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I'd read a lot of books by this time and I was really,
really aware of money management, position, sizing, stop losses.
I never really lost a lot of money.
I've never blown up a trading account or anything like that.
I've learned a lot from the likes of Larry Williams and he'll often say that we
are looking to catch trends. And trend is a function of time.
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the more profit is available to catch some of Larry Williams old books.
But my favorite book, I cannot recommend this book enough. It is fantastic.
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it's a book filled with entry and exit ideas for strategies.
Episode 222. Alright folks, today we've got Jared Goodwin in the House,
also goes by the transparent trader on YouTube and for good reason too.
You're gonna find out why soon. Now,
Jared has spent the past eight years studying Larry Williams amongst, uh,
other top traders, Andre Unga, other guys who've been on the show. In fact,
Larry was only on the show two weeks ago, if you wanna check out that episode.
Now,
what Jared has done is verified whether or not the strategies that he teaches
actually work, and he's tested them over many, many years, uh, and now trade.
Some of them live. Now, uh,
what we're gonna do after this is we jumped on a video. What we did,
shall I say, we jumped on a video recorded, uh, Jared,
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Alright folks, here we are on Trading Out.
We've got Jared Goodwin in the house all the way over there in the UK from the
Transparent Trader. So welcome to the show. Jared.
Hello Cam. Thanks having me on.
Hey, look, um, today we're gonna get your full 14, 14 year trading journey, uh,
to start off with and then dive into what you're doing now, uh,
and how you've managed to deconstruct the markets and gain a bit of information
and insight into, uh,
what you've managed to do and how people can learn from that. So,
to start off with Jared, how's the best, uh,
how did you get into trading and where'd all start?
Okay, so yeah, a bit, bit of a strange one. Um,
I come not from a trading background,
I don't come from a computer background or a programming
background, anything like that. In fact, uh,
prior to trading I spent most of my life fixing cars, uh,
actually mostly body shopwise. Anyway,
so about 2008, 2009 ish,
the guy I was working for, um,
he used to buy and sell some shares, um, British Airways, in fact,
cuz he had a little part-time job with British Airways.
And I was just fascinated that, you know, he was,
this was back in the day where he would ring up on the telephone, um,
to get the quotes every, like twice a day. It's to get the share price.
And I was just fascinated that, you know,
he could invest a certain amount one day and the next day it'd be worth more or,
or not if the case may be.
But that fascinated me and I soon got into it.
I got an old laptop computer and I got a, um,
I dunno if you remember, you used to get like, um,
like a USB dongle for the wifi. Do you remember those? Um,
you could plug the USB dongle in Yeah. And it could give you wifi.
And I, I managed to get wifi in, in the,
in our workshop and I opened a share trading account and started to
buy and sell some, some shares just in some UK companies.
And that's pretty much where it all started. And I did that, uh,
had this laptop set up in the corner of the workshop getting dusty. Um,
did that for, for a couple of years probably. Uh, and that's, yeah,
that's pretty much where it started. I never And.
And you made money on that or, or did it?
I did. I'd actually did quite well. Um, I think it was more luck, uh,
and I knew that, um,
and that's why I was always just in the pursuit to learn exactly how to
do it. A lot of the stuff that I happened to buy, I'd read from tips, um,
visa shares, and I'd read from tips and they'd just gone my way. Uh,
but yeah,
ultimately I knew I didn't want to be trading off the back of somebody else's
tips. So it made me, you know, go investigate even deeper.
So we are too next. What was the next protocol?
So the next protocol I couldn't understand. Well,
I was told that just because it was quite frustrating just because the main
market though, it'd be the FOOTSY 100. In my case,
if the FOOTSY 100 had a had a bad down day,
let's say it was down one half percent, uh, the shares that I were,
I was holding, which had been been going up nicely,
they'd also dropped down as well. And yeah,
we all know that I didn't really quite understand it then and it was
frustrating. Uh, so I thought, why am I trading these individual companies?
Why not trade, uh, the Foote itself? So then I got into, um,
we have spread betting, uh, over here. We still have it actually, uh,
you probably know what that is and gives you access to trade all,
all different products. So I trade it started trading in like the index,
so the actual, the foot scene. Um, and yeah,
done that for another few years. Um, and I mean this,
this took me probably right up to 2016,
so I probably spent a good seven years. Um,
this is all on a part-time basis, so there was no urgency.
It wasn't like I needed to do this to earn a living. Um, there was no urgency,
but I was very passionate and I would spend evenings,
weekends looking at it. Uh, so yeah, did that with,
with cap hazard results, really, um, no,
no real success eventually because.
