Line Your Own Pockets
A weekly show for systematic traders who want to make more money from their trading strategies.
Episodes
Should You Optimize Longs and Shorts Separately?
In this week's episode of Line Your Own Pockets, we answer a multi-part question from long-time list member Chip D.S. (name used with permission).The first part of his excellent question:Do you typically optimize longs and shorts separately. assuming there are enough trades after the split. You have a couple newsletter articles that mention "directional" columns...so there must be situat
Interview with Steve Bravo from Massive (Polygon)
We interview Steve Bravo from Massive (formerly known as Polygon.io).I passed along several questions from MabeKit Mastermind members, who brought up some good ones.We discuss:Why there are so many data providers and what makes Massive uniqueWhy the name change? (They changed from Polygon to Massive several months ago)How AI has changed the data business - dramaticallyDiscrepancies betwee
Close To Quitting Trading? This One's For You
In this week's episode of Line Your Own Pockets, we discuss a question I received from a reader named Sridhar.He recently went live with 8 automated trading strategies - and none of them are performing well.In his words (used with permission, excerpted for clarity):Sridhar:Hi Dave, I'm struggling at the moment, and you're the person whose judgement I trust most on this.In less than 2 mont
Backtesting a Swing Trading Strategy
In this week's episode of Line Your Own Pockets, Michael and I have a heated discussion on swing trading versus day trading.It starts innocently enough with a question about how to backtest a swing trading strategy with a "trail forever" component.But then it quickly turns into a swing trading versus day trading cage match.We do finally end up agreeing on the fundamental approach to backt
Common Mistakes Advanced Traders Make
Common Mistakes Beginning Traders Make
How To Use Candle Patterns In Your Strategy
In this week's episode of Line Your Own Pockets, we explain how to use candle patterns in your trading strategy.Topics covered:Candle patterns aren't magical signals, but that doesn't mean they have no valueInstead of "when does pattern A work?", ask yourself "when does pattern A help my strategy?"Don't get stuck on the exact definition of a pattern (e.g., a hammer) - it's arbitraryThe Ma
How Strong Should Your Signal Be?
In this week's episode of Line Your Own Pockets, we discuss a question submitted by long-time list member, Matt H., about signal strength.How strong should your signal be when creating a trading strategy?It depends...Topics include:Stronger signals make strategy development easierA weaker signal can be viable, but in this case the filters do more of the workThe more filters contribute tow
Small Changes for Big Results
In this week's episode of Line Your Own Pockets, we discuss how small changes to your routine can have big impacts on your trading.Topics include:Beware of doing something simply because "that's how you've always done it"Find the most arbitrary assumption in your trading strategy and challenge itHow I recently changed a strategy I've traded for 20 years using this approachIt's good to "ge
All About Volatility Halts
When to Switch Trading Strategies
In this week's episode of Line Your Own Pockets, we discuss strategy diversification versus strategy hopping.One is productive; the other is not.Topics include:How to go deeper on strategies rather than hop from one to the nextBefore moving on from a strategy, document whyThorough notes about why you're moving on will make it easier to return to it in the future"This strategy doesn't work
Backtesting Without Stops?
What To Do During a Trading Drawdown
In this week's episode of Line Your Own Pockets, we follow up on last week's topic of trading drawdowns and discuss concrete things you can do when you're in one.We discuss:Even though you can't predict when they'll happen, that doesn't mean you can't prepare for drawdownsUpdate your data, rerun your backtests, and reconcile all live tradesSmall execution differences can cause large P&
Why Drawdowns Break Traders (And How to Survive Them)
Every trader who has quit trading did so during a drawdown.In this episode of Line Your Own Pockets, we discuss this difficult topic and what you can do now to prepare.Topics include:Drawdowns are psychologically much harder than most traders expectThe biggest pain isn't the money - it's questioning whether your strategy actually has an edgeHaving only one strategy makes your identity mor
The Best Trading Ideas We've Shared in 100 Episodes
In this week's episode of Line Your Own Pockets, we reflect on 100 episodes of the podcast. (!!)We compare the most popular episodes by downloads with those we think are most valuable.Michael and I independently came to the episode with a list of 3 episodes we thought were the best.I was shocked when we compared the lists!Whether you're new to the podcast or a veteran of LYOP, this is a g
The Fastest Way to Find Your Next Trading Strategy
Why Your First Trading Strategy Can Hold You Back
In this week's episode of Line Your Own Pockets, we continue the recent series on the mindset of creating new strategies.This time, we focus on branching out from your first profitable strategy, after you've started creating variations of that first one.Topics covered:Why do even successful traders struggle to create a second strategy?Develop new strategies before you need themDaily revie
How to Add More Trades to Your Strategy
In this week's episode of Line Your Own Pockets, Dave shares the exact steps he took to go from 300 trades a year to 3500 by backtesting and automating his trading system.We discuss:Moving down timeframes to add more tradesHow I added more trades but spent less time tradingHow backtesting changed everything for meMost strategies have more depth than traders realizeAnd much more...
