Price action is always trying to fool you it's always trying to confuse you it's always trying to take advantage of your emotions your fear your greed everything with System trading all your emotions go out the window cuz everything's backed by numbers like what did you find that made you decide that oh shorting is better I found a statistical Edge on paper I found like for example large percent gappers on the Day have about an 80% chance 79 maybe of closing below the open price on the day so therefore I already have a directional edge of
where that stuff wants to go that day and the directional Edge is it wants to go below the open a lot of Traders they think the view this systematic trading is like a Holy Grail that will change their trading or propel them from losing money to becoming profitable overnight but clearly there's a lot of work involved yes all the work Comes out outside Market hours and there's a ton of work you're going through so much data be shocked how many times just simple little small errors changed everything in our equation it's been amazing I can't
express it enough algorithm trading um yeah I I barely have any any any much effort now I don't even have to look the algorithm takes care of everything it locates the shares shorts the stock for me gets me out exits it's like I can just do anything And I I have my robot knowing that it it's going to trade for me and it sends me notifications when things happen you probably have this perception of day Traders how they must wake up early every single day and they're glued to the monitors for 10 hours of day
staring at charts well that couldn't be further from the truth especially judging from the systematic Trader that we are chatting with today Evan Shunk is a systematic Trader who achieved what most Traders cannot allowing algorithms he developed to completely take over almost all the steps of the trading process from stock selection to taking entries profit and stopping out but of course he didn't get here overnight in today's conver iation with Evan you're going to learn how his systematic trading approach helped Evan to finally find consistency and reach the first million profit goal the pros and
cons of systematic trading it's not the N all be All for trading but it certainly can help event step-by-step process of tracking data finding patterns and extracting various strategy executions from thousands of thousands of sample size and how you can do the same too I love learning more about system Trader especially having interviewed a few very successful systematic Traders before such as Chris Verma and Steven Ducks so I personally am very excited for today's unique conversation so make sure to drop A like down below and get ready for today's mindblowing interview with Evan Shunk welcome
to the show Evan hey it's great to have me it's very nice to meet you finally I've seen you on uh YouTube a bit I have yeah uh I'm really excited for our conversation today um I I I want to say these podcasts are just my really selfish way of like trying to meet different Traders with different styles and uh today I'm really excited because I think you the third or the second systematic Trader that we have on the podcast and whenever you know systematic Traders show up my I feel like my brain explode because
you know I'm more discretionary but I'm always trying to learn how to more be more disciplined and systematic like you guys so um without further Ado yes how would you describe um what kind of Trader you are and how are you different from traders who generally trade more discretionary Style um well I'm a systematic Trader so what I do is I look for edges in the market through all through data everything I do I pull it on polygon I even use Spike eat but I'm using historical Market data to um Define my entries and ezx
that give me a statistical Edge um that essentially my entire strategy so all the work comes outside Market hours um all my entries and exits are predefined based off uh data and the statistical edges that you Can find in them and that is is exactly how I trade have you always been a systematic Trader or in the beginning stages when you first found out about trading you know what was your style of trading like yeah I was more of a discretionary Trader when you start I feel like most people are discretionary when you start yeah
and uh it's hard I I think I was trading for about a year and a half straight um well actually was trading for two years and didn't really Make any money until I switched more to a systematic approach um you know discretionary trading you it's it's really difficult the people that get successful out of it are are really good at it but I didn't find as much success with discretionary trading that I did systematic trading okay and what do you think it's a main difference between let's say someone who trades more discretionary versus systematic uh
defined entries and exits Based off specific criteria that you put on the stock and you stick and if that criteria is hit your entries are there no matter what uh and then you place your exits right after your entries um just discretionary Pro it has more of a feel on the market they have more of a pulse on the market um they more have a they they can change their mind at whim just depending on how they look at the price action uh Des for systematic trading everything's defined by numbers And you there's a line
for everything everything is Quantified so that sounds like no level two no price action no reading candlesticks price action no price action is in my opinion is a syst system Trader is such a it's such a lie not a lie in a sense that it does work but in a lie in a sense that the price action is always trying to fool you it's always trying to confuse you it's always trying to take advantage of your emotions your fear your greed everything Uh with System trading all your emotions go out the window because everything's backed
by numbers oh I see I can see why that would be appealing for a lot of especially newer Traders you're very emotional and the price action like there's a stuff then a swipe and then it's back up and price action gets crazy uh so I find uh you know having a data backing up your entries and exits gives me a lot of comfort before discovering um systematic trading and you were just Learning and being more discretionary and trading a lot of different strategies you learned online yes how was the first couple years like how how
much money did you l i I lost maybe1 to $12,000 in my first two years okay um consistently just slowly just a slow bleed yeah just uh you know discretion trading sometimes I'd hit some most of the times I'd lose um and it was just really hard and I I wanted to see my um what was I started doing I started Tracking data I see I just started tracking big gappers you know all the price data open high low close the float market cap you know lots of variables it any variable I could think of
