Better System Trader

Michael Himmel is a Founding Partner, Portfolio Manager and Director of AI Research for Essex Asset Management. He has been actively trading and designing systems since the 1980s, managing the No.1 Global Macro Hedge fund in the world in 1999. He now uses large doses of AI and Machine Learning in his current practice. In this week’s episode we discuss Artificial Intelligence, the challenges and applications of AI in trading, criticisms of Machine Learning, event studies and the importance of selecting datasets. He also shares insights from starting out as a runner for some of the biggest players in the 1980s, to managing the no. 1 global macro hedge fund in 1999 to using AI in his practise today. Even if you’re not into AI and machine learning, the stories and insights Michael shares are invaluable. Topics discussed Lessons from running orders for some of the big players in the 1980s Transitioning from discretionary to systematic trading The challenges of applying Artificial Intelligence (AI) and Machine Learning in the 1990s How changes in technology have made AI in trading available to almost every body How Hedge Fund Lambeth Capital achieved a 260% return in 1999 The impact September 2001 events had on hedge fund operations The applications of AI in non-finance industries The three divisions of AI The relationship between machine learning and AI Trading applications of AI How to decide which datasets should be used to avoid data mining Addressing the criticisms of machine learning The challenges of using AI for longer timeframes and is it the right tool for the job? Event studies in trading The future of trading   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.

Robert Bubalovski is the Managing Director and Head Trader at TradeView investments, a privately held proprietary trading firm located in Melbourne, Australia. Since 1996 Robert has been actively involved in the financial markets and trading, in 2012 he decided to set up his own Proprietary Trading Firm to concentrate on his own trading strategies. His team of professional proprietary traders specialize in the trading of Equities, Futures, Options, FX and Money Markets across multiple exchanges around the globe and around the clock. In this weeks episode we discuss prop trading, the challenges and lessons from beginner trader to starting an investment firm and what it takes to be a successful trader. We also discuss arbitrage and pairs trading strategies, statistical rather than indicator-based trading and the importance of simplicity. Topics discussed The pros and cons of prop trading The progress of a prop trader How long it takes to become a successful prop trader The attributes of successful traders Advice for those wanted to get started in prop trading Challenges starting out and the lessons learnt Arbitrage and Pairs trading Index arbitrage Selecting stock pairs for arbitrage opportunities Getting started in pairs trading/arbitrage The benefits of pair trading indices vs stocks The dangers of pairs trading in stocks Why keeping strategies simple is so important The main attributes a trader needs to be successful How to increase trade size and be comfortable with it The advantages of strategies based on statistics rather than indicators   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.

Tim Rea is a proprietary trader, trading his own money with well over 100 automated systems across 25 different Futures contracts. He is a past winner of the World Cup trading championship, along with being a CTA and broker but gave that away to focus on trading his own money. In this weeks episode we discuss various aspects of trading multiple strategies, including monitoring performance, money management, correlation, technology and trading in markets not in your timezone. We also discuss the impacts of the MFGlobal and PFG collapses and how Tim overcame the heavy losses to continue trading. Topics discussed How poor experiences investing with others drove Tim to figure it out for himself Becoming a systems vendor, CTA and broker and why he then left it all behind to just trade his own money How shorter term trading can increase confidence in a system How many strategies he’s currently trading (hint: its more than 100!) Keeping track of the performance of multiple strategies Why you shouldn't just stop trading a system when the drawdown is larger than it has been historically Why you should try to understand the underlying reasons for strategy drawdown Considerations when adding more strategies to a portfolio Managing correlations with multiple strategies Position sizing when trading multiple systems The benefits of trading a portfolio vs trading an individual method How to manage trading in markets not in your timezone The impact of the PFG collapse and how Tim overcame the heavy losses Lessons learnt from dealing with MFGlobal and PFG collapses How to manage your trading account to minimise risk of loss in another collapse The benefits of trading Forex How Tim won the World Cup Trading championship trading just the EURUSD The importance of vision in your trading business   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.

In this weeks episode Larry Williams talks about conditional trading, understanding what drives prices, the misuse of indicators and how to apply them correctly. We also discuss cycles, forecasting markets, what to look for in market tops plus loads of listener questions where Larry shares tips and insights from 50 years of trading. Topics discussed What it means to be a conditional trader Why buy and sell signals need to be analysed in the context of market conditions Fundamental factors that drives markets Interpreting the COT reports correctly The buying differences between retail and commercial traders and how it can indicate future market direction Why you should approach trading like a combination lock Coming up with unique indicator ideas The mis-use of indicators and how to use them correctly Trading styles of successful traders Forecasting markets based on technical factors Characteristics of stock market tops and bottoms The fundamentals to watch during market tops Listener questions Issues with the Forex market Trading prices patterns, do they still work and are they scalable Why short term price patterns work What happened in 2002 and why you need to consider that when backtesting Will trend trading always be effective? How many positions to trade at one time Money management tips for those who aren't into heavy maths Choosing the best markets to trade Favourite Larry Williams indicator What keeps Larry motivated to trade after 50 years What drives peak performance (it’s not money…) The key component that really drove Larry to becoming a consistently successful trader How Larry lasted so long in the industry How to overcome emotions when entering or holding trades Larry’s biggest contribution to the trading industry Why Larrys strategies have lasted the test of time Common traits against the most successful traders The trading model that’s worked for Larry for over 50 years   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.