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From One Profitable Strategy to Two
In this week's episode of Line Your Own Pockets, we take on a listener question from Emmett on how to go from one profitable strategy to two.We discuss:How most traders never get to this point and whyDifferent approaches for strategy two - a variation of strategy one or completely different?It's easier to create a variation of strategy one - start going a mile deep rather than a mile wide
Follow Up on Interview with Garrett Drinon
On this week's episode of Line Your Own Pockets, we reflect on the recent interview with Garrett Drinon from last week.We discuss:Principles of elite performance span across different domainsProcess matters more than outcomesCopying others might work temporarily, being truly unique matters in the long runAdapting to changing markets is a skill you can developAnd much more...
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Interview with Garrett Drinon, SMB Capital
A Better Way to Get Market Data
In this episode of Line Your Own Pockets, Dave shares two new tools to download and manage market data for backtesting and creating profitable trading strategies.Both of these tools are available for free in the Free Tools section of my website. (More free tools coming soon.)Michael and I discuss the motivation for creating these.Topics covered:Traditional IQFeed/AmiBroker backfill workfl
How Important Are Delisted Symbols to Your Strategy?
In this week's episode of Line Your Own Pockets, we discuss the touchy subject of delisted stocks. In this "spirited" discussion, Michael and I agree on the concept of survivorship bias, but disagree on how important it is.Topics covered:What is survivorship bias, and how does it affect trading strategiesWhat types of strategies are more vulnerableWhen it makes sense to include delisted s
Create Redundancy in your Trading Business
In this week's episode of Line Your Own Pockets, we discuss adding redundancy to your trading. Outages aren't a matter of if but when.Topics include:Failures will happen eventually - plan for them ahead of timeBroker-side, server-held exit orders (like at IBKR) make this simpleTest your setup before you get forced toRevisit your setup regularly as your trading income grows over timeAnd mu
How To Choose a Broker for Systematic Trading
Interview with Brandon Kaisler from Cesta Capital
In this week's episode of Line Your Own Pockets, we sit down with Brandon Kaisler of Cesta Capital, a brokerage catering to active short sellers.In a wide-ranging interview, we discuss topics from a broker's perspective, including:How most brokers make money from hidden fees, not commissionsWhy brokers prefer systematic traders (hint, hint)How the market for short locate fees worksHow 24/
All About Data for Backtesting
In this week's episode of Line Your Own Pockets, we discuss market data for backtesting.Topics covered:Data for backtesting is far different (and easier) than for real-time tradingLike "free" commissions, you typically get what you pay for when it comes to market dataChoices come down to whether you need intraday dataAvoid overengineering - no premature optimization!And much more...
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Interview with Trent Smalley from DTN/IQFeed
In this week's episode of Line Your Own Pockets, we interview Trent Smalley with DTN and IQFeed.We discuss:Why it makes sense for traders to pay for market data when brokers offer it for freeWhere bad ticks you see in your charts actually come fromWhat happens to market data before it hits your feedWhen you know you're ready to upgrade to a high quality feedAnd much more...
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Using AI Agents for Strategies Part 3
In this week's episode of Line Your Own Pockets, we continue the discussion of using AI agents for strategy creation gruntwork.Topics discussed:Delegation skills are important - the more specific, the betterHow Dave's approach differs from Michael's regarding Claude useHow to implement "unit tests" for your trading strategyDevelopers always want to build - here's why you shouldn'tStarting
Using AI Agents for Trading Strategies Part 2
We continue last week's discussion on using Claude and OpenClaw to automate strategy creation.We touch on:How to get AI to do the grunt work so you can be the CEO of your tradingWhy Michael switched from OpenClaw to Claude CodeTeaching Claude to automate Amibroker (hint: point it here)How giving Claude Prop Firm constraints helped focus its workAuditing its work is critically important -
Using AI Agents to Backtest Strategy Ideas
In this week's episode of Line Your Own Pockets, we discuss Michael's project for having OpenClaw create and run backtests from his list of research ideas for trading strategies.His agents have created over 200 backtestsHow they've primed the backtests to be used in the Strategy CruncherSOPs (Standard Operating Procedures) have paved the way for this workflowAI as a research assistant/int
Strategies for Small Accounts
We cover:Making mistakes early when they're relatively cheapFocus on scaling wide versus scaling upLearn R-multiples - it normalizes your performance as your account growsBecome the best in the world at a very specific strategy (it's not as hard as you think!)And much more...