Were you sort of, were you using your like sort of, uh,
share trading strategy on the footsie or,
and things like stop losses and, you know, did you have those?
Cause a lot of people who trade shares at the start will just get in and they'll
get out. They won't like have a fixed stop loss.
Yeah. So I, yeah, this brings me on to, yeah. Um,
I was lucky enough that I had read a lot of books by this time and I was
really, really aware of, uh, money management, position sizing, stop losses.
So I never really lost a lot of money. I've never,
I've never blown up a trading account or anything like that.
I've never lost a big chunk of my account just because I'm,
I am pretty risk averse and yeah, I,
I'm one of these people and it's probably in some ways to my detriment,
you know, I kind of want to know everything.
I want everything right before I do the thing. Um, and I mean,
in this case it stopped me blowing up accounts and that sort of thing,
but getting back to the journey, so that was indexes.
I then got into foreign exchange somehow, I think, oh, I know how I did. I,
I bought a book by, um, Courtney Smith. Um,
it was a trade in foreign exchange book. So I've got into that.
And then eventually, uh,
what really turned the corner was 2016,
I discovered a guy named Andrea unga,
and I got onto one of his courses at the time,
and that was the start of my algorithmic trading journey.
So up till then it was, I didn't really have any plans.
I kind of like technical analysis type stuff. I, I preferred the charts.
I've always hated anything to do with fundamentals, always hated news,
that sort of thing. So that was why I kind of moved to the,
the algorithmic side of things.
And then pretty much from 2016 through to today, um,
it's just been algorithmic. Um, and all my,
all of my live trading is all automated as well.
And so you so like to, to go from, I suppose,
body shop work to automated trading, it's quite a big shift, isn't it? I mean,
how did you overcome that learning curve?
Um, just having someone show me how to do it. I mean, I,
I often credit Andrea Aranga, um, and I credit him now. Uh, you know,
he, he had a really good course and I use, um,
multi chart. So that's the, the trading platform.
It's very similar to Trade Station and it's not the hardest thing to program.
Um, and I was along learning alongside Andrea's course
and I guess, okay, I was just fixing cars,
I guess I do have quite a mathematical technical brain and picked up
the, um, the programming quite quickly. So yeah, that's how, that's how it went.
That's an, that's an absolute in achievement. We've actually, uh, I,
I said to you before the show, I've had Andrea, uh, anger on the show before.
I actually haven't had it on, had him on, I remember now,
it was like back when I did 52 traders. And my daughter actually,
who was probably seven at the time,
she read out the questions and I read Yeah, Andre's answers because he didn't,
he didn't come on. I should actually try and get him on. That's a good point.
Yeah, you should. Yeah. Yeah. So, so, okay, so you went from there.
So how did your sort of first foray into, into, you know, coming up with,
I guess at this point you look, you know,
you're deep into strategies and mm-hmm. ,
did you have a strategy before you started this or not? Were you sort of like,
I did, this is my strategy? Yes. Yeah. And what was it, what was it,
what was it based on?
Um, so price action, obviously, um,
it was the main one that I was using and I happened to just go through
a really good spell, um,
was a variation of one I picked up in this book from Courtney Smith.
And it just looked at an inside daily bar on the four X markets.
Um, and it was a breakout of the inside bar. And in fact,
I still trade a variation of it today, only on one market, mind you. Uh,
but yeah, that was, that was the strategy. So that was my first, it was,
it was really good to have a strategy to program and thoroughly back
back test as soon as I'd learned how to use some software. So that was the,
that was the first strategy.
And, and was it, like, what,
what'd you find out when you back tested that strategy?
So when you actually got like, you know,
a lot more data and were able to see how it performed over time? Um.
Yeah, yeah, it was interesting. Uh, it was, I mean,
quite pleasing that I knew that it worked, especially on, um,
dollar Yen, but I could quite quickly see on a lot of the other pairs.
It just doesn't work. And I had been trading it, um,
and I'd been trading this manually, so this is before I was using software.
I'd been trading the strategy manually looking every night, uh, uh,
about probably six different fourex pairs, uh,
looking for an inside bar and then placing the orders for the next day.
But yeah, being able to or, uh, automate or program it and,
and automate the back testing, uh, I'd already,
I'd also done a lot of back testing prior, but all manual. Um,
and not just this strategy by the way. Um,
I've probably spent before actually getting into multi
charts, Andrea run's course,
I'd probably spent the last two or three years back testing manually,
uh, those sort of strategies.
So I already knew that I was into mechanical algorithmic
rule-based strategies, and I was, I've got many,
many spreadsheets where, you know what it's like, you know,
writing down the numbers and back testing using Excel.
