Tasty Trade

When Dave Mabe backtested his strategy, it outperformed his own discretion — and changed how he approached trading. In this episode, we discuss gapping breakouts, expectancy, systematic trading, drawdowns, and the reality gap between backtests and live execution. A practical conversation for traders serious about building durable edge. ________________________________________ In this episode, we explore: • How Dave got introduced to markets: From early exposure to investing through his family to actively seeking more control over his capital and moving from swing trading into day trading. • Why rules matter: The transition from discretionary decisions to systematic frameworks — and why trading without a process is a fast path to inconsistency. • Backtesting as a “superpower”: What backtesting really does for strategy development and confidence in your edge. • Reconciling backtests with real life: Practical realities of execution, slippage, and market structure — and how to build a feedback loop so your live results get closer to your imulations. • Drawdowns and mindset: How to handle periods where a strategy doesn’t behave as expected, and why many traders quit in drawdowns rather than at all-time highs. • Scaling a trading business: The difference between scaling size versus scaling breadth — and why uncorrelated strategies matter. • Practical first step for systematic traders: How to start adding structure to your trading with backtesting, even if you’re not a programmer. ________________________________________ About the guest: Dave Mabe has been a professional trader and technologist for over two decades. As a former CTO of Trade-Ideas, he has unique experience at the intersection of algorithm design, real-time market data, and automated execution. Outside trading, he writes a popular daily newsletter on backtesting and systematic strategy development, and hosts the Line Your Own Pockets podcast focused on systematic approaches to markets. Links + Resources: • Link to Better Backtesting — Dave’s free multi-day email course on building strategies and improving them over time. • Trade-Ideas, Amibroker, RealTest — examples of backtesting and strategy development platforms discussed in context. Sponsor of Chat With Traders Podcast: Trade The Pool: http://www.tradethepool.com Sponsor of Episode 318: Tasty Trade: http://www.tastytrade.com/chat Time Stamps: Please note: Exact times will vary depending on current ads. 00:00 Intro and Background 08:29 Stock Selection and Systematic Trading Rules 11:32 Position Sizing, Expectancy and Risk Management 16:50 Discovering Backtesting and First Backtests 18:40 Backtesting Principles, Sample Size and Common Pitfalls 20:34 Gradual Automation and Live Trading Implementation 22:17 Trading Journal and Reconciling Backtest vs Live 27:27 Scaling through Automation: More Trades, Better Results 29:26 Drawdowns, Psychology and Handling Setbacks 34:14 Tools, AI and Software for Backtesting and Coding 39:56 Common Trading Myths Debunked (Partials, Stops) 48:01 Getting Started: Practical Steps, Resources and Closing Trading Disclaimer: Trading in the financial markets involves a risk of loss. Podcast episodes and other content produced by Chat With Traders are for informational or educational purposes only and do not constitute trading or investment recommendations or advice. #systematictrading #algotrading #automatedtrading