Line Your Own Pockets

Systems for Withdrawing Profits

In this week's episode of Line Your Own Pockets, we discuss a question I received from a list member on strategies for withdrawing profits from your trading account. Topics discussed: Get your strategy working first; don't worry about withdrawing until that's obvious Trading is much easier if you don't need the money Systems I've used for withdrawing Keeping living expenses low makes everything easier Withdrawing rules affect your trading mindset - and even the strategies you decide to trade And much more... Of course, this is not financial advice - a good financial advisor and/or accountant can be worth every penny. --- 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!

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Is Your Backtest Too Good to be True? Here's How To Tell

In this week's episode of Line Your Own Pockets, we tackle one of the most important issues for systematic traders: is your backtest too good to be true? The best time to discover your backtest is unrealistic is as early as possible, even if it ruins your day (I've been there SO many times!). We discuss: Make your default stance skepticism rather than excitement Understanding future leak - probably the most common way backtests fall apart in live Beware entry/stop/exits happening in the same bar (and how you can deal with this) How to identify unrealistic outlying trades quickly Your reconciliation process with your backtest is your ultimate backstop for ANY issue And much more... Whether you're a seasoned veteran or a systematic trading newbie, you'll want to listen. SHOW NOTES: Sir Isaac Newton's terrible trading record --- 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!

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Advanced Metrics and Optimizing

In this week's episode of Line Your Own Pockets, we continue our discussion of metrics for optimizing strategies. What you choose to optimize when you're creating a strategy can make a big difference in your results. The obvious choice is Total Profit, but the optimal path that comes with that could be jagged and painful. Here are some of the topics we touched on: Optimize for your confidence, not just maximum profit Try creating two different versions of a strategy, each optimized toward different outcomes The path a trade takes matters - not just its final P&L Smooth equity curves are easier to scale - here's why Don't solve hypothetical problems too early And much more... SHOW NOTES: Previous episode: https://lineyourownpockets.com/episodes/what-metrics-should-you-optimize-for Efficiency function Dave mentions: Loss from mfe = mfe - profit Gain from Mae = profit - mae Inefficiency = (loss from mfe + gain from mae) Efficiency = -inefficiency And then a new objective function could be: Profit / inefficiency --- 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!

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What Metrics Should You Optimize For?

In this week's episode of Line Your Own Pockets, we discuss which metrics to use to evaluate trading strategies. There's no shortage of these - just look at the default report in an Amibroker backtest - there are dozens! Topics covered: Why it makes no sense to optimize on just one metric If you had to choose one "metric," make it the equity curve. There is no perfect set of metrics, just like there's no perfect trading strategy Which metric gets our vote as the most overrated (hint: it's not win rate) Optimize for an easier trading life rather than maximum return And much more... There's something for everyone in this one. --- 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!

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Should You Optimize Longs and Shorts Separately?

In this week's episode of Line Your Own Pockets, we answer a multi-part question from long-time list member Chip D.S. (name used with permission). The first part of his excellent question: Do you typically optimize longs and shorts separately. assuming there are enough trades after the split. You have a couple newsletter articles that mention "directional" columns...so there must be situations where you think optimizing them together is best? We discuss: Why optimizing separately is a good default, but not a set-in-stone rule Look for commonalities when optimizing the long versus the short trade sets How "directional" columns are useful when combining long and short trade sets When going live with an Amibroker strategy, how to strip down the code to make it run fast 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!

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Interview with Steve Bravo from Massive (Polygon)

We interview Steve Bravo from Massive (formerly known as Polygon.io). I passed along several questions from MabeKit Mastermind members, who brought up some good ones. We discuss: Why there are so many data providers and what makes Massive unique Why the name change? (They changed from Polygon to Massive several months ago) How AI has changed the data business - dramatically Discrepancies between data vendors and what causes them What's coming next from Massive? (L2, fundamentals, etc) And much more... Thanks to Steve for joining us! --- 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!

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Close To Quitting Trading? This One's For You

In this week's episode of Line Your Own Pockets, we discuss a question I received from a reader named Sridhar. He recently went live with 8 automated trading strategies - and none of them are performing well. In his words (used with permission, excerpted for clarity): Sridhar: Hi Dave, I'm struggling at the moment, and you're the person whose judgement I trust most on this. In less than 2 months, I found up to 8 intraday strategies, each with >1.5 PF, each researched to a locked backtest. The results don't match the effort. I'm down about $16.8k net of commissions since mid-July, and I've been red on 22 of 35 trading days. I hope things can turn around, but honestly, I'm losing spirit a bit. The process and the engineering are strong, and I'm still losing money. I'd really value your perspective. We discuss this in detail in this episode, with concrete steps to improve and identify the mistakes. Topics include: Start with 1-2 strategies rather than 8 Trade tiny at first - you can learn a lot with minuscule size, so you can avoid "paying tuition" to the market How to plan for drawdowns before they happen Don't "build the pedestal" - use established backtesting software and focus on the important thing: the strategies Only scale after the market has given you concrete feedback that your process is sound 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!

