Should system traders override their systems?

What an eventful few weeks we’ve had since the last episode.

The results of the Brexit decision took a lot of people by surprise and the markets reacted accordingly. What was interesting about this market event is that we all knew the date and time period when the Brexit votes would start rolling in, so we had a rough idea when we might see some type of market reaction, if the market reacted at all.

As systematic traders, what should we do in this type of situation:

Should we continue trading as usual, following our systems?
Should we override our systems to reduce exposure, or perhaps temporarily stop trading altogether?
Are there any other approaches that we should consider?
How do we go about deciding what to do?

In this episode we’re asking 13 system traders and past guests of the podcast (actually it’s 12 past guests and one future guest) about their approach to trading around the Brexit vote.

I’ll be asking them what their trading plan was going into the Brexit decision and you might be surprised with some of their answers.

I’ll also be asking them what factors they considered to reach that decision, whether they were happy with the approach after the event and any key learnings we can get out of this experience.

I personally found it really interesting to hear what they had to say so I’m sure you will too.

Topics discussed

How 13 pro system traders approached the Brexit decision – did they trade through it, reduce exposure, stop trading or something else? Their answers may surprise you!
The factors they considered when deciding on that approach
Lessons learned and insights from their results and the market reaction to the Brexit decision

Workshop announcement

John Ehlers is holding an exclusive 3 day workshop on Digital Signal Processing and Cycles techniques in trading.

From basic concepts right through to advanced techniques, including code for a number of trading strategies, John is going to share all of his research.

He’s even going to disclose the secrets behind the MESA algorithm, along with the code, which he has NEVER done before! (you will be required to sign an NDA)

This is a one-off event and numbers are limited due to the size of the venue, so if you’re interested, check the workshop information page by clicking the blue box below.

Guests

Nick Radge is a professional trader, analyst, educator and author. He has been trading for over 30 years and he was a guest on Episode 5 where we discussed a number of elements of system design and also what it takes to be a successful trader over the long term.You can find more from nick on nickradge.com

Robert Bubalovski is the head trader and managing director of a privately held prop trading firm called TradeView Investments, which is located right here in Melbourne. Rob has been trading for 20 years and was a guest on episode 22, where we discuss prop trading in great detail plus we also discuss a bit of arbitrage in there too. If you’re interested in prop trading or are a prop trader, that is an excellent episode to listen.You can find more from Rob at tradeview.com.au

Tim Rea is a proprietary trader who trades his own money with well over 100 automated strategies across 25 different futures contracts. That’s right, I did say over 100. Not only that but he also won the World Cup Trading Championships as well, and place top 3 in a few years too. In our chat in episode 21 we talked a lot about diversification and trading with multiple systems, but he also shared his experiences dealing with the collapses of PFG and MFGlobal, losing a chunk of capital and he approached that which was quite inspirational so if you’re in a similar situation go check that one out.

As a lot of traders would know, Larry Williams holds the record for the largest return in the World Cup Championships, turning $10,000 into over $1.1 million in 12 months. He also published a number of books and created a number of indicators. Larry was a guest on episode 20 and episode 40.If you want to learn more about Larry, check out his website ireallytrade.com

Laurent Bernut is a dedicated short seller who spent years working in the Hedge Fund world before leaving to trade his own strategies and travel the world with his family. He has a wealth of knowledge on short selling so if you want to hear more about that, he is featured in episode 32 and episode 44.If you want to hear more from Laurent, his website is alphasecurecapital.com

Gary Stone, who has been trading for almost 30 years and does a lot of media appearances here in Australia. He was a guest on episode 8 where we talk about market timing in detail.If you want to hear more from Gary, his website is sharewealthsystems.com

The next guest, Adam Grimes, hasn’t actually been on the podcast before, but we do have something to release very soon so look out for him in the next few weeks. Adam has two decades of trading experience and is currently CIO of Waverly Advisors.You can get learn more from Adam at adamhgrimes.com

The next guest has been on the show a few times before but not as many times as he’s won the World Cup Trading Championships. That’s right, Andrea Unger, 4 time world cup trading champion is our next guest. He was featured on episodes 16 and 45, have a listen to what he has to say.
Andrea’s website is oneyeartarget.com if you want to learn more about him

Our next guest is hedge fund manager Andreas Clenow, who is author of books “Stock on the move” and “Following the trend”. He was a guest on Episode 13 where we focused on trend following in stocks.You can find more from Andreas at followingthetrend.com

Ernie Chan manages a hedge fund as well as individual accounts. He’s also published 2 popular books called ‘Algorithmic Trading’ and ‘Quantitative Trading’. Ernie was a guest on episode 12.Ernie can be found epchan.com

OK so we’re getting pretty close to the end of our guests now, we only have 3 to go, and the guest for this one is Andrew Gibbs. Andrew was on episode 35 of the podcast, where we talked about volatility and trading the VIX, so very appropriate when talking about the market reaction to the Brexit so let’s hear about Andrews approach.You can find Andrew at halifaxonline.co.nz

This next guest is our most recent guests actually, he was on the previous episode sharing Market Internals and then also on episode 43 discussing breakout strategies. That guest is Tomas Nesnidal.Tomas can be reached through his website systemsontheroad.com

And our final guest for this episode is Rob Hanna, from InvestiQuant. Rob was a guest of the podcast on episode 7. Before investiquant he actually published research on his websites OvernightEdges and QuantifiableEdges.Rob can be found at investiquant.com