Yeah. And so what about the, what about like the, uh,
I mean the comparison between like,
so you ran your eight year back test or whatever it was on the strategy that
you'd manually tested, I'm guessing over possibly if you're lucky,
maybe a year or two. Yeah.
What.
And you, and you saw,
and you saw that it didn't work on all these other pairs and it worked on one.
What was sort of like, what, what were you think,
what were you thinking at that point? What was it sort of like,
was there a revelation there, like, damn, I'm c I'm actually,
I'm going in blind, or something like that, or.
Yeah, I guess so. Um, I don't really remember. Obviously I,
I, well not obvious,
but I dropped a lot of the markets that it clearly didn't work on after seeing
that back test just completely dropped them. Um, but, um,
I remember I was,
I was probably so wrapped up with what I had been learning from Andrea Aranga in
his course, uh, that I was tested so many other stuff as well, uh,
at the same time and coming up with better re much better results.
So that kind of, kind of went on the back burner a little bit, that strategy.
Yeah, it's, it's interesting. So, okay, so, so what, what kind of, let,
let's put it into perspective for the guys listening and watching, what,
what would con you consider, you know,
much better results than what you were seeing? I mean, what was like,
what was sort of like, ah, this thing's really good because it does X, y, Z.
Um, just a more consistent behavior,
better as in a better equity curve, um, a higher average trade value?
Uh, that was, that was probably the main thing with that, that, um,
inside bar original strategy, uh, it was a, a day trading strategy.
It was out at the end of the day,
so maximum it was in a trade would've been 24 hours. It, it wasn't,
it was less than that.
So you're always struggling to get a high enough average trade. Um,
so I was developing a lot of other strategies which lasted days or
weeks, um, and just more profit.
Alright.
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Okay. So, so, and, and at what point do you sort of go, okay,
this strategy is something that I'm going to now trade, uh, live mm-hmm.
, what, what was that sort of decision making point for you?
Yeah, that, that was, um, I found it quite easy, uh,
at the start. In fact, I say I'm risk averse,
but when I first had a handful of strategies, uh,
that I'd developed using the knowledge that I'd been gaining from Andrea aga,
uh, I, I was quite quick to put them into practice. Um,
and I actually, looking back at 'em now,
I was actually quite lucky that they did happen to to work pretty well for the
first year. After the first year.
I ditched quite a few of them because I could see that they just weren't, um,
it was mainly that I talk about the average trade value. Um,
I talk about the size of the average trade. Um,
so the amount of money per trade. So when you add up, um,
add up all the winners, take away the losses divided by the number of trades,
you're gonna get an average trade value. And it was really easy.
Or it still is really easy to develop a strategy that gets an average trade of
let's say five pips. But by the time you take out some trading costs, you look,
you know, four x you're looking at spreads, um, swap costs, that sort of thing,
um, that five pips can almost disappear. Uh,
in some cases it will completely disappear with some pairs,
and you'll know that yourself. So that was, um,
that's why I quickly or didn't quickly cut some of these strategies,
but that's why I cut some of these other strategies. And then from that,
probably about, that was the sort first year. And then from that time on,
I was much slower to go live with strategies as they came along.
And what,
what if you had to sort of try and group these strategies that you created that
you know,
didn't work because the spreads and stuff just ate away at the cost and and
whatnot, what would you, how would you sort of describe them?
Or could you explain one in detail?
Um, what the ones that didn't make a high enough average trade,
or the ones that I, yeah.
The ones that, the ones that you cut, because they, they, they were just like,
you know, you ran there for a year and then they,
they started p performing poorly.
Okay. Yeah. So, so it was a mixture of two, two things really. So, um,
if you imagine an equity, an equity curve of the strategy, um, some of them,
uh, would continue working and they'd continue moving up to that right hand side
really nicely. But they would have two lower average trade. So the one,
by the time you've included costs, you're not making any money with them hardly.
So that's, that's the one group.
And through comparing live trading fills,
uh, you know,
could compare my broker statement to the back test statement,
um, then I could see how much it was costing, you know, in trading terms. Uh,
so there,
so those ones I would cut that just weren't at a high enough average trade.
And then there's the other side of things where the equity curve just started to
take a dip and they just stopped working and mostly because they were
over-optimized, or I just hadn't quite gone through the, the,
the process correctly. And I mean, that's our,
that's our biggest as our algorithmic trade is, that's our biggest challenge,
is not over optimizing, building something that,
not building a a great back test,
but building something that's most likely to work in the future. Mm-hmm.
and,
and were these price based or indicator based kind of strategies? Uh.
Yes. They were all price based. Um, some of them time based, um,
based on biases, uh, whether it be, um,
times of the day where, uh,
some instrument is likely to rally or likely to decline, uh,
that goes the same with days of the week, um,
and even days of the month trading, days of the month.