I actually tracked it all by hand on pen and paper the whole thing I had so much papers it's crazy yeah is this before Excel existed or I just I wasn't a computer comp guy oh okay I just my yeah it wasn't until my my brother finally joined me in 2020 he just like dude are You kidding me what are you doing with all these papers like get on Excel he's more of a computer guy oh okay anyways um yeah I lost about 10 12 K I was trying Panic dip buys uh I wasn't even
at like a short selling broker so I was doing all Longs and I'm like all right Longs aren't working out yeah and then I started getting into more watching uh Tim gratani okay um and Steven Ducks after that um and uh I started started listening to their more data approach And how they're tracking uh data so I got the gist of how to just basic track data and patterns from them and then that's what opened the door and I just kept growing from there oh so Tim crani and and stevenh Ducks were kind of like
your what you call like Mentor figures to start the biggest yeah cuz I was in the Tim Sykes room I learned a lot from but then I feel like I really related with Gran's approach okay I I found it interesting that you said before you Were systematic you were all um long biased Trading long strategies so what what changed uh I lost too much money okay and I had to switch something up and I had to find an approach that made sense to me uh maybe maybe I could have Stu stuck with longing and maybe
it would have turn out well one day but I found what worked for me you know learn a variety of different styles from different different Traders cuz there's so many different ways to make money in The market yeah for sure and then I chose the style that that resonated with me the most yeah but I was trying to say is you Dove deep into data and tracking is it because like what did you find that made you decide that sh's better I found a statistical Edge on paper I found like for example large percent gappers
on the day have about an 80% chance 79 maybe it varies per year okay of closing below the open price on the day so therefore I already have a Directional edge of where that stock wants to go that day and the directional Edge is it wants to go below the open oh I see so therefore I would want to be short that day interesting is that is that the kind of the big picture you found back in 2019 yes so looking at more big picture data uh statistical moves backed by data yeah and when you're
tracking these data data you know can you explain to our viewers what what what is this data and what's in there And what specifically are you tracking so it's Market it's just a historical Market data you can get it on spikey you can get it on polygon I use polygon but uh polygon's not so user friendly you got to know how to code to get the data out of there um and what you're tracking is just everything you can think of that all the price data open high low close the time that it makes a
high a day timing matters um uh the market cap uh the float these things might change the Uh the winning percentage of how often they they close below the open and maybe there's some resistance involved track that you know um if it's some really news it's usually pretty irrelevant but sometimes there are some news pieces that can be important track that you know track everything you think of and see what variables are changing the statistical uh big picture moves and obviously you want the variables that are making it the go down the most the Price
go down so usually from let's say you extracted all those different data points how many samples do you actually look at and how back to how many years right so back in the day we used to only have maybe like we start with like maybe 200 samples maybe sometimes 250 150 300 before I um but now we are dealing with like thousands of samples so it's very robust and I trust it much more um but you know you can I I personally I Would say if I don't have a minimum of like 300 samples I'd
feel pretty uncomfortable that's just me but I know some people that do less than that and and they're okay but now I'm dealing with thousands of samples for each pattern so my confidence in in the patterns the more samples robust it is uh the more confident I am in it yeah that makes sense if it's only a couple hundred I feel like that can be like six months right cuz the market can change On a dime the data can change on a dime the market and all a sudden that pattern fell apart that happened to
me in 2022 okay I think I was uh overfitting using small sample sizes and uh and then I found this new pattern we thought oh it looked great on data it's worked for the past 10 years I'm like oh it should continue to work we have time on our side this is amazing but there was only like 200 samples from the past 10 years yes right and so that yeah and then so We were like oh this is gold let's let's let's go in heavy on it first play we take three just non-stop massive losses
and we were just like if the pattern just stopped working the day we did it I think we overfitted we bad is not a robust sample size um I think that's what hit me the most and that's why I had such a bad year in 2022 partly why so thank you for sharing at a high level what kind of your big picture strategy is is that what you described earlier That's what you're currently trading right yes that is my current strategy okay and and how many strategies are you currently trading at the moment that all
back tested by data yeah we got one two three three four five six oh wow six oh that's plenty yeah okay and you have thousands of data for each of the strategies one we have thousands one we have about 1300 okay one we got about 900 and then one we got about maybe like 800 700 okay Yeah yeah and are these strategies all um on the short side yes I find it interesting that most of the systematic traders that we interviewed before um Chris Verma being one of them and Mike hudie as well he's also
pretty systematic everyone's kind of leaning towards the short side I think yeah well probably because there's a real uh statistical Edge in the short side but there's a lot of danger in the short side so it's not for everybody because It only takes one trade and you can lose your entire account if if you don't have the discipline to to cut your risk know what you're doing if you you know deer Frozen in headlights squeezing on you so if you don't manage these things well your career could be over so I'd say much more dangerous
to be a short seller mhm yeah um but I think you have more of a statistical Edge for sure yeah is there a reason that you're all focusing on Short Selling small caps and are you Also the second question would be does that mean there's not a lot of um Edge uh backed by data for the midcaps the large caps from your there yeah not the edges we look for I'm sure there there are edges in there um but it does not operate under the same rules as small caps um what do you mean by