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on o
How to Trade with a Small Account
In this week's episode of Line Your Own Pockets, we discuss trading with a small account.Topics discussed:Don't wait until you have "enough" money to start learningHow trading with a small account is an advantageFunding options: an overview of the prop trading landscapeNo matter how big your account is, your trading strategy is paramount - focus on thatLessons learned at this stage will b
Curve Fitting is Easy to Avoid
If you've ever wondered if you're curve fitting with your trading strategy, this episode is for you.We discuss:Curve fitting is a continuum, not a binary yes/no conditionEvery strategy has a little bit of curve fittingLet's say you wanted to maximize curve fitting. What would you do?Easy ways to avoid curve fittingAnd much more...
---Before you go!The next time you find yourself in a draw
How to Grow Your Column Library
Michael and I discuss how to think about improving your column library over time.We discuss:How your column library is like a shared software library: build once, reuse everywhereContinuous variables are better than binary variables (e.g. Above/below a moving average)The MACDV case study - MACD normalized by ATRHow intra-trade columns allow testing multiple concepts with a single backtest
Qualities that Predict a Profitable Trader
Topics discussed:Profitable traders don't follow the crowd - or any particular trading guruHealthy attitude towards trading and riskMaking great trades is the goal - ironically, the money is almost secondaryDay trading is key (don't believe me? Just do the math)Automation is a massive trading edgeMuch more...
---Before you go!The next time you find yourself in a drawdown, I want you to st
Should You Use Python for Backtesting?
We discuss:Python is a great general-purpose language, but that's what makes it a bad choice for backtestingIterating on your strategies is the critical piece - anything that makes that more complex will make things more difficultIn a world of LLMs, the argument for using Python for everything makes less senseChoose your tools based on profit potential, not because "I like Python and am g
Amibroker: The Adventure Continues
Topics include:Batteries Data Not Included - the best way to get data into AmibrokerThe code that adds custom columns in Amibroker is resource-intensiveQuirks with databases in AmibrokerYour computer hardware matters with Amibroker (get more RAM)Dave's hardware specs for his backtesting computer.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you'r
How Discretionary Traders Can Add Automated Strategies
We go over:How "visual" backtesting is not real backtestingDiscretionary traders try to replace what they're doing with automation - but that's wrongHow to create a completely new strategy from the ground up to be automatedHow to build your "idea noticing" muscleMuch more.Here's the book mentioned in the show: The Art of Noticing
---Before you go!The next time you find yourself in a drawd
Next Steps with Amibroker
Dave continues helping Michael create a first backtest in Amibroker. You might think "backtesting is backtesting," but we cover many of the differences between RealTest and Amibroker, as well as their implications.We discuss:What makes AI so bad at generating good AFL code for a backtest in AmibrokerThe better you get at understanding how AFL works, the better your use of AI getsHow a col
Getting Started with Amibroker
Dave offers advice and feedback to Michael, who is learning to use Amibroker for the first time.He's coming from RealTest, so we go over the similarities and differences between the two platforms.We discuss:How RealTest is great for daily data, but hits a wall for most intraday trading strategiesAmibroker is not just a backtester; it’s a full charting, analysis, and execution environment.
How To Run Your Trading Like a Franchise Business
We discuss the actual nuts and bolts of what running your trading like a franchise means:Systematize everythingA process for eliminating low-value workWhat makes sense to outsource and what you should keep in-houseMake your trading survive without youAnd much more...
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to be
The ICE Method for Prioritizing Strategies
As traders gain experience, the problem shifts from not having enough ideas to having too many ideas competing for limited time and mental energy. Without a system, this abundance quickly becomes overwhelming and leads to paralysis or procrastination.We discuss the ICE method - a simple scoring method to determine which ideas to work on first.Spreadsheet Link https://docs.google.com/sprea
How Much Does Speed Matter in Trading?
