Utilizing edge stacking techniques to create a probability map for market probabilities across various buckets.
Integrating fundamental and technical indicators in a systematic framework to adjust portfolio allocation based on probability analysis.
Deep dives
Approach to Trading and Investing Strategy
David Stitz, a systematic individual investor with over 20 years of trading experience, shares his approach to trading and investing, which involves implementing a long-term investment portfolio alongside swing-term trading strategies. He combines fundamental and technical analysis to trade various assets like equities, bonds, and cash, aiming to create systematic frameworks and models for consistent returns.
Mapping Market Probabilities and Edge Stacking Techniques
David discusses the concept of mapping market probabilities using his meta strategy, which guides his investment decisions based on current market environments. By utilizing edge stacking techniques, he overlays trading strategies onto his investment portfolio, adjusting exposure according to the probabilities derived from his probability map. This approach allows him to adapt his portfolio allocation based on a systematic analysis of market data.
Key Indicators for Trading Decisions
David emphasizes the importance of key indicators such as the VIX futures term structure for risk-on-risk-off signals and moving average crossovers for trend-following strategies. He also integrates fundamental indicators, using a traffic light system to align the market landscape with his overall investment strategy, signaling entry or exit points based on the convergence or divergence of these indicators.
Importance of Discretion and Adaptability
While David's approach is systematic and data-driven, he underscores the role of discretion in managing trading strategies. He highlights the significance of adapting to changing market conditions and the need to constantly evaluate and adjust the weights of new edges in his model. By staying flexible and remaining attentive to various market signals, David aims to make informed trading decisions that optimize returns.
David Steets from Systematic Individual Investor joins us to discuss how to map market probabilities and identify high probability markets using "edge stacking" techniques, including:
The importance of mapping market probabilities,
How to identify if something really contains an edge,
Blending return probabilities across buckets to create a probability map,
Classifying markets over multiple timeframes,
How to confirm which edges are currently relevant,
Using both technical and fundamental in models,
The reliability of edges over time,
Managing conflicting information and edges,
Bear market signals, integrating discretion, weighting edges, VIX term structure, “anti-edges” and 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.
Get the Snipd podcast app
Unlock the knowledge in podcasts with the podcast player of the future.
AI-powered podcast player
Listen to all your favourite podcasts with AI-powered features
Discover highlights
Listen to the best highlights from the podcasts you love and dive into the full episode
Save any moment
Hear something you like? Tap your headphones to save it with AI-generated key takeaways
Share & Export
Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more
AI-powered podcast player
Listen to all your favourite podcasts with AI-powered features
Discover highlights
Listen to the best highlights from the podcasts you love and dive into the full episode