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On this week's episode of Line Your Own Pockets, we reflect on the recent interview with Garrett Drinon from last week. We discuss: Principles of elite performance span across different domains Process matters more than outcomes Copying others might work temporarily, being truly unique matters in the long run Adapting to changing markets is a skill you can develop And much more... --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on o...
In this episode of Line Your Own Pockets, Dave shares two new tools to download and manage market data for backtesting and creating profitable trading strategies. Both of these tools are available for free in the Free Tools section of my website. (More free tools coming soon.) Michael and I discuss the motivation for creating these. Topics covered: Traditional IQFeed/AmiBroker backfill workflows can silently corrupt your database The tools use CSV files plus incremental updates for reliability a...
In this week's episode of Line Your Own Pockets, we discuss the touchy subject of delisted stocks. In this "spirited" discussion, Michael and I agree on the concept of survivorship bias, but disagree on how important it is. Topics covered: What is survivorship bias, and how does it affect trading strategies What types of strategies are more vulnerable When it makes sense to include delisted symbols in your backtest Deciding whether including them is a form of "requiring perfect data." And much m...
In this week's episode of Line Your Own Pockets, we discuss adding redundancy to your trading. Outages aren't a matter of if but when . Topics include: Failures will happen eventually - plan for them ahead of time Broker-side, server-held exit orders (like at IBKR) make this simple Test your setup before you get forced to Revisit your setup regularly as your trading income grows over time And much more... As mentioned in the podcast, here's an example of an internet router that can use multiple ...
Dave Mabe and Michael Nauss delve into their personal brokerage histories and offer key considerations for systematic traders selecting a broker. They discuss the critical balance between commission costs and execution quality, highlighting the pitfalls of "free" trading. The hosts emphasize the importance of advanced platform features, API access, and reliable short locate lists, drawing on their extensive experience with platforms like Interactive Brokers and DOS-based systems. The episode also touches on the evolving technological landscape of brokers and the impact of customer support on a trader's decision.
In this week's episode of Line Your Own Pockets, we sit down with Brandon Kaisler of Cesta Capital, a brokerage catering to active short sellers. In a wide-ranging interview, we discuss topics from a broker's perspective, including: How most brokers make money from hidden fees, not commissions Why brokers prefer systematic traders (hint, hint) How the market for short locate fees works How 24/7 trading will affect your trading Whether eliminating the pattern day trading rule will help or hurt th...
Dave and Michael delve into the complexities of market data for backtesting, highlighting why reliable, paid data is superior to free alternatives. They discuss challenges in data integration, the impact of data quality on strategy performance across different timeframes, and the necessity of aligning data sources with specific trading goals. The episode also advises retail traders against over-engineering their data solutions, advocating for a focus on foundational data needs before pursuing advanced complexities.
In this week's episode of Line Your Own Pockets, we interview Trent Smalley with DTN and IQFeed. We discuss: Why it makes sense for traders to pay for market data when brokers offer it for free Where bad ticks you see in your charts actually come from What happens to market data before it hits your feed When you know you're ready to upgrade to a high quality feed And much more... --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on ov...
In this week's episode of Line Your Own Pockets, we continue the discussion of using AI agents for strategy creation gruntwork. Topics discussed: Delegation skills are important - the more specific, the better How Dave's approach differs from Michael's regarding Claude use How to implement "unit tests" for your trading strategy Developers always want to build - here's why you shouldn't Starting points for developers Much more... I think this was the best one yet on AI. --- Before you go! The nex...
We continue last week's discussion on using Claude and OpenClaw to automate strategy creation. We touch on: How to get AI to do the grunt work so you can be the CEO of your trading Why Michael switched from OpenClaw to Claude Code Teaching Claude to automate Amibroker (hint: point it here ) How giving Claude Prop Firm constraints helped focus its work Auditing its work is critically important - the more you understand, the better Much more, including the next steps of using the Cruncher in this ...
In this week's episode of Line Your Own Pockets, we discuss Michael's project for having OpenClaw create and run backtests from his list of research ideas for trading strategies. His agents have created over 200 backtests How they've primed the backtests to be used in the Strategy Cruncher SOPs (Standard Operating Procedures) have paved the way for this workflow AI as a research assistant/intern for your trading business And much more... --- Before you go! The next time you find yourself in a dr...
We cover: Making mistakes early when they're relatively cheap Focus on scaling wide versus scaling up Learn R-multiples - it normalizes your performance as your account grows Become the best in the world at a very specific strategy (it's not as hard as you think!) And much more... --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course. I hope to see you there!...
In this week's episode of Line Your Own Pockets, we discuss trading with a small account. Topics discussed: Don't wait until you have "enough" money to start learning How trading with a small account is an advantage Funding options: an overview of the prop trading landscape No matter how big your account is, your trading strategy is paramount - focus on that Lessons learned at this stage will be valuable to your trading forever And much more... including my rant about a trading mistake I made ju...
