Better System Trader

The discovery of DNA as well as the understanding of its function and structure may be one of the most important discoveries of the last century. As researchers continue to unlock its secrets, the applications to the scientific, medical, agricultural and forensics fields has been enormous. From enabling the breeding of animals and crops that are better resistant to disease, to being able to accurately identify criminals and victims, and even to detect diseases early on and create breakthrough treatments for diseases that were previously considered lethal, DNA research is having a huge effect on mankind. But just as scientists are getting a better understanding of DNA and it's potential applications, can traders apply the same to the markets? One of the topics we discuss in this podcast episode is the 'DNA approach' to trading. What is it, how can we understand it and what are the benefits? To discuss this topic plus a number of others, we're joined by Bruce Vanstone from Vanstone Trading. Bruce is a trader, consultant and university lecturer in Computational Finance and Big Data. He's published a number of research papers and trading systems, and presented material at a number of non-academic conferences. He also consults to a boutique funds management business, trading personally and at a larger fund management level. In our chat with Bruce you'll discover: The 'DNA approach' to trading and why you need to understand it, How to add another layer of logic over a strategy to identify the best trading conditions, Why it's important to have trading strategies with academic credibility, How a simple change in timeframe can increase returns and reduce drawdowns, The common 'trap' strategy creators fall into when adjusting strategies without even realising it, Plus much more. Let's head on over to my chat with Bruce. 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 idea for this podcast episode has its roots in a trip I made to the States last year. I was at a conference and one of the speakers was 1993 Karate World Champion Ricardo Teixeira. Ricardo was explaining how he came about becoming World Karate Champion and he shared his #1 secret to achieving this success, any ideas what it was? It was something that sounds incredibly boring, but it produces big results, and that is: Mastering the fundamentals. Ricardo explained that leading up to the World Championships, he spent months and months just practising the core fundamental moves. He wasn't practising all those complicated, fancy looking moves you see in the Hollywood films. No. He spent weeks just practising a punch... Until he became so great at it that nobody else could beat him. I think this "mastering the fundamentals" approach has strong applications to trading too. Many traders, especially when starting out, think that the latest software or fanciest indicator is going to guarantee their success, but over time I think we realise that there are some core fundamentals to trading which really bring the results, and perhaps from time to time we even forget them too, so today we're going to discuss some fundamentals with our guest Martin Lembak. Martin is in a very interesting position because he has access to hundreds of different trading strategies, being traded live in the markets, so he's in a very exclusive position to see what works and what doesn't. In our chat today you'll here: Why it's important to understand the characteristics of a market before trying to create or match strategies to that market, How to choose the types of strategies that suit the personality of the market and the types of trading styles that are the most popular (and profitable) in the markets right now, Commonalities between developers of successful trading strategies and what traders can do to accelerate their progress, The fundamentals of portfolio construction, including some challenges and false assumptions of creating portfolios, Broker selection and some warning signs when assessing whether a broker is safe to use, Plus much more. So, let's get started, over to my chat with Martin. 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.

We have a really interesting one here for you today, one that may challenge your existing thoughts on trading models. I know this episode has certainly made me think about it from a different angle, so I hope you enjoy this. Our guest for this episode is Kevin Saunders from Tribelet Capital. Kevin is a specialist in electronic trading across many international exchanges, co-founding Non Correlated Capital in 2009, which later became a licensed CTA with more than USD 40 million under management. He has won a bunch of awards for his trading and academic achievements, and he also developed a program here in Australia called the "Joey Experiment" which we're going to talk a little bit about as well. In our chat today you'll discover: Why traders must disentangle themselves from the requirement that a model must work and produce money – and the alternative approach that uses charts more predictable than the underlying market, Why building a mathematical model is like creating a unicorn that doesn't represent reality, Why traders need to stop thinking about building a model as a 'solution' and how to think about it instead, Plus much more. Sounds interesting? Well let's get started, and jump over now to my chat with Kevin. 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 this podcast episode we're going to be talking about something that can have a huge impact on the markets and on trading strategies. It's something that can happen very quickly and cause a lot of damage, and that is spikes in volatility. And our special guest to discuss volatility spikes today is Andrew Thrasher, who published a research paper called 'Forecasting a Volatility Tsunami', which won the Charles Dow award in 2017. Whenever the VIX is at low levels we here all about in the mainstream media, with the implication that it's about to rise, however a low level in the VIX alone doesn't necessarily mean volatility is going to increase, and in our chat today Andrew is going to explain why and he's also going to share his research and the 3 key factors that can actually improve predictions of volatility spikes. In our chat today you'll here: How volatility is usually interpreted and why this common approach is unreliable and missing a key part of the picture, Why a low VIX reading alone is not a good predictor that volatility will rise, 3 key factors that can improve predictions of volatility spikes, Plus much more. 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.