that I I've looked like if you look at large gap percentages for big caps they don't have the same uh statistical Edge so already off the back it's Different just on that one strategy and of itself um it's hard finding I've I can't find much edges in the large cap Market but I think I'm approaching it the wrong way I don't think I can approach it the same way as small caps oh interesting yeah can you describe to our viewers kind of break down your process because you talked about you use um Excel or you
use some paper before use spiky um what's the process of and all the tools that involved for someone To if they really want to start becoming more systematic like you guys what's the process they and what are the steps they should take to kind of analyze maybe their existing strategies and make it a little bit more bulletproof a little bit more backed by data what should they do how should they approach um to be more systematic and less discretionary um well you just track your pattern everything about it for example you could just start with
ch Tracking large gap up percentages and just see how frequently the odds and and statistical percentage that they close below the open okay take a look you can start there it's just a little open window of how to look if you're a long bias Trader um there's actually not really good I haven't found any good data for a long bias Trader if there was I'd be so happy my dream is to find a long bias long biased uh pattern that has a statistical Edge to the long side I haven't found it maybe one day I'll
get lucky and stumble upon something but for long bias Traders more discretionary I mean systematic approach is track all your trades everything every single trade track it exactly what you did and what's not working take that out and always stick to your risk levels you know just have a more discipline and respecting your risk it's like a huge rule for me so yeah interesting so let's say they do track all their trades they Have know what you mentioned the the Open The Gap percentage um I guess where the stock ends up at the end of
the day what's the percentage Yeah everything yeah so they have all of that how do they go in and find let's say you know they have the the bigger picture now how do they go in and find out where they can Define their entries and exits test just test test different entries and exits experiment uh try the open try it on 20% spikes try on 30% spikes try on 10% spikes I see uh just just try everything just trial and error yeah yeah and I guess they can do all that on light you can correlate
moving averages like when break certain moving average you can correlate whatever you want any of those indicators in in the market yeah okay so I guess the the message here is just to keep trying and testing and keep coming up with ideas If You observe it live once you observe something enough you be like I keep Seeing this thing happen over and over I'm going to try and see if that's a good entry I'll test it you know I see it's trial and error yeah I think a lot of our a lot of Traders they
think the view this systematic trading is like a Holy Grail that will change their trading or propel them from losing money to becoming profitable overnight but clearly there's a lot of work involved right yes all the work comes out outside Market hours and there's a ton of work You're going through so much data it's very easy to make mistakes me and my brother have a good checks and balances we always check all our work you'd be shocked how many times just simple little small errors changed everything in our equations and so we check and balances
all our work so that's really good I encourage others to get in team to find edges as well share edges things that you find a small Niche team it's good to have those yeah yeah you you Mentioned your brother is this the brother who uh first introduced you to excel in 2021 he's the one the first introduced me to excel in 2020 okay okay yeah he saw me so uh I started tracking data 2019 okay um and I tracked it for a whole year on pen and paper everything all those variables I did all of
them pen and paper yeah and my brother finally comes in in 2020 one because I finally told him look I'm I finally started getting profitable uh but I was On more of a hybrid approach half Hy half system half discretion when I started getting profitable okay um and he uh I was like I come in I'm ready to teach you I also built a system I got all this stuff and he came in and he also just lost his job that year because it was covid 2020 yeah so it was great timing everything just lined
up he's like all right come in I remember his very first trade I told him short here at the close wait till tomorrow morning Cover at the open and it was like my overnight short pattern at the time I see and it was his first trade and he made like $1,200 and he was just like what is this this really like I was like he's like all right I'm all in let's let's go so he tried following me all my trades with the discretion part and he couldn't stand it um because I was doing a
lot of discretion in half system right and he was just going so annoyed like dude I just I'm so annoyed following you I can't stand this and I was like well here's my sister take a look this is all this this is the strategy I I developed this past year in 2019 I've never tested it yet but on paper for this year it was incredible and he was like he looked at it he was like dude this is so good like why aren't you doing this I'm like I don't know just I'm profitable right now
I just haven't tried it yet but I I want to and he was like dude forget your uh discretion forget following you I'm Doing this and I was like okay so he he was actually the first one to start the system that I built on paper uh and then I remember the very First Trade he made it was like the second trade he made like four or 5K that day on one trade and and I made maybe like 2,000 that day I'm like he's just going to come in here and start making more money than
me my older brother I'm like no not that's not happening so um we're we're competitive you know and so I started doing the System as well right right when I saw that wait this might be something really special yeah so that's the point where you abandoned your past discretionary I still did a little bit a little discretion I did but I uh yes yeah that's when my system really began I remember you mentioned that in 2020 you thought you is that the strategy that you thought you cracked the code of the stock market yeah we
