The Algorithmic Advantage 047 - Tom Starke - The Basics of Building a Strategy Development Pipeline
Dec 18, 2025
Tom Starke, a quantitative trading practitioner, shares insights on creating a successful strategy-development pipeline. He emphasizes the importance of setting realistic trading expectations and the role of robustness over perfection. Starke discusses the benefits of strategy breadth to enhance performance, as well as managing transaction costs and market microstructure challenges. He also highlights the necessity of hypothesis testing before backtesting, suggesting a data-driven approach to trading that combines simplicity with effective risk management.
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Start With Realistic Expectations
- Set realistic expectations and prioritise robustness over searching for a perfect winning strategy.
- Manage risk, drawdowns and portfolio-level objectives before chasing high win rates.
Breadth Multiplies Skill
- Boost performance by increasing breadth as well as improving signal skill (information coefficient).
- Systematic automation makes scaling breadth far easier than discretionary trading.
Test Signals Statistically First
- Do statistical hypothesis testing on signals before running full backtests to avoid path dependency.
- Use fast regressions and correlations to weed out non-predictive signals early.