How to Build Your Own Algorithmic Trading Business

Ernest Chan's "Quantitative Trading" will change how you trade - for the better.

Here's a full breakdown - so you don’t have to read all 256 pages.

Be sure to save this thread: 1. You don't need a PhD to succeed.

Most people think automated trading requires degrees in math's to get started.

Chan proves this wrong. He shows that simple strategies often outperform complex ones.

The key is execution, not complexity.

I tested 100 trading strategies, and I found this: What makes a trading strategy work on live markets?

I used to assume it was all about discipline and market experience I didn't have.

But after backtesting 100s of strategies over 6 years,

Here are 2 surprising discoveries:

I don't care how well you trade - if you don't have an edge your lucky streak will run out.

No edge is the #1 account killer.

I used to trade aimlessly. Now i just look for edges.
Here's how I eliminated guesswork for good: 1. Most traders confuse luck with skill.

They hit a winning streak and think they've "figured it out."

But here's the harsh reality: random outcomes can produce impressive short-term results.

Without a real edge, those profits are just borrowed.

Gun to my head if I had to choose three tools to be stuck with, one of them would be:

Parameter Sensitivity Analysis

An elegant tool that helps separate working strategies from garbage.

A comprehensive guide on one of the best backtesting tools: 1. What is Parameter Sensitivity?

It measures how changes in input parameter values affect a trading strategy's performance metrics.

These metrics could be:
- Total return
- Sharpe ratio
- Max drawdown

The primary objective is to tell how sensitive the strategy is.

A hill I'm willing to die on:

Simple strategies will outperform 90% of traders.

After backtesting 1000 strategies, the pattern is clear: the winners are embarrassingly simple.

Let me break down why complexity kills live results (and what you should focus on instead): 1. Complex Strategies Fail Because of Overfitting.

Most traders think more complexity = better performance.

Reality: Complex strategies often look amazing on a backtest but lose you money when live.

The more parameters, the more you're fitting to noise, not signal.

If you give me 2 minutes,

I'll show you exactly how I automate my trading strategies.

No emotional execution, no guessing—just a process that has made me $100,000.

Here's how it works: There are THREE main ways to trade:
• Manual
• Hybrid
• Full Automation

Each has its own process and ideal use cases.

Let’s break them down so you understand which makes sense for you.

Stop trying to trade every move.

I spent months doing it,
It trapped me in a losing cycle, throwing away weeks of PNL.

Then I focused on ONE principle & finally made over 6 figures.

Here's how: The Principle: To make money in trading, you need an EDGE.

But most traders are obsessed with entries and exits while completely ignoring if an edge even exists.

Without it, you're just doing "sophisticated" gambling.

Here's how to solve that.

Evidence–Based Technical Analysis.

David Aronson's Evidence–Based Technical Analysis will change how you see trading.

Here’s a full breakdown - so you don’t have to read all 544 pages.

Be sure to save this thread: 1. Subjective vs objective analysis.

Most traders draw lines on charts and trust their gut.

This is purely subjective analysis.

Objective analysis is where you can confirm or deny ideas with real data.

This is why data is so important.

I run a $100,000+ portfolio of automated trading strategies.

I execute 0 trades manually.

Here are 7 tools I couldn't live without: 1. Ninjatrader.

This is where I run the majority of my automated strategies for futures markets.

They have backtesting and automation capabilities and solid infrastructure.

It's always an easy recommendation.

I wasn’t a bad trader. I just couldn’t execute the trades I knew I should.

I'd freeze up, overanalyze, and watch winning trades move on without me.

Then I made ONE change that erased all doubt & turned those profits into reality.

Here's what I did (so you can copy me): Finding a strategy has rarely been a problem for me,

But consistently executing and managing positions,

That's where it all fell apart.

Every. Single. Time.

The 6 math formulas every trader needs to know (explained simply):

1. Expected value The backbone of trading.

Positive EV is what you're after if you want to succeed in trading.

You will want to calculate this for every strategy.

Me in 2019: Losing $3,000+ per year.
Me in 2024: Making $100,000+ per year.

Here are 6 trading skills that made it possible: 1. Systematic over discretionary.

When I first started, I made emotional decisions based on gut feelings and the illusion of having "intuition."

Now I have clear, defined criteria for every trade my strategies take.

This by itself was the most pivotal skill to learn.

Direct Market data can cost $34,000 a year.

But you can get it for free.

Here are 6 data providers you should know (it'll save you $34,000): 1. yfinance

The classic choice for newcomers to financial data.

It's the lazy go to and easiest way to pull daily data.

It covers equities, forex and crypto.

However data quality can be spotty, so be sure to double check.

Five years in the markets taught me some brutal truths about trading:

1. Read all the psychology books you want - It's impossible to beat the market with that alone 2. Your ego is the most expensive position.
3. Past performance is the best predictor of success we have.
4. Your win rate means nothing on its own - It could be 10% or 90%.
5. Your first profitable strategy is often only the start.

The biggest scam in the trading industry:

"You just need ONE perfect strategy."

It's marketed to retail traders as the key to profitability,

But hedge funds make BILLIONS doing the opposite.

Here's what they're not telling you (the "holy grail"): 1. The myth of the perfect strategy.

Most traders waste years looking for a single strategy that works in all market conditions.

This doesn't exist.

The real edge comes from a different approach entirely.

I'm 5 years into trading.

I used to lose money on candle stick patterns, thinking success was from intuition.

Then I discovered "The Man Who Solved the Market", and it changed my trading forever.

6 lessons from the man who beat the market for 30 years using data: Context:

Jim Simons wasn't always a quant.

He started with pure discretionary trading like most of us.

His first trading venture actually worked for a while.

But it was gut-wrenching and inconsistent.

I'm from the UK.

12 months ago at 23, I moved to Dubai.

• Zero capital gains
• $20 for soap

Is it worth it? Here's my honest breakdown as a trader in Dubai: 1. Zero capital gains tax.

This isn't just a minor benefit - it's a complete game-changer for traders.

Compounding works exponentially faster when you're not giving away 20% to 50% of your profits every year.

What would take 10 years elsewhere happens in 5 to 7 years here.

Meet Salem Abraham.

He created a multimillion-dollar trading career from a tiny Texas town.

All because he bumped into a legendary Turtle Trader,

That completely changed his life.

Here are his lessons from being consistent for over 31 years: Salem Abraham was studying at Notre Dame, looking for how he was going to make a living,

When he met Turtle Trader Jerry Parker at a family wedding in 1987.

That conversation changed his life.

Abraham abandoned his original plans and decided to become a trader.

Out of 3,700,000 daily YouTube videos uploaded,

Here are 9 trading videos that deserve your attention: 1. Systematic Trading and Trend Following 101

If you don't have rock-solid data, you'll never be able to find and test an edge.

Here's everything I use in 20 seconds: First, the non-negotiables for any data you use in systematic trading:

• Clean, survivorship-bias-free historical data
• Point-in-time data that doesn't include look-ahead bias
• Adjustment for dividends, splits, etc

And we need a lot of it.

I just finished backtesting 3 of the most popular volatility indicators over the past 6 years.

The results were unexpected...

Here is what I found summarized in 3 minutes: Before we start,

Each indicator addresses unique parts in strategy implementation.

I will cover their basic application and provide a simple historical backtest.

However, more advanced testing techniques are crucial for thorough validation of the results.