Troy Bombardia is a big fan of interpreting historical data. He realized he needed a quantitative approach to trading and started studying historical data on the SP500 index. Troy started a successful hedge fund in 2011, closed it down in 2015 and now trades his own money.

Besides managing his own money, Troy runs a blog on the SP500, Dax and Chinese equity market news and developments.

In the show Troy reveals:

  • Why the SP500 trend so strong in one direction over the long term
  • How history has influenced his approach to trading
  • What he uses to pick buys at the bottom
  • Why trades ETF’s over Eminis (ES)

Interview

77: Troy Bombardia, ex Hedge Fund Manager, on Quant Trading Tricks for Retail Traders
00:00:00 00:00:00

Recommended Book

Market Wizards, Updated: Interviews With Top Traders by Jack D. Schwager

Interview Links

MarketHistory.org

Broker & Platform

Interactive Brokers

Key Lessons

  • Never underestimate people’s ability to be optimistic
  • The big money is made running big trends
  • Take a long-term perspective to trading
  • Start to follow the news and the economy
  • SP500 will not have a bear market if the economy is improving
  • Don’t focus on making profits week in, week out
  • Focus on an yearly target for your profits
  • Trading ETF’s and sectors works better than trading an individual stock
  • Find your edge, why are you better than other traders?
  • Observe one time frame higher and one lower than your regular time frame
  • Use weekly charts
  • Treat trading as your job, not your life

Troy’s Trading

  • Troy loves to buy corrections on the SP500 when the system gives a bottom signal
  • He goes long 100% as the initial reaction is very fierce
  • Starts looking for a correction in about ten months time
  • He uses a big correction signal that’s never failed before
  • Uses ETF’s rather than ES’s
  • Looks for a correction after a 80% bull run
  • Mixes technical and fundamental analysis when trading SP500 bear and bull markets

Troy’s Strategy of the Week

  • On the weekly time frame
  • Go long when the 50 crosses above the 200 SMA and go short when it crosses under will beat a pure
  • This beats a pure buy and hold strategy, in certain markets
  • This keeps you in really strong trends
  • Because cross overs don’t happen that much, it prevents your portfolio from being whipsawed when the market swings flat
  • If the market falls 2% below your entry price then close the trade to avoid the big crashes when you’re shorting the market
  • Trades should last between 5 day’s and 1 month

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HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

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