In this week's episode of Line Your Own Pockets, we take on a topic submitted by Isaac, a trader I work with.We discuss:When timing/speed matters and when it doesn'tThe types of trading strategies where latency is likely the bottleneckHow rushing to solve problems can be counter-productive (waiting can reveal simpler solutions)Concrete steps to determine if latency is really an issue and
Portfolio Level Backtesting - Useful or Waste of Time?
We butt heads in this episode, arguing about the value of portfolio-level backtesting, one of the key feature differences between RealTest and Amibroker.Is portfolio-level testing essential, or simply premature optimization?
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free
How Often Should You Re-Optimize?
We discuss:How to optimize so you have to re-optimize as little as possibleHow better columns directly translate into more robust strategiesHold a rule "in reserve" so you can apply it when needed without full re-optimizationDocumenting previous optimization decisions will make the next strategy betterAnd much more...
---Before you go!The next time you find yourself in a drawdown, I want
Is Moving Your Stop To Breakeven a Mistake?
We discuss:Similar to taking partial profits, moving a stop to breakeven is more about psychological comfortProfitable trading requires tolerating discomfort, as difficult as that is at timesIt seems like a simple idea to test, but it quickly adds significant complexity to a backtestHow to actually test this in a backtestThis is a great example of the platitudes you often hear from people
Next Steps When Your Strategy Fades
You Missed a Trade - Now What?
You didn't get a fill on your original entry. The trade would have been profitable for a bit, then it comes back to your original entry price. Do you take the trade? We go in-depth, answering this common dilemma.Your default should be to take the trade if it still matches your systemThere's more information to decide on - what can you add to your backtest?What are post-entry columns, a
NASDAQ's Announcement on Tokenization of Stocks
Michael and Dave discuss NASDAQ's initiative to tokenize all securities and the implications for traders. They discuss:What tokenization is and what that means for equitiesHow it affects settlement and paves the way for 24/7 tradingPrediction markets and positive externalities of betting ("Betting is a tax on bullsh*t.")Dave proposed a bet to Michael based on the volume traded in the open
What To Do When a Strategy Flips
Stopped Out by a Penny? Good.
We've got news for you - there's nobody who cares enough about your stops to go "hunting for them."And getting stopped out by a penny is frustrating, but it's actually a good sign.Blaming an algo or anything else for your trade getting stopped out is counter-productiveWhy most traders are completely wrong about placing stopsHow to select stops for your strategy in a data-driven wayMuch mo
Is Trading Gambling?
In this episode, we tackle this popular question. Dave polled several traders he coaches and got some surprising answers.How much is trading like, say, poker, or something that is even more up to chance?Even starting a business can be called gambling if defined purely as "risking money on uncertain outcomes."Does having an edge make trading less like gambling?In a casino, is the house "ga
Using Alternative Data in a Backtest
In this episode, we discuss the best way to use alternative data in your backtest.What is alternative data and how can you use it in a strategy?Examples of alternative dataUsing it in real-time versus a backtestHow to automate the process for backtesting and real-time tradingOther episodes mentioned: Using News in Your Trading Strategy
---Before you go!The next time you find yourself in a
A Different Way to Go Live
In this episode, Dave discusses a conversation he had with John M. from SMB Trading and his unique approach to taking a strategy live.We discuss:John's 35+ strategies he runs liveHow he quickly gets a strategy running in productionHis approach to collaboration with other tradersWhat is "strategy taste" and how you can improve yours over time
---Before you go!The next time you find yoursel
Follow Up On Quant/Discretionary Collaboration
Follow-up discussion on quant and discretionary trader collaboration.We discuss:How Dave first connected with BellaThe cultural DNA of SMB CapitalThe challenges of quant/discretionary collaborationThe importance of being a giver, not a takerRelated episode:Mike Bellafiore and Nick Coutrakon from SMB Capital on Trading TeamsCreating a Trusted Trading GroupBooks mentioned:Give and Take by A
Mike Bellafiore and Nick Coutrakon from SMB Capital on Trading Teams
Mike Bellafiore and Nick Coutrakon join the podcast to continue a discussion Mike had with Dave on the makeup of trading teams at SMB Capital, a proprietary trading firm in NYC.What's the best way to include a quantitative trader in a discretionary trading team?
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterb
Baby Steps Towards Automating Your Trades
Are you a profitable trader but hesitant to automate your trades?In this episode, we discuss multiple steps to take towards having a computer make trades without fully automating.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you th
Which Version of This Strategy Is Best?
