Market corrections can be a stressful and challenging time for some traders, but it can also be a time of incredible opportunity.
How can we not only protect our trading accounts but also grow our capital even further during market corrections?
Our guest for this episode, @Ivanhoff, is author of the book ‘Crash: How to Protect and Grow Capital During Corrections’ and in this episode he's going to share with us:
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.
Earlier this week I was on a flight from LAX back to Melbourne.
As we were sitting on the plane waiting for our departure I overheard a flight attendant say to a fellow passenger that one of the other planes had been struck by lightning causing delays to other flights.
At the time I didn’t know if a lightning strike on a plane was a bad thing, it sure sounds like something you don’t want to experience, however it got me thinking about the risks of flying.
Now admittedly, it’s probably not the best thing to be thinking about just before the plane takes off for a 16 hour flight across the Pacific ocean at night but luckily my thoughts quickly switched to trading and the risks we face as traders.
One of the concepts which immediately came to my mind was ‘risk of ruin’, which we first discussed way back in episode 2.
In that podcast interview, futures trader Brent Penfold says:
"In my humble opinion, I think the risk of ruin is number one or the most important concept in trading."
I want to share a little bit more of that audio with you now, because it explains:
Plus I'll share what happens to a plane when it's struck by lightning, so take a listen.
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.
"Basing your decisions on past data is like driving down the road, looking in the rear-view mirror".
For the most part, traders don't know what’s going to happen in the future and never will.
In the previous podcast episode, Gary Hart explains how considering future probabilities can be beneficial, suggesting traders “base decisions on the probable future instead of the certain past.”
In this episode, we explore this idea further by reviewing a dangerous trading assumption and how traders can better position themselves for future market conditions.
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.
Our guest for the episode is Gary Hart, the founder of Trendfinder Trading Systems, a company offering mechanical intraday and swing trading strategies in futures.
Gary has been trading futures for close to two decades now, becoming a member of the NFA and a registered CTA.
He's had a number of trading strategies take the top spots in Futures Truth rankings so we’re going to discuss how he builds trading strategies that do that plus we also cover a lot of other aspects of trading, including:
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.
One of the biggest challenges we face as traders is strategies that either fail or experience a reduction in performance over time.
There are a number of possible causes for this, one obviously being changes in the market.
In podcast Episode 10, Perry Kaufman discussed the change in the markets and how they've become noisier over time, with an increase in erratic movements up and down.
This increase in market noise can have a huge impact on trading strategies and particular trading styles too and we're going to hear a little bit more about that from Perry today, including:
So lets take a listen to Perry.
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.
Last week I finished reading a book called ‘Peak – Secrets from the new science of expertise’.
I wanted to share a concept from that book with you today because it contains a model that has the potential to:
What trader wouldn't want that?
Most people tend to assume that if they keep working on something they will automatically get better at it, but performance scientists have shown that is not necessarily what happens.
A lot of people reach a certain level of competence and plateau...
Others don’t really progress much at all...
And often the process can take a long time to play out, progress can be slow...
So that leads to the question, is it possible to reduce the amount of time that process takes?
Are there techniques that we can use to accelerate the process?
Well, there are and today we’re going to talk about one called "deliberate practice".
Our special guest, Kris Longmore from Robot Wealth, is going to explain what deliberate practice is and how we can leverage it to become better traders, faster.
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.
Machine learning has seen a huge amount of growth over recent years with the increase in available data and processing power.
It's an incredibly powerful toolset for uncovering patterns and relationships in data, however, these tools can be challenging to learn, apply correctly and are also open to abuse.
Our guest for the episode, Kris Longmore from Robot Wealth, specializes in Machine Learning, Algorithmic Trading and Artificial Intelligence.
He is the co-founder and Head of Quantitative Research at Quantify Partners and also provides consulting and educational services through his website Robot Wealth.
In this episode Kris is going to share with us some of his insights into Machine Learning and strategy validation, including:
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.
One of the main challenges with Mean Reversion trading is when to get into a trade, which can have a huge impact on profit and drawdown levels.
How far from the Mean should we wait before considering a trade?
PJ Sutherland shares the approach he uses to:
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.
"My best losing year ever" and how traders can become better by learning from drawdowns, losses and other trading challenges.
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.
With the toolsets we have available to us today it’s really quite easy to create a trading strategy by just mining market data.
As we've just heard in that opening bit of audio and also from previous podcast guests too, if you try enough combinations you can find something that appears to work purely by chance or by luck.
The challenge however is trying to identify something that could be sustainable.
Something that may persist long enough in the future for us to take advantage of, and hopefully make some money from.
Our guest for this episode, Dave Bergstrom from BuildAlpha, has spent years researching, building, testing, and implementing market making and trading strategies for a high frequency trading firm, CTAs, money managers, individual clients, and even aspiring retail traders.
In this episode Dave is going to share some of his insights into strategy development and validation, including:
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.
My face-off with a deadly brown snake - what can traders learn?
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.
In the previous podcast episode with Larry Tentarelli, we opened up the opportunity to submit questions for Larry and received quite a few pages.
Surprisingly, a large portion of the questions were about exits.
Why are exits so hot?
I actually asked Larry why he thought exits were such a hot topic and he suggested that perhaps exits are an area that people really struggle with.
This got me thinking about exits more and I recalled an interesting point that Murray Ruggiero made back in episode 42.
