap trading works Markets where gaps work best and those that don't The best type of stocks to trades gaps and the stocks to avoid The benefits of trading gaps in indices vs stocks The 3 market conditions to look at when analysing a gap How seasonality impacts gap trading Signs of gaps to avoid Using ATR to determine the probability of gap size closing Gap zones and how the location of the gap can provide useful information The worst

Jerry Parker, Turtle Trader and CTA, talks about trend following, how to approach wins and losses, dealing with drawdowns, managing correlations in asset classes and how changing market dynamics have impacted trend following and the solution. He also gives us some tips on systematic trading including how he trades without relying on optimal values of the past. Topics discussed What types of characteristics Dennis and Eckardt were looking for in the Turtle traders program How the Turtles were taught to approach losses Common traits amongst the most successful Turtles The hardest part of trading as a Turtle How Jerry overcame the fear of taking trades The biggest lesson being a Turtle What Jerry did with the Turtles approach after the program ended The impact managing other peoples money can have on trading The key factors that make trend following work Managing correlations between asset classes Long-term vs short-term trend following Dealing with drawdowns How changes market dynamics have impacted trend fo

World Cup Trading champion Andrea Unger discusses how to create robust strategies, the role of indicators in trading, principles to strategy creation, Forex trading strategies and optimising to understand market behaviour. Topics discussed The strategies and position sizing Andrea used to win the world cup trading championship 4 times The role of luck in trading Controlling risk when trading multiple strategies Where to find trading ideas The principles Andrea uses in the Forex and Futures markets to develop profitable strategies The role of indicators in strategy development Matching strategy type to market characteristics Why you should analyse your biggest winners as well as your biggest losers Forex trading tips and changes in the Forex market Using longer timeframes to filter trades in shorter timeframes When to optimise or tweak a strategy and how to ensure you don’t over-optimise The drawbacks of trend following and the solution Tips to handling drawdowns Intraday vs End-of-day trading The key to tr

Stuart McPhee discusses the common mistakes traders make, the single biggest factor to trading success, the counter-intuitive side to trading and tips to improving trading discipline. Topics discussed Why trading can be simple but not easy Common mistakes traders make Factors to consider when choosing a trading strategy that suits you Common Money Management mistakes The single biggest factor to trading success Common mindset issues traders experience Tips to improving discipline and changing trading behaviour How the Petronas towers can be applied to trading The counter-intuitive side to trading The Chinese Bamboo story   Disclaimer: Trading in the financial markets involves a substantial risk of loss and is not suitable for everyone. All content produced by Better System Trader is for informational or educational purposes only and does not constitute trading or investment advice. Past performance is not necessarily indicative of future results.

Performance coach Rande Howell discusses the most common issues limiting trader performance, the impact of emotions on trading, the importance of managing process not outcome and tips on changing our physiology to improve performance. Topics discussed The most common issues impacting trader performance What causes hesitation when taking trades How to calm the emotions when trading An easy way to monitor changes in emotions The impact of breathing on emotions and trading A simple trick to disrupt fear Patience and boredom in trading and how to overcome them Are you an African Lion or an American Cougar when trading? Personal traits that don’t align well with trading success How successful traders handle drawdowns The stage in a traders journey where performance coaching provides the most value What successful traders need to watch out for to continue operating at their peak How overconfidence and euphoria can destroy your trading Tips for getting prepared for the trading session   Disclaimer: Trading in th

Andreas Clenow is a hedge fund manager who specialises in developing and trading quantitative strategies across all asset classes. Before joining the hedge fund world by establishing his own hedge fund he maintained Global Head positions at Reuters and Equis International. He is the author of two books, the first being international best seller ‘Following the Trend’ and the second ‘Stocks on the Move’ has just been released. In this episode Andreas talks about trend following in stocks, why traditional approaches don't work and what you can do to account for this. We also talk about trading concepts, cash vs risk allocation, position rebalancing and building robust strategies. Topics discussed The origins of trend following and why a traditional trend following approach doesn't work on stocks Why it’s a bad idea to think in terms of cash allocation and the solution Position rebalancing, why, how and when How hedge funds look at position sizing compared to retail traders Why pyramiding positions doesn't

Dr Ernest Chan talks about many aspects of quantitative trading, including how market crises impact momentum strategies and how to manage the impacts, when to use stop-losses and when they don't make sense, automating trading, managing funds in a portfolio of strategies and a simple money management approach which aims to limit drawdowns while maximising returns. Topics discussed Where to find trading ideas The first aspect of a market to identify before building a strategy for it Momentum crashes and the performance of momentum strategies after a financial crisis How to manage the times when momentum strategies aren’t working When stop losses should be used and when they don’t make sense How to limit drawdowns while maximising growth Factors to consider when automating your trading How independent traders can avoid competing with the big trading firms When you need to worry about market microstructure and when it doesn’t matter Managing funds for a multi-strategy portfolio The hardest part of trading   D

Ralph Vince talks about position sizing, how to choose a position sizing model that suits you, optimalf, the curve and how it can be used for maximum growth and other applications. The risk of multiple strategies in a portfolio and how to manage it, dynamic position sizing, martingale strategies and how Ralphs views on money management has changed in the past 25 years. Topics discussed The single biggest factor in trading which is also probably the most overlooked The most important factor when determine position sizing How horizon impacts position sizing How Optimalf is only one point on the curve and other critical points you also need to consider Traversing the curve and how it applies to your trading criterion How to manage a portfolio of multiple strategies The risk of multiple strategies and how to manage it Trading the equity curve Dynamic position sizing When Martingale strategies make sense How Ralphs views on money-management have changed in the past 25 years   Disclaimer: Trading in the financi