We discuss 4 different variations of a strategy that Dave is deciding between and the thought process for doing so.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you there!
Choosing a Trading Computer
Lessons learned from buying a new trading computer.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you there!
How to Trade When Traveling
Remote desktop solution mentioned:RustDeskTailScale
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you there!
Running Out of Buying Power - Part 2
More discussion on buying power and running out of it might be a good thing.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you there!
Running Out of Buying Power - A Good Thing?
Is running out of buying power... actually good?Here's the graph of buying power mentioned in the episode:Is Running Out of Buying Power A Good Thing?
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you there!
Deep vs. Wide: Two Paths to Trading Profits
How many trades should your strategy take and how profitable should each one be?There are two distinct approaches to answering this question, and most profitable traders fall into one camp or the other.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email cour
Symbol Lists in Strategies - Yes or No?
Should you restrict your strategy to trade a certain list of symbols?In a surprisingly heated debate, Michael and Dave discuss this topic and different reasons for each approach.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you the
Looking at P&L (Your's or Some Else's) Is Toxic
Looking at your P&L while you're trading is toxic. This also applies when looking at someone else's results - perhaps even more so.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you there!
Your Backtest Looks Great - What Could Possibly Go Wrong?
Be wary when going from backtest to live trading. You're at peak optimism, and if you're not careful, disappointment awaits.In this episode, we discuss all the ways a live trading can fall short of your backtest and what you can do about it.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to si
When is your Strategy Good Enough?
How to get out of backtest world and make the next steps to get your strategy live.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you there!
The Key to Backtesting: Your Library of Columns
The second episode in our series on creating profitable strategies using backtesting.We review:How most traders backtest the wrong wayHow to add columns to your backtestWhat columns make the most senseHow your "library of columns" gets more and more valuable over time
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to b
You're Probably Backtesting Wrong
The first episode in a mini-series on how to create a trading strategy using backtesting.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you there!
How Real Traders Use AI to Trade
We discuss Dave's recent experience using ChatGPT to create the Strategy Cruncher, a tool for optimizing your trading strategies.Prediction market for who will have the best AI model by the end of the year.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email
What Metric Should You Be Optimizing For?
Every trader has an opinion on what the perfect metric is to evaluate a strategy and to optimize on.We discuss our favorites and why.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you there!
How Far Back Should Your Backtest Look Good?
"If your backtest looks great for the last 3 months, why do you care what it looked like before that?"A trader Dave started coaching recently asked this question. The answer cuts to the core of why most traders give up on a trading strategy and end up quitting trading altogether.The Spurious Correlations website that was mentioned in the podcast.
---Before you go!The next time you find yo
What to Prioritize
You've got a lot of ideas, each requiring a certain amount of work. How do you decide what trading ideas are likely to pan out?Improving an existing strategyCreating a new strategyRelated workflow tasksThe ICE Method
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtes
Why Not Automate Your Trades?
We discuss the most common objections traders have to using automation and how to get over the hump.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you there!
Learning From Top Performers
A follow-up on our previous interview with Jared Tendler where we go deeper into:the role of optimism in tradingpoker and tradinglearning from top performers in non-trading fieldsA chart of earnings season:https://www.davemabe.com/earnings-season/
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com
Interview with Jared Tendler
This week, we interviewed Jared Tendler, a mental coach for traders, poker players, and golfers. Jared has written several books, including The Mental Game of Trading.This was a wide-ranging interview where we discussed:The mental side of systematic tradingHow poker and trading are similar and differentWhat traders can learn from top performers in other fieldsFind more info about Jared on
Should You Turn Off Strategies On Crazy Days?
When the market is raging in a way that's far out of the ordinary, should you turn your strategies off? Or let it be business as usual? We discuss the things to consider.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email course.I hope to see you there!
Turning A Trading Weakness into an Advantage
We discuss how Dave turned a trader's frustrating bad habit into a positive workflow for creating new trading edge. This is a great case study for the power of a positive mindset and a desire to get better.
---Before you go!The next time you find yourself in a drawdown, I want you to stop what you're doing and head on over to betterbacktesting.com to sign up for my free backtesting email
How To Trade When Everything is Moving
You're trading a strategy - you're comfortable with the number of trades. And then BOOM - one day the entire market is moving and your system generates 10x the number of trades it normally does.How do you react? Michael and I discussed the first time this happened to me and how best to respond to prepare for the next time.
---Before you go!The next time you find yourself in a drawdown,