Welcome to the first podcast episode for 2018, happy new year! I hope that you had a great Christmas or holiday season and all the best for 2018. In this podcast episode we're talking about the impacts that large institutions can have on the markets, especially on stocks, and how certain institutional behaviours can indicate potentially big moves in prices. Our special guest is Jason Bodner from Macro Analytics for Professionals (MAP). His previous experience working some big institutional orders has given him some valuable insights that I'm sure we can all find useful, so in our discussion today you'll hear: How institutional activity can indicate potentially big moves and the signals to look out for, How the techniques of scouting out players on a sports team can apply to stock selection too, 3 basic factors that can quickly identify when institutions are working a big trade, plus loads of other signals to watch for as well, How mixing technical with fundamental factors can give you a more complete picture than just technical or fundamentals alone, Plus much more. 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.

Well here we are, another year gone (and so fast too!). I'm glad you could join me for this final episode for 2017, where we'll be reviewing all of the special guests we had on the show this year, the topics and insights they've shared plus their top trading lessons. I think this is a great way to look back, to be reminded of some of the key points, and all of the amazing knowledge our guests have shared with us this year. Also, thanks for all of the emails of support and appreciation throughout the year, I'm glad that what we're doing here has been so helpful! I hope you have a great Christmas and holiday season and all the best for 2018... It's going to be a massive year! Happy trading, Andrew 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 podcast episode, Dimitri Speck, first became interested in the markets as a child when he found gold while diving at the beach. And even though trading isn't usually as easy as just picking up gold off the ground, Dimitri has spent years diving deep into the markets and uncovering hidden and consistent anomalies that traders and investors of all styles can profit from. In this episode he's going to share some of these powerful insights with us, including: How understanding Intraday behaviours can help you to get better prices and additional edge on trade execution, The 4 specific hours of the day that would have given you most of the last 10 years of S&P returns (hint: it's probably not what you think), The 1 market event that has produced almost the entire S&P performance over the past 20 years in just 6% of the days, The challenges of accurately measuring these anomalies which could give you misleading results, The 3 simple techniques traders of all styles can use to apply these behaviours to their own trading, Plus much more. 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.

A few weeks ago we organised a family holiday for December. We booked a luxury villa in Port Douglas and we're all really excited to get there and start enjoying the holiday. Last year the Huffington Post published an article about vacations, and shared a study in a journal claiming that just planning or anticipating your trip can make you happier than actually taking it. I'm not sure if anticipating a holiday is more fun than actually taking it (I guess that depends on whether you have to take your kids or not...), but there is definitely value in anticipation, which ties in quite nicely with this podcast episode. Our guest today is John Carter, and John is going to share with us the value of anticipation in trading, and how anticipating market action and the "pain points" of other market participants can give us an edge in trading. Some of the topics you'll hear are: How anticipating the actions and pain points of other market participants can give you an edge, A simple but powerful mental switch that can crush the fear of executing trades, The subtle clues the TICK and volume data give to indicate if a trend or range bound day could be more likely, How to identify potential false breakouts and how 'stop runs' can actually improve your trading results. 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.

