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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 metricIf 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 strategyWhich metric gets our vote as the most overrated (hint: it's not win rate)Optimize for an easier trading life rather than maximum returnAnd 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!

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 ruleLook for commonalities when optimizing the long versus the short trade setsHow "directional" columns are useful when combining long and short trade setsWhen going live with an Amibroker strategy, how to strip down the code to make it run fastAnd 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!

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 uniqueWhy the name change? (They changed from Polygon to Massive several months ago)How AI has changed the data business - dramaticallyDiscrepancies between data vendors and what causes themWhat'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!

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 8Trade tiny at first - you can learn a lot with minuscule size, so you can avoid "paying tuition" to the marketHow to plan for drawdowns before they happenDon't "build the pedestal" - use established backtesting software and focus on the important thing: the strategiesOnly scale after the market has given you concrete feedback that your process is soundAnd 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!

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 strategyOpen-ended trailing exits make backtesting more complicated, and how to handle this in your testHow outliers can affect your backtest and how the trailing-exit component can magnify themOverlapping positions suck up buying power, creating an overnight choke-pointAnd 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!

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 valueInstead 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 arbitraryThe MabeKit Dojiness column as a good example of a continuous versus binary variable in a backtestAnd 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!

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 easierA weaker signal can be viable, but in this case the filters do more of the workThe more filters contribute towards the edge, the more curve-fitting riskMy 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!

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 itHow I recently changed a strategy I've traded for 20 years using this approachIt's good to "get your teeth kicked in" every once in a whileAnd 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!

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 nextBefore moving on from a strategy, document whyThorough 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 whyAnd 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!

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 drawdownsUpdate your data, rerun your backtests, and reconcile all live tradesSmall execution differences can cause large P&L gapsProfessional traders treat drawdowns as opportunities to improveAnd 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!

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 expectThe biggest pain isn't the money - it's questioning whether your strategy actually has an edgeHaving only one strategy makes your identity more dependent on its successProgrammatic sizing rules help eliminate emotional decision-makingAnd 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!