I think Murray raised a really important concept which most traders may not even consider when they’re looking at exits and specifically how to choose the best type of exit for your strategy, which we’ll get to in just a sec.
How do you choose the right exit?
Larry was kind enough to share his philosophy behind exits but you may have noticed that he didn’t give exact details about them, which I think was intentional because it’s something that traders really need to figure out for themselves.
So then how do you go about choosing the best type of exits for a strategy?
Let’s take a listen to Murray answering a question from a listener about exits.
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.
As traders, we can sometimes get tempted into making things more complicated than they need to be.
Entries...
Exits...
Position sizing...
Trade management...
There are a number of aspects to trading where we get to decide how simple or complicated we really want to make it.
Our guest for this episode, Larry Tentarelli, has developed a simple, no nonsense approach to trading and in our chat he shares the trading insights and approaches he's developed over the past 20 years.
In this episode Larry shares:
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.
Did you know that Dr Seuss wrote the book “Green Eggs and Ham” on a bet that he couldn’t write a book with 50 words or less?
That’s right, in 1960, the founder of Random House made a $50 bet with Dr. Seuss that he would not be able to write a book using only 50 different words.
Well he accepted the challenge…
Creating “Green Eggs and Ham”…
And that book has sold more than 200 million copies, making it one of the best-selling childrens books in history!
Think that was a fluke?
Dr Seuss found that setting constraints was so powerful he used it with other books as well.
His book ‘The Cat in the Hat’ was limited to around 250 different words from a list of 348 words selected from a first graders vocabulary list.
That book sold millions of copies too.
Dr Seuss is just one example of the power of constraints, showing us that setting limits can often produce better results than “keeping our options open”.
Constraints can force us to think better, work better, and come up with more creative solutions.
So how can we apply this principle to trading?
What impact can it have?
In this episode we discuss a few ideas from Kevin Davey, take a listen.
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.
One of the most common uses for optimization is to find the best value or best group of values for a trading strategy, but is this approach only giving us part of the picture?
Are there other uses for optimization that we can leverage to create better trading strategies?
Today we’re going to have a quick chat with World Cup Trading Champion Andrea Unger, the only trader to ever win the competition 3 years in a row.
Andrea has a slightly different view on optimization which we touched upon in a previous podcast episode, back in Episode 16.
Today we’re going to dig into that a little more and hear Andrea’s thoughts on optimization and how he uses it to get a deeper understanding of the markets.
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.
Our guest for this episode is Art Collins.
Art’s story is interesting because in his younger days he was an expert card counter in black jack, and he’s translated some of those skills into building robust trading strategies from really simple market concepts.
Not only is Art a trader but he’s published a number of books and magazines articles, he’s done lecturing, both online and offline so I’m sure you’ve seen his name around the place and it’s an honor to have him here on the show today.
In this episode Art shares:
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.
Let me tell you the story of 2 lumberjacks and how we can become better traders by NOT trading.
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.
Let's have a bit of fun today.
It's Australia Day, so we're going with an Aussie theme for this Thursday Trading Thought...
I'm going to share an email about a lamington and what it can teach us about trading strategies.
(Yes, food and trading combined - it's ingenious! Just don't listen to it before bed...)
Happy Australia Day!
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.
Risk Management…
It's not as sexy as the latest hot indicator…
Or the undiscovered penny stock poised for an explosive move…
Or the trading guru who appeared out of nowhere and is now promising to share the “secrets” to making million dollar profits overnight…
… But there are a whole host of risks that have the potential to destroy trading accounts in just seconds, so it’s an incredibly important topic for serious traders to consider.
We have plenty of examples in history that show what happens when Risk Management goes bad, so what can we learn from these and how can we best protect ourselves from catastrophic losses?
Our guest for this episode, Robert Carver, is an independent systematic trader, freelance writer and research consultant.
He spent years working for one of the world’s largest systematic hedge funds and is the author of “Systematic Trading: A unique new way to make investment and trading decisions.”
In this episode, Rob shares with us:
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.
Today we have a quick chat about technology and in particular Blockchain.
Yes, Blockchain has been around for a few years now but we’re really seeing more and more of it in the news lately, and there has been a lot of hype about the potential applications of this technology.
Some people have even said the Blockchain will have a greater impact on our lives than ANY other technology that exists today.
How big is that?
Much of the hype around Blockchain has been focused on the financial industry, or the potential for Blockchain to fundamentally change the financial services industry.
Which got me thinking..
... How could this impact us in the future, both as traders and as fine, upstanding members of society? :-)
Anyway, my own personal knowledge of Blockchain was pretty limited - even though I’d heard of it a number of times I didn’t really have an idea of what it was.
But I do remember that Bert Mouler mentioned it episode 64 of the podcast where we were discussing cryptocurrencies.
So I asked Bert to come back on the show and give us a very quick introduction into Blockchain:
So let’s head over to Bert and hear what the fuss is all about!
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.
How do we know when it's time to quit working on a trading strategy and move on to something else? Here's a lesson from the TV show Gold Rush.
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.
The guest for this episode is Jack Vogel from Alpha Architect, a quantitative asset management and consulting firm.
Jack has published a number of papers on SSRN and also co-authored a couple of books including “Quantitative Momentum: a practitioners guide to building a momentum-based stock selection system”.
In our chat with Jack you will hear:
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.
What can traders learn from airline pilot Captain Sullenberger and his response and actions landing a plane in the Hudson River?
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.