Line Your Own Pockets

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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Why Your First Trading Strategy Can Hold You Back

In this week's episode of Line Your Own Pockets, we continue the recent series on the mindset of creating new strategies. This time, we focus on branching out from your first profitable strategy, after you've started creating variations of that first one. Topics covered: Why do even successful traders struggle to create a second strategy? Develop new strategies before you need them Daily review is key - it's non-negotiable for me Strategy two is hard, but the benefits of diversification start immediately 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 to Add More Trades to Your Strategy

In this week's episode of Line Your Own Pockets, Dave shares the exact steps he took to go from 300 trades a year to 3500 by backtesting and automating his trading system. We discuss: Moving down timeframes to add more trades How I added more trades but spent less time trading How backtesting changed everything for me Most strategies have more depth than traders realize 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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From One Profitable Strategy to Two

In this week's episode of Line Your Own Pockets, we take on a listener question from Emmett on how to go from one profitable strategy to two. We discuss: How most traders never get to this point and why Different approaches for strategy two - a variation of strategy one or completely different? It's easier to create a variation of strategy one - start going a mile deep rather than a mile wide Why a related strategy makes sense How much should you worry about correlation? 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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Follow Up on Interview with Garrett Drinon

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 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 Garrett Drinon, SMB Capital

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A Better Way to Get Market Data

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 and speed The Massive/Polygon version automatically includes delisted stocks and splits An idea for a reverse split trading strategy using these tools 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 Important Are Delisted Symbols to Your Strategy?

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 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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