Trading Gameshow Questions
If trading was a gameshow, these are the questions you would have to answer to win… how many points can you achieve?
Launch Phase
Data and Data Sources
Risk Management
Going Live
Backtesting
Portfolio Construction
Trading Mastery
Trading Psychology
5
5
What is the primary goal of the launch phase in the Enlightened Trader Journey?
5
5
What is the role of data in developing and testing trading systems?
5
5
What is the primary purpose of risk management in trading?
5
5
What are the two main methods for starting a trading system live, and how do they differ?
5
5
What is the primary purpose of backtesting in trading?
5
5
What is the primary goal of portfolio construction in trading?
5
5
What is the primary goal of the mastery stage in trading, and how does it differ from earlier stages like Launch or Diversify?
5
5
What is trading psychology, and why is it important for long-term success?
10
10
How does systematic trading simplify decision-making during the launch phase?
10
10
Why is it important to use clean and accurate data for backtesting?
10
10
Why is it important to set a maximum percentage of capital to risk per trade?
10
10
Why is it important to compare live trading results to backtest results when going live?
10
10
Why is it important to include slippage and commission costs in your backtesting?
10
10
Why is diversification important when building a trading portfolio?
10
10
Why is curiosity considered a critical mindset for achieving mastery in trading?
10
10
How does fear impact trading decisions, and what strategies can help manage it?
15
15
What are the key steps a trader must complete before taking their first live trade in the launch phase?
15
15
What is survivorship bias and what are the 2 common kinds of survivorship bias?
15
15
How does diversification reduce risk in a trading portfolio?
15
15
What are the potential risks of launching a trading system with a full-scale account immediately?
15
15
What is the difference between backtesting and optimization?
15
15
How does correlation between trading systems impact portfolio performance?
15
15
How can advanced techniques like walk-forward optimization and Monte Carlo analysis improve system robustness?
15
15
Why is it critical to maintain emotional detachment from individual trades?
20
20
Why is it important to follow a daily trading process during the launch phase?
20
20
How does back-adjusting data for stock splits or consolidations impact backtesting results?
20
20
What is the role of stop-loss orders in managing risk?
20
20
How can incubating a system help identify issues before going live at full scale?
20
20
How can backtesting help you identify fragile trading strategies?
20
20
What factors should you consider when allocating capital across multiple trading systems?
20
20
What is the importance of analyzing non-compounded profit per trade in smaller time chunks during backtesting?
20
20
How can overconfidence after a winning streak lead to poor decision-making?
25
25
What are some common challenges traders face during the launch phase, and how can they overcome them?
25
25
What is the problem with backtesting a system on stocks that are currently in the Nasdaq 100 index?
25
25
How can you calculate position size based on your risk tolerance and account size?
25
25
What steps should you take to ensure your trading system aligns with your personality before going live?
25
25
What are the risks of over-optimizing a trading system during backtesting?
25
25
How can you use backtest results to determine the ideal weightings for systems in your portfolio?
25
25
How can journaling and reviewing psychological reactions to trades help refine trading systems?
25
25
What role does self-awareness play in identifying and managing emotional triggers in trading?
30
30
How does the launch phase prepare traders to treat trading like a business?
30
30
If you must develop a system on data without historically accurate index constituents or delisted stocks, how should you do it?
30
30
Why is it critical to consider risks that may not appear in backtesting?
30
30
How do slippage and commission costs impact live trading compared to backtesting?
30
30
How does backtesting improve a trader’s confidence in their system?
30
30
What are the risks of over-concentrating your portfolio in a single market or strategy?
30
30
What are the key indicators that a trading system may be deteriorating over time, and how can you identify them?
30
30
How can traders develop the discipline to follow their system during periods of drawdown?
35
35
What role does backtesting play in building confidence during the launch phase?
35
35
What types of additional data, beyond price and volume, can be used to enhance trading systems?
35
35
What are the potential consequences of using excessive leverage in trading?
35
35
Why is it critical to monitor whether live trades match the trades expected from backtesting?
35
35
What is the significance of testing a system across a wide range of parameter values?
35
35
How do you decide which systems to include in your portfolio when starting with limited capital?
35
35
How does regular portfolio and system review contribute to long-term trading performance?
35
35
What are the psychological challenges of transitioning from discretionary to systematic trading?
40
40
How can traders ensure they are following their system rules consistently when going live?
40
40
What would happen to a short side system's backtest if you tested it on data that is not split adjusted?
40
40
How can you identify and mitigate process risks in your trading system?
40
40
What psychological challenges might arise when transitioning from backtesting to live trading?
40
40
Why is it important to compare live trading results to backtest results?
40
40
What is the process for transitioning from trading one system with all your capital to a diversified portfolio?
40
40
What steps can you take to personalize and fine-tune a trading system to align with your objectives and personality?
40
40
How can traders cultivate resilience to recover quickly from significant losses?
45
45
Why might the launch phase take more time each day compared to later stages like Stabilize?
45
45
What is the problem with using data from the US stock indices on your Australian trading system and how do you resolve it?
45
45
What are the key differences between market risk, stock-specific risk, and emotional risk, and how do you manage each?
45
45
How can you manage risk effectively when starting a trading system live?
45
45
What is the limitation of backtesting when it comes to future market conditions?
45
45
How can you use the Capital Allocation Spreadsheet to evaluate the performance of a combined portfolio?
45
45
How can you use performance metrics to generate ideas for system improvement?
45
45
What techniques can help traders observe their emotions without acting on them?
50
50
How does the launch phase set the foundation for progression to the Stabilize and Diversify stages?
50
50
What system attributes would leave a system most exposed to not having delisted stock data in your database?
50
50
How can you use a self-assessment of your current trading approach to identify hidden risks and improve your risk management practices?
50
50
What role does a trading journal play in the process of going live with a system?
50
50
How can you validate that a backtested system is robust and not overfitted?
50
50
What are the key mistakes traders make when constructing a portfolio, and how can you avoid them?
50
50
What are the potential pitfalls of over-analyzing trading data, and how can you avoid them while maintaining a critical eye?
50
50
How can traders identify and overcome deeply ingrained psychological biases that affect decision-making?