Ep. 1216: Marsten Parker Interview with Michael Covel on Trend Following Radio
Sep 18, 2023
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Marsten Parker, featured in Jack Schwager's Unknown Market Wizards, joins Michael Covel to discuss systematic trading. Topics include discretionary vs. systematic trading, different trading strategies, backtesting, Jim Simons' career and strategies, misconceptions about short-term trading, and the philosophy of trading and entrepreneurship.
Having a method, whether discretionary or systematic, is crucial for trading success.
Finding a balance between intuition and systematization is key to individual trading success.
Deep dives
The Shift from Discretionary to Systematic Trading
The podcast episode explores the shift from discretionary trading to systematic trading. The host discusses his own experiences and observations, noting that many successful traders have embraced systematic approaches over the years. He questions the debate between discretionary and systematic trading, emphasizing that having a method, whether it's purely intuitive or systematized, is crucial for trading success. The guest agrees, highlighting that most successful discretionary traders still have a method even if it may not be the true source of their edge. The conversation underscores the importance of finding a trading approach that provides confidence and consistency.
The Spectrum of Discretionary and Systematic Trading
The podcast delves into the spectrum of discretionary and systematic trading. The host and guest discuss how the line between these two approaches can be blurry, and often there's some level of discretion in even seemingly systematic strategies. They emphasize the need to look beyond labels and focus on the actual impact that discretion or systematization has on trading results. The guest shares his own experience of combining discretionary chart analysis with mechanical exits, leading him to eventually become fully mechanical. They highlight that the key is finding a balance that works for individual traders, whether it's embracing intuition within a systematic framework or developing situational awareness.
The Pragmatism of Systematic Trading
The podcast touches upon the pragmatic nature of systematic trading. The host and guest reflect on how advancements in technology and access to data make it logical for traders to embrace systematic approaches. They highlight the benefits of using tools like coding and backtesting to develop repeatable processes that instill confidence and offer a competitive edge. They also discuss the allure of discretionary trading and how the perception of intuition and secret sauce can sometimes overshadow the evidence of systematic trading's effectiveness. Ultimately, they agree on the importance of having a systematic framework as a foundation for trading, providing stability and predictability in an unpredictable market.
The Journey from Discretionary Trading to Systematic Trading
The podcast episode covers the guest's journey from discretionary trading to systematic trading. The guest shares his early interest in the market and the challenges he faced in finding a method that could be tested and backed by historical data. He describes his initial experiences with off-the-shelf software and manual implementation of a semi-systematic strategy. Over time, through extensive testing and refining, he transitioned into fully mechanical trading, developing his coding skills along the way. The conversation underscores the importance of curiosity, testing, and adapting strategies as traders evolve and strive for consistent profitability.
My guest today is Marsten Parker, a self-taught programmer and trader with 13 years of software industry experience and two decades plus in trading. For the past 20 years, Marsten excelled as an independent systematic securities trader, utilizing his expertise to develop innovative trading-related software. He was featured in Jack Schwager's Unknown Market Wizards.
The topic is systematic trading.
In this episode of Trend Following Radio we discuss:
Discretionary vs. systematic trading
Different trading strategies
Backtesting
The career and strategies of Jim Simons
Trading software and tools
Misconceptions about short-term trading
Philosophy of trading
Life choices and entrepreneurship
Jump in!
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I’m MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I’m proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show.
To start? I’d like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/