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Better System Trader

If you’re looking for inspiration, motivation and practical advice on improving your trading results, Better System Trader delivers every week. Each episode brings you an expert trader who shares their own story, along with the steps, both good and bad, that they’ve taken on their path to success. With a focus on actionable insights, the tips and tricks used by the experts contain loads of value, providing you with insanely practical tips and tools you can start using TODAY. Improve your trading with Better System Trader.
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Now displaying: October, 2017
Oct 28, 2017

And we're back for the 2nd episode in this 3-part series on building Mean Reversion strategies with Cesar Alvarez from Alvarez Quant Trading.

In the first episode we discussed the goal of Mean Reversion trading, how to select a trading universe, a number of effective techniques to measuring Mean Reversion and how to combine indicators to identify better quality trades.

If you haven't listened to that episode yet, you should check it out first here.

In this 2nd episode in the Mean Reversion series, Cesar will be sharing:

  • How to classify market conditions and adjust Mean Reversion strategies to the current market,
  • Tips to choosing trades with a higher probability of success when you have more trades than your account can take,
  • How the maximum number of positions you trade affects the role of luck on trading results and how to produce more 'reliable' results instead,
  • Why it can be a good idea to have different strategies that enter at market and on limit orders instead of just one or the other,
  • The impacts of stops on returns and why they don’t often protect you from the really big losses,
  • Implementing multiple exits, what works best in Mean Reversion (and what to avoid) and testing exit combinations.

Watch out for the 3rd episode in the series, where Cesar answers all the questions submitted by Better System Trader listeners.

Oct 26, 2017

Have you ever wondered:

  • Why the word "abbreviate" is so long?
  • Why are wise men and wise guys opposites?
  • Why is it called quicksand if it takes you down slowly?
  • Where do forest rangers go to "get away from it all?"
  • Why is it that when we transport something by car it's called a shipment, but when we transport something by ship it's called cargo?

I'm sure there are reasons for all of these, but on the surface they don't seem to make sense.

What about stop losses, do they make sense?

We often hear the trading rule of 'always use a stop loss', no matter what, use it everywhere, but…

Does it actually make sense to ALWAYS use a stop loss?

Or are there occasions when using a stop loss DOESNT make sense?

And if so, how do you handle that? How do you manage your risk?

In this week’s trading thought, we’re going to review a chat with Dr Ernie Chan about stop losses, and we discuss these exact points, so let head on over to Ernie and find out if it makes sense to ALWAYS use a stop loss.

Oct 17, 2017
As you probably know, we’re currently focusing on Mean Reversion trading strategies.

In episode 127, Cesar Alvarez shared a number of techniques to measuring Mean Reversion and identifying setups.

There was probably close to 10, maybe 12 different ideas Cesar shared with us, so there are lots of ways to measure Mean Reversion when looking for trade setups.

Are any techniques better than others?

In this weeks Trading Thought I want to add a little bit more to the insights Cesar shared with us on Mean Reversion setups by referencing another very popular Mean Reversion episode I did with PJ Sutherland, episode 62.

In this weeks 'Trading Thought' PJ is talking about measuring Mean Reversion setups and a technique where he ‘really started to see phenomenal test results’ -  who doesn’t want that right?

So what is this technique?

And where did PJ see these phenomenal test results?

Take a listen as PJ explains it to us... 
Oct 14, 2017

We’ve got something special organised for you here...

This is the 1st episode in a special 2-part series on building Mean Reversion trading strategies.

And to discuss Mean Reversion we have a special guest, someone who has been on the podcast a couple of times already - Cesar Alvarez from Alvarez Quant Trading.

Those of you who know Cesars work would be aware that he is a Mean Reversion specialist.

He has a wealth of knowledge on Mean Reversion trading that he's going to share with us over this special 2-part series, so I’m really excited to be sharing it with you.

In this first episode Cesar will be sharing:

  • The high level steps to building a mean reversion trading strategy,
  • Why carefully selecting a trading universe is so important and the factors you need to consider,
  • Simple but highly effective techniques to measuring mean reversion you can start testing today,
  • How to combine indicators properly to identify better quality trades, and
  • Why strategies with a smooth equity curve may not actually be the best strategies to trade in the future.
Oct 13, 2017

It seems from the emails I’ve been getting lately that more and more traders are becoming concerned about the state of the markets, especially the stock markets, which is understandable.

And the concern is really around what’s going to happen when the stockmarkets start falling.

What could happen to their strategies and accounts and how can they prepare for it now?

How can they protect their portfolios?

One form of protection that often comes up is using diversification to reduce portfolio risk.

However, a common question that is raised is how to actually go about diversifying?

Is there more protection in diversifying across markets, or staying in the same market and diversifying across strategies?

In this short piece of audio, Perry Kaufman discusses how he looks at diversification, and it’s something you may want to consider when you’re thinking about how to protect your own trading account and portfolio in a market downturn.

Oct 6, 2017

In this weeks ‘Trading thought’ we’re going to discuss an issue that all traders have to face...

How do you know when to stop trading a strategy?

A common approach is to wait for a strategy to reach the maximum historical drawdown and then either stop trading the system or look at modifying it or optimizing it, but...

There are a couple of problems with that approach:

  1. Once the strategy has hit that drawdown level, the damage is already done, you’ve already taken a series of losses to get to that level,
  2. What if you stop trading the strategy and it recovers from the drawdown, you missed out on the recovery.

When we have a system that goes into drawdown, we never really know if it’s the beginning of the end for that strategy or if it will be a drawdown within expectations, so it can be tricky issue to address.

Can this be managed differently?

Are there warning signs to watch out for that can tell us if our strategy is sick or healthy and can we manage these sick strategies differently without having such an impact on our trading accounts?

In this episode we’re going to hear from Alan Clement, who is going to share some ideas on measuring system health, so take a listen to our chat with Alan.

Oct 1, 2017

Trade management is a critical component of a trading strategy.

It can often be the difference between a profitable trade and a loss...

However many traders focus on the entry only and leave trade management as an afterthought.

In episode 49 of the podcast, Linda Raschke, said "trade management is probably the most neglected area of system development".

In that episode we focused on Linda's approach to modelling the markets but in this episode Linda is back to discuss trade management and exits, including:

  • Why trade management is such a neglected aspect of trading,
  • How to model different types of exits and the impact of market environments,
  • How volume and breadth measures can give clues to the tone of the market, and
  • How to use the power of relative strength to target the best markets to trade.
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