The 6 biases that plague most traders from achieving success.

1. Recency Bias Our minds tend to retain recent information,

Leading to cases of overreacting and distributing our decision-making process.

The best solution is to focus on 100s of trades, instead of the past few.

90% of traders fail due to a lack of edge,

When they thought they had one.

Here's how to identify and prove your edge with these 7 tips: 1. “Past performance is the best predictor of success.”

- Jim Simons

This is the foundation of 90% of edges,

Bringing the importance of having access to quality historical data to test your ideas on.

This is Jerry Parker.

A former accountant who is now worth a billion dollars,

All from a newspaper ad.

He is still crowned as one of the most successful Turtle Traders today.

Here's how he did it: Jerry got started in trading after he saw an ad in the Wall Street Journal,

It read that Richard Dennis (Worth 300+ million) was looking to teach his trend-following strategy.

Jerry applied,

Becoming one of the twelve turtle traders.

If you are new to algorithmic trading,

Here's how to get started in less than 30 seconds: Coding language choice:

• C# for Ninjatrader / Algos requiring speed
• Python for all purposes
• Pinescript for quick idea builds

I use all 3 but Python is a great starter choice.

3 common quant trading strategies, explained by experts:

1. Mean reversion There is no one better to learn from for mean reversion,

Than Ernest Chan.

He goes over:
• The risk of over-leveraging on mean reversion
• Stop loss management

And much more:

This is Robert Carver.

An independent trader who used to work for some of the largest banks in existence.

His books are some of the best out there on systematic trading.

Here is one of his lectures that fixes the biggest problem in trading: Overfitting is the killer of most strategies.

It leaves you thinking you have found a profitable strategy,

But in reality, it is all noise.

What we want instead is a balance.

7 lessons that will teach you a year's worth of trading wisdom:

“Being wrong is acceptable, but staying wrong is totally unacceptable.” 1. Varying Perception

The complete list of books for algorithmic trading:

1. Time Series Analysis 2. Quantitative Momentum: A Practitioner's Guide to Building a Momentum-Based Stock Selection System

How two guys built a $60 billion quant firm,

That was almost stolen from them.

Here's the story of Renaissance Technologies biggest competitor: Two Sigma,

Is one of the largest hedge funds with over $60 billion in assets under management,

Now using an array of machine learning in different asset classes,

While still employing classic models in trend following and mean reversion.

But it all started over pizza...

Your trading potential is trapped by what you don't know.

To overcome this,

Here are 6 videos full of timeless wisdom worth millions: Most TED talks suck,

But this 23-minute lecture,

Has a better understanding of a trader's mindset than many I have ever seen.

(1.25x speed recommended)

"The Mindset of a Trader | Hicham Benjelloun"

Most traders struggle to find alpha.

So I spent 10s of hours binging:

• Jim Simons (billionaire hedge fund manager)
• David Shaw (king of quants)

What did I discover?

The true method of finding alpha in the market: We're taught that the markets are efficient also known as the Efficient Market Hypothesis,

But this couldn't be more untrue.

This belief must be broken before you can go out and find any alpha.

Here's Jim Simons's take on the matter:

If you are interested in trading, here are 15 visuals that will help your PNL... 1. Monte Carlo

Trading is a random distribution meaning we can't just rely on one outcome.

Monte Carlo simulations show the likelihood of different trade sequences, and scenarios in your historical backtests.

A must-have in every backtest.

A concept that changed my trading.

The Law of Large Numbers: In 2022, casinos made $60.42 billion,

They did this by exploiting multiple mathematical concepts,

But the key was the "Law Of Large Numbers".

How does this link?

In trading, you don't want to be the player you want be the house.

This is David Shaw.

He’s the billionaire hedge fund manager nicknamed “King of the Quants”.

Over his time, he was part of the highest-performing funds,

Exploiting inefficiencies like none other.

Here's how he created billions in wealth: D.E. Shaw managed to produce 22% annual returns from 1988 to 2000.

With now over $50 billion under management,

D.E. Shaw is in the top 10 biggest hedge funds to exist.

How did he accomplish this?

I'm 22.

I've been obsessed with trading for the past 5 years.

I spent collectively 5,000 hours studying the best books, the greatest traders of our time, and having 1 on 1 calls with them.

Here's what I found on how to become a top trader: University professors will tell you the market is efficient,

They're wrong.

Take it from billionaire hedge fund manager,

Jim Simons.

Who beat the market every year, averaging 66%.

5 formulas every trader needs to know, explained simply:

1. Sharpe Ratio The Sharpe ratio is used to evaluate the performance of a strategy,

By adjusting for the risk taken.

It's the cornerstone for strategy comparison,

And should be used by every trader to gauge backtests.

5 profitable quantitative trading strategy types (examples inc):

1. Mean Reversion This is a strategy around asset prices reverting to their fair value, often using the average price over time.

Example:
Using the z-score (measures the difference between price & mean & divides it by standard deviation),

Shorts would happen when z-score = 1.0 and vice versa.

This 4 minute thread will save 3+ years of your trading journey: On average, prop firms suggest it takes:

3-5 years for a beginner to become profitable,

And that is with 7 figure mentors around them every day.

But by the end of this thread,

You will have 3 key lessons that took me years to learn,

And 3 books full of knowledge.

7 lessons that increased my trading profits.

These took me 13,500 hours to learn, It will take you 4 minutes: A solid backtesting process.

This means a thorough testing process including:
• 5 years plus of data/high sample count
• Monte Carlo
• Parameter sensitivity
• Out of sample
• forward testing

As well as a well-built backtester,

As libraries come with pre-made assumptions.

4 mathematical concepts that will improve your trading.
(Explained Simply).

1. Law of large numbers The law of large numbers is the backbone for most systematic trading,

Without it, we are making decisions off insignificant amounts of data.

With more samples, we get closer to the true expected value.

Allowing for clearer and less uncertain conclusions.

I've read and tested over 100 strategies since 2019.

There are countless bad ones,

And only a handful of good ones to draw from.

Here they are for free: Playing Gaps.

From "Trade Like a Hedge Fund: 20 Successful Uncorrelated Strategies and Techniques to Winning Profits"

By James Altucher