Top Traders Unplugged SI59: The dangers of investing in "stories" but why we all do it
On the show today, we cover some of the dangers of investing in something based on its story alone, how market environments can change while the behaviour of participants stays the same, why Trend Followers rely on secret fundamental information being baked into price, the importance of avoiding Outcome Bias, how cockroaches behave in ways that should be the basis of any robust Trading System, and Niels explains how to use the Top Traders Unplugged Trend Barometer. Questions we answer this week include: Do you prefer simple or exponential Moving Averages? Should you use the closing price or the settlement price? Do you measure ATR from the closing price or settlement price? How would you best illustrate trend strength over particular periods of time?
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Episode TimeStamps:
00:00 – Intro
00:50 – Live event recap
06:00 – Macro recap from Niels
09:55 – Weekly review of returns
12:45 Niels describes his trend indicator
16:40 – Top tweets
34:55 – Questions 1/2: Scott; Do you prefer a specific type of moving average? Do you use settlement or last trade in your models?
38:50 – Question 3: Carl; Do you calculate ATR using the closing price (versus entry price)?
40:30 – Question 4: Nathan; How do you articulate the current volatility environment versus history?
50:00 – Benchmark performance update
51:40 – More live event comments
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