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Top Traders Unplugged with Niels Kaastrup-Larsen | Engaging Conversations with the Top Traders & Investors
Richard Brennan joins us this week to discuss how to spot potential outlier trades before they occur, the power of simple trading rules over complexity, why endogenous events move markets 90% of the time and news events are behind only 10% of large market moves, how Trend Following models safely reduce risk exposure automatically as drawdowns increase, how to approach correlated markets in your portfolio, how to achieve diversification with limited capital, the Efficient Market Hypothesis versus Adaptive Market Hypothesis, and the differences between Trend Following and ‘Trend Trading’. ---- In this episode, we discuss: Spotting patterns among previous outliers Simplicity over complexity How little the news really moves markets Professional Trend Following versus 'Trend Trading' The ability of Trend Following models to automatically reduce open risk during drawdowns Follow Niels on https://twitter.com/toptraderslive (Twitter), https://www.linkedin.com/in/nielskaastruplarsen (LinkedIn), https://www.youtube.com/user/toptraderslive (YouTube) or via the https://www.toptradersunplugged.com/ (TTU website). IT’s TRUE ? – most CIO’s read 50+ books each year – get your FREE copy of the Ultimate Guide to the Best Investment Books ever written https://www.toptradersunplugged.com/Ultimate (here). And you can get a free copy of my latest book “The Many Flavors of Trend Following” https://www.toptradersunplugged.com/flavor (here). Learn more about the Trend Barometer https://www.toptradersunplugged.com/resources/market-trends/ (here). Send your questions to info@toptradersunplugged.com And please share this episode with a like-minded friend and leave an honest Rating & Review on https://www.toptradersunplugged.com/reviewttu (iTunes) or https://open.spotify.com/show/2OnOvLbIV3AttbFLxuoaBW (Spotify) so more people can discover the podcast. Follow Rich on https://twitter.com/RichB118 (Twitter). ---- Episode TimeStamps: 00:00 – Intro 01:19 – A big thank you to listeners of the show for leaving your 5-star reviews on iTunes, and feel free to share this link with 3 of your like-minded friends: https://top-traders-unplugged.captivate.fm/listen (https://top-traders-unplugged.captivate.fm/listen) 02:41 – Macro recap from Niels 04:13 – Weekly review of performance 11:14 – Q1; Jonathan: What are the parameters that indicate a high chance of an outlier trade? 17:22 – Q2; James: Do you treat correlated markets as individual markets or group them together? 21:24 – Q3; Adam: One system has a better average performance when looking at the backtest, and another system has a worse average performance in its backtest while having a large outlier, making its overall returns higher. Which system is better? 24:14 – Q4; Irving: How can I trade a 100 markets as an individual investor with capital limitations? 29:07 – Q5; James: How do you approach correlation risk management? 32:39 – The differences between Trend Following and the more common term ‘Trend Trading’ 38:24 – Expanding on the theme of hunting for outliers, and how Jean Phillipe Bouchard’s research was useful in understanding the nature of outliers 01:01:53 – Efficient market hypothesis versus adaptive market hypothesis 01:22:03 – What importance does it have that we’re changing the narrative around Trend Following? 01:25:32 – Benchmark performance update A huge thank you to listeners of the show for leaving your 5-star reviews on iTunes, and feel free to share our link with 3 of your like-minded friends: https://top-traders-unplugged.captivate.fm/listen (https://top-traders-unplugged.captivate.fm/listen) Copyright © 2022 – CMC AG – All Rights Reserved ---- PLUS: Whenever you're ready... here are 4 ways I can help you in your investment Journey: 1. My library of interviews with some of the world’s best traders One of my favorite things is to hear...