In his first podcast episode ever, Bill Eckhardt emphasizes that successful trading hinges more on risk control than on predicting market movements, a theme that resonates throughout his conversation with Moritz Siebert and Rob Sorrentino. The episode explores Eckhardt's journey from the renowned Turtle trading experiment to his current systematic trading strategies at Eckhardt Trading Company. The conversation provides insights into the evolution of trading strategies, the importance of maintaining emotional discipline, and the necessity of adapting to changing market conditions. The discussion also delves into the challenges of overfitting in trading models and the significant role that robust statistical methods play in managing risk. With anecdotes about the unique characteristics of traders and the importance of maintaining a diversified portfolio, this episode offers a fascinating look into the mind of a trading legend and the principles that guide his enduring success.
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Episode TimeStamps:
02:30 - Introduction
03:59 - Eckhardt's relationship to Richard Dennis
06:34 - Can trading be taught?
08:50 - The story behind the trading rules
12:32 - What characterises Eckhardt Trading?
13:44 - How did their perception of risk change over the years?
22:01 - Why they focus on short term trading
27:25 - How they use volatility in their trading
32:49 - Do they utilize other methods than trend following?
34:05 - Why do they avoid trade summary statistics?
40:26 - How they control overfitting and underfitting
45:37 - How they use "the gauntlet" to test systems
49:12 - How many markets do they trade and why?
53:57 - Why they don't trade single stocks
56:28 - Their view on replication strategies
01:05:23 - Evaluating the success of systems
01:08:02 - What are the most important things to avoid when designing trend following systems?
01:08:47 - The future of trend following
01:11:11 - Criticise ideas, not people
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