Systematic Trading Archives

How Long is a Trading System valid for?

Q. When you go live with a system, how long do you actually expect it to last for and continue to give you a trading edge. Do you anticipate that it may only be good for a certain amount of time, whether that’s a couple years? Or, if it’s truly robust, should it continue to […]

Live Trading Scenario

In a live trading scenario, is there ever a time when fundamentals or macro events would cause you to step in and override your systems? I would say that if I was to override a system it’s not because of any macro or any fundamental view, it’s because of an emotional input. Have I done […]

Survivorship Bias

Survivorship bias refers to stocks that have survived. So for example, Microsoft is in the S&P 500 these days, and it was in the S&P 500 back in 1998. Enron is not in the S&P 500 these days because it’s now bankrupt, but it was back in the S&P 500 back in 1998. So Enron […]

What defines a robust system?

I can’t stress this enough; You need to have a robust system. What is a robust system? A robust system is a trading system that has been validated, that works reasonably well over various markets and that the end user, the trader, can implement on an ongoing basis. The first question I ask people is, […]

Why I don’t trade on the short side?

I only trade the Australian and U.S. markets on the long side. I don’t trade short. I use to trade short but I stopped in 2009. There’s a couple of reasons. First of all, I’ve never really come across a strategy I’m 100% happy with. I can find strategies that make a profit trading on […]

Market Conditions

Are there certain market conditions where a mean reverting strategy may be more effective than other strategies? Absolutely, every strategy whether it be technical or even fundamental, will have periods of time where it works better than others. Every strategy goes in and out of sync with the market. Doesn’t matter what you do, that’s […]

What is a mean reversion system trading system?

Mean Reversion Mean reversion is buying weakness, and selling strength. Warren Buffett is a mean reversion trader, essentially. He is buying value and waiting for those companies, or that value to be realised. There’s a number of reasons why someone would trade this type of strategy. First of all, the diversification. I think if you […]

A Systematic Approach to Trading

Nick Radge what type of trader are you? What is your trading approach? I have an extensive background in technical analysis. I am a 100% systematic trader. I trade trend following systems for the majority of my funds and also a selection of mean reversion systems as well. It is 100% systematic. I focus on […]

Debunking Trading Myths

Let’s debunk some trading myths. “Trends don’t last forever. If a stock becomes too popular it will reverse, leading to a sharp decline, from which you can lose a lot of money.” Response: What does that have to do with trend following? A fundamental investor or a value investor could be on the same stock. […]

Trading with the Trend

2008 What does trading with the trend mean? A very simple reason why ‘buy and hold’ offers average returns is because you wear all market conditions. You are fully involved in the good times, which is what you want to be, but you’re also involved in bad times, like the GFC. Now, I haven’t met […]