An insight to John "Rambo" Moulton trading

Discussion in 'Educational Resources' started by s0mmi, Jul 7, 2018.

  1. s0mmi

    s0mmi

    Rambo has been a folk lore legend in the Australian prop industry... he came to the Australian floor (from USA) and traded the Aussie bonds/stirs. Recently he was featured on Chat with Traders.

    99% of the interview is fluff and generic motivation. He tells you to "believe in yourself" and "let the market come to you". Unfortunately this means nothing for the average trader. He also says the key is to be observational. Doesn't tell you what to observe... this is rough to hear for most people.

    Youtube interview:

    "I've traded millions and millions of contracts over the years and I've never used a stop"

    He spends only 1-minute talking about how he trades.

    My friends have asked me to translate, into laymen terms, how John trades when he talks about it at about the 51:00 minute mark...

    He calls it "Price spread divergence". Its not new...

    Aussie 3yr v 10yr Curve Spread

    We have 3 charts. The Aussie 3yr, The Aussie 10yr, then the Aussie 3yr-10yr spread.

    upload_2018-7-7_15-26-18.png
    upload_2018-7-7_15-26-24.png
    upload_2018-7-7_15-26-29.png


    Strategy:

    Every session, you observe what the Bonds are doing and the net-change of the yield curve. As you can see, The Aussie 3yr chart is going higher and higher, but the 10yr bond is not breaking higher. The "reason" is not too important, it's just the observation that matters most.

    What he does is observe the net-change of each session. For illustrative purposes:

    Session 1: Bonds are rallying, the yield curve (3yr v 10yr) finishes +1bp.
    3yrs are stronger!
    Session 2: Bonds are rallying, the yield curve is up +2 bp
    Session 3:
    Bonds are flat for session, yield curve flat 0bp
    Session 4: Bonds are rallying, but yield curve is still flat 0bp

    At session 4, this is where you may sell the 3yr-10yr spread.

    This is what someone might call "reading the market". You are observing that, even though the Bonds are continuing to rally, the yield curve is running out of steam. It's a basic play between Leg A and Leg B relationship.

    Philosophy:
    This trade can be done across any spread and its what call a form of observational relative value.

    However, the the next part is working out where you enter... where you exit... do you scale in?.... what about figures?... how do you know you're wrong?

    You can also do this with the STIR spread flies if they decide to move interest rates. You would observe how the spread is moving vs. the individual legs.
     
    HighRiskBets, treeman, Pekelo and 6 others like this.
  2. d08

    d08

    No sleeping disorders, almost no 10+ year traders -- what a room.
     
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  3. Palindrome

    Palindrome

    Wondering why he moved to Australia to begin with. Maybe he liked the asian volatility of fixed income... just a guess. (nevermind, he answered it towards the end)

    I like his philosophy of not keeping daily/weekly score, just simply trading. Always looking for the next trade, very in the moment. Great advice.
     
    Last edited: Jul 8, 2018
    JesseJamesFinn1 likes this.
  4. Pekelo

    Pekelo

    Anybody knows his returns, size? Somewhere was mentioned a quick 4-5 M loss what he made back a few months later.
     
  5. TraDaToR

    TraDaToR

    That guy is awesome. I don't remember the exact quote, but on his first day at the SNFE:

    -"This is not your booth, John!"
    -"It's mine now."
     
  6. Palindrome

    Palindrome

    If anyone Cares... I took some notes on this guy. Big fan.

    -the comet analogy where charts are the tail, and you really can’t grasp what the market is actually going to do. You got to learn to get aboard the comet and ride the comet.


    -future or past, does not matter. It is only the next trade, finding good trades.


    -guy does not use stops has zero feelings towards the money


    -lives a minimalist lifestyle


    -clears his head often


    -winning is easy, losing is the key


    - tons of self-belief


    -society does not teach you how to lose. How do you deal with taking a loss. You need to experience the loss, learn from it then spit it out and focus on the next trade.


    -focus on the now of trading. The next trade is the most important trade


    -Observations, practice observing – work on observational skills


    -Don’t track equity curve daily or weekly… perhaps just monthly. Distance yourself from the money, it is not that important. Completely divorce yourself from money


    -Front of comet is your entrance, it is the bid ask


    -Challenge brain all the time


    -Challenge is to be the best, never think you are the best


    -focus on next trade, you become immune to winning and immune to losing. Focus on the Now of Trading
     
  7. Sounds like the typical person they have on Chat With Traders, other podcasts as well. All fluff, no substance, just like you described somi. I listened to hundreds of different episodes before figuring this out.

    The only way I would change my mind about this guy if neither he nor any of his affiliates have any programs where they ask you for money lol.
     
    s0mmi likes this.
  8. TraDaToR

    TraDaToR

    Pretty common for ex-pit scalpers to sound "all fluff". Their technique was just to sit on bid and ask all day and yell on the top of their lungs, perhaps just legging spreads here and there to evacuate outright risk. It doesn't mean Charlie Di Francesca, Tom Baldwin or Margie Teller were snake oil salesmen. Pretty sure Rambo was legit in the pit.
     
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  9. Pekelo

    Pekelo

    >-lives a minimalist lifestyle

    So what does he do with the extra money he doesn't need? Or why doesn't he retire if he already have enough money for the rest of his life?

    He doesn't really look extra healthy...
     
    JesseJamesFinn1 likes this.

  10. LOL yea he looks like he had a 24 pack of natty light and followed it up snorting coke off hookers' arses.
     
    #10     Jul 10, 2018
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