Notes for Chat with Traders, Episode 108

Added on by C. Maoxian.

Episode 108 ... John Netto (55:25)

  • Placed first sports bet at age 8
  • He lost the first bets he placed but didn't discourage him
  • Doesn't bet on sports anymore
  • Father conservative, imparted importance of saving and investing
  • Remembers the 1987 crash, he was 13 then, age 42 now
  • Oliver Stone's movie Wall Street made strong impression on him
  • Stone didn't realize he was turning kids onto the market instead of off
  • He wasn't a bookie, he was a liquidity provider (in high school) [has a sense of humor]
  • "The Netto Number" -- redefining alpha [they didn't explore this idea]
  • Claims creating "Progressive Points Spread," not a binary outcome on sports betting
  • Poor grades in school but worked hard on his bookie business
  • Grew up in East Bay Area, Interstate 80
  • Recorded Stardust casino opening odds delivered via radio
  • Dec 1992 graduated high school and joined the Marines, 18 yo 
  • Classic underachiever, poor grades, low self esteem in high school, so Marines transformed him
  • First assignment in Japan, in two years
  • Learned Japanese language, passionate about it, 1994 (no Google translate)
  • Assigned to Tokyo (embassy detail?), continued to study Japanese, two more years 
  • Came back to US in 1998
  • Opened eTrade account
  • Studied Chinese at Univ. of Washington
  • Wouldn't say he's "fluent" in Japanese (smart to say that), it was just "effortless"
  • 2200 hours to become "professionally competent" in Level 4 language (like Arabic, Chinese, Japanese)
  • Had horrific sense of timing in the markets at first
  • He had no process then, just impulsive
  • Thought he should just do the opposite of what he naturally did 
  • Truth is that throwing darts at the wall with good money management, you'll do ok
  • But held his losers, cut his profits short
  • Left Marines in 2002, joined prop trading group
  • Joe DiNapoli's book really helped him
  • Still uses DiNapoli's Fibonacci ideas
  • Managing risk not a problem for someone with Marine-like discipline once he had a process
  • Trades futures markets and options
  • Uses eight monitors
  • "Protean" trader ... highly adaptable
  • Developed multiple strategies: mean reversion, relative value, momentum, trend following, breakout systems -- uses all of these
  • Key is knowing which strategies to apply to current market environment
  • "Global Macro Edge" -- name of his book
  • He's a fast talker
  • Three keys to be successful trader: operations, analytics, execution
  • (He has a lot of set-phrases memorized, clear military training)
  • Hired programmers to automate things, on a contract basis
  • His wife helps him organize things [she must be an angel]
  • Hires people based on word of mouth
  • Wants people certified on certain APIs
  • "Prow-ess"
  • When to lever things up and lever things down -- that's what it's all about
  • "Market Regimes" -- technical, fundamental, sentiment
  • Spends a lot of money on bespoke research (~$80K a year)
  • Makes $500-600K a year trading [on how much capital? Netto says $1MM in capital]
  • Spends $26,000 a year on his Bloomberg Terminal
  • Uses CQG as well
  • Great asymmetrical trades (paying 5 to 1) come with a great deal of discomfort
  • Wrote a 580 page book, self-published? (yes, self-published
  • Low volatility for years now ... have to adapt to that
  • Make your lack of capital your biggest strength, small positions can be an advantage
  • Trades from home in Las Vegas
  • Has patents on his process, but won't talk about it
  • Global Macro guys can be brilliant but don't know how to manage risk
  • Importance of getting out of your comfort zone
  • Want to be a little bit afraid in a trade
  • Be aware of your emotions, feelings, instincts
  • Does daily "Qualitative Self-Assessment" -- preparation, focus, routine
  • Journal everything constantly
  • Be in tune with yourself
  • You need to be uncomfortable to hold your winners
  • You need to feel the nnnngggggg, but power through it [I know what he means]
  • Overconfidence > complacency > mistakes > losses
  • Respect the market
  • Embrace your losses
  • If you're not losing money, you're not taking the risk necessary to succeed
  • Separate discomfort from fear, confidence from complacency
  • Boy he talks fast, sort of an interesting rapid-fire military cadence throughout  
  • Twitter: @JohnNetto

Notes for Chat with Traders, Episode 109

Added on by C. Maoxian.

