EP 064: The casino edge, mean reversion strategies, and how to develop robust trading systems w/ Nick Radge

Aaron Fifield Podcast 1 Comment

For this episode I spoke with returning guest Nick Radge, who was originally on episode number 4.

But in case you missed it; Nick is a systematic trend follower and momentum trader, most active in Australian and US equity markets.

This time around, we discussed mean reversion strategies and why they may appeal to certain traders, the importance of trade frequency when developing a system, which then leads into the characteristics of a robust trading system.

One of my own ‘top takeaways’ from this conversation, was hearing about Nick’s emphasis on trying to break and stress test systems – rather than simply trying to develop the “best system”.

Like the last few guests, Nick has also offered to answer any trading questions you might have. So if there’s something you want to know more about, just leave your questions in the comments are at the bottom of this page.

“Trade frequency is a very important part of profitability, because you get to exploit your edge more and more.”

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“Do you want to make money, or save money?”

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Lessons learnt in this interview:

  • The key differences between momentum strategies and trend following strategies, and the benefits of trading a mean reversion strategy.
  • Trade frequency; why we should take note of how casinos exploit their edge. The more something occurs, the less likely it is to be a fluke…
  • The characteristics of a robust system versus a non-robust system. Plus, how to remove survivor-ship bias and the importance of quality data.
  • Why you should do all you can to break your system by stress testing, and the life expectancy of a robust system.
  • To what extent Nick has automated his day to day trading and retirement funds, and insight to what software he uses to do this.

Links and resources mentioned:

  • EP 004: Nick Radge – Here you can listen to Nick’s previous Chat With Traders interview, where we discuss his timeline as a trader and more.
  • Unholy Grails: A New Road to Wealth – Nick’s most recent book which outlines example strategies, and also includes interviews with other trend followers.
  • AmiBroker – The inexpensive software Nick uses to develop systems and automate processes.
  • PremiumData – The high quality EOD data provider Nick relies on for testing and develop trading systems.
  • Free eBook – Here you can download the free mean reversion strategy ebook mentioned at the end of the interview.
  • @TheChartist – Twitter is a good way to contact Nick, go follow!

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