I can't believe it's only 4 weeks until Christmas! We've got the Christmas ads running on the TV here already... The local grocery store has the Christmas decorations up... And they're even playing Christmas carols - can you believe that? At home my 5-year-old daughter is already priming me for what she wants from Santa this year, which by the way is pretty much everything on TV right now! 2017 has gone by really fast and we're coming into a time of reflection and rest, time to take a break if you can, and so I wanted to take a few minutes in this weeks Trading Thought to talk about balance, both in trading and in life. Pretty early on in my trading journey I was absolutely consumed by trading. I lived and breathed it, it was all I could think about and all I wanted to do was quit my corporate job and trade for a living. By day I was working a full-time job in a bank, and at night I was staying up late to day trade the ES. I joined a trading room and my wicked plan was to get a few hours sleep after my day job so I could then trade the US session during the night, and then when the US markets closed I would have a brief rest before I went off to work for the day. Sounds crazy right? Well at the time I thought it was a great plan, but I'm sure we can all see how poor it really was. You can probably guess what happened too. It wasn't sustainable. I was only able to do it for a short period of time before lack of sleep impacted not only my trading, which sucked by the way, but it also started impacting my day job and it also pissed off my girlfriend at the time because... I wanted to watch 1 minute bars more than watch a movie with her! So, at that time there was no balance in my life, and my trading, health, relationships and life really suffered. In this weeks Trading Thought, I want to share some thoughts from Linda Raschke on how Balance can make us better traders. Then after that I have a small announcement to share, so take a listen to some nuggets of wisdom from Linda first. 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 Petronas towers in Malaysia are the tallest twin towers in the world at 452m (1483 ft) tall. Because of the ground underneath the building site, they had to put in some deep foundations, up to 114m (374 ft) deep. Without these deep foundations, the building would run into problems. In fact, during construction, at around the 72nd floor, they discovered that tower 2 was leaning 25 mm (0.98in) from vertical, so to correct that lean the next 16 floors were slanted back the other way. They even hired specialist surveyors to check the lean of the tower twice a day until the building was completed. Now obviously the foundations anchor the building and keep it from falling over, and even though they're not visible, they're probably the most important part of the construction. When you look at constructing a portfolio of strategies, there are a couple of key concepts, or foundations to consider as well, so that you have a solid portfolio, one that will hopefully weather all types of hostile conditions and produce higher returns with reduced drawdowns. In this weeks Trading Thought we're going to hear from 2 guests, who will explain how they construct portfolios and some mistakes that traders sometimes make during portfolio construction, which you need to be aware of. Take a listen as we start with Gary Hart from Trendfinder Trading Systems explaining the benefits of a portfolio of strategies and we take it from there. 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.

And we're back for the final episode in this 3-part series on building Mean Reversion strategies with Cesar Alvarez from Alvarez Quant Trading. In the 1st 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. In the 2nd episode we discussed market classification, trade ranking, exits, order types, position sizing, risk control and much more. In this 3rd and final episode, Cesar answers all your questions, covering a wide range of topics, including: Mean Reversion in markets outside of Stocks, Controlling risk during market sell-offs, gaps and being overweight in particular sectors, Performance of Large caps vs Small caps, Ranking Mean Reversion setups, Shorting strategies, Readjusting strategy parameters and measuring robustness, Balancing Mean Reversion in a portfolio of other trading styles, Tail risk, leverage, options, performance monitoring and so much more! 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.

A few weeks ago I got the fright of my life. I found myself in a situation where I could potentially be crushed by a car, or perhaps even a bus or truck. Find out what happens and how it applies to tracking the performance degradation of trading strategies (before they kill your account). 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.