Episode 110 ... Edward Thorp (65:15)

  • Ham radio license at age 13
  • Fascinated with all things science at age 10, 11
  • Born in 1932
  • Sold Kool-aid to WPA workers, turned 5 cents into 6 cents
  • Early reader, loved books
  • Started talking in full sentences
  • Precocious youth
  • Learned how to make gunpowder from encyclopedia
  • Parents worked in War Industry, kids weren't supervised, family very poor
  • Delivered newspapers, bought chemicals from corner druggist
  • Won scholarships to fund education
  • Studied chemistry at UCLA
  • Switched to physics, working on PhD
  • Switched to math, got his PhD in two years instead
  • Got job at MIT teaching, spent two years there
  • Wife hated Boston winters, moved to New Mexico, then UC Irvine
  • Independent thinker
  • Interested in whether roulette wheels could be gamed
  • Found out people playing blackjack and running games didn't understand what they were doing
  • MIT had an IBM 704 computer
  • Taught himself Fortran 2, early 1960, test his card counting ideas
  • Saw how to beat blackjack in multiple ways from computer results
  • Saw blackjack as a math problem
  • Bet big when you have an edge, bet small when you don't
  • Everyone thought he was a crank
  • Casinos said they'd send a cab for him
  • Manny Kimmel wanted to bankroll Thorp
  • Kimmel owned parking lots in NYC
  • Didn't know Kimmel was mob-connected
  • Kimmel an experienced gambler
  • Doubled $10,000 bankroll on their first trip to Vegas
  • Thorp more interested in academics than gambling
  • Casinos continued to scoff, so he decided to write a book about it
  • April Fool's Day 1964, changing the rules of blackjack, no doubling down , no pair splitting
  • Eventually rescinded those rules
  • Still are people who make a living counting cards
  • Thorp never interested in money, liked to be around smart people who knew a lot
  • Thorp not a conventional guy, unique thinker, Depression-era type of man [vanishing bunch, alas]
  • People steal your ideas so he published quickly
  • Claude Shannon sponsored his paper for National Academy
  • Claude Shannon was a gadgeteer ... wanted to help build wearable computer to beat roulette
  • 1950s terrible in casinos, 1960s awful, same in 1970s -- mafia violence
  • Casinos improved in 1980s when they went corporate
  • Played baccarat, won regularly, they drugged his drinks
  • Also tampered with his car so accelerator stuck -- apparently tried to kill him off
  • Casino owners hated Thorp and card counters in general, wanted to kneecap him
  • Money made from gambling and book sales, tried to invest it, but didn't do well
  • Studied investing all summer 1964
  • Discovered warrants in 1965 
  • Figured out how to price warrants, buy warrant and short stock, or buy stock and sell warrant
  • Wrote a book about his warrant findings called Beat the Market
  • Beat the Market inspired Black and Scholes, pricing uncertain payoffs
  • 1973 Black Scholes paper on options pricing, Thorp says he had exact formula years earlier
  • CBOE opened in early 1970s, options finally tradeable on an exchange
  • Playing poker or blackjack great training for investors or traders
  • "An edge" -- winning money at a fairly predictable rate
  • "Mathematical Expectation"
  • Managing your bankroll -- gambling is the master teacher
  • Kelly Criterion -- maximizing expected growth
  • Play 100 hands an hour, for 100 hours, that's 10,000 hands -- a lot of bets
  • "Maximum Expected Return"
  • KC a compromise between timid betting and overly aggressive betting
  • Find a situation where you have an edge, use Kelly Criterion to manage your bet size
  • Warren Buffett on one end of having an edge, HFT on the other end
  • Don't pursue money or success ... do what you love and enjoy, then money and success will follow
  • A Man for All Markets -- a memoir ... what's important in life
  • Don't just pile up money, enjoy the people you love

Techies and Medics

Added on by C. Maoxian.

Glassdoor released yet another list of jobs that pay over $100K; they are:

  1. Finance
  2. Medic
  3. Tech
  4. Tech
  5. Medic
  6. Medic
  7. Medic 
  8. Medic
  9. Tech
  10. Tech
  11. Tech
  12. Medic
  13. Tech
  14. Medic
  15. Medic
  16. Tech 
  17. Medic
  18. Tech
  19. Tech
  20. No idea?

See why there's no Single Payer healthcare system in America? 

Best and Brightest

Added on by C. Maoxian.

Earlier this year my son got into the Center for Talented Youth program at Johns Hopkins, and we recently attended an award ceremony for the kids who got the highest scores on the entrance exam. 22 children from western New York state chose to attend the event and I was interested in the distribution of their backgrounds, which I've detailed below.

6 Chinese: (Chen, Fang, Feng, Hu, Lin, Ren) -- 27%

3 Jewish: (Arias, Raskin, Rutberg) -- 14%

3 WASP: (Harrow, Smith, Wells) -- 14%

2 Indian: (Bhatt, Pendri) -- 9%

2 Korean: (Lee, Lee) -- 9%

1 African-American (Amos) -- 5%

1 Nigerian: (Shoyinka) -- 5%

1 German (Heinzelman) -- 5%

1 Greek (Levedakis) -- 5%

1 Portuguese (Antunes) -- 5%

1 Ukrainian (Homik) -- 5%

Immigrants are still making America great.


Honda CR-V Generations

Added on by C. Maoxian.

These are the five generations of the Honda CR-V ... still see plenty of First Generation CR-Vs on the road here in Appalachia. The front grille and cargo area side windows are the things I look at to tell them apart:

First Generation (1995-2001)

First Generation (1995-2001)

Second Generation (2002-2006)

Second Generation (2002-2006)

Third Generation (2007-2011)

Third Generation (2007-2011)

Fourth Generation (2012-2016)

Fourth Generation (2012-2016)

Fifth Generation (2017- )

Fifth Generation (2017- )

Notes for Chat with Traders, Episode 110

Added on by C. Maoxian.

Episode 110 ... @RollyTrader (69:09)

  • "George"
  • Native New Zealander
  • Now living in Australia
  • Brother 11 months older
  • Dad gave them a thousand dollars, brothers would compete buying stocks
  • 2001 in University
  • Rugby friend said markets were the ultimate game
  • Read the Market Wizard books
  • You won't get rich quick
  • Without a trading plan, it's just gambling
  • Pick an asset class and stick to it
  • Narrow your focus, and master those set-ups
  • Read William O'Neil, learned CANSLIM
  • Copied Mark Minervini style
  • Worked in corporate finance, but hung out with traders all day
  • At old Australian brokerage firm, no one talked about charts
  • Started trading on his own
  • Moved to Argentina
  • Visited Mark Cook in Ohio ... watched his daily ritual, George was 26, 27 yo then
  • Paid Mark Cook $5-$10K to do this for a week
  • Mark Cook had super simple style, but day trading didn't suit George
  • Read Mark Minervini books, met him, Minervini gave him direction
  • Paid Mark Minervini for his courses
  • Learned a ton from the two Marks
  • Find someone with an audited performance record
  • Mimic their style, then adapt
  • Mark Cook traded bonds and emini only
  • Day trading will never work for him because he likes to make a cup of tea (not watch screen)
  • Two Marks are super calm traders, they do same thing over and over
  • Minervini scales in and scales out
  • Record every trade, study them carefully
  • Minervini discipline rock-solid, never takes a trade outside his system
  • Same is true of Mark Cook
  • Most mistakes new traders make are avoidable
  • Most new traders don't give trades room to work
  • Trade one asset class
  • Stick to your set-ups
  • Don't add to losers
  • Don't trade against trend
  • Everything comes down to risk management 
  • Doesn't care about the index, just the stocks he's watching
  • Looks for strong sectors, strong companies
  • Always uses the chart to enter
  • Uses volatility contraction pattern from Minervini
  • Uses "Pocket Pivot" from Gil Morales (another guy he subscribes to)
  • He's a swing trader, not a day trader
  • Trades Australian stocks mainly (90%)
  • Has 15 scans, uses four religiously
  • Looking for volume and price contraction
  • End of day: runs scans, builds watch list
  • Puts on a documentary then waits for his alerts to ding
  • Mentions MarketSmith 
  • Uses TradeStation and CQG
  • Just looks at price and volume, some moving averages, no other indicators
  • Looks for "bases" ... price and volume contraction through the range
  • Only buys uptrending stocks
  • Volume dries up, price contracts, he'll set his alert above
  • Without trading rules, you won't survive
  • "Optimal F" formula gives you optimal position size
  • Usually doesn't put more than 8% in any one position
  • But might put 20% in one stock
  • Adapt trading rules to the market since it's dynamic
  • Average stop is 6.5% away
  • Controlling risk is what all successful traders are good at
  • Spread on Australian microcaps is 10% alone
  • New traders need to trade leading names, not microcaps
  • Gamblers love to buy one cent stocks that go to two cents ("think they've done something right")
  