Mark Rzepczynski joins us this week to discuss ‘algorithm aversion’ and the science of how ‘model anxiety’ shows investors to be naturally wary of rules-based systems. We also discuss how to evaluate momentum data, how a busy week for market news can still be a quiet week for Trend Followers, the benefits of moving away from ‘peak complexity’ as soon as possible, why having too many filters can expose a trader to large opportunity costs, the optimal percentage amount of risk per trade, as well as portfolio construction versus signal generation and which is more important.

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In this episode, we discuss:

How behavioural finance leaves investors under-allocated to Trend Following strategies
How to perceive momentum data
Why the steady flow of market news often has little value for Trend Followers
Embracing simplicity
The need to avoid too many filters in your system
How much should be risked per trade

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Episode TimeStamps:

00:00 – Intro

01:49 – A huge thank you to listeners of the show for leaving your 5-star reviews on iTunes

03:02 – Macro recap from Niels

04:48 – Weekly review of performance

11:59 – Q1; James: What are your views on momentum indicators diverging against price action?

24:56 – Q2; Frank: What is your view on the relationship between the stop and the look-back period?

28:52...

SI149: Model Anxiety & Algorithm Aversion ft. Mark Rzepczynski

Top Traders Unplugged