were doing such a basic strategy um but it worked well And it worked so well like it was so simple and we thought dude we're Geniuses we cracked the code like every day we were wake every day we were waking up like how much money are you going to wake that day it was so ridiculous we had it was the craziest cycle of success for these gappers just always dumping out of the open um and and we thought we cracked the code we were making a ton and and and then 2022 all the patterns changed
the data Changed the market we got wrecked so it was a humbling experience in 2022 because data can change on a dime the market can change yeah so you always got to keep up to date you always got to be keeping track yeah it's a never ending process yeah that's what I was going to ask so what how do you know no well now it's 2024 knowing that experience from 2022 and 2020 nowadays how do you keep track of your data and how do you know when to Abandon a pattern altogether like what what do
you need to see on your Data Tracking to tell you that one is looking at the Historical um downtrend of the pattern so um like how what's the farest the pattern has dipped and in the bankroll has like is it 20% draw down 30% draw down what's the largest dip and if I ever see a dip break its previous record of the largest do draw down it's ever had that's a red flag and it might make Me think a hold and weight approach let's see if it comes back up um because if if we're we're
trading new Waters right now the draw Down's never been this bad who knows how much worse it can get let's uh be let's be safe so that would be one maybe Point another one if uh the profits overall average gain on the year if it starts going way below the the average on like you know I'll make a chart on Excel that might be cause like wait for it to get back above The average and then start again uh and then there's a third approach um that's good that I remember I learned from someone else
but I actually I forget that one so these are just ideas um that that I would look into if I want to stop a pattern so you mentioned the the draw down is below the the average the hisorical yeah of your trade or the historical back tested historical back testing oh so you also not only do you mine the data you also Kind of input some uh your account size to simulate the p&l yes we simulate p&l and we'll simulate the whole historic p&l right of the data of the pattern interesting yeah so but but
that also just means if it worked in let's say in the last 10 years and now it's stopping to work so how do you then further back test to find a new strategy I guess that's my question if that makes sense you just you just keep looking keep looking for different things you look For something completely different sure oh so you abandon this whole thesis together I've abandoned a couple strategies yeah oh I see yeah yeah usually if it gets that bad sometimes I just need a tweak sometimes maybe um certain parts of the pattern
are working and I just got to get rid of another like a part of a layer of the pattern it really varies it's just a case by case basis yeah you say like what like when you say you're tweaking Things you just remove criteria or re change your execution so potentially change criteria like for example if like the stock is incredibly overextended on the day the the Stock's up 200% from the previous day right uh maybe the ones that are gapping down the next day are not working but the ones gapping up are working so
maybe I only want to play the ones that are gapping up now and not the ones gapping down I see you know that's just a little example there many yeah oh That's that okay it sounds like you know the back going back to what I said earlier about people think oh why does it go systematic like you never have to do any work again no you have to constantly adap you're constantly working yeah yeah you might even arguably working more than discretionary trading maybe yeah but depends on who the discretionary trade is everyone works hard
if you you know and the the Traders I know discretion or system yeah M I think the difference is if you're more discretionary you rely on chart patterns or Price Action level twoo then you're working more during the market hours yeah you're working much more me I'm I'm pretty not working hard in the market hours no I'm just filling an entries and exits that's it oh yeah all it's very effortless for system traders in the market hours right the effort comes outside Market hours I see I see yeah that's that's very interesting so Like in
in a way obviously you still need to research back test keep track outside the market hours but during the day like right now yeah motions throw out throw the emotions out the window yeah throw stop trying to read the price action just stop it's fooling you that that's our approach yeah yeah I mean so many times when I try to override my system because the price action was convincing me that no this is not going to go your way I Think more often than not I'm wrong uh I had a good run where my discretion
was beating the system and then I just get overwhelmed when my discretion stops working and the system's beating me and it eats me up I'm like all I had to do was nothing just follow your system you know so following your rules are easier said than done you know every Trader knows that but now I'm much more of a systematic I've kind of really tossed Discretion out the window ever since we built our uh algorithm I see yeah yeah let's talk about that cuz I I remember um earlier you mentioned that you used to be
kind of yes you're systematically Trading but you're still manually entering all the orders and yeah you know monitoring it so what has the transition been like and where are you now with your current strategy and system it's been amazing I can't express it enough algorithm trading um yeah I I Barely have to do any any any any much effort now I don't even have to look the algorithm takes care of everything it locates the shares shorts the stock for me gets me out exits I still have to keep an eye open and and manage it
because there are bugs we are still fixing bugs sometimes errors do occur and we have to be there when that happens but it's been gave me so much more free time um and it's just it's like I can just do anything and I I have My robot knowing that it it's going to trade for me and it sends me notifications when things happen so I always have my phone you know beeping about seeing what's going on and you just got to keep track of it but it it's it's really awesome what about from the very
let's say in the morning when you're selecting trade is that also youro does it for you the CU all of our patterns are Quantified with exact criteria I see so the AL so you quantify That into the algorithm it can do anything you ask once you quantify it oh so for example just hypothetically you say select only trade stocks within float of one mil to two mil gaing up this much I say you know given exact uh exact criteria exact quantifications for each specifics that you wanted to do I think this is why you mentioned