I've just arrived back home from a few weeks in the States, I had a great time there but it's also good to be home. I'm a bit jet-lagged today so let's hope what I share today actually makes sense! A few weeks ago I had the honour of speaking at the ATAA members meeting here in Melbourne. I presented for about an hour and the topic of my presentation was '7 practical tips to reducing drawdown'. In this weeks Trading Thought I want to share a quick story from that and how it applies to Mean Reversion in low volatility environments. In part 1 of the Mean Reversion series, Cesar made a statement about Mean Reversion strategies not performing so well in low-volatility market regimes, and I received a number of emails asking what type of strategies DO work in low volatility environments, so... In this week's Trading Thought I want to share a quick little sneak-peek into the next Mean Reversion episode with Cesar, due for release in a few weeks, where he answers this question, plus much more. It's only short, but let's take a listen to Cesar sharing what he's found to work in low-volatility market regimes. 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.

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. 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.

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. 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 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... 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.

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. 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.

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. 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 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: 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, 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. 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.

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. 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 this weeks Thursday Trading Thought we're going to discuss a market pattern that was identified over 80 years ago, perhaps even longer, that could indicate what happens in the markets for the rest of 2017. Now, I can imagine some traders are probably thinking, "who cares about some old, dusty trading rule from the 1900's, surely that has no relevance to the markets today?" Well, that's what we're going to discuss with our guest Brent Penfold, who is going to answer the following questions, plus more: What is this pattern and can something identified over 80 years ago really have any relevance to trading today, Does the pattern still work and what is it suggesting the markets could do for the rest of 2017, And how could this pattern be applied to trading today? Brent is even going to share 1 application of this pattern with some very interesting backtest results so you don't want to miss that. 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 explosion of computing power, more and more resources are being deployed to analyse the markets. Edges that used to work are being eroded away or destroyed as traders from all around the world get to work analysing the same sets of price data. Add to that mix the sophisticated machine learning algorithms and the rooms full of PhDs, how do we even compete with that? If everyone is looking at the same price data, is trading based on price alone enough, and if not, then what is the solution? In this weeks Thursday trading thought Gary Hart from trendfinder trading systems is going to share his approach to this problem. We pickup the conversation discussing changes in the markets over time. 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 this episode we're going to explore a topic we don't cover much on this podcast and that is options trading. 2 of the mains reasons we don't discuss options trading much, is firstly because I don't trade options myself and have limited knowledge of how to use them, but also because there are some challenges with testing options strategies which makes it difficult to backtest them systematically. However, there are some potentially huge benefits to trading systematic options strategies in a portfolio, if you can overcome these challenges. Today's guest, Luca Giusti from QTlab, is here to discuss options with us, explaining: The benefits of trading options systematically, The challenges of testing options strategies and the solution, Why volatility is such an important aspect of trading which can't be ignored, How to factor market volatility into trading strategies to reduce risk and increase performance. 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 this weeks Thursday Trading Thought we're going to inject some inspiration into the podcast. Trading is a really tough business and sometimes as traders we can get into a bit of a funk, no matter what level of trading we're at. But we're only human and we're all trying to get better, so in this episode I've pulled together 3 of my favourite stories or motivations from the podcast. We've had a lot of inspirational guests on the show over the years so I could have pulled out a whole bunch of these but to keep it short for this Thursday Trading Thought I'm going to share 3 that stood out to me. Hope you enjoy them! 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.

Fear, Hope and Greed are 3 dangers that traders of all levels need to watch out for. They can have sometimes have a dramatic impact on our trading results, and even cause traders to quit trading or to blow up their accounts. And even if you think you've got them covered things can change pretty quickly, and even seasoned pros that are often as cool as ice can turn into a quivering mess in the corner! OK, that was a little dramatic, but it can happen and I'm sure you get the point that at times traders of all levels can become susceptible to the dangers of Fear, Hope and Greed. So how can we manage them so that it doesn't impact our trading? In this weeks 'Thursday Trading Thought' Brent Penfold is going to share some practical tips on how to overcome these 3 dangers, so let head on over to our chat with Brent to see what he has to share. 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.

