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David Stendahl is founder and president of Signal Trading Group, an international speaker and the author of four books. He has designed trend, pattern and momentum-style trading systems for more than 20 years. As a Commodity Trading Advisor (CTA), he traded 40 individual futures markets across eight different sectors. He currently focuses on trading the global futures markets, following a systematic, low-leveraged, highly diversified trading regiment. Follow him on Twitter at @David_Stendahl.

How did you get involved in trading and what path took you to where you are now?

David: I have always looked at charts and intuitively designed trading systems to do X if the market moved higher or Y if it moved lower, but it wasn’t until I bought the Telerate program back in 1990 that I was finally able to program my systems and test their performance. Since that time, I have designed thousands of systems as well as a wide variety of trade-related software programs, all in an effort to divorce myself from the emotions of trading. The key for me has been designing trading systems that remain consistent over time and that match my trading personality.

Do you have a specific trading event or date on the calendar that you remember because of a big winner or a big draw down?

David: Every trader remembers their best and worst trades, but as a systematic trader, I look at things differently. For example, unlike the weekend scratch golfer who can recite every excruciating detail surrounding their miracle hole-in-one golf shot from ten years ago, I simply view my best trade as a “one” on the score card and nothing more. I believe in the process and whether the outcome is good or bad; it’s just a number. I don’t pat myself on the back for the great trades, nor do I beat myself up for a series of losing trades. I’m happy with every trade as long as it executes properly and performs in a similar fashion to historic testing. I don’t like surprises, which is why I spend a lot of time reviewing my trading systems.

What advice would you share with someone starting in trading today?

David: The best advice I can give is to trade without ego—no emotions, no greed and no opinion. I’ve been able to accomplish this by trading systematically using a wide variety of trading styles on multiple time frames across a diverse basket of markets. This process isn’t for everyone given the amount of time and effort it takes to set up, but once established, it makes trading without ego a reality. The key is to understand that there is no perfect system. Trading longevity comes from full diversification, which means designing systems that follow diverse trading styles, such as trend, momentum or pattern-based. It also means tracking different time frames; for example we watch 45/60/90/120/240-minute bar and daily/weekly time frames. Lastly, diversify across a wide variety of markets and sectors and avoid being a one-trick pony who trades a single market. We monitor 23 futures markets across eight sectors, which provides us with plenty of trading opportunities.

What is the next big thing in trading? Analytics? Virtual reality? Artificial Intelligence? Something else?

David: The next big thing in trading will likely be a continuation of the evolution of systematic, algorithmic, quantitative trading methods. The process will presumably become faster and, unfortunately, more complex and leveraged. I like faster speed in both my analytics and trade execution, but I fear complexity. The thought that traders are following trading algos that they are completely unfamiliar with frightens me. Even more concerning is the amount of leverage allocated to these systems…and that should frighten everyone. However, I can’t stop or even slow the evolution, so I simply try to expect the unexpected and prepare for every reasonable scenario.

Are there any interesting trades out there now that you would like to talk about?

David: There are always great trading opportunities when you track many trading systems. Here are a few upcoming examples:

    • The S&P 500 is likely to see a short-term sell off from mid-June to early July based on our seasonal accuracy analysis. The systems will wait for opportunities.
    • Live cattle is running into resistance after a long runup. We will be watching for a reversal, but will wait for confirmation from our systems.
  • Sugar has been in a long-term bear phase since last September. We don’t see a bottom in place yet, but we are watching for a consolidation period. When conditions are right, our systems will be waiting for the next breakout or breakdown.

And finally:

  • Coffee is a great market to trade, but it’s not for the faint of heart. We are looking for a base to form in June, and if that happens, we will be looking for multiple short-term, “violent” long positions to trigger all the way up to October.