The Mudder Report & EOY Project Updates
LLM-created Strategies, ATS Strategy Alerts, APMs, VPS Strategy, Forward Test & Incubator
Important: There is no guarantee that ATS strategies will have the same performance in the future. I use backtests and forward tests to compare historical strategy performance. Backtests are based on historical data, not real-time data so the results shared are hypothetical, not real. Forward tests are based on live data, however, they use a simulated account. Any success I have with live trading is untypical. Trading futures is extremely risky. You should only use risk capital to fund live futures accounts and if you do trade live, be prepared to lose your entire account. There are no guarantees that any performance you see here will continue in the future. I recommend using ATS strategies in simulated trading until you/we find the holy grail of trading strategy. This is strictly for learning purposes.
I’m on a quest for the holy grail of automated trading. Questions? Check the FAQs or feel free to reach out directly: AutomatedTradingStrategies@protonmail.com.
Housekeeping: We have a lot of new subscribers this month, so welcome! If you have any questions about the process, please feel free to reach out via email or Substack Chat. It can be a bit overwhelming at first.
Okay, let’s get into it…
Every now and then I like to step back to see how far we’ve come and where we’re going. With so many new subscribers, this felt like the right time for an overview.
I can’t remember any quarter with this much going on. We started with HMM theory, then spent September and October reviewing strategy performance, with the last Mudder report going out in late October.
Currently, I am in the process of creating the Q1 2026 Forward Test. That involves looking at performance metrics over the last quarter as well as the full year. It also involves auditing strategies in the Incubator to determine what makes the cut for Q1 of 2026.
As you can see, we’re up $277K. The portfolio hit peak equity at $433K and is now in drawdown, but we still have two big weeks left in the quarter (FOMC, second week of month, last month of the year).
I’ll provide a comprehensive update on the Forward Test & Incubator later this week for paid subscribers. I think you’ll find the analysis highly valuable.
What Else Did We Do This Quarter?
I had some fun with the Ninjatrader Arena Cup Tournament. You can read more about my experience here:
These events represent a great way to test out your favorite trading strategy. I look forward to participating in the next one.
We also looked at a few automated trading strategies meant specifically to help new traders understand both where and when to trade by following “The Dog” and “The Cat.” These strategies visualize the best way to think about trade placement.
In Strategy 106, we talked about my process for creating a barbell strategy.
We aIso looked at VPS providers. We examined which features matter most in your trading setup. I’ll share a quick update on this today. Full project details here:
I also shared my favorite trade set-ups for 2026, which is all about energy.
“Almost everything is going to be energy constrained.”
-Jensen Huang, CEO of Nvidia, on Joe Rogan
Read the full post to learn about how AI data centers and tariffs are reshaping the entire commodities landscape, especially over the next year.
Automated Portfolio Managers: What I’m Most Excited For in 2026
The thing I’m most excited for in 2026 are Automated Portfolio Managers (APMs). When I’m running 20+ strategies under an APM:
Some are in drawdown (expected)
Some are thriving (expected)
Some are being retired (expected)
New ones are being promoted from incubation (expected)
When I’m betting on a single strategy, every drawdown is a crisis. Is it broken? Should I stop it? Am I about to give back all my gains?
If you follow this newsletter you know that over the last year, I’ve been obsessing on the subject of edge—which is constantly being chased by most strategies. Strategies are either in, out, or transitioning from degrees of edge, which expires completely for some strategies and marginally for others. This isn’t scalable. However, a system that can draw from different strategies depending on APM logic—HMM, contrarian, equity curve—just might be.
A single strategy is a hypothesis about markets. An APM is a hypothesis about how to continuously generate and validate hypotheses about markets.
The APM doesn’t need any single strategy to be immortal. It only needs the system to continuously identify and allocate to current edge. As I discussed in the post The Holy Grail Is A Process Not A Strategy, the edge isn’t in any individual strategy. The edge is in the process. APMs automate this process.
During the last Live Test two years ago, I had a difficult time with this “PM” role. As much as I want to believe that automated trading takes the emotion out of trading, in reality it only takes away my ability to act on that emotion. APMs create a secondary cushion of protection around the selection process. So you’re not only relying on the logic of the strategy, but the logic of the automated portfolio manager.
How are the APMs performing so far?
It’s been a rough start, but there is one APM that’s showing real promise. It made $63K last week on 741 trades. One PM made $5K over a three day period, and the other two performed poorly. The APMs are programmed to learn and tighten filters over time so performance should improve.
We’ve covered where we’ve been, now let me provide you with a quick EOY update on where some of these projects are today.