And those ideas actually come from, uh, Larry Williams,
I've learnt a lot from Larry Williams reading his stuff. Um, and he's a,
he's a big, um, yeah, he's very big on things like trading day of the week.
Uh, yeah, you can quite clearly see that there's repeatable times of the month.
You know, he might go, go long on trading day 12 and exit on trading day 18.
Um, and if that's worked for the last 10 years,
it's pretty much likely that it is gonna continue to work. So yeah.
It's interesting, isn't it? Cause it's, um,
it's funnily enough we're building something like that in the,
the robot lab that I've run with,
with the guys where you we're looking at a specific, um,
we're only working on the hours, but there's this sort of like,
the guy's come up with a, a way, um,
where he use it himself where there's this repeatable pattern of enter here
mm-hmm. exit here based on the hour. Yeah.
Or the day or any timeframe. It's any timeframe really. Um, yeah. So, okay,
so that's interesting. Now what about, um, what about the,
uh, the ideas for the strategies? I mean, how were you coming up with these, uh,
back in the early days? Was it just like, somebody's given me the strategy,
I'm gonna come up with it? Or were you sort of using your own mouse to go, well,
this is what I know, or were you looking at the price chart and saying, well,
that looks like a repeatable pattern, let's try and build that.
Okay. Okay. So let's start with the last one first. Um,
looking at the price chart,
I have never looked at a price chart and been able to spot something with my
eyes. Um, and that brings me onto,
let me just divert very quickly. Um,
something that I learned from certainly Andrea Lunga,
uh, possibly I heard, heard, I've heard Larry Williams talk about it,
but what a lot, what a lot of people do. And I mean,
it seems logical what a lot of people do.
They take their a discretionary approach or a technical analysis
approach there because they're a manual trader, but they look at charts, um,
and then they try and program it and they tried to make that their algorithm,
and most often it just doesn't work.
So algorithmic trading strategies are very,
very different to something you would ever try and manually trade on on the
charts. So that's just a little side note. Um, okay.
And, and can you explain, expand on that a bit more based on why different? Um.
Yeah, I mean, looking at, um,
just different price levels, I mean, hands up,
I don't know too much about discretionary trading. I've never really been,
I've certainly not been a successful discretionary trader.
Obviously I've done a bit of it in the early days, um,
but a lot of the times it, it doesn't work. Um,
people will try to implement, um,
splitting positions, um, exiting at break even,
uh, all stuff that you, you're kind of told to do, uh, when you,
when you discretionary trade and it often doesn't,
just doesn't work when you apply it to, to an algorithm.
Yeah, it's, I I found that as well, like, you know,
moving your stop to break even taking partial exits for whatever reason. Yeah.
It just does not work. , like it doesn't give you as, sorry, it,
I mean it can work, it doesn't give you as, um,
I suppose solid equity curve as or as robust kind of results
or better, even better results than, than just taking a position,
leaving your stop. Yep, yep. And taking the profit at the target Yep.
And suffering through all the pain that goes with, with the Yep.
In between bits. Um, and it could be, you know, days or weeks for,
for a position to close depending on what timeframe you're on. Um, yeah. Okay.
That's interesting. Okay. Okay, that is interesting. Now, um,
if you had to sort of like, let's dive into what you do now.
If you had to sort of look, look at all the strategies you've got running now,
how many have you got that you've come up with that you would consider, like,
you know, your top sort of, you know, a, a-list strategies?
Um, I'll tell you what's working best for me,
and if you were gonna ask me what my favorite strategy or favorite setup
was, um, I don't have one, but I'll tell you which works best for me.
Um, and that's probably my favorite one, and that is, um, breakouts,
um, into trends that's been, that's been working really well the last few years.
So I've, um, unfortunately, um, you've,
you've heard of the 80 20 rule. Um,
well I can pretty much apply that to my trade-in that probably 20% of my
strategies have made 80% of profits, which by the way, I don't like, um,
you know, we'd all like it to be, you know,
we trade 20 strategies and they all make a fifth of your profit, but they don't,
um, sorry, 5% of your profit, but they don't. Um,
so the, the ones that have really shown, um,
have been breakout trend strategies and they've pretty much been on the yen pair
pound Jen in particular.
Right, right. Okay. That's interesting. So there's a couple of things there.
So the, um, the breakout into trend, it's funny cuz we had, we had,
uh, Thomas Neal on the show a while ago. Mm-hmm. I dunno if you've heard of him,
but he, he was Yeah, missed the breakout is what he called himself. Yeah.
And he just went deep, deep,
deep into breakout trading from an algorithm point of view. Okay.
