Advice for aspiring algo-traders
- Thread starter ValeryN
- Start date
Precise and spot on!!! I will add with DD not being excessive.
Great nuggets here. I haven't caught up on all responses so I don't know if someone has already said, but another danger of writing your own backtest platform is that you might be subconsciously curve-fitting it to the software it is testing. Any dev knows that it's ok to unit test your code but you need someone else to do the real stuff - because that other person has no prior knowledge of what is being tested, only a list of functional and non-functional requirements.
Saying that, I developed my own backtesting platform :-D
Saying that, I developed my own backtesting platform :-D
Your clients are likely a specific subset of aspiring traders
bone said:
Perhaps those with good discretionary skills don't seek training?
Wide cross section of client backgrounds. And more than a few are quite successful traders before they hire me.
It's been my experience that successful legitimate "discretion" over a protracted period of time is quite rare. Exceedingly so.
It's been my experience that successful legitimate "discretion" over a protracted period of time is quite rare. Exceedingly so.
I used to think discretion was a vice, in that adding discretion to my trades hurt results. I learned that the quality of the discretion is the issue. If one's skill in discretion adds to positive results then it is great! If one believes discretion is a negative then one seeks out styles and teachers with that alignment. If one believes that quality discretion has value then one seeks to refine and hone those skills and aligns with others on the same path.
I would assume for stock traders, studying the prospects of companies and trading on news would account as discretionary trading. Examples; directors comings and goings, new developments, upcoming financial results announcements, major shareholder activities. Even observing the behaviour of stock turnover can be considered discretionary.
Especially stocks, imo discretionary decisions is paramount to a higher win rate for experienced traders who know about position sizing and stops.
Especially stocks, imo discretionary decisions is paramount to a higher win rate for experienced traders who know about position sizing and stops.
I am very PRO making money legit trading. If you’re consistent at it over a protracted period of time - doesn’t matter if it’s astrology or TA or Time series analysis or discretion. Be it far from me to question or interfere with long term success.
If a successful trader hires me to teach
him how to spread trade - I would never ask him to change what he has relied upon to put food on the table and to pay the bills.
In the last 25 years I have seen and worked with hundreds of traders. Standing in a Pit, at a Commercial Desk, at a Hedge Fund, at Proprietary Firms, and as clients...
A successful long term Discretionary trader is a very rare species indeed.
If a successful trader hires me to teach
him how to spread trade - I would never ask him to change what he has relied upon to put food on the table and to pay the bills.
In the last 25 years I have seen and worked with hundreds of traders. Standing in a Pit, at a Commercial Desk, at a Hedge Fund, at Proprietary Firms, and as clients...
A successful long term Discretionary trader is a very rare species indeed.
As we are all aware, the crowd is usually wrong.
That imo is where money is made in trading, doing something which not many others have clicked onto.
Now if the majority of discretionary traders lose money or tread water, to me it's obvious they're going about it the wrong way. My guess the majority are using hunches and more than likely using impulsive emotions which they can't control.
I equate the logic of the movement of markets as to a machine, ie, the markets are hugely driven by algos.
This type thinking imo allows one to trade in a manner where media news for example and dummy moves (short term pullbacks) doesn't change an opinion and shaken out.
What often differentiates a mechanical / algo system from discretionary is 'repeatability'.
A mechanical system in theory has no thought other than repeat a process over and over, it just grinds on through thick and thin unless the operator decides to switch (which more often is a discretionary decision).
A successful discretionary trader needs to apply the same principles, have a set of guidlines which they adhere to.
One example could be, "My trading of stocks must include looking at the competency/qualifications/experience of directors to ascertain their suitability of the job at hand"
Following on from that, let me give an example, one of my niches is trading resource stocks, when I come upon an unfamiliar company, I'll do a search on directors. For resource (mining) stocks, if the directors are few and heavily weighted towards being bankers/accountants/financial advisers, that stock goes in the rubbish bin.
A mechanical system in theory has no thought other than repeat a process over and over, it just grinds on through thick and thin unless the operator decides to switch (which more often is a discretionary decision).
A successful discretionary trader needs to apply the same principles, have a set of guidlines which they adhere to.
One example could be, "My trading of stocks must include looking at the competency/qualifications/experience of directors to ascertain their suitability of the job at hand"
Following on from that, let me give an example, one of my niches is trading resource stocks, when I come upon an unfamiliar company, I'll do a search on directors. For resource (mining) stocks, if the directors are few and heavily weighted towards being bankers/accountants/financial advisers, that stock goes in the rubbish bin.
Last edited: