Apologies upfront for the blowhard post title but I sincerely believe that to be a true statement. I’ve been trading exchange traded futures, both professionally and for my own account, for almost 30 years now and really do wish that I had had the benefit of a more experienced trader to bounce ideas off in the early years. It would have helped a lot and certainly saved significant time spent researching wrong-headed trading approaches. Maybe I should start by clarifying what this post is not about. I am not looking to enter into any sort of formal mentoring program nor am I after your trading monies. I can promise you I will never ask for any form of payment, nor do I have any desire to sell you software, books, trading systems or signals etc. What I am offering is an opportunity for less experienced traders to benefit from almost 30 years of real world trading expertise. So why am I doing this? Simple really, I’m passionate about trading and still get a big kick out of talking with other traders, whether they be newbies or seasoned investors. I enjoy listening to and considering other people’s approaches to trading and normally find there is somewhere that I can add some value, which I find to be a very satisfying experience. To begin, a little background … I traded my first futures contract (FTSE 100) back in the early 90’s and have been at it without pause almost every day since then. I started small, just trading some of my own funds (a $30,000 account). My original goal was to see if I could make 50% on my account, at which point I planned to inject further funds. I did this, but it took me about 4 years … yep that’s right, it took me 4 years to make $15,000. Anyway I continued in this manner, adding further funds as I reached various profit objectives until around 2000 when my account was at a size that allowed me to trade fulltime. So for the last 20 years trading has been my sole source of income. By 2005 I had a fairly solid track record and was encouraged by an investment bank to have my past performance audited and then set up a hedge fund business, with the bank as a minority shareholder and begin trading on behalf of institutional clients alongside my own funds. Profits continued to accrue however I found more and more of my time being taken up by fund-raising, compliance, staff, IT, legals, etc. rather than focusing on what I really enjoyed … trading and research. In addition when I started the business, fees were 2&20, but over the years this changed … in fact these days I don’t think any institutional clients pay anything close to this. We never got particularly large, with only 7 staff at the peak, and unable to break through that magic $100m barrier, so it seemed that a happier and equally profitable life could be had by reverting back to trading prop money, while keeping a couple of programming staff on part-time. That was several years ago and that’s where I am now. I’ve continued to trade and I’ve continued to research, not because I need any more money, but because that’s just what I love doing. Regards how I trade, I’ve never been married to any single trading methodology and over the years have researched and implemented many different trading styles, including … · Momentum – both cross-sectional and time series · Relative Value – inter-commodity spreads and long/short equity indices strategies · Term structure – exploiting contango/backwardation to extract roll yield · Mean Reversion and Counter-Trend or contrarian trading · Short-term volatility breakouts (think early Toby Crabel) · Wavelet Analysis – a form of DSP for the engineers out there · Machine learning techniques - specifically focusing on genetic algorithms · Portfolio Construction and Allocation Methodologies I don’t normally publish my research but here’s a small example of the type of projects that I like to work on … https://www.elitetrader.com/et/threads/the-skewness-of-commodity-futures-returns.301362/ If you’re going to benefit from any discussions we may have then it’ll probabaly help if you have an understanding of my investment philosophy. What follows is lifted straight from my company’s earlier marketing materials and still holds true for me today … The aim of XXX is not to maximize predictability of market prices, but to maximize consistency and predictability of trading performance. However finding a way to build steady profits is a difficult business, so XXX tries to be realistic about how to find broad-based strategies that can survive change, by using a lateral solution rather than a vertical one … “Vertical thinking is concerned with digging the same hole deeper. Lateral thinking is concerned with digging the hole somewhere else” (DeBono, 1977) By way of example, a vertical solution may involve the development of a trend-following strategy and then the addition of further enhancements to improve the effectiveness of that strategy. Only one problem – if markets aren’t trending, the strategy no matter how refined, won’t be making money. On the other hand, a lateral solution builds a wide base by taking a number of strategies, each one of which can stand on its own and then combining them side-by-side into a single structure. None of the parts are complicated and none of them duplicate another piece. If one fails, the others continue to work. XXX feels there is great strength in using differing strategies across a variety of time frames. Benefits include the smoothing of equity curves, the balancing of returns and providing diversification among trading styles to help avoid the risk of degradation of a single trading approach or style. It is this diversity of trading systems combined with its proprietary method of portfolio management which dynamically adjusts allocations to each market, that holds the key to XXXs’ performance and the maintenance of low correlations to other hedge fund managers. So, enough about me. If you’re starting out in your early years of trading and feel you could benefit from some experience, have some specific queries or just looking for a soundboard to throw some of your ideas against then please feel free to forward me a pm with a brief intro and perhaps an outline of the issues you’d like to address. Following that we can set up a Skype to begin our conversation. Keep in mind that when we talk, most of your questions, will be met with further questions, so be prepared to do some thinking for yourself. Blindly following someone else’s approach will not get you where you want to go. At the end of the day you have to figure some of this stuff out yourself. I’m not promising that I can add value in every instance, but you can rest assured that any thoughts I provide will be honest (maybe even brutally so), unbiased and completely free of any vested interests. At the same time I’m hopeful I’ll enjoy the experience and maybe even learn a few things myself. Apologies for the length of this post but I’m trying to pre-empt any queries people may have, by providing readers with at least some details of my own background. Also note that this is a very genuine attempt to offer some assistance to those who could maybe benefit … so if any readers feel the need to troll, then have at it, but I’m unlikely to bite
Being that I'm not looking for a mentor, I have one question. Is that your picture in your profile? I understand your situation and your desire to share your knowledge. I do this often too but I have to stick with non-trading issues as compliance does not allow me to teach trading. I have to stick with general trading topics, market structure, hedge fund formation etc.
the lack of controlling risk and not having a well thought out plan that is executed as planned when trading is responsible for most traders demise.
Hi KCOJ, Thanks for your post. How do you think about win % rates, avg win/avg loss ratios and trade frequency?
One request before I read any more. Can you post a few charts with trades marked by the platform, on something like a 1 minute chart, where the entry and exit is clear?
This ET forum seems like a good place to do what you have in mind - I would be suspicious of someone looking to corral newer traders to them. ET gives you the aggregate of hundreds years of trading experiences, with plenty of old timers in the mix. I see your a Quant living in HK. Many on here are discretionary or a hybrid of the two, such as systematic on one account and discretionary on another.