Better System Trader

026: Systematic trader Robert Carver discusses trading rules, what makes a good trading rule and the advantages of using continuous rather than binary rules. He also shares insights into over-fitting

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Robert Carver is an independent systematic trader who spent more than seven years working for one of the worlds largest systematic hedge funds.

In this episode we discuss trading rules, what makes a good trading rule and the advantages of using continuous rather than binary rules. He also shares insights into over-fitting and the challenges of walk-forward testing that can make it impractical.

Topics discussed
  • What makes a good trading rule
  • The advantages of simple rules
  • Why only some trading rules are profitable
  • Walk-forward testing and some of the challenges that can make it impractical
  • How much data you actually need to determine if a trading rule is better than another
  • Why choosing the optimal values during a walk-forward test is not the best approach and some alternatives
  • Weighting trading rules
  • Steps to avoid over-fitting
  • Should trading rules be adjusted for individual instruments?
  • Continuous trading rules compared to binary rules
  • The applications and advantages of continuous trading rules
  • What makes a good systematic trader
  • The issues that overconfidence creates in trading
  • Two aspects of institutional trading that most retail traders could apply to their own trading
    • ...more
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