I think it’s a lot harder than it looks for an employee to do it. the catch all is that these firms monitor and restrict the employees trading. So the employee either has to quit or run the copy strategy through a friend’s account. This is after they have to get access to your trades and figure out how to copy them and earn while being behind you. And if they are caught (say they forget to use the burner phone and instead use the company phone which is recorded), they not only will be fired but unlikely to work in the industry ever again.
At this point in time, I am no longer a quant. I rely on other people’s backtests, not ones I have done.. The backtesting software I have access to, can do anything in the world. However, it was written by a PhD in Math, not a software engineer, so it is very user unfriendly. You almost need to be a software engineer to learn how to use it, so I gave up. Here is how I invest now. I have some newletters I subscribe to that have beaten the market. I buy sectors that are undervalued. Right now, they are latin /South America, small cap international, and small value international. I also have a few ETFs like MOAT, cowz, calf, SPGP and syld that have beaten the market. I buy a lot of preferred stocks, and close end bond funds for income. For options, when I retire in a year I will be using three strategies, CSPs, CCs, and my favorite, DITM leaps. And I have a lot of money in plain old index funds. To answer your question, I would use I would use backtests as only one piece of evidence that a strategy is good, but I would not assume I will get the same results going forward.
Also, I don't expect to beat the market by a lot. If I can beat it by 1 - 1.5% a year with a high sharp ratio, I am happy.
Hello d08, Why build a trading system if the trading system will not last forever and will not make you rich? Is it not easier to just manual trade?
I have backtested for decades over mountain of data,I have learned much. I know what works for me and don't backtest anymore. But I do forward test few months and go live.
Most are looking for the grail,but if nothing else,Backtests can illuminate one to expect the unexpected.. Peak to trough,Max DD,consecutive losers are metrics that test ones belief system on a good day,and very existence on a bad day.... You dont know what you dont know.. Backtest....
You’ve got a point about long backtests not being reliable due to ever-changing markets. What do you think quant strategies should include to stay relevant and effective?