So here it is, the 2nd part of our conversation with Brian Miller from Optimized Trading. In the chat today we're going to combine some new topics with an expansion on our previous conversation, including: The application of game theory in trading (it doesn't just apply to HFT), The importance of letting the R&D process guide you instead of trying to squeeze it into a preconceived idea, How to balance simplicity with complexity for more robust trading solutions, The impacts of price data evolution on trading model longevity and how to address them, Plus a few questions from listeners. 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.

A common misconception with systematic and algorithmic trading is that it removes the impacts of human psychology on trading. But that's really not the case. In fact, even when we've got trading platforms automatically executing trades for us, the mental aspects of trading can still have an impact on execution, model development, position sizing and other areas... Sometimes without us even knowing. And not only can they have a negative effect on our trading results, but can also take a toll on our health, well-being, relationships and other areas of our personal lives. But by being able to identify issues and putting plans in place to address them, we can make better trading decisions. So how do we do that? In today's Trading Thought we're going to hear Laurent Bernut explain a technique that he uses, plus he also shares a 'jedi mind trick' that can quickly reset some of the mental states traders can get into. 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.

You may have noticed over the past few weeks of 'Thursday Trading Thoughts' that we've been following a theme. In episode 113 we heard about a test Kevin Davey calls the 'Monkey test', which can be used to measure the effectiveness of entries and exits. Then in episode 114 we reviewed a technique that Dave Bergstrom shared to measure the decay of a trading edge so that we can determine when an edge has gone, and not overstay our welcome at the party. In this weeks trading thought we're going to discuss the process of combining edges, filters, conditions into a trading system. A common practice when building trading strategies is to combine indicators or filters to see how that particular combination impacts performance, however this practice can be overused or abused, leading to curvefit strategies that don't perform so well in live trading. In today's episode we're going to hear one solution for this problem, from our guest Art Collins, who is going to tell us the process he uses to combine edges while reducing the risk of overfitting, so let's hear from Art. 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.

Glad you could join us today for our chat about intelligent systems that maintain themselves. Sounds good doesn't it? Well actually, that's not all we're going to discuss today, we've got so much more than that. Our guest for this episode is David Stendahl, from Signal Trading Group. David is a CTA with more than 20 years of experience designing and trading systems, and not only is he an international speaker and the author of 4 books but he also co-created the backtester in Tradestation many years ago. In this episode he's got a lot to share with us, here are just some of the points we cover: How to build intelligence into trading strategies so they dynamically adjust and maintain themselves over time, The key to portfolio construction and the major factors to consider for effective diversification, Why it can be better NOT to specialise in a particular market, The main drivers behind strategies that have lasted more than 10 years in the markets, How to assess if a strategy suits your personality. 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 we reviewed a technique Kevin Davey shared to measure the effectiveness of entries and exits using something he calls 'the monkey test'. This week we're going to look at entries and exits from a slightly different angle: How can we measure a trading edge after we've entered a trade, Is it possible to identify when that edge has disappeared so we can consider exiting the trade rather than overstaying our welcome? In this episode we're going to review a technique that Dave Bergstrom uses to measure the decay of a trading edge. We pick up the conversation talking about validating trading strategies for robustness, 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.

Today, we're going to have a quick chat about the effectiveness of entries, and a simple technique you can use to determine how good an entry or exit really is. I've been working on some breakout strategies lately and I've noticed in some of them that the entry really isn't that important at all… That is, I can be pretty loose with the entry values and get similar results… So there are other components to the strategy that are actually driving the performance. Now, this got me thinking about measuring the effectiveness of entries and exits, so today I want to share a technique that Kevin Davey calls the "monkey test". And no, you don't need actual monkeys for this! Let's hear how Kevin uses the monkey test to check how good his entries and exits really are. 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.