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Backtesting a Swing Trading Strategy

In this week's episode of Line Your Own Pockets, Michael and I have a heated discussion on swing trading versus day trading. It starts innocently enough with a question about how to backtest a swing trading strategy with a "trail forever" component. But then it quickly turns into a swing trading versus day trading cage match. We do finally end up agreeing on the fundamental approach to backtesting a swing trading strategy - barely. Topics discussed: The differences between backtesting a day trading and a swing trading strategy Open-ended trailing exits make backtesting more complicated, and how to handle this in your test How outliers can affect your backtest and how the trailing-exit component can magnify them Overlapping positions suck up buying power, creating an overnight choke-point 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!

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Common Mistakes Advanced Traders Make

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Common Mistakes Beginning Traders Make

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How To Use Candle Patterns In Your Strategy

In this week's episode of Line Your Own Pockets, we explain how to use candle patterns in your trading strategy. Topics covered: Candle patterns aren't magical signals, but that doesn't mean they have no value Instead of "when does pattern A work?", ask yourself "when does pattern A help my strategy?" Don't get stuck on the exact definition of a pattern (e.g., a hammer) - it's arbitrary The MabeKit Dojiness column as a good example of a continuous versus binary variable in a backtest 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!

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How Strong Should Your Signal Be?

In this week's episode of Line Your Own Pockets, we discuss a question submitted by long-time list member, Matt H., about signal strength. How strong should your signal be when creating a trading strategy? It depends... Topics include: Stronger signals make strategy development easier A weaker signal can be viable, but in this case the filters do more of the work The more filters contribute towards the edge, the more curve-fitting risk My favorite strategies are those where the signal is "hiding in plain sight" And much more... No matter where you are in your strategy creation process, you'll get something out of this episode. --- 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!

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Small Changes for Big Results

In this week's episode of Line Your Own Pockets, we discuss how small changes to your routine can have big impacts on your trading. Topics include: Beware of doing something simply because "that's how you've always done it" Find the most arbitrary assumption in your trading strategy and challenge it How I recently changed a strategy I've traded for 20 years using this approach It's good to "get your teeth kicked in" every once in a while 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!

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All About Volatility Halts

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When to Switch Trading Strategies

In this week's episode of Line Your Own Pockets, we discuss strategy diversification versus strategy hopping. One is productive; the other is not. Topics include: How to go deeper on strategies rather than hop from one to the next Before moving on from a strategy, document why Thorough notes about why you're moving on will make it easier to return to it in the future "This strategy doesn't work" is NOT a sufficient answer - you should be able to explain why 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!

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Backtesting Without Stops?

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What To Do During a Trading Drawdown

In this week's episode of Line Your Own Pockets, we follow up on last week's topic of trading drawdowns and discuss concrete things you can do when you're in one. We discuss: Even though you can't predict when they'll happen, that doesn't mean you can't prepare for drawdowns Update your data, rerun your backtests, and reconcile all live trades Small execution differences can cause large P&L gaps Professional traders treat drawdowns as opportunities to improve 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!

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Why Drawdowns Break Traders (And How to Survive Them)

Every trader who has quit trading did so during a drawdown. In this episode of Line Your Own Pockets, we discuss this difficult topic and what you can do now to prepare. Topics include: Drawdowns are psychologically much harder than most traders expect The biggest pain isn't the money - it's questioning whether your strategy actually has an edge Having only one strategy makes your identity more dependent on its success Programmatic sizing rules help eliminate emotional decision-making And much more... If you've never had a drawdown or aren't planning on having any more, then you can skip this one. :-) Otherwise... --- 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!

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The Best Trading Ideas We've Shared in 100 Episodes

In this week's episode of Line Your Own Pockets, we reflect on 100 episodes of the podcast. (!!) We compare the most popular episodes by downloads with those we think are most valuable. Michael and I independently came to the episode with a list of 3 episodes we thought were the best. I was shocked when we compared the lists! Whether you're new to the podcast or a veteran of LYOP, this is a good episode to learn which concepts we think are the most valuable to serious traders. --- 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!

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The Fastest Way to Find Your Next Trading Strategy

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