Six Lessons on Systems Trading

In my recent post, Confessions from a Discretionary Trader, I wrote how I was spending more time each day learning about quantitative trading. Today I attended the live taping of our new course, SMB Systems Foundation, with market veterans Rick Martin and Andrew Falde at our NYC headquarters.

Here are the six most interesting ideas I found shared in this course from Day One:

1) The only way a robust auto strategy loses is if it gets turned off too early. You are the casino.

2) You can take a winning system and make it better. But if your initial tests do not show success, move on to another idea.

3) Build a system that fits your personality. If you have a need to be right, then consider a mean reversion system that may offer an 80 percent win rate. If you like home runs, then trend following maybe best for you.  Just like discretionary trading.

4) Without a 1,000 points of data nothing is statistical, no matter what your field or business structure may be. How many times have you failed this test in your trading life/business?

5) Trading systems are Pass/Fail. They either work or they don’t. There is no such thing as a C+ for systems trading.

6) 100 trades or two months of positive data is a good measure for whether you have an idea worth pursuing.

I enjoyed Day One of the course. Rick has such a wealth of knowledge of systems trading, and Andrew has a genuine way of distilling complex topics into easy-to-learn language. I am looking forward to Day Two.

For more information on SMBU Systems Trading, click here.

Bella

You can be better tomorrow than you are today!

Related blog posts:
Why Automated Systems?
SMB Automated Systems Webinar (Part One of Five)

Mike Bellafiore

One Good Trade
The PlayBook


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