Glad you could join us today where we get to chat with Stefano Serafini – the current leader of the World Cup Championship of Futures Trading®* I met Stefano in New York at a trading masterclass a few years back and he's been doing some great things with his trading. As I mentioned, he's the current leader of the World Cup Championship of Futures Trading®* Sometimes in these trading competitions you see traders rocket to the top of the leaderboard really quickly, but they usually disappear just as quick. Anyone who's been watching the competition this year would have noticed that Stefano has been pretty consistent so far, so we're going to discuss his trading approach, especially around intraday trading strategies and portfolio construction. In our chat you will learn: How to use filtering on higher timeframes to produce higher quality intraday trades, How 'time windows' can improve trading results and what to look for, How to combine multiple strategies into a portfolio and then manage it to keep the portfolio fresh and performing optimally, A common mistake traders make with correlations that could give false results and how to overcome it. 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 systematic and algorithmic traders, we have a number of tools and processes we can use to test and validate trading strategies. For example, in-sample/out-of-sample testing, walk forward analysis, cluster analysis and a bunch more. (And don't forget all the fancy named techniques that have been lumped in with Machine Learning that are sometimes just rebadged techniques that have been around for ages already!) Anyway, one of the tools that we have at our disposal is Monte Carlo analysis. When you're using a tool it can be good to understand how it works... What are it's strengths? What are it's weakness? Today I'm going to share with you a little bit of audio from Dave Walton of Statistrade, explaining the benefits of Money Carlo analysis, and also a few of the weakness or false assumptions around Monte Carlo analysis that we really need to be aware of if we want to manage Monte Carlo effectively. Let's take a listen to what Dave has for 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.

T Today I want to share with you one of my favourite Seinfeld episodes ever. It's the episode where George Costanza realises that all of the decisions and actions he's taken throughout his life have been the wrong ones. So he decides to do everything the opposite. He's in the diner with Jerry and Elaine and he sees an attractive woman sitting up at the counter who seems to be interested in what he's doing, glancing over at him. Instead of sitting back and doing nothing about it he does the opposite... He approaches the lady, announces that he's a short, bald, unemployed man who still lives with his parents, and... She immediately goes out with him! Later on, he gets an interview for a job with the New York Yankees and during the interview he gets an opportunity to meet the owner. Instead of sucking up to the owner, he does the opposite and tells him how much the team sucks, how he's done a poor job managing it, making stupid decisions etc, and... The owner immediately hires him! Every time George does the opposite of what he would usually do, it works out well. He succeeds. And guess what? It can sometimes be the same with trading too... Listen to find out how. 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 markets are in a constant state of adaptation. Conditions change. Strategies fall in and out of sync with the market, causing periods of good and poor performance. So what can we do to improve consistency by making our systems adapt better to changes in market conditions? Our guest for this episode, Brian Miller, is from Optimized Trading, and in our chat he shares with us: Why implementing adaptability into strategy design is so important and some techniques you can use to create adaptive systems today, Why market classification needs to be considered and the types of approaches you can use to classify the market, How to pursue a multi-model structure that adjusts dynamically to changing market conditions, Plus much more. Note: This is the 1st part of 2 recordings, look out for the 2nd part coming soon! 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.

Over the last few months you may have noticed an increase in the number of articles being published on the internet using Market Breadth to predict which way the stock markets could go next. In fact, I saw one just recently that said the US stock market is set for a parabolic move. Now, as systematic traders I'm sure most of us are not really interested in predicting those types of things... However Market Breadth measures can provide us with additional insights into the underlying conditions in the market that aren't so obvious looking at a price chart. So today I want to share with you some Market Breadth knowledge from Greg Morris, who oversaw the management of over 5.5 billion dollars. Take a few minutes now to hear from Greg about Market Breadth and what it can reveal about the underlying conditions in 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.

"I think most traders use canned indicators like a stochastic or RSI or MACD, with a fixed length without thinking much about them." - John Ehlers They take the default length, or one that performed well in a backtest, or even one that has been recommended by someone else, and they start trading with it. They may have a good run for a while... And then it falls apart for no explainable reason... The basic problem is that market conditions change, but indicators are fixed and don't adjust to changes in market activity. So how can we make our indicators more adaptive to market conditions? Take a listen as John Ehlers explains a technique we can use to build indicators that adapt to market conditions and also shares a simple trick to check if our indicators are in-tune with the markets or not. 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.

