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Neal: Would you say most of your traders are system-technical or discretionary traders? |
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Andy: Certainly there are some of both. The trend is toward system-technical. Most of the global banks have decreased their appetite for proprietary trading risk in general as they try to smooth out erratic returns to the bottom line. This fits better with traders who can clearly define their parameters and show viable, consistent track records. I find that discretionary traders also seem to have a harder time as information is more available to a wider audience at the same time and traditional sources of market information have changed. I am not commenting on who makes more money or who is the better trader. If you look at the top traders, their funds under management, and their long-term returns, you won't find many that trade by the seat of their pants. Most of them utilize complex, multilayered trading engines that were already revolutionary at their inception and have been constantly updated to adapt to both changing market conditions and the desired risk-reward ratio of their intended investor. |
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Neal: Can you describe some of the similarities or differences between "good" traders and "bad" traders? |
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Andy: This may sound strange, but all the long-term successful traders that I have been in contact with knew everything about the products they were trading. I mean everything: from underlying deliverables, expiration dates, and historical spread differentials during volatile markets to who the major players are and how opening prices are calculated. They use this information to their advantage. Unsuccessful traders say things like "As long as I can see the prices and get a chart, I can trade it." This isn't trading. This is gambling. The successful traders I have dealt with are not trying to reinvent the wheel, pick the top or bottom of the market, or look for the latest trading system. They take a disciplined, proven approach, start small, and learn from their mistakes. |
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