Line Your Own Pockets

Dave continues helping Michael create a first backtest in Amibroker. You might think "backtesting is backtesting," but we cover many of the differences between RealTest and Amibroker, as well as their implications. We discuss: What makes AI so bad at generating good AFL code for a backtest in Amibroker The better you get at understanding how AFL works, the better your use of AI gets How a column l...

Dave offers advice and feedback to Michael, who is learning to use Amibroker for the first time. He's coming from RealTest, so we go over the similarities and differences between the two platforms. We discuss: How RealTest is great for daily data, but hits a wall for most intraday trading strategies Amibroker is not just a backtester; it’s a full charting, analysis, and execution environment. Back...

We discuss the actual nuts and bolts of what running your trading like a franchise means: Systematize everything A process for eliminating low-value work What makes sense to outsource and what you should keep in-house Make your trading survive without you And much more... --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to bett...

As traders gain experience, the problem shifts from not having enough ideas to having too many ideas competing for limited time and mental energy. Without a system, this abundance quickly becomes overwhelming and leads to paralysis or procrastination. We discuss the ICE method - a simple scoring method to determine which ideas to work on first. Spreadsheet Link https://docs.google.com/spreadsheets...

In this week's episode of Line Your Own Pockets, we take on a topic submitted by Isaac, a trader I work with. We discuss: When timing/speed matters and when it doesn't The types of trading strategies where latency is likely the bottleneck How rushing to solve problems can be counter-productive (waiting can reveal simpler solutions) Concrete steps to determine if latency is really an issue and how...

We butt heads in this episode, arguing about the value of portfolio-level backtesting, one of the key feature differences between RealTest and Amibroker. Is portfolio-level testing essential, or simply premature optimization? --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backte...

We discuss: How to optimize so you have to re-optimize as little as possible How better columns directly translate into more robust strategies Hold a rule "in reserve" so you can apply it when needed without full re-optimization Documenting previous optimization decisions will make the next strategy better And much more... --- Before you go! The next time you find yourself in a drawdown, I want yo...

We discuss: Similar to taking partial profits, moving a stop to breakeven is more about psychological comfort Profitable trading requires tolerating discomfort, as difficult as that is at times It seems like a simple idea to test, but it quickly adds significant complexity to a backtest How to actually test this in a backtest This is a great example of the platitudes you often hear from people who...

You didn't get a fill on your original entry.  The trade would have been profitable for a bit, then it comes back to your original entry price.  Do you take the trade?  We go in-depth, answering this common dilemma. Your default should be to take the trade if it still matches your system There's more information to decide on - what can you add to your backtest? What are post-entry columns, and how...

Michael and Dave discuss NASDAQ's initiative to tokenize all securities and the implications for traders. They discuss: What tokenization is and what that means for equities How it affects settlement and paves the way for 24/7 trading Prediction markets and positive externalities of betting ("Betting is a tax on bullsh*t.") Dave proposed a bet to Michael based on the volume traded in the opening a...

We've got news for you - there's nobody who cares enough about your stops to go "hunting for them." And getting stopped out by a penny is frustrating, but it's actually a good sign. Blaming an algo or anything else for your trade getting stopped out is counter-productive Why most traders are completely wrong about placing stops How to select stops for your strategy in a data-driven way Much more.....

In this episode, we tackle this popular question. Dave polled several traders he coaches and got some surprising answers. How much is trading like, say, poker, or something that is even more up to chance? Even starting a business can be called gambling if defined purely as "risking money on uncertain outcomes." Does having an edge make trading less like gambling? In a casino, is the house "gamblin...

In this episode, we discuss the best way to use alternative data in your backtest. What is alternative data and how can you use it in a strategy? Examples of alternative data Using it in real-time versus a backtest How to automate the process for backtesting and real-time trading Other episodes mentioned: Using News in Your Trading Strategy --- Before you go! The next time you find yourself in a d...

In this episode, Dave discusses a conversation he had with John M. from SMB Trading and his unique approach to taking a strategy live. We discuss: John's 35+ strategies he runs live How he quickly gets a strategy running in production His approach to collaboration with other traders What is "strategy taste" and how you can improve yours over time --- Before you go! The next time you find yourself...

Follow-up discussion on quant and discretionary trader collaboration. We discuss: How Dave first connected with Bella The cultural DNA of SMB Capital The challenges of quant/discretionary collaboration The importance of being a giver, not a taker Related episode: Mike Bellafiore and Nick Coutrakon from SMB Capital on Trading Teams Creating a Trusted Trading Group Books mentioned: Give and Take by...

Mike Bellafiore and Nick Coutrakon join the podcast to continue a discussion Mike had with Dave on the makeup of trading teams at SMB Capital, a proprietary trading firm in NYC. What's the best way to include a quantitative trader in a discretionary trading team? --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktes...

Are you a profitable trader but hesitant to automate your trades? In this episode, we discuss multiple steps to take towards having a computer make trades without fully automating. --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course. I hope to see you there!

We discuss 4 different variations of a strategy that Dave is deciding between and the thought process for doing so. --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course. I hope to see you there!

Lessons learned from buying a new trading computer. --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course. I hope to see you there!

Remote desktop solution mentioned: RustDesk TailScale --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course. I hope to see you there!

More discussion on buying power and running out of it might be a good thing. --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course. I hope to see you there!

Is running out of buying power... actually good? Here's the graph of buying power mentioned in the episode: Is Running Out of Buying Power A Good Thing? --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course. I hope to see you there!

How many trades should your strategy take and how profitable should each one be? There are two distinct approaches to answering this question, and most profitable traders fall into one camp or the other. --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course. I...