that news doesn't really matter because the ELO cannot well can it well I think actually it could if if you're very Specific on what type of news I imagine that's possible yeah um but for my strategy the news is is 90 n 99% of the time irrelevant 98 I see yeah yeah because you're shorting small cap most of the news just garbage news yeah exactly or like recycle like there's like a 1% time that you get some real news in a small cap you know it's like the viral news on like mainstream media and it's
like everywhere and it's a small like that that's important news I I'd track that might even stay away from it or if I see a small cap tied with like Nvidia news and they partnered up that terrifies you I'll probably not short that one so you you would then let's say you you found out about it later you would then override yes I probably would okay if it's that serious of news where it's really real then yeah but that's n that's like a one % chance yeah yeah that that was what I was going to
ask next because you know smoke cap Sometimes you especially when a short selling you have these black Swang events right so how do you make sure that you get you get before that or like stop the algorithm and and how how do you make sure you you don't get blown up during that one event of well we have our stops in always all of our stops are hard Market stops as soon as it hits it it markets out immediately uh and all of our stops are uh backed by data um and so we usually when
when things Start to squeeze our Market orders usually get filled yeah we'll have some slippage sometimes yeah but that's just the way it goes yeah so I'm I'm very curious so what what's the I guess risk of word expectancy like uh for our strategies I'd say it's more of a one to one okay yeah you don't have highrisk reward with our strategy but you have high statistical edges numbers backing up your strategy so the win rate should be a lot higher the rate win rate's a Lot higher uh risk rewards a lot lower oh interesting
it what do you know why the risk reward is lower like what we because we use a wide risk we found that wide risks are advantageous to our strategy and we have dat at to back that up so you know if we're using such a wide risk maybe we make 30% or 40% on the day but maybe we're risking a lot higher than that you see I see I see yeah so when you are red that yeah let's just say it's 60% loss vers is when you Make money it's 30% win but you're just making
you're just winning more just winning more I see yeah I would say even sometimes it's not even a one to one it's one to two right yeah yeah meaning I could lose I'm risking twice as much as I might gain I see but I'd say it's in between there it's in between one and two one and one rarely do we make more than we risk and how do you decide how much you size in per strategy is that something you you manually decided so I Use a Kelly system for mine which essentially the basic way
to explain it I'll choose a bank roll at the beginning of the year so let's just let's just say I started in the year with a 50k bank roll um then I'll use uh depending on what pattern is just for one for example I'll use a 10% Kelly meaning that I will risk starting with a 50k bankroll I'll risk 10% on that 50k bankroll I'll risk 10% of my bankroll every single trade okay so my first trade I'm risking 10% Of 50k so I'm risking 5K on my first trade um then let's say after that
trade's over I made 2K that day right so now my bank roll is 52k so on the very next trade for the same exact pattern I'm now risking 5.2k instead of 5K so I'll size up more and more as I make money and if I lose money I'm actually sizing down oh inter so that's how I compound profits it compound's much better this way the more I make the more I'm actually risking I see yeah and is That percentage a same for all six of your strategies it varies some I'll do a 10% I think
the highest I do right now is 14 okay High yeah I used to be I used to go to like 20 crazy now I have I don't go past 15 anymore I even try to keep around the 12 area 12 I can it's I can manage that sort of volatility obviously the higher you're risking the more volatile your risk would being I find that a 12% Kelly I I can I can handle that volatility okay and I guess That also means you you don't really withdraw money out right or do you just keep yeah right
well I do when I got expenses but I have a portion of it that is just only my bank roll that that yes that I don't wire out whatsoever okay do you do you I guess this this is discretionary do you ever deposit more during times where you know it's really hot for your strategies no I I would just no I don't okay yeah sometimes I might do a little Discretionary like an extra percent instead of 12% bump it a 13 how much I risk but I rarely ever do that usually I just stick to
it and stick throughout the whole year this is this is really fascinating for me so does that mean going back to the whole System trading scenario since you know you've back tested like thousands of samples and you know the on average how much you should make what the win rate what the profit should be does that mean you your system Take every single trade that qualifies for the criteria absolutely oh during times where the Market's hot yeah when the Market's not hot let say in the summer right like technically summer months the smoke caps are
generally not as hot you would still trade oh yeah the algorithm's still up I I turn it on every night before I go to sleep oh okay and that's all I got to do and then and then it just operates for me yeah and I'm I'm good to go usually but there's We still have bugs and we have a so we have to watch it yeah so are you finding that just from the last couple years of systematic Trading are there months where the small caps just generally don't favor your kind of strategies absolutely yeah
we call those the draw Downs they always come in your system sometimes they get nasty um yeah when the market gets really hot that's usually it's usually when our jaw Downs occur when the when the when the market Gets really hot right because I'm I'm a short seller so everything's squeezing and uh that's when we usually get hit okay M so then why not since you already track those you know which month that may be why not just turn off your system during those months uh when the market gets really hot it it really varies
um it's always random how it's going to play out that hot sector on the day some are more hot than others and sometimes our a system overall usually performs Fairly well decent even when the market gets hot so our data is backed even through the hot sectors and we've tried to Define when a hot sector comes and how that's really hard to quantify we've tried very hard quantifying what detects a hot sector and I just uh haven't fully figured that out I maybe someone else I don't know who has really um and there's so much
