147: Building trading strategies with confidence with Adrian Reid

Confidence is a powerful thing – when people have it they can do some pretty amazing things, but on the opposite side, a lack of confidence can be debilitating too, and for traders it can have some similar effects, especially when the performance of a strategy starts to suffer and a trader has money on the line.

So, what can we do about this?

How can we have more confidence in the strategies that we build and trade? Confidence that we’ve built strategies that are robust. Confidence to continue trading strategies during the periods when strategy performance may be struggling.

Our special guest for this episode is Adrian Reid from Enlightened Stock Trading, and in our chat Adrian is going to enlighten us on building trading strategies that we can have confidence in.

We’re not just going to talk about trading psychology here, but Adrian will be sharing practical aspects of system design and validation, that can give us more confidence in the strategies that we create and trade live.

Some of the things you’ll discover in my chat with Adrian are:

• The 5 key areas traders must address to build confidence in a trading system,
• Significance testing - why it’s important to strip a strategy down to just the core components and how to determine which components are really driving performance,
• Why the transition from backtesting a strategy to trading it live can be a difficult and uncertain one, and the preparation steps you need to take to make the transition smooth,
• How a technique called ‘start-date stepping’ can provide valuable insights into how a strategy could really perform in live trading,
• Plus, performance profiling across market conditions, sensitivity testing, why traders lose discipline, testing strategy rules in reverse, and much more.