Trading Nut

236. Trading Nut

236: In 10 Years, Will Your "Mechanical Trading Strategy" Still Work? Pro Trader, Kevin Davey, Explains

Kevin Daley
72 mins

I’m honored to welcome back Kevin Davey, a distinguished expert in the field of Algorithmic Trading. Reappearing after a our interview eight years ago, Kevin brings forth a wealth of invaluable insights useful for any trader no matter if they prefer algo or manual trading.

During the show, Kevin unveils the fundamental disparities between discretionary traders and algo traders, shedding light on their distinct approaches.

Delving further, he reveals the meticulous process behind his creation of trading algorithms that possess enduring viability. Moreover, Kevin astounds us with intriguing statistical revelations, illustrating the key indicators of an exceptional trading system.

Prepare to be enthralled by Kevin’s profound wisdom and expertise, as he unveils the secrets to thriving in the ever-evolving landscape of algorithmic trading and what you should aware of regarding the developments surrounding AI.

Podcast Interview

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Kevin Daley

0:00—:—

Key Lessons

  • [11:44] Trading ideas are your raw material and they come into your factory just like if you are building watches, you want metal.
  • [13:59] When you have that mindset of “Hey, I’m just going to be the ultimate trader”, you won’t know when you actually have something good because what you’re looking for is something that’s unusually great.
  • [16:41] Usually, the more complicated your idea is, the more perfect it is.
  • [22:28] Discretionary traders do have a very tough time switching to algo trading and vice versa.
  • [23:06] The mindset of a discretionary trader and an algo trader are totally different.
  • [28:24] Out-of-Sample data is the best way to predict your future performance.
  • [28:48] There’s always some luck involved in a good back test.
  • [47:24] You don’t necessarily need thousands of trades to get something to work.
  • [58:48] You really have to have a plan upfront for when you’re going to stop trading any of these strategies.
  • [59:43] What is optimum is having something in place before you start trading.
  • [65:09] There’s one of the things people don’t realize with algos is no matter what software you use it’s not going to be trouble-free.

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