variability in there that our data says do not turn it off okay yeah yeah I I guess what you're saying is Even the big draw Downs during those period it's and sometimes the draw Downs are not during hot sectors it could be totally uncorrelated too so we don't see enough data to say it's only in hot sectors but we do see it happen a lot during but not we don't see enough reason to turn it off and how to turn it off we have to Define what that hot sector is and then be able to
say okay now it's the hot sector so we can safely turn it off we don't we don't have that I don't yeah yeah usually it's like you see a th% Gainer that's for example that just happened recently there was a th% move it felt like a hot sector's coming you know even Trump just won the Market's getting a little hot uh however we our system has been working fine so it's not always every hot sector just we just never know so we haven't seen enough evence to really say turn it off yeah yeah okay and
could you share with our viewers and Listeners how like for a more technical sense like how are these systems set up like what platforms are you using D um and we get our data market data from polygon okay and then we use Das to locate shares execute our trades oh so so um like you have scripts that you coded to put in to D to Ultimate I guess you connect the API with it I'm not the coder um so I I I'm not not the best person that ask these questions yeah we have a three-man
team me and my brother Do all the analysis we we do all the analysis for the data patterns and then we have our our buddy uh do all the the coding oh okay so that means you and your brother and and maybe the third partner if you guys all trade together you have red days on the same days and green days days you'll be green together oh yeah all us yeah like P andl will be super close then right yeah yeah oh yeah it's me and my brother and our our buddy Calvin yeah yeah I
thought you mentioned That you were like competitive with your brother how are you gonna how are you gonna beat him this way at this point we're doing so well I guess the competitiveness has gone down a little bit it has actually which is a good thing yeah um he's also really taking off he's been able to do a pattern this year that I wasn't doing at the early of the year um and we it's now we're we're more I guess you could say we're less competitive now Okay yeah yeah you're more you're more like a
team working on the same algorithm strategy together yeah okay how I'm just trying to think because I know a lot of people used um trade station for a lot of these automated trading or even I know you can do some something like this on trading view um but it's the first time I heard someone use a Das Trader oh really yeah yeah we use I use Cobra Cobra broker okay Cobra and dash Trader yeah D the Das on Trader right dash they have it at all those Brokers C Point yeah so D and Cobra yeah
on the topic of going fully systematic like you have rely on relying on the platforms and you know your your algorithm to send you notifications yeah are you ever worried that you know maybe certain entries are not taken with certain stops are not placed absolutely yeah the algorithm's not perfect you got to keep an eye on it even even you fix all the bugs and even when we fix all The bugs and it's running really smoothly I'm sure it'll be lot a lot more comfortable then I mean we've been building it now for eight months
so like it's this a work in progress there's so many bugs that just keep popping up yeah um and um yeah we we keep one eye open always we we got to keep track because we want to make sure we getting all the trades that our system tells us to has there ever been any mistakes cost by and costume money oh for sure um it got me In a stock that it wasn't supposed to get to I see and then the stock it was like a tiny tiny float but it misre or something or it
just got the wrong data I'm not we're not sure what happened I think like like probably Calvin knows our guy um and uh we weren't supposed to get in it it got us in and it just kept ripping kept going higher and we just ended up taking a Max and yeah okay and these stops that you're taking you say you have live market Order stops are they do you use no do you use the I guess your strategy your system tell you where to place stops but do you also use um a lot of Traders
use a Max broker no Max broker oh Max broker J no yeah we don't I've never I've never put one on never use that okay yeah so you are fully well I guess you just said you also monitoring the the stop you got to monitor yeah and it'll send you notifications when it gets uh when he gets there too but also just keeping an Eye on it as well also set up some trade alerts if he gets to certain levels on my phone but you're definitely not like constantly looking at your I'll put like price
alerts I'm not constantly looking but I'm always coming back to checking on it do you have any memorable um big wins or big losses from this year from your system I remember my worst losses in my career for sure or my earlier in my career um memorable big wins um I can't Say that I don't even remember the exact ticker but the stock was a massive Spike maybe like 200% uh there was a system entry on a backside for that Spike and the stock came I think retreated about 70 to 80% of its move oh
like it went red on the day almost yeah basically went back to red and that was an amazing uh move I forget the ticker that it was but that happened losses I don't know the algorithm is doing most of the work so I'm uh I'm really detached from my computer nowadays i' say yeah that makes sense that you don't you really have to know that tickers anymore M what about any um big losses as a as a result of the system just working but just didn't work out or system messing up so one time which
can happen another huge reason why you got to always keep watching it right is because uh or just keep an eye open monitoring it is because um our stop loss canceled on us We had like a limit stop and it like went way past it okay so it cancelled our stop-loss order and I didn't get filled out fully it was actually happened on a a China stock it just I see went right past my stop stop order got cancelled and I'm still in maybe half my shares oh God exactly so I luckily I was there
and I immediately was getting out maybe you know 10% past my stop though 15 even like it was way past my stop but I still I'm getting out Immediately but if I wasn't there it would have been a lot worse you know CU it kept going it kept going up I forget the ticker but I just know it was a China stock HKD something it was dangerous yeah but luckily I was there and then got myself out oh so that could happen yeah mhm is it after that you decided to use Market order stuffs yeah