Scott Andrews 'The Gap Guy' shares his expertise in gaps, why they work, what factors to take into account when trading gaps and what to avoid. We also discuss gap zones, when to fade and when to follow and calculating stops and targets. PLUS, for those that aren't into Gap trading, we cover some important concepts that can impact all styles of trading, include one concept called 'Ensemble Systems' which may just change the way you look at trading strategies. Topics discussed Why it’s important to trade a style that matches your own strengths rather than follow someone else Why gap trading works Markets where gaps work best and those that don't The best type of stocks to trades gaps and the stocks to avoid The benefits of trading gaps in indices vs stocks The 3 market conditions to look at when analysing a gap How seasonality impacts gap trading Signs of gaps to avoid Using ATR to determine the probability of gap size closing Gap zones and how the location of the gap can provide useful information The worst performing gap zone The psychology of certain gap zones and why some work better than others When to fade the gap and when to follow it Calculating stop and profit levels based on gap characteristics and market conditions How to determine if a target should be a full gap close, partial gap close or an extended target past gap close The impact of QE on gaps How to combine systems into Ensemble Systems for an interesting view on trading strategies   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.  

Jerry Parker, Turtle Trader and CTA, talks about trend following, how to approach wins and losses, dealing with drawdowns, managing correlations in asset classes and how changing market dynamics have impacted trend following and the solution. He also gives us some tips on systematic trading including how he trades without relying on optimal values of the past. Topics discussed What types of characteristics Dennis and Eckardt were looking for in the Turtle traders program How the Turtles were taught to approach losses Common traits amongst the most successful Turtles The hardest part of trading as a Turtle How Jerry overcame the fear of taking trades The biggest lesson being a Turtle What Jerry did with the Turtles approach after the program ended The impact managing other peoples money can have on trading The key factors that make trend following work Managing correlations between asset classes Long-term vs short-term trend following Dealing with drawdowns How changes market dynamics have impacted trend following and solutions How to diversify to lessen the impact of any one parameter How to trade without relying on optimal values of the past PLUS questions submitted by listeners: The difficulties in knowing when to adjust strategy parameters Adjusting your system for whipsaws Tips to avoid data mining Do the Turtles systems still work in the todays markets? Are there any markets where the strategies no longer work? Short versus Long trades Overcoming emotions in trading Biggest mistakes and the lessons learnt What todays Turtle program would look like   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.

World Cup Trading champion Andrea Unger discusses how to create robust strategies, the role of indicators in trading, principles to strategy creation, Forex trading strategies and optimising to understand market behaviour. Topics discussed The strategies and position sizing Andrea used to win the world cup trading championship 4 times The role of luck in trading Controlling risk when trading multiple strategies Where to find trading ideas The principles Andrea uses in the Forex and Futures markets to develop profitable strategies The role of indicators in strategy development Matching strategy type to market characteristics Why you should analyse your biggest winners as well as your biggest losers Forex trading tips and changes in the Forex market Using longer timeframes to filter trades in shorter timeframes When to optimise or tweak a strategy and how to ensure you don’t over-optimise The drawbacks of trend following and the solution Tips to handling drawdowns Intraday vs End-of-day trading The key to trading success.   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.

Stuart McPhee discusses the common mistakes traders make, the single biggest factor to trading success, the counter-intuitive side to trading and tips to improving trading discipline. Topics discussed Why trading can be simple but not easy Common mistakes traders make Factors to consider when choosing a trading strategy that suits you Common Money Management mistakes The single biggest factor to trading success Common mindset issues traders experience Tips to improving discipline and changing trading behaviour How the Petronas towers can be applied to trading The counter-intuitive side to trading The Chinese Bamboo story   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.

Performance coach Rande Howell discusses the most common issues limiting trader performance, the impact of emotions on trading, the importance of managing process not outcome and tips on changing our physiology to improve performance. Topics discussed The most common issues impacting trader performance What causes hesitation when taking trades How to calm the emotions when trading An easy way to monitor changes in emotions The impact of breathing on emotions and trading A simple trick to disrupt fear Patience and boredom in trading and how to overcome them Are you an African Lion or an American Cougar when trading? Personal traits that don’t align well with trading success How successful traders handle drawdowns The stage in a traders journey where performance coaching provides the most value What successful traders need to watch out for to continue operating at their peak How overconfidence and euphoria can destroy your trading Tips for getting prepared for the trading session   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.

Andreas Clenow is a hedge fund manager who specialises in developing and trading quantitative strategies across all asset classes. Before joining the hedge fund world by establishing his own hedge fund he maintained Global Head positions at Reuters and Equis International. He is the author of two books, the first being international best seller ‘Following the Trend’ and the second ‘Stocks on the Move’ has just been released. In this episode Andreas talks about trend following in stocks, why traditional approaches don't work and what you can do to account for this. We also talk about trading concepts, cash vs risk allocation, position rebalancing and building robust strategies. Topics discussed The origins of trend following and why a traditional trend following approach doesn't work on stocks Why it’s a bad idea to think in terms of cash allocation and the solution Position rebalancing, why, how and when How hedge funds look at position sizing compared to retail traders Why pyramiding positions doesn't make sense How to get a more realistic understanding of performance results than just a backtest report can provide How a random number generator can beat the mutual funds How to ensure you strategies are robust and not curve-fit Handling large losses or periods of drawdown The role of critical thinking in trading   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.