And obviously has, well he's got, obviously he's got,
he says he has something like 1500 strategies based on different variations
of a breakout. Um, wow. What is it, I mean,
have you sort of gone down that route of just focusing on a breakout and what is
a breakout strategy from an algo point of view look like compared to,
and I'm guessing, if you don't know, I can probably fill in the blanks. Um,
a manual trading point of view.
Okay. So typically a breakout strategy for,
from an algo point of view, um, I'll be looking at highs and lows,
so highs and lows over the last 20 days.
So, I mean, you could, you know,
use something like a dungeon channel to visually see that on the chart,
but the highest high over the last 20 days, 40 days. Or it could be,
um, a breakout above yesterday's high, um,
or break below yesterday's low, or it could be looking at,
uh,
a time window of let's say between midnight and eight
o'clock and then looking at a breakout above the high of that eight
hours or below below of that eight hours.
So it's just a price level and it's normally either highest highs or
highest closes and lowest lows. Lowest closes.
Okay. Okay. So, and then taking the profits on those, how do you,
how do you get out of those breakout trades?
So those ones and the ones that have seem to have done the best, um,
pretty much all stop and reverse cam. So for those who,
those of you who have lessers that, dunno what I'm talking about,
stop and reverse. So let's say I'm taking a breakout.
If the price breaks above the highest high over the last 20 bars,
the only way I'm gonna get out of that trade is either a stop loss,
cuz I do use stop losses. Um,
or typically it's going to be if the price breaks below the low of the last
20 bars. So that's a stop and reverse.
It means I'm going to be stopped out of my long trade and I'm gonna reverse the
position and get into a trade in the opposite direction.
Right. And, and, okay, so that's, that's if you got a loss.
What about getting a profit? How do you get out at a.
No, no, no, no. That works with profits. So imagine, oh, imagine.
So if you're taking the profit, okay, so you're not necessarily losing, but you,
yeah, you're getting your opposite signal and you're, you're getting out. Okay,
gotcha. So, so what on that, what did.
These.
Sorry mate, go on.
I was gonna say, although these are pretty low, I was only, I was only looking,
um, a few weeks ago, these are pretty low win rate strategies.
We're talking like a 35% win rate on some of these,
some of these breakout strategies.
Okay. Okay. That was the other question I was gonna ask. And, and what,
what is your sort of like,
if you're gonna go risk to reward on those kind of strategies, what,
what are you expecting to get on average?
So I don't actually deal,
I don't really obsess too much on things like risk and reward because
I'm not, I don't often use profit targets. Um, you know,
a lot of discretionary, um, traders, they'll obviously,
they'll use profit targets, they'll look at two to one, three to ones,
five to ones, whatever. I generally don't,
I gen I like to see how much net profit the thing makes. Is it consistent?
Has it got a reasonably consistent equity curve? Um,
has it got a high enough average trade? However, on,
I do know on on some of those breakout strategies probably looking, um,
between two and a half to three to one, um, at the most.
And that's with a 35% win rate.
Right, okay. Which is, which is a profitable strategy, right?
Yes. Yeah, yeah.
Yeah, yeah.
So some of those have made, made me the most money in the last couple of years.
Yeah.
And, and like looking at sort of portfolio, I mean,
how many trades are you expecting to see? Uh, yeah,
the portfolio take over the course of a week.
So I've got about 16 strategies live at
the moment. Um, and some variations of the same strategy as well.
Um, I seem to always have, always have a trade, um, if not two or three,
um, in terms of how many
open and close I couldn't actually tell you. Um, but oh yeah,
I've always got, it's.
Always, it's always gonna be, yeah. So you're always on the market. You,
you're very really always in the market. Yeah, yeah. You're very, really flat.
Yeah. Now, now have you ever considered sort of moving to, you know,
you're saying a lot of the strategies of trader are jp y peers on the four
X market. I mean, have you ever considered moving to, um, like, you know,
indices or anything like that?
Or do you test on these other kind of instruments and they just don't work?
Okay, so, um, yeah, let's just just clear that up. Um,
the trend following strategies, um, tend to work best on the, uh, the yen pairs.
Uh, I have a lot of other strategies which work on other pairs, um, you know,
uh, pound dollar, euro dollar, uh,
that sort of thing I have considered because I actually like the trend
stuff now.
I'm very comfortable with the trend stuff and I've only really found
that the yen pairs definitely seem to be the best within four x
as, as a, um, as, as an asset class. However, yeah,
I, I do want to actually move now. Um,
I've been in four x now for what, eight years or so. Uh,
I do want to start moving and exploring possibly into futures because I'm
told now, um,
I'm told that there are some better trends to be had within futures. I mean,
maybe you'll be able to tell me.
