Kardec TraderFutures Trader. Creator of The Midas Touch. Mentor

The EXACT Pipeline Institutional Traders Use (MUST WATCH)🚨

8 Sept 2026 · 1 min

Watch on YouTube

1:13

In this instructional video, the presenter outlines the exact workflow that institutional traders follow when developing algorithmic trading strategies. The process begins with generating a trading idea and defining a clear set of rules, which are then encoded into code—often with the assistance of large language models like ChatGPT. The encoded strategy is backtested on historical data to produce a single equity curve. Validation follows a two‑phase approach: first, the data is split into in‑sample and out‑of‑sample periods, allowing the trader to fine‑tune parameters on the in‑sample set and then test the unchanged rules on unseen out‑of‑sample data to guard against over‑fitting. Second, a Monte Carlo analysis reshuffles the order of all backtested trades thousands of times; the spread between the best and worst simulated equity curves reveals the robustness of the edge. Only after a strategy passes both validation steps does the trader move it into live trading.

Chapters

This is the pipeline that every single institutional trader follows. And this pipeline starts from getting the idea, defining a set of rules, encode it, leveraging the power of your ChatGPT, and then backtest. You translated it into a piece of code to just replay history. And this one is going to give you one single equity curve. Then we need to validate. It usually is divided in 2 phases. One is splitting your data between in-sample and out-of-sample. In-sample data is where you're going to work on your rules, adding, moving parameters, fine-tuning the parameters until you find a strategy that looks like it's behaving correctly in sample. And afterwards, feed the same rules to unseen data. If your strategy is still performing good, it means that you didn't overfit and there is a high chance that your strategy will work well with live data. And the second step is Monte Carlo analysis, just taking all the trades of your backtest, reshuffling the order of the trades, and then you repeat this process thousands of times. And the bigger is the dispersion from the top equity line The bottom, the weakest, is your edge. And once all of these steps are completed, only at that point we reach the final phase, which is live trading.