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Find Your Edge With

FIND YOUR EDGE WITH

ALGORITHMIC
TRADING

HI, I’M MATTI OWENS.

I teach people to build trading systems to generate more consistent profits. My hope is to educate people who know they should be using statistics to improve their trading performance but don’t quite know where to start.

By revealing my approach below, I hope you can begin to see there is a smarter way to trade, with less-risk and more reliability than many of the hot-shot day trading schemes sold on the web today.

Thanks for stopping by, and feel free to reach out if you’re interested in learning more about my fundamental and quantitative training.

6

STEPS YOU CAN USE TO DEVELOP ALGORITHMIC TRADING SYSTEMS

TO ACHIEVE “HEDGE FUND” STYLE RETURNS

1.

Research the Market

The most successful hedge funds in the world use algorithmic approaches. So why shouldn’t you? Ever hear of Renaissance Technologies? They have made 60% before fees for decades! There is no debate over whether or not algorithmic trading works. It does.

The question is, can you find a reliable edge?

I’ve been trading the market for years. But it all started when I was in high school and picked up a copy of “Don’t Sell Stocks on Monday.” That book changed my life. It opened my eyes to a better way of trading. Finding a statistical edge. And you should trade with an edge too.

2.

Learn the Basics of Programming

Yes, building an algorithmic trading system requires programming ability. Do you need to be the world’s best programmer? No. But you need to be willing to put in the time and effort to get comfortable manipulating data and writing functions. If you already have some programming experience, you’re way ahead of the game.

EasyLanguage: This is the native programming language inside of Tradestation. Tradestation is a broker that allows you to design, build, and back-test algorithmic trading systems. This is my preferred broker, and one I recommend to my students.

Python: This language is one of the most popular, not just for finance, but in programming in general. It’s one of the easier languages to learn, and there are many books and courses about quantitative finance that use python. And you can watch my YouTube course on it here.

3.

Write Your Algorithm

Once you’ve explored different aspects of the markets (I mostly trade futures) and where you can find exploitable patterns, you need to write your algorithm. You need an entry, an exit, a stop loss, and a plan for money management. The idea here is to develop a system with a profitable expectation. This is the same principle casinos use to rake in millions of dollars.

The expectation is when you take your win % times your average win in dollars, and add that to a factor of your loss % times your average loss in dollars. (W% * W$) + (L% * L$). For example, if you have a system where (0.70 * $200) + (0.30  * $400) your expectation is $260 per trade. How many times would you make a trade if you made roughly $260 each time?

4.

Back-Test Your System

How will you know if your system will work? Well, the short answer is, you will never know for sure. But, fortunately, there are different tests you can run to validate whether the algorithm you have is robust. I look at total profit and loss. Sharpe ratio and a few other metrics to see how well the system performs.

TIP: It’s important you spend a lot of time analyzing max drawdown. It’s critical your strategy doesn’t generate huge drawdowns, because obviously, that’s a bad thing. A monte-carlo simulation will take your system and re-shuffle the sequence of trades 1,000 times to see what the average maximum drawdown could be. If the system is not producing large drawdowns, then, congrats, you may have a system that can handle uncertainty well!

5.

Watch Your System in Real-Time

Once you’ve gone through the validation process, you want to watch your system trade in real-time. But you don’t want to trade with real money. I like to trade a system for a few months on paper before I launch it. I like to see how it behaves in the real-world to see if it seems to be working well under the present market conditions.

TIP: You can look at your monte-carlo simulations, and if the system is not generating returns within the 5% and 95% range of expected returns, then it may be time to pull the plug. That’s how actual quantitate hedge funds decide when to shut down a trading system.

6.

Launch Your System and Make Money!

After you’ve done all of the steps above, and you’ve watched your system perform on fresh market data, it’s time to pull the trigger and launch your system! The beauty of algorithmic trading is that you put a lot of work up-front into designing it, so that when you are actually in trades, you set your emotions aside. Emotions are the #1 reason why most traders fail.

How much money can you make? Well, it depends a lot on how much you start with.

FREE VIDEO SERIES: “6 STEPS IN ALGO TRADING”

I have several training programs that teach algo trading. But if you’re new, you should start with this free video series. It goes over my 6 steps in more detail, so you can get a better idea of if algo trading is right for you. To get started, simply enter your email address below.

TESTIMONIALS

PERFORMANCE

WARNING: Past performance does not indicate future results. And my track record is no guarantee that you will be able to make money, I am legally obligated to say that. That said, you probably wan to be learning from a trading coach who has made real money in the market, year after year. You can take a look at some of my verified account statements below.

FREE VIDEO SERIES: “6 STEPS IN ALGO TRADING”

I have several training programs that teach algo trading. But if you’re new, you should start with this free video series. It goes over my 6 steps in more detail, so you can get a better idea of if algo trading is right for you. To get started, simply enter your email address below.

FAQs

How much money do I need to get started?

The minimum I recommend someone start algorithmic trading with is $10,000. Ideally you have a little bit more, say $30,000 to $50,000.

How much money can I make with algo trading?

This really depends on your system. Some of my students make tens of thousands of dollars per month. Exceptional students have made upwards of $70,000 in a month. This is not typical, but it has happened. I try to set realistic goals for my students.

Do I need to be good at math and programming?

There is no escaping the fact that there is some statistics and programming involved in algorithmic trading. If this scares you, then it’s probably not the right field for you. But, if you are interested in programming, have a logical mind, and are not afraid of technical endeavors, then quantitative trading should be right up your alley.

Why do you teach trading? That seems suspicious.

I like to help people, and let’s face it, I can make extra money. Why would I pass up an opportunity to make extra money in addition to my trading systems. I am NOT teaching you exactly what I do, nor do I reveal my much of my edges. But I do reveal how you can find your own in the market. I really don’t like to see people taken advantage of by get rich quick trading coaches. Yes, some discretionary traders are amazing, but they are few and far between.

Aren’t all the hedge funds using these strategies?

You can have a very simple strategy. You don’t need a lot of complexity. Big hedge funds are managing a lot of money and that limits the opportunities they can participate in. There is plenty of edge left in the market for the average retail trader to exploit.

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