Yeah, I mean I think, I think generally you do get a better trend, but, um,
cause a fourex is typically me reverting tired of missing trades or spending
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get the free training and download a free robot. I mean, in terms of, you know,
with eight years experience in the four x market and sort of going into the
detail there of trying to build bots that work around the four x market,
I mean, if you had to sort of say to like, a new trader coming into Forex,
here are the,
here are sort of three or four things to look out for that you're probably not
gonna pick up straight away.
Do you have anything like that where things that like devil in the detail kind
of things?
Um, what would I say?
I would say straight away I would probably say, um,
stay away from short-term strategies, sort of day trading strategies.
Um, look for, so a lot of my other strategies, not,
not so much the breakout ones, but a lot of 'em are based on daily bars,
um, price action of a daily bar. Um, and they typically,
uh, tend to be a much,
much stronger signal on a daily bar than anything intra day. Um,
so yeah, stay away from trading intraday,
let your trades last two or three days to two or three weeks.
Um, and, um, more so because you, uh,
come back to that average trade value thing, you know, the size of the trade,
you're really gonna struggle if you are just looking at intraday trading within
the Forex because, you know,
there are costs and I believe the costs probably are or can be higher than
the likes of futures as well. Um, so that's my,
that's my number one thing. If, if you're gonna come into it,
look at daily bars, uh, look at daily patterns, um,
and look at leaving those trades to run a matter of days rather than in and out
within a day. I, I remember, um, like I said, I've,
I've learned a lot from the likes of Larry Williams and he'll, um,
he'll often say that, you know, we are looking to catch trends, um,
and trend is a function of time, so the longer you can stay in a trade,
the more profit you are, you is available to catch. So that's,
um, that'd be my number one advice. Um, and number two is just test everything.
Just come up with, um,
you don't even have to come up with your own your own ideas,
just find some ideas and, um, just start testing them, which does mean using,
well it, it should mean using some software really, because yeah,
you don't wanna be testing things manually.
. Yeah. Yeah. Um, it's funny, I've, I should rerelease it,
do an interview with Larry way back in the day. Oh yeah.
So I should actually re-release that one here on the channel. Uh, now, um,
one thing I was gonna ask is around like sort of when you are optimizing,
or let's not call it optimizing, let's say just testing your, uh,
your strategy. I mean,
do you sort of apply a number of different techniques to that to see,
like if say for example, you come up with an idea and go, okay, well here's the,
here's the concept of learn it from Larry Williams book or whatever.
Will you then apply different, um, I suppose,
what are they called really tactics or strategies to that particular
strategy to find potentially a better solution? And if so, yes,
what are your sort of go-to go-to things? What are your go-to things?
Okay, yes, the answer is yes. Although, um,
more recently, uh,
within the last couple of years I've really tried to step away a little bit. Um,
I spent a lot of time looking at intraday charts and
looking, like I say,
because I grew up with or I learned a lot from Andrea Runa,
he often uses, uh, sort of look at daily patterns.
So if you're entering intraday on a breakout,
or let's say we we're looking at a breakout of yesterday's high, um,
he might look at what happened the last five days prior to that day.
So are we in a downtrend or are we in an uptrend? Um,
and that's the sort of thing that I would look at to try and improve the
original signal. Um,
nowadays I don't do it too much because nowadays I do generally focus on,
uh, longer term stuff, um, like I say patterns using daily bars.
Um, but with regards to trying to improve stuff,
I almost, yeah, I guess I've been taking stuff away from strategies, um,
to what I used to do. And in doing so I think I've made them more robust. Uh,
they don't quite look as pretty in the, in the back tests,
but they tend to have carried on working better in the future.
And I'll give you an example. Um,
let's say coming back to that breakout strategy, um, let's say I'm,
I'm pound Jen and we're gonna buy, um,
a breakout of the 20 day high.
I'll actually run a test and I'll run a test from let's say buying
the high, the five day high right up to buying a hundred day high.
And I might do it in steps of five. So look at a five day high, a 10 day high,
15 day high, et cetera.
If I find that the 20 hi to the 20 day high is the best
one and none of the others work particularly well, I'll throw the strategy away.
I, I don't wanna know,
I'm looking to see something that works consistently over that whole test
period, uh, that, that to me is robust.
And then I'll, now, this is something I learned from um,
Perry Cal, um, then I'll look at rather than then you,
then you've got the, um, the quandary about actually,
which length do you choose? So you found this,
this trending strategy that works, but which length do you use?
Because five works, you know, 15 works, 40 works, which ones you choose.