If you've ever wondered if you're curve fitting with your trading strategy, this episode is for you. We discuss: Curve fitting is a continuum, not a binary yes/no condition Every strategy has a little bit of curve fitting Let's say you wanted to maximize curve fitting. What would you do? Easy ways to avoid curve fitting And much more... --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for m...
Dave and Michael discuss building a powerful "column library" for backtesting, akin to shared software libraries, to enhance trading strategies. They highlight the importance of normalizing indicators, moving from binary to continuous variables for more precise analysis, and introduce innovative concepts like intra-trade columns for efficient exit optimization. The episode emphasizes a continuous learning process to adapt and discover new edges in the market.
Topics discussed: Profitable traders don't follow the crowd - or any particular trading guru Healthy attitude towards trading and risk Making great trades is the goal - ironically, the money is almost secondary Day trading is key (don't believe me? Just do the math) Automation is a massive trading edge Much more... --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting ema...
We discuss: Python is a great general-purpose language, but that's what makes it a bad choice for backtesting Iterating on your strategies is the critical piece - anything that makes that more complex will make things more difficult In a world of LLMs, the argument for using Python for everything makes less sense Choose your tools based on profit potential, not because "I like Python and am good at it." Much more... --- Before you go! The next time you find yourself in a drawdown, I want you to ...
Topics include: Batteries Data Not Included - the best way to get data into Amibroker The code that adds custom columns in Amibroker is resource-intensive Quirks with databases in Amibroker Your computer hardware matters with Amibroker (get more RAM) Dave's hardware specs for his backtesting computer. --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course. I h...
We go over: How "visual" backtesting is not real backtesting Discretionary traders try to replace what they're doing with automation - but that's wrong How to create a completely new strategy from the ground up to be automated How to build your "idea noticing" muscle Much more. Here's the book mentioned in the show: The Art of Noticing --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my...
Dave continues helping Michael create a first backtest in Amibroker. You might think "backtesting is backtesting," but we cover many of the differences between RealTest and Amibroker, as well as their implications. We discuss: What makes AI so bad at generating good AFL code for a backtest in Amibroker The better you get at understanding how AFL works, the better your use of AI gets How a column library makes all the difference in creating P&L Quick backtests can promote bad habits And much ...
Dave offers advice and feedback to Michael, who is learning to use Amibroker for the first time. He's coming from RealTest, so we go over the similarities and differences between the two platforms. We discuss: How RealTest is great for daily data, but hits a wall for most intraday trading strategies Amibroker is not just a backtester; it’s a full charting, analysis, and execution environment. Backfilling with IQFeed versus Polygon (there is really no contest) Best practices for databases in Amib...
We discuss the actual nuts and bolts of what running your trading like a franchise means: Systematize everything A process for eliminating low-value work What makes sense to outsource and what you should keep in-house Make your trading survive without you And much more... --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course. I hope to see you there!...
As traders gain experience, the problem shifts from not having enough ideas to having too many ideas competing for limited time and mental energy. Without a system, this abundance quickly becomes overwhelming and leads to paralysis or procrastination. We discuss the ICE method - a simple scoring method to determine which ideas to work on first. Spreadsheet Link https://docs.google.com/spreadsheets/d/1iWG87jZ7KiANQzH9O8KwgtRRl5Wcd60Q/edit?usp=sharing&ouid=112987133391354450813&rtpof=true&...
In this week's episode of Line Your Own Pockets, we take on a topic submitted by Isaac, a trader I work with. We discuss: When timing/speed matters and when it doesn't The types of trading strategies where latency is likely the bottleneck How rushing to solve problems can be counter-productive (waiting can reveal simpler solutions) Concrete steps to determine if latency is really an issue and how to address it And much more... --- Before you go! The next time you find yourself in a drawdown, I w...
We butt heads in this episode, arguing about the value of portfolio-level backtesting, one of the key feature differences between RealTest and Amibroker. Is portfolio-level testing essential, or simply premature optimization? --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course. I hope to see you there!...
We discuss: How to optimize so you have to re-optimize as little as possible How better columns directly translate into more robust strategies Hold a rule "in reserve" so you can apply it when needed without full re-optimization Documenting previous optimization decisions will make the next strategy better And much more... --- Before you go! The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtes...
We discuss: Similar to taking partial profits, moving a stop to breakeven is more about psychological comfort Profitable trading requires tolerating discomfort, as difficult as that is at times It seems like a simple idea to test, but it quickly adds significant complexity to a backtest How to actually test this in a backtest This is a great example of the platitudes you often hear from people who are good at talking about trading , but don't actually trade . --- Before you go! The next time you...
You didn't get a fill on your original entry. The trade would have been profitable for a bit, then it comes back to your original entry price. Do you take the trade? We go in-depth, answering this common dilemma. Your default should be to take the trade if it still matches your system There's more information to decide on - what can you add to your backtest? What are post-entry columns, and how can they help? How deep thinking about the issue can help you create brand new strategies Here's the o...