I have to admit… I'm a bit of a sceptic. However, I've had so many people recommend meditation to me in the past. Successful people. People I have a lot of respect for. In fact, some of the previous podcast guests, some big names, have shared with me how powerful meditation has been for them, both personally and for their trading. But it's not just traders, many successful business people swear by it too. So, what's all the fuss about? I'm always on the lookout for anything extra that can give us an edge in the markets, so could meditation be something us traders can harness to our benefit? Or is it all just some weird mumbo jumbo sham? Well it's time to find out, so in this episode I speak to Adam Grimes about meditation and trading, including: What is meditation, and does it actually work? What are the benefits and drawbacks of meditation and can it help traders become better? How to get started and what to expect. This is only a short episode, so even if you're a sceptic like me and think this may have nothing to do with trading, I recommend you take a listen anyway. Try to approach it with an open mind and form your own opinion from there, so let's jump over to our chat with Adam Grimes . 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 I want to share an optimization insight from Perry Kaufman. I was reading an article on a trading website and the author was making some assumptions based on the optimization results which may not have been entirely accurate. I think alot of traders can get caught up making this same assumption... I know I definitely have... And it's good to be reminded of these types of things so we don't make the same mistakes. Listen to Perry explaining what this assumption is, the danger in making it and how to overcome it. 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.

A few years back I was on a holiday with friends at Hamilton Island in the Whitsundays. We were cruising around the island in a golf buggy when a friend suggests we go to the shooting range. I'd never even touched a gun before but while we were there I decided to shoot a .44 Magnum... 'the most powerful handgun in the world' according to Dirty Harry! Take a listen to hear what happens next and how it applies to 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.

Indicators often form a large part of trading systems, however there are a number of issues caused by indicators that can result in under-performing trading strategies, like: they're reactive, instead of predictive, they have alot of lag, which means they're slow to respond to the markets, and they can often give you a signal too late so you've already missed some of the move or even a large part of the move! Today we talk to John Ehlers who is going to share with us a brand new indicator he's developed that overcomes alot of these issues. This new indicator: Minimises lag, Is very responsive to the market, and Gives a fast indication of turning points. Plus at the end of the chat we share how you can get a FREE copy of this new indicator to try it out for yourself. 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.

I'm currently in Sydney for a week doing some work, and I'm staying in one of the hotels near circular quay, overlooking Sydney Harbour. I won't share name of the hotel because it's a well-known name, and it's actually a really nice hotel... However I had an experience with them when I was checking in that I wanted to share because I think it has some nice parallels to trading strategies. 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.

Most trading strategies are built to find repeatable patterns in the market and then attempt to exploit any future occurrences of the pattern to make a profit. There are lots of different ways to find patterns, and in this episode Brent Penfold talks about patterns in price action. Brent is a full time trader, author, educator and licensed Futures Advisor, and in our chat you will learn: Why it can be better to focus primarily on price instead of a collection of indicators, How to identify patterns in price action, The dangers of trading stocks and why Futures are a superior trading instrument for active traders, How a 'universal dataset' can lessen the risk of datamining, How to blend individual systems into a portfolio to produce smooth equity curves. PLUS, we announce the lucky winner of the Better System Trader 'Super-package' giveaway, worth almost $20,000! 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.

Jack Schwager returns to answer all your trading questions. Jack is a well known expert in the industry, working for some of wall streets leading firms and is also one of the founders of FundSeeder. Plus, he's the author of the best-selling series of 'Market Wizards' books, which I'm sure most traders on this earth have read! In this 2nd part of our chat with Jack, he answers all of the trading questions you submitted (well most of them anyway, unfortunately we didn't have all day to talk!) Plus, to celebrate the milestone 100th episode, we've got a huge giveaway worth almost $20,000 - and one lucky trader is going to win it. Listen for more details and information on how to enter. 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.