So then what I'll do is rather than choose one length,
I'll split my position into, I typically use threes,
so I'll actually choose three of those lengths because I don't know in the
future which one of those lengths is gonna work best. So typically,
so for example, this strategy, this trending one I use on pound gen,
um, I use a 20 day, I use a 40 day and I use an 80 day, um,
it's actually a bar, sorry, um, because it's on, um, it's on two hour bars,
but I use 20, 40 and 80, um, doubling it every time by the way.
Um, but they all work and everything in between works.
So that to me is, is robustness.
Mm-hmm. . Okay. And, and do you, on robustness,
do you do any sort of walk forward testing where, you know, you,
you test say it's a 2018 and then you then get your settings that you think
these are the ones, and then test again from 2018 to 2023 and say,
okay, great. Yeah, still made money, I, I'm happy and, and.
So yeah,
so typically what you've described I would describe as in sample and outer
sample, um, which is, which is exactly what I do. Now there's,
people are in many different camps when it comes to talking about this.
So Andrea, aa, um, I dunno if he still does it now,
but the way he used to teach was he would take the complete data set,
so a hundred percent of the data, uh, develop strategy. Um,
and his argument was the more data the better and your including very up-to-date
data. Um, and I guess he was so comfortable,
he had so much experience with developing strategies,
he had a very I good idea of whether or not something was over-optimized or not.
Um, I've never done that actually, um, just,
just felt comfortable from me from day one was to leave,
like you just described,
leave two or three years of the most recent data out of sample.
So do all the development on, let's say you've got 15 years of data,
take 12 of those older years of data, do all your development,
do any optimizations when you're happy with it,
then you can look at the out of sample data,
which is the most recent three years.
And if the strategy continues or the the
performance looks in line with the rest of the in sample data,
then I've been inclined to be happy to go live. In fact,
even nowadays I even do more, um,
I'll use more out of sample data. So I'll often,
so with four x I'll typically go back to 2008. So nowadays,
because I've got back in 2016 when I started only at eight years of data,
now I've got 15 years of data. Um,
so typically now I might look at using 2012 to
2019 data as the in sample and do the development on that.
And then the out of sample, uh, do the, the ends of it.
So the most recent and the, and the, and the oldest data and see how that,
that goes. Where's walk forward analysis?
The way I know walk forward analysis, um,
is completely different.
It's taking chunks and altering the settings on a predetermined,
um, time period, like every year looking,
optimizing for the last say four years,
applying the settings to the fifth year and then doing that in chunks.
I, I do, I've done it manually. We've got software, um, multi charts does it,
um, automatically. And in all honesty, I don't really use it.
I have never really found it that helpful.
I know the likes of Kevin Davy, superb trader, um,
he uses walford analysis. Um,
it's not something that I particularly use.
What about like frustration around this? I mean,
are there any areas where you get mega frustrated and think like,
this just this, this annoys me? Or is it all pretty much like, okay, well,
you know, I've, I've built this robot, I've tested it, it failed,
move on to the next.
Yeah, I think, um, I think we just,
I think I've just accepted or been told slash accepted
the fact that, you know, the vast majority of stuff that you test,
you're never gonna trade live cuz it's never gonna be good enough. Um,
and that might mean working on something for a few days that you just have to
throw away. I guess that's, that,
that's my biggest frustration is with a lot of,
let's say jobs, um,
you get paid for every hour you put into the, into your, into your job.
Um, so if you work for three days, you get paid for it.
With developing trading strategies,
you don't get like an immediate obvious payment because you,
you could spend, like I say,
you can spend three days on a trading idea and at the end of it you can just,
no, didn't work, throw it away. And, but yes, you've gained a lot of experience,
yes, you know what didn't work, um,
but you certainly didn't get paid at the end of those three days. So that's the,
that's the frustrating part of it.
Mm-hmm. and, and from like a, a mindset point of view,
are there any sort of special characteristics do you think somebody in the space
needs to have?
Um, the willing to,
the willing to just succeed, the willing to just keep on going?
Uh, yeah, just keep on going. You, you will find something that works. Um,
it's not, you know, it's cliche but it is not a get rich quick thing,
it's not an overnight thing. Um, it takes a lot of work, you know,
you're up against a lot of very, very clever people out there doing the trading.
So you know, you're not just gonna, um,
you're not just gonna come to the market and uh, you know, win straight away.
Cool. Right. We're gonna wrap up with a couple of quick fire questions here. So,
um, what's your recommended trading book or resource?
Um, some of Larry Williams old books,
um, but my favorite book, uh, I've got it here for you,
hopefully you can see that. You see that?
Uh, yeah, I've, I've never seen, oh, Kevin Davy. Okay, okay. Yeah,
Kevin's been on the show years ago.