well part we we do both we do both yeah Market orders is the way to go like have you considered that Since all of your strategies are kind of concentrated on small cap Short Selling you know with short selling getting so popular nowadays and everyone wants to short sell the fees are definitely getting higher and higher like have you considered that know will they be would there be a point where certain location you just don't take anymore yeah we probably got like about a if the locate price is more than 10% we we won't we
probably won't borrow that more than 10% Of the stock price correct I see okay so like let's say a stock is $5 you would have loc more than 50 c per share correct that's right that's our limit yeah okay good to know mhm then do you ever worry that short sellings getting more and more crowded nowadays because so popular I don't know I'm not too worried um hasn't seemed to be affecting us you know we always got to adapt with the market um yeah so I'd say no I'm not I'm Not too worried but you
know the more short sellers the more competitive it gets the more people are stealing my locates um and I don't know I haven't had too much of a problem though yeah I I was thinking I was discussing this with with another Trader the the the popularity of Short Selling is probably what cost a lot of these squee these huge squeezes and why certain short strategies are no longer working yeah the data changes I even see In one of my patterns the average gain has gone down this year that's a concern because it's never gotten to
this low of an average gain in any other year so it's one I'm keeping track of and um it's something you always got to keep track of but yes if I think there's something to do with when the crowd really starts to get to an edge and and when the crowd overwhelms certain parts of the short cap edges it might it might make it it might ruin the edges a Little bit possibly but I don't know how true that is because the patterns are still working so we we'll see and I've been saying I used
to really believe in Ed and roen for like like a year ago okay um but my patterns are still working and it's and it's getting crowded so I don't I don't know if it's how how worried I am about it I guess it's a we'll we'll find out approach yeah I guess if you have to switch things up up and change patterns every Couple years it's not that bad it's not that bad you just got to keep adapting and we've had to do that so I'm not too worried about it because even if the edge
does get crowded we will adapt we'll find another way to attack that pattern and we'll find what is working yeah okay yeah that goes to my next question since you know you are trading SM cap stocks do you believe that there is a max amount of liquidity or shares that you are able to take in Smoke cap Definitely there's always going to be liquidity issues we are not there yet we're not massive whales we're getting big but um it's that's a wait and see approach and once we start hitting thresholds of liquidity we'll deal with
it then probably put a cap on what how the amount we could trade depending on the volume that day you know so we'll probably filter but as of now we're not there yet we're still getting in and out fine with our size so we're okay okay And you are just to clarify you are trading actual equities you're not trading options correct yeah yeah small cap stock only yeah because I find a lot of um well I don't know how true this is but a lot of the small cap Traders once they scale up they eventually
move on to like large caps I keep I don't know how true that is that's what I hear I hear that from a lot of bigger Traders but we'll see it um what are some of the current strategies or systems that at a High level that you're working on um a large large gap percentages is always something we're looking on okay uh large any sort of serious extension moves large spikes large uh large gap percentages there is always some short sides Edge we find in the data through things that get very extended on the day
so that seems to be like the the the big picture for a lot of these Short Selling strategies yes yeah I mean it makes sense like stock has to go up all Terrible garbage companies so they can only get high before they want to start coming all the way back down are you excited that now that they're starting to be rate Cuts because that just makes it easier for these companies I hope so yeah I hope it brings back some some some good better Edge in the short side we'll see but yeah I hope so
yeah that was a scenario in 2020 2020 anomaly year for short sellers I mean for everybody really I feel like Everyone was making every Trader was making money every strategy was working so so uh we interviewed Chris Verma here before on the podcast maybe two years ago okay and I think he in the podcast he said that uh most of the profitable discretionary traders that he knows are actually just systematic traders who who well sorry are really systematic in the way they approach their strategies but they just don't I guess they just don't follow it
exactly more of a hybrid Approach I agree with that I think think the best Traders out there usually have a discretionary aspect to them and have a hybrid approach yeah um I think that's true as well I think when you have when you mix your discretion in there it can I think can and you're really good at that discretion part I think it could take you to a a higher level than maybe just pure system yeah yeah and and and to clarify this for our viewers by by that we just mean like having really Concrete
rules or criteria tracking data discretionary guys the hybrid they're still tracking all the data know the statistical edges but they're adding their own feel and pulse on the market in price action than a pure system guy would yes and I think that could take them to a higher level yeah if you really hone in on that skill but it's really difficult I I think it's really difficult yeah yeah because there are certain things that is just hard to Quantify by numbers yeah absolutely yeah for example well actually I'm not a good person with these kind
of EX because I'm not a math person yeah um but but yeah I trade mostly large cap stocks nowadays um I don't think I think some of the stuff I trade can be coded into a system but a lot of it is based on like how I see the chart oh as well yeah but I wonder if I could you know also create you know just create you know an algorithm that just trade what I see for Me yeah if you define define exactly the the Criterion entries and exits and then once you define it
you can back test it yeah and then you could see how it's worked in the past and how it's working now yeah especially I want to do more swing trading approach going to I I am already swing trading a lot more than day trading so I just want to be able to capitalize on that aspect a lot more you know obviously you've come a long way from when you first started in 2018 yeah Um what is your daily routine like nowadays now that you have a bot who trade for you like how much time just