When I was learning to snowboard, I still remember the first time I got off the lift chair, strapped myself in the board and looked down the mountain. It was really overwhelming and I wondered how I was actually going to get down there without any injuries! My instructor was very comforting telling us 'Not to focus on the bottom of the mountain', because even though that's the destination, to get there we were actually going to zig-zag down the mountain. So we needed to focus on the next turn and how we were going to execute that. We were told to look where we wanted to go, so if you want to go left then look left, your shoulder/hips will turn, your body weight will shift on the board and that will steer the board. And as you're moving across the mountain you obviously want to look for hazards, look for where you want to turn and focus on shifting your body weight to steer the board around the corner It was all about the process. By focusing on the process, the outcome would eventually come. That is you'd work your way down to the bottom of the mountain with hopefully no broken bones! However, if you were to just focus solely on the bottom of the mountain, then you're likely going to fall down and crash. Trading can be a very outcome-focused activity, there is the temptation to focus on the results of our trades. Did the trade make or lose money, how is our P/L progressing for the month or year? But is this the best focus for traders to have? Should we be focusing more on the outcome or the process and what produces the best results? Do we need to have a balance between the two, and if so how? Let's take a listen to performance coach Rande Howell now as he shares a story about an Olympic hurdler and how his approach to focus applies to trading performance. 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.

It can be really interesting and exciting to research the markets and test different ideas but at some stage we need to decide if the strategy is ready for live trading. Some traders can get stuck endlessly researching… Trying to find that perfect system… Which comes at a cost. How do we avoid getting bogged down in research? How do we know when a trading strategy is actually ready for trading? Let's listen to Kris Longmore from Robot Wealth explain his approach to determining when a trading strategy is ready for live 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.

Jack Schwager needs no introduction. He's a well known expert in the industry, working for some of wall streets leading firms. Plus he's the author of the best-selling series of 'Market Wizards' books, which I'm sure most traders on this planet have read! In this chat with Jack we discuss Optimization Myths, referencing some interesting results of a study that analyses the effectiveness of optimization... The results may not be what you expect... And could have a huge impact on the way we test and trade strategies. There are plenty of other nuggets of info too, including: The relationship between the best performing past and future parameter sets, Why optimization adds very little to the power of a trading strategy and where to focus instead, and How to properly assess trading results to determine if it's your strategy or the market that's actually any good. 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 there are some situations that can cause traders to throw away perfectly viable trading strategies, without even realizing it? Imagine that! Putting all that hard work and effort into building a trading strategy but due to some arbitrary decision we're making during the strategy creation process, we throw the strategy away... When it could have been a good trading strategy... So, what could be causing this? And, what's the solution? Let's hear Dave Walton from Statistrade explain what this danger actually is so we know what to look out for, and then briefly discuss one of the solutions to this 'hidden' problem. 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.

Have you ever wondered what exactly is it that makes a trader successful? Is it based on personality? A specific approach to the markets? Pure luck? Dr Brett Steenbarger is a trader and performance coach, and gets heavily involved in the recruitment process for trading firms. He gets to interview traders, see how they work and analyse their performance so he's in a really great position to make these types of observations. Take a listen to Brett sharing the 3 main components he's observed in successful traders. 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 many traders do you know that have successfully cornered a market? If you're not familiar with the term 'corner the market', it means to get enough control of a commodity, stock or other asset so that you can manipulate the price. There are a number of documented cases in history where people have tried... ... and it usually doesn't work out too well for them! This weeks podcast guest Kurt Sakaeda has cornered a market, however it was more of an amusing accident that an intentional act. And this is just one of the entertaining stories Kurt shares with us in our chat today. Those familiar with the World Cup Trading championships would recognize Kurts name because he's won it a few times, with his first win in 2000 so he's been trading for a while. In our chat with Kurt we discuss a mixture of trading topics, including: How to include seasonality in trading models and why you don't need to worry about curve-fitting seasonal trades, The dangers of counterparty risk and how to reduce them, Finding profitable trades in a crisis, and How Kurt accidentally cornered a futures market and the amusing results - the 'authorities' weren't too happy. 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.