192: “Predicting profitability using machine learning” – Ernie Chan
Quant trader Ernie Chan from PredictNow.ai joins us to discuss how to predict the profitability of trades using machine learning, including:
- Unconditional probability and the problem with win% in backtest reports,
- Why “conditional probability” is much more useful for a trader and how to apply conditional probabilities to capital allocation,
- Why you should use Machine Learning for risk management and capital allocation only (and not for building trading strategies),
- Why feature selection and feature importance ranking are so valuable,
- Plus, the best ML techniques for prediction, how simple should trading strategies be, insights from cluster-based feature selection, do these techniques really work, ML as a crystal ball and much more!