Yeah, yeah. So I cannot recommend this book enough. Um,
it's fantastic. It's probably his cheapest book. Um,
and all it is, uh, I'll.
Say,
actually do you wanna read out the title for the guys listening on the podcast?
Cuz they're probably going, what, what's the book? ,
you just up to the script. Sorry.
About that. Okay, so it's,
it's by Kevin Davy and it's entry and Exit Confessions of a Champion Trader.
And the little subtitle is 52 Ways a Professional Speculator
Gets In and Out of the Stock Futures and the Fourex Markets.
And basically what it is,
it's a book filled with entry and exit ideas for
strategies. Um, and not only is it full of ideas,
is actually got, uh, the trade station code in there as well,
or multi charts. So, uh, that's really,
really useful for people who are using trade station and multi charts and those
52 entries and exits. Um,
he gives examples on mainly the futures markets, which he, he uses 'em on,
but I've swapped 'em about, I've used, you know,
entry number 13 with exit number 27 and um,
on four X markets obviously. Um, it's just,
it's just completely full of ideas. So if you are, uh,
if you are a trader who has got a solid idea of actually trading
risk management, that sort of thing, I,
I don't think he he details anything like that in that book,
but if you are just looking for ideas, which I find is the most,
is the most difficult part of algorithmic trading, it's coming up with an ideas,
then I cannot recommend that enough.
And I've re recommended that to a lot of my students so far and they found it
really useful. So thanks for that, Kevin. Uh, it's,
it is the book I wish I'd wish I'd written, so.
Yeah. Well, and and does it, uh, does he give like charts of, you know,
this is the equity curve that this one produced or is it more just ideas? Yes,
yes, he does as well are.
Well, yes. Yeah. Yeah, it gives examples. Um, yes and equity curves. Yeah.
Man, I've gotta get some of these guys back on the show. It's been a ,
they have been on and it was a long time ago when I did 52 traders
talking about 52. Yeah, yeah. Um, right now, now, uh, last question.
If you go to leave our listeners with one piece of advice, what would it be?
Uh,
try and work out what sort of a trader you want to be and that might require
actually going out and doing it. Um,
personally I knew that I never wanted to be a day trader,
discretionary trader sat in front of the screens. Um,
that's why I started out doing end of day stuff and eventually got into
algorithmic stuff because it requires no time.
So go out and find the type of trader you want to be. Uh,
once you have found the type of trader you want to be, um,
learn as much as you can. Um, and you're probably far better off paying someone,
um, for some sort of education rather than looking, uh, free stuff,
unless it's mine, of course, . But no, go out, find someone who's,
who you think is very, very good at it, um,
because it's gonna speed up your journey massively.
Like when I first bought, um, a training program,
Andrea Runa, um, it was really, really eye-opening. Um, it, it,
it really, um, give my, my training a real good kickstart.
Awesome. Um, and last question here before we end up.
So what's your preferred broker and trading platform? Look, folks,
I know you want the answer to this question. Which broker is this trader using?
Now the answer has been sponsored by Black bill markets.
So to find the answer out, you're gonna need to go over to trading nut.com,
find the show notes page for this guest and then all will be revealed.
And before you wrap up, what's the best way for the traders to get ahold of you?
Um, you can find my website,
it's the transparent trader.com, but really there's not that much on there.
I really update that. Most of my stuff is on YouTube,
so go to YouTube and search the Transparent Trader or Jared Goodwin and
you'll find me all over the place.
Well look a big thank you to Jared for sharing with us today.
Everything that we've discussed here,
along with all thosee links are in the show notes To find them,
simply search for Jared in the search box on trading nut.com. Until next time,
wish all my listeners at Trading Happiness and Success. Alright folks,
there you have an interview done and dusted with Jared.
Now do remember we shot a video afterwards where he breaks down the Smash Day
strategy from Larry Williams, not just breaks it down,
but also gives you a 10 year track record of how performed.
You're gonna find out that his win rate was actually quite high when he traded
it in a specific way. Uh, other things do remember the live streams.
If you want to enter that, then there's links below the video and podcast.
And if you do wanna check out how, uh, Herrera, for example,
past phase one of the Fidel CREs 50 K challenge,
then you're gonna be able to see that over there on the channel. Uh,
other things Trading View Pro for free. Yep.
There's a link below the video to that as well.
And if you're looking to automate anything, then yeah,
check out my Robot Builders Club where I've got a whole bunch of solutions,
not just Robot Builders Club,
but other things there as well that you can sink your teeth into for the
mediterra four and five platforms. Alright folks, enough from me.
Have a great training week and we'll see you in the next episode.