Ep. 253: Perry Kaufman Interview with Michael Covel on Trend Following Radio

Michael Covel's Trend Following

Michael Covel

Business, Investing

4.6 • 732 Ratings

🗓️ 2 July 2014

⏱️ 42 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

My guest today is Perry Kaufman, an American systematic trader, index developer, and quantitative financial theorist. He is considered a leading expert in the development of fully algorithmic trading programs.

The topic is systematic trading.

In this episode of Trend Following Radio we discuss:

How Kaufman came to the idea of 100% algorithmic trading systems
The difference between being systematic and being automated
Optimization vs. validation
The biggest advantages of testing
Why discretion is not part of Kaufman's toolbox
The problem of tail events
Why discipline is the most important characteristic of a systematic trader
The "loose pants fit everyone" philosophy
Preparing yourself for uncertainty
Comparisons between risk management and risk measurement
The Sharpe ratio
High volatility trades vs. low volatility
Why Kaufman places equal weight on both risk management and the underlying system
Systematic trading in established mature markets vs. emerging markets

Jump in!

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I'm MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I'm proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show.

To start? I'd like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/

You can watch a free video here: https://www.trendfollowing.com/video/

Can't get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast

My social media platforms:
Twitter: @covel
Facebook: @trendfollowing
LinkedIn: @covel
Instagram: @mikecovel

Hope you enjoy my never-ending podcast conversation!

Transcript

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0:00.0	This is Trend Following Radio, where great thinking comes alive.
0:10.9	Nobel Prize winners, legendary traders, bestselling authors, and the pros that know what drive us irrational human beings.
0:21.1	I am your host, Michael Covel, not filtered, raw, honest.
0:27.4	That's my passion.
0:32.7	Today on the podcast, I have Perry Kaufman.
0:35.6	He's an American systematic trader, index developer, and quantitative financial theorist.
0:41.0	He is considered a leading expert in the development of fully algorithmic trading programs.
0:46.4	As the author of 12 books, Perry brings wisdom on the subject of systematic trading.
0:53.1	And for me, 250 episodes into my podcast series, this was one of my favorites.
1:01.3	I do hope you enjoy this episode.
1:03.5	Also, at the very beginning, as you jump into our conversation, I'm referencing Perry's
1:09.9	background.
1:11.1	Before he was a trader, he was involved in the aerospace industry.
1:16.4	Check out his Wikipedia entry.
1:17.9	Very interesting.
1:19.4	Again, I hope you enjoy this episode.
1:29.0	Perry, Mike Covell. Okay. Perry.
1:30.8	Perry, Mike Covel.
1:32.8	Hello, Mike Covel.
1:36.5	Are you in Hong Kong or somewhere out there?
1:44.5	I like the somewhere out there, perhaps looking back to your early, early work before you got involved in trading, maybe really out there, maybe like way out.
1:47.8	And the space, the space either.
	...

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