Kevin Davey is a trader with over 25 years trading experience, a best-selling author, and a teacher on all things algorithmic trading.
In this latest Trader Dozen interview, find out why Kevin compares developing trading strategies to a factory manufacturing a product, and take note of the words of wisdom he has on failure and attributes he puts his success down to.
We're also give you an exclusive chance to win one of five PDF copies of Kevin's latest book Introduction to Algo Trading. To find out how to enter, check out the bottom of the page...
Failure in the short-term does not mean failure in the long-term. Trading is a marathon, not a sprint. Sometimes just staying in the game is the keyKevin Davey
1. Can you remember when and why you got into trading? (and what do you trade?)
It was a direct (paper) mail piece on how easy it was to make money trading commodities. The course did not work – I actually received a refund for the course – but by that time I was hooked!
2. What’s your trading style and how do you fit this into your other life activities? Do you trade around your life or does your life/job fit around trading?
I am an algo trader, so I trade a lot of strategies, around the clock. I work from home, but trading and trading related activities (like research) are always a big part of my daily life.
3. What motivates you to constantly work on improving your trading systems and enjoy what you’re doing?
The markets are an ever-changing puzzle, and that fascinates me. Trying to figure it out is what it is all about. Plus, you have thousands of competitors trying to do the same thing. It is a tough, but fun, endeavour.
4. Throughout your journey, are you able to pinpoint a moment or a routine that you started doing that then made all the difference to your trading and/or life?
Probably the time when I realized, after many lunchtime trips to the bank to do wire transfers to avoid margin calls, that I must be doing something wrong. That experience – days and weeks of continual losses – really changed my view of trading.
5. I’m presuming that you’ve come up against failure in the past. What has been your approach on getting past these failures and has this evolved since?
I realised that failure in the short-term did not mean failure in the long term. Trading is a marathon, not a sprint. Sometimes just staying in the game is the key!
6. What would you put your success down to? Just being lucky, your intellect and smarts or just consistent hard work? Or possibly a combination?
Patience, hard work, discipline. Probably some luck too. It is like any job or career – it takes hard work to succeed.
7. What do you think sets you apart from others who are trying to be successful?
I’d like to think I am more dedicated to trading than the average trader, but I don’t know for sure.
8. What advice do you have for those who fail, give up or never get started? For either trading or something else in life.
Make sure you love what you are doing, whatever it is. If it becomes a chore, long-term success will be tough. I love trading, even though it is really hard and frustrating at times. If I did not have that passion for it, I would have quit a long time ago.
9. Do you set yourself goals? And do you feel that it is a good way to achieve what you want?
Absolutely! Goals are key in life, and in trading. In fact, the first step in my process for developing strategies is goal setting. It is critical. Most people ignore or neglect it.
10. Knowing what you know now and how you got to where you are today. Is there anything you would like to have done differently, maybe done something earlier in life (or later) etc.
That is hard to say. Part of the reason I am where I am today is precisely because of all the mistakes, all the wrong turns, all the goofs I made over the years. While all of that was painful, it helped me get where I am at today. So for that I am grateful.
11. You’ve created a Strategy Factory Workshop for those looking to design and develop trading strategies. You mention that you compare developing strategies to a factory manufacturing a product; can you expand on this analogy?
I think to succeed in trading you need a lot of strategies. There is no one Holy Grail strategy out there, but many people search for years and years in vain for it. The strategy is the final product – that is what comes out of your strategy building factory.
On the input side, your ideas and untested strategies are the raw material coming into your factory. Then inside the factory are the machines – the tests and steps you run to turn ideas into tradable strategies, or into scrap.
It is a neat way of thinking of the strategy development process. It forces you to treat development as a business, since you are running a factory.
12. In 2014 you published the popular ‘Building Winning Algorithmic Trading Systems’, but in 2018 you came out with ‘Introduction to Algo Trading’. What made you want to write an introductory book?
I found many people reading my book who were true algo trading beginners. In those cases, my first book did not make much sense to them. The “Introduction To Algo Trading” book provided a good bridge for the trader who is new to algo trading. Many now read “Introduction to Algo Trading” and then read my first book.
13. Finally, what do you do outside of the trading world to take your mind off the markets?
I spend most of my free time with my three children. They are a great distraction from the markets and trading!
Follow Kevin Davey on Twitter @KJTrading or head to his website kjtradingsystems.com
Competition! (NOTE THIS COMPETITION IS NOW CLOSED)
We're giving you the chance to win one of five PDF copies of Kevin's latest book Introduction to Algo Trading. To be in with a chance of winning, simply answer the question below (clue - you'll find the answer on Kevin's website)
- In what years did Kevin win or place second in a real money futures trading contest:
a) 2005 & 2006
b) 2005, 2007 & 2008
c) 2005, 2006 & 2007
d) 2004 & 2008