Building Back Tests that Match Live Performance - 03/30/3025

How to Build Strategies that Work

I had a thought this week about what constitutes my "trading edge". You know, the question every trader is expected to be able to answer. It's supposed to constitute some kind of evidence that you can out-perform the market, your peers, or whatever. Something Bob Pardo mentioned made me think differently about this when he reminded me that when trading pits were around, every trader "had to have their edge" to stay ahead of the other guy or gal. Back then, on the floor, it was necessary to have some kind of "insider knowledge" so to speak in order to carve out success. But perhaps times have changed, and this phrase doesn't even carry the same weight any longer? I mean, when I think about what I have that enables me to generate great returns, it's a combination of a lot of experience, hard work, generating good processes, training the brain to think a certain way, building skills through constant education, using the right tools, finding the right technology, making sure I have first class execution & data, and so on. It's that I treat trading as a business, one with very fine margins, and I strategize like any good businessperson to find my place in the market.

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