Perry Kaufman discusses market noise, the impact it has on trading styles and how it can be used to determine which strategies suit a particular market. We also talk about price shocks and how to mitigate their effects, how to use volatility in your favour, volatility parity for position sizing, the information ratio for strategy performance and some strategy ideas you can test yourself. Topics discussed How market noise impacts trend following and mean reversion The effects of money flow during a crisis The types of strategies that work best in new markets and why How the efficiency ratio can be used to determine the best type of strategy for a market The best markets for trend following and mean reversion What strategy style to choose if you're just starting out Using Volatility Parity for position sizing Impacts and dangers of price shocks on backtesting and how to handle them Mitigating the risk of price shocks Using the Information Ratio to measure strategy performance and detect possible over-fitting

Gary Antonacci discuss all things momentum; the different types of momentum and their individual applications, how they can be combined, how momentum can be refined, the benefits and challenges of momentum, why momentum works and much more. Topics discussed The different types of momentum and their use How to combine them for better performance How Dual Momentum protects in a bear market The benefits of Dual Momentum The impact of lookback periods and rebalancing Using Dual Momentum with other asset classes Reducing the impact of mean reversion in stocks Why momentum works and is likely to continue working in the future   Disclaimer: Trading in the financial markets involves a substantial risk of loss and is not suitable for everyone. All content produced by Better System Trader is for informational or educational purposes only and does not constitute trading or investment advice. Past performance is not necessarily indicative of future results.

Gary Stone discusses market timing, why it works, the impact it can have on strategy performance and simple methods you can test for yourself. We also discuss the misinformation published by some fund managers and how you can outperform the majority of professional fund managers using very simple techniques. Gary also explains the importance of perspective and how it can improve your trading and we get some tips on one of the most important components to executing your trading plan correctly.   Disclaimer: Trading in the financial markets involves a substantial risk of loss and is not suitable for everyone. All content produced by Better System Trader is for informational or educational purposes only and does not constitute trading or investment advice. Past performance is not necessarily indicative of future results.

Rob Hanna tells us how he comes up with so many trading ideas, the type of market behaviours to look out for and his favourite piece of information in a backtest report (clue: it’s not a number). He also discusses how a confluence of ideas can improve trading results, how to look at market behaviour from different angles, some simple market timing techniques, adjusting strategies based on market conditions plus loads of ideas we can test ourselves. Topics discussed Where to find trading ideas The types of market behaviour to look for and what to ignore The most important piece of information in a backtest – it’s not a number! How to handle an edge that is performing poorly How a confluence of ideas can improve trading results Looking at market behaviour from different angles Simple market timing techniques Where to find the biggest edges Adjusting strategies based on market conditions How Fed meeting days impact the market and how it can be traded PLUS loads of ideas to test!   Disclaimer: Trading in the

In our chat with Dr Howard Bandy we talk about major changes occurring in the fields of trading system development, trade management and technical analysis. We also discuss why trading is becoming increasingly difficult, what causes trading systems to experience periods of poor performance, how to identify and manage a trading system when it is out of sync with the market and the 2 most important skills in system development. Topics discussed The major changes occurring in the fields of trading system development, trade management and technical analysis Why trading is becoming increasingly hard How to compete with the professionals What causes trading systems to experience periods of poor performance How to identify and manage a trading system when it is out of sync with the market The shift towards machine learning and pattern recognition The importance of data mining in the system development process The 2 most important skills in system development   Disclaimer: Trading in the financial markets involve

Kevin Davey talks about how we went about winning the trading competition, the type of systems you want for the future, some very important aspects of system development that will cost you money if you ignore them, what you need to do before you start trading a strategy and what skills you need to be a good system developer. He offers some really valuable insights and provides an excellent process to system development so you do not want to miss it. Topics discussed:   Why goals and objectives are so important in trading How to use "the monkey test" to validate entries and exits Which type of systems adapt better to future conditions Why walk forward testing is so important and when you shouldn't use it How often should you re-optimise your systems Why ignoring Monte Carlo testing can cost you money Why you shouldn't start trading a strategy immediately after you've finished testing it How to eliminate bad systems before risking your money on them Adding or removing systems from your portfolio Why you need

In our chat with Nick we discuss system design, the best type of systems to trade, how observations can lead to better strategies, the best way to handle a bear market, measuring system performance, survivorship bias and the difference between successful traders and everyone else. Topics discussed: The trading style most people should try first Systematic ways to determine a trend Why simple systems are the best Why broker consensus is a poor indicator The best type of stocks for trend following strategies What you need to know about a system to be able to handle the drawdown How observations can lead to better strategies Why buy and hold offers average returns and the best approach to handling a bear market How trading can take less than 5 minutes per day Measuring the performance of a system The difference between very successful traders and everyone else The types of survivorship bias that could be ruining your backtest results The warning signs of over-optimisation Coping with drawdown and personal doubt

In our chat with Cesar Alvarez we talk about trading ideas, key concepts and pitfalls of backtesting, the impact of stops on returns, market timing, over-optimisation, drawdown and using multiple strategies in a portfolio. Topics discussed: Where to find trading ideas Why you should test all of your ideas, even if you think they won't work Pitfalls of backtesting you need to look out for How to identify coding errors in backtesting Some clues that indicate you may have over-optimised a strategy Issues with splitting data into in-sample and out-of-sample portions The impact of stops on returns Handling a 50% overnight drop in a stock price Finding your personal drawdown tolerance How market timing can impact a strategy Why you need multiple strategies in a portfolio   Disclaimer: Trading in the financial markets involves a substantial risk of loss and is not suitable for everyone. All content produced by Better System Trader is for informational or educational purposes only and does not constitute trading or