QUESTION – Thank you for taking the time to participate in the Q & A session. Before we start in detail. Would you like to share with everyone who may not know, who you are, what you do, where you live, work and your experience trading as we understand you started at a very young age.
DAVE: My name is Dave Mabe and I work at Trade-Ideas. I created a lot of the things you see in Trade-Ideas: the Holly AI, charts, Brokerage+, etc. I grew up in Pfafftown, a small town in North Carolina outside of Winston-Salem. I live in Carrboro, NC just outside of Chapel Hill (Go Heels!). I’ve been trading for ~17 years or so. As I was growing up my parents instilled in me a saving/investing mindset. My dad was always investing in something – in fact, we had some cattle on our postage stamp sized property for a few years as an investment. I learned the value of this mindset early on and it’s stuck with me ever since. I started the online trading journal StockTickr which I sold to Trade-Ideas in 2011 and have been with Trade-Ideas ever since.
QUESTION – We understand you are considered by many as a data scientist. Can you explain in more detail what exactly that is – and how it relates to trading. And improving one’s trading performance
DAVE: I started using the term “data scientist” before it was cool to describe the way I think about trading the markets. I have a programming background so I was pretty quickly drawn to backtesting. I think it’s always good to be skeptical about lots of things and number one on that list is trading advice. Hear someone promoting a trading technique? Create a backtest for it and let’s see exactly how well it’s done over a long time period and a large number of trades. This sometimes feels like a superpower and you quickly gain a lot of experience in the market without actually putting money at risk. Even when strategies sometimes turn out to be a dead end, the knowledge you gain from learning that might pay off down the road in ways that are not obvious at the time. Having a backtest as a reference point is hugely valuable. When an inevitable drawdown comes, being able to refer to a backtest to determine the current health of the strategy is really important – without it I feel like I’m simply trusting my gut which I learned long ago is a bad idea!
QUESTION – What failure or setback have you experienced in your life that has set you up for later success?
DAVE: There’s not a single setback that stands out but lots of smaller ones. I’ve traded lots of strategies that ended up not working. I’ve been successful because I’ve always measured strategy performance like a hawk and while paper trading has its place, it’s way more valuable to take what I call “pilot trades” – real trades with tiny risk to start the feedback loop for improving. I describe my process in some detail in a post on my Medium blog: https://medium.com/@davemabe/my-approach-to-trading-with-bigger-size-1a99564293db
QUESTION – What role model did you have earlier in life? And do you currently have anyone you would consider a mentor?
DAVE: My wife Joan made a living running and coached herself to the U.S. Olympic Team in Track and Field (https://en.wikipedia.org/wiki/Joan_Nesbit). I often joke with her that she’d be a terrible trader but she’s a great coach! She’s not afraid to deliver difficult advice that you don’t want to hear. Although running and trading are obviously very different there’s a good bit of overlap with any activity where you’re trying to be the best you can be. Our personalities are very different which makes her perspective really valuable for me.
QUESTION– How would you describe what makes a successful Trader – keeping in mind that it has been reported that 90% of traders fail.
DAVE: My experience creating and running StockTickr showed me that there are a lot of ways to be successful in the markets. So why do most traders fail? It’s a variety of reasons with the main one being: it’s really hard! You have to treat it like a full time job. You have to be honest with yourself and oftentimes the truth hurts! The best traders I’ve been around are meticulous record keepers. They know their trading edge backwards and forwards. A successful trader takes years to create through persistence and experience – most people aren’t able to consistently do anything for the length of time required, much less the risk of trading.
QUESTION : What is the role in having a balance all around life in your day to day activities. What hobbies do you enjoy?
DAVE:I consider daily exercise part of my trading edge. I run or bike every day and I take it seriously. It provides the perfect kind of distraction I need to think about tough problems and performs a mental reset almost every time I exercise. It’s a lot easier to do it when you treat it competitively. If you’re going to do something you may as well try to be the best you can be at it. I surround myself with friends who also enjoy exercise and being competitive which makes it all the more fun.
QUESTION – What advice would you give to your peers looking to enter the trading profession ?
DAVE: I’ve gotten this question quite a bit over the years and I also hear other traders gets asked this question. I always emphasize just how hard it is – basically the opposite of snake oil. If they’re still interested then I tell them to have another source of income and always trade money you don’t need. If you’re not there yet then there’s probably things you can do in your financial life that would provide a better immediate return than trading would. Once you get there and start trading, lower your expectations for success. Set goals that are very attainable and way, way lower than your wildest dreams.
QUESTION – What are your favorite books to read and why?
DAVE: I’ve read a lot of trading books over the years and I find them not as useful as I once did. My favorite genre is books that I think might relate to trading but only tangentially. Books like Annie Duke’s Thinking in Bets – it doesn’t mention trading but there’s a lot traders can learn from a book like that. Another one I can recommend is The Art of Learning by Josh Waitzkin.
QUESTION – When you have lost your mojo or focus , what do you do to get back on track?
DAVE: When one of my strategies has a drawdown, the first thing I do is compare my journal results with the backtest results. Sometimes I find some tweak to make that can get things back on track. Other times I realize that the drawdown is “normal” and no changes need to be made. Every time I do this analysis, though, one thing definitely happens: I learn something. It may not be applicable immediately but it very likely will be one day when you least suspect. I think of it like this: I have a library of trading ideas that I’m constantly adding to and cultivating over time. As time goes on I have more knowledge that I can apply to future strategies that I haven’t even thought of yet. This is the kind of mindset that works for me.
QUESTION – If you could have a big billboard with your favorite saying or message on it, what would it be.
DAVE: One of my favorites is from Richard Feynman: “The first principle is that you must not fool yourself – and you are the easiest person to fool.”
QUESTION: Thank you for taking the time for our readers to get to know you. How can our readers contact you on social media?
DAVE: I always enjoy connecting with people on Twitter: @davemabe Thanks so much for this interview!
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