so our audience know realis ially how much time are you spending on trading and also outside of the market hours yeah I'll wake up early um I'll check you know I'll look at the pre-market I'm looking at Market hours I'm me I'm trading at all parts of the market hours I'll be in the after hours I'm everywhere um so I'll wake up real early Um and really I just I I keep I'm kind of resting in my bed in the early parts of uh the trading and uh the algorithm's working I have it on loud
so if it it it will announce anytime it gets into a trade and so anytime hear an announcement I'm up there watching making sure everything's working good to go and then I'll probably usually be pretty done around 11 a.m. eastern okay uh I just you know it's really the first hour and a half where all the most Activity that I find comes in yeah and um then midday there's usually not much going on it's just I'm usually in my position and we're seeing how it works out I got my my bot put stop orders in
probably just go to the gym at that point you know make a nice lunch um do some other activities and uh I us you know pretty free I got a lot of free time wait what happened to the work you do outside the market oh yes but we've Done so much uh data work that it's more of like a because we've done so much that it's really uh we got to keep up to it maybe every once once every week or two and do like a full on another update um but it's not like I
don't have to be every day type of thing not anymore okay yeah we have a bought now cuz now all of her data we don't have to do it everything's pulled automatically so everything's tracked automatically we just have to pull it now so there's not Much manual labor anymore it just comes down to when we need to check on a pattern maybe you know once a month once every two weeks um then that's when the work and that takes hours yeah that takes hours hours of work um but other than that uh when that's not
happening I'm pretty I got a lot of free time and I've been traveling a lot and it's been really good yeah but our coder guy can't say the same thing for him he's he's got a lot more work coding cuz he's got to Do the actual coding and building the foundation and me and my brother what we're good at is the the data and the analysis uh but know we have our patterns down right now so we just have to keep up the date with them but it's not an everyday thing yeah yeah yeah and
also how many hours of work would you say um for you to like in the early stages of before you even have a pattern how much hours of research did you guys put in to collect all those thousands of Sample sizes and to compile that into one strategy how much time do that take days Days yeah days yeah days okay yeah yeah and that's involving three people three people and then me checking my brother's work or him checking my work um it takes days I remember that pattern probably took a couple weeks yeah yeah okay
that makes sense just so our viewers are clear it's not something you can do overnight a lot of work work is still involved absolutely yeah to close Off do you have any tips for either beginner Traders or discretionary traders who are struggling like what if they really want to become more maybe not full on systematic like you but they want to be more disciplined and have more set criteria where where should they start I think you should start with tracking Data Tracking the patterns that you're looking at every variable you can open high low close
high in the day low on the day market cap float any Variables the moving averages whatever you want I think looking at all that stuff and having it on paper and and trying to see your statistical edges on paper so you can have a visual of it and have data given you the confidence that this worked in the past it could work now I think is something uh would be good for anybody and if you were to start another small account today I know you shouldn't but if you were to do it let's say $5,000
account how would you Approach it differently now knowing what you know um how would I approach it differently I guess I approach it the same yeah yeah yeah so you're just plug in your system have your system trade the $5,000 account right but I would probably only choose one single pattern because I can only have three trades a week oh yeah yeah so I wouldn't lose out on all the other patterns yeah but I would choose The best one and then I would just keep working that yeah yeah that brings me to another question how
come cuz I know you have six but you know which ones work best why don't you just stick with the let's say the top three we like diversify we want to diversify our entries okay uh we don't want all of our bullets on one entry uh it will create a lot less volatility when you diversify your entries yeah and it will in the end the market goes in Cycles this entry is Working real well right now but that one could stop working these next months and the other ones are working well see what I mean
so having a diversified entry approach and um not putting all in on one entry I think is a very wise approach and what what kind of challenges or what kind of issues are you working on right now for your systems um right now it's really just a bot it's just having errors uh locate we're having locate issues I see um Stuff like that yeah so it's more like technical is technical yeah what have your thoughts about for next year do you have any um goals for yourself or trading goals things out like outside of trading
yeah I want to make one mill in a year okay that's my goal yeah yeah I want to have a mill year yeah okay with your current trading systems yes you you you run the numbers you did all the calculations and back testing is that possible oh yeah absolutely my brother Is already over a mill on year I'm think I'm at about 530 okay so yeah it's definitely possible okay it's my brother already did it so yeah yeah amazing where can people uh follow you if they want to find you on social media oh follow
me on Twitter at e Shunk 8 um I usually post a lot of stuff um you find some helpful things if you're interested about data uh just do a advanced search with the keyword data okay yeah sounds good and uh we got to have your brother On the show next I know he's uh he'd love to come on yeah yeah okay that's coming up next thank you Evan great thank you so much it was great to meet you so what do you think after hearing so much about Evan's story and his systematic trading approach are
you tempted to adapt your current discretionary trading strategies to more systematic and hands off we've also interviewed previous systematic Traders on this podcast before so if you want to Check out their interview you can check out the playlist over here [Music]
