Good to see you back. Whether you realize it or not, I think many have benefitted from your past contributions (myself included), so thank you. As a one man shop, it's hard not to get greedy with a slew of questions here, so I'll do my best to show some restraint. Here's a couple if you find them interesting enough to comment on: 1) You've mentioned in the past stepping into provide liquidity during dislocations when algos get turned off. How do you determine that they've been turned off? How do you determine where to place your bids/offers? 2) If you had your mind erased of everything except for the basics of financial markets, how would you go about product selection and the resulting trading strategy? Or would you go about selecting products with a strategy in mind?
Best to see them is when moves are several standard deviations. CL last year -40. It was clear to see algos start to turn off around +10. And subsequent market action made it very apparent that going negative was a near certainty. If you can play back that day that would be a good start. product before strategy. With no data and just my eyes... with sufficient money I’d look at PA, PL, HG. Otherwise either bond future correlations and correlation breakdowns or gasoil. the trading strategy follows from product selection quite naturally.
As the industry is virtually non-existent here, I don't think it's worthwhile for me to try, but maybe for US residents. I've talked personally to one of the 'big guys' in trading here in Norway and one which actually ran a hedge fund, but he says trading is virtually non-existent here, except a few private individuals who wish to stay below the radar, unless you yourself have something to bring to the table. I've been in contact with a few people on this site too who I believe to be profitable and some of them very profitable too, but none are interested in mentoring anyone or giving away any secrets beyond some guidance and good advice. And that's of course completely understandable.
Appreciate it. I think there's enough in your posting history to figure out which approaches you'd apply to the above. I'll hazard a couple add'l fun questions while the thread is quiet: Is this still going or can you reveal more detail? https://www.elitetrader.com/et/threads/spreadprofessor-clients-thanks.286592/page-4#post-4028886 It must get increasingly difficult for you to keep capital employed as profits accumulate - any interesting assets or outside businesses that you like or are involved with?
Crypto and opportunity zones. Holding excess cash is starting to carry big risk. I’m sure whatever I was doing in 2014 I’m not doing now... so I’d tell you if I remembered. Could have been something with Platts. But I’d have to review my posts for context which is kind of boring.
I have questions. 1) What’s the amount of leverage (contracts) you can realistically use before algos will actively hunt you? I’m well capitalised. Not far from giving up the day job and going full time. Below 10 contracts I can freely trade intraday. Whenever I’ve tried to trade 20+ I feel like I’m being terminated by algos. 2) Better edge - 2 sigma dev or tape reading? 3) Your posts are blocked for me. Can you enable access? Thanks in advance, if you take the time.
1) extremely product specific. PA feels uncomfortable with more than 1 lot. It will move things. Other products I’ve done max order of 49,999. (Talking futures). If you are placing passively and you have an order by order feed then I’d just pick something in the middle. A lot of times it’s just better to cross for entry and exit. I could discuss why for a very long time. If algos detect you crossing they will probably help move stuff in your direction anyways. 2). I’m not sure of what the question is. But your edge should match your capitalization. 3). Don’t know why that would be. Or how to undo it. I do have a trigger finger on the ignore button. But you aren’t on it.
I was on my own during that time and joined with a friend shortly after. No new capital. I don’t care much for the voodoo spirituality linked trading descriptions. It’s a job. It takes a toll like other jobs. You learn like other jobs.. some perspective. Pretend you are a new hire at Jump or HRT or Tower as a jr trader. A) how much ‘training’ do you think highly compensated people are going to be giving you B) how long do you hang around while not making money. I don’t have direct knowledge of A because I don’t work there but I’ve seen enough to make a pretty good guess on that answer. And B I know for sure. There’s not a significant amount of ‘magic’ in the corporate structure that you couldn’t have learned in 2-3 decent conversations outside the structure. In regards to finding something profitable. The things you’d look for would be different but the effort is about the same.
fair enough. and I appreciate the honesty. Wow, so yes you are affirming you started on your own and within a year had made 1000% returns. IMHO to newer traders Id advise that either you are just brilliant top .0000001 percentile, (even smarter than Isaac Newton who lost his shirt in the market) or was something like winning the lottery? like buying XYZ at the bottom last spring and just holding till selling the top, hopefully you didnt buy the top and sell the bottom the next trade. This is cool but not something any one should expect. Unfortunately, trading whether discretionary or even algorithmic is unlike any other job. The toll it takes can be described almost as voodoo, for example even the best ball kickers in history dont have to worry about the goal being moved as their running to kick the ball. If I was a new hire at a firm Id expect them to actually pay me a salary while they were teaching me something actually valuable not something 2-3 conversations with quants or old school wall street cowboys could teach me. If I was spending most my time crunching numbers and nerding out on new math strategies. I guess its doable if your just so rich you can just hang and "intern" but there is probably a reason most algo and HFT firms offer a salary. Also, to be fair 2020 was not the best year for every algo trader, I know someone who has been trading very profitable for a good while and he mentioned his algos lost money in 2020. So, yeah I dont believe in the math magic voodoo either, at least not yet maybe as the tech progresses. If I was at a discretionary prop firm, Id be willing to do the commission only thing if the education, access to technology/information, and mentorship there was worthwhile, again not sure how many people can just "hang". I appreciate your contribution but guess we'll just have to disagree, for a brand new retail trader that in 6 months you should either be 80%+ winning days or not cut out for trading. If your at a huge fund with enormous bankroll, experience and strategies behind you, mabye. but only if youre lucky. But do agree on opportunity costs etc. Thanks for offering your insight
Garachen, really grateful for your contributions in years past. I got into trading on the wrong path (TA, useless stuff). But shifted gears after studying successful people and started seeking out what the market tends to give risk premium for. After finding a few minor tailwinds like levering up diversified basket of +ev positions and doing basic optimization in places with tailwinds (index vol, overloaded SN vol), I have done ok but nowhere near tapping into a convex return profile up into a respectable ceiling of at least a few $mm which is kind of the goal of sinking time into this field. I had the good fortune to stumble upon one trade that’s fairly capacity constrained but has huge expectancy so I know what is possible, but don’t have a good idea how to find more of these types. Mediocre coding skills, passable discipline/intuition. Lucky enough to be surrounded by several individuals way more talented than I am, but of course they can only share so much. I suppose I don’t know the right questions to ask from here. Absent any new ideas I will just keep capital deployed on small edges and try to hone my skills at scaling in against moves that get a bit out of control. Better than passive investments; but it isn’t a real edge. Any general thoughts? Always appreciate getting input from those more experienced.