Interview with Dr Howard Bandy - Better System Trader

Dr Howard Bandy has university degrees in mathematics, physics, engineering and computer science, completing graduate studies and research in modelling and simulation, statistics and some of the early work in artificial intelligence.

He has over 50 years experience in research and applications of modelling and simulation of financial systems.

Howard has previously worked as a senior research analyst for a CTA firm and as a consultant to trading companies and individuals.

He is a speaker at international conferences and is the author of 5 books on quantitative trading systems.

In this episode we talk about major changes occurring in the fields of trading system development, trade management and technical analysis. We also discuss why trading is becoming increasingly difficult, what causes trading systems to experience periods of poor performance, how to identify and manage a trading system when it is out of sync with the market and the 2 most important skills in system development.

‘The period of time over which an inefficiency exists is growing shorter and shorter’ – Howard Bandy

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Topics discussed

The major changes occurring in the fields of trading system development, trade management and technical analysis
Why trading is becoming increasingly hard
How to compete with the professionals
What causes trading systems to experience periods of poor performance
How to identify and manage a trading system when it is out of sync with the market
The shift towards machine learning and pattern recognition
The importance of data mining in the system development process
The 2 most important skills in system development

Resources mentioned in this episode

To learn more about Howard and his work, checkout his main website blueowlpress.com
His other websites are:
Books:

FREE DOWNLOAD: ‘Introduction to AmiBroker’ book by Dr Howard Bandy

The importance of being stationary

Focal points in quantitative trading

Quotes

The easy inefficiencies have pretty well been discovered.

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Other people are using more powerful trading tools, we need to do that as well.

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Data mining is important. The question is whether what’s been learned will persist into the future.

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We need to use correct modelling and simulation techniques to identify whether we have found valid signals or not.

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Withhold prejudgment, think of an idea and test it.

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Top tips from my chat today

Trading is hard – all the easy inefficiencies are gone and any new inefficiencies that get discovered are being arbitraged out quicker,
The competition in the markets is fierce, they have better tools, more resources, are well funded and well educated, however we can compete,
Systems fall in and out of sync with the market so we need to be able to identify the level of synchronisation and adjust position size accordingly,
Data mining is an important step in the system development process so the question on data mining should really be whether the signals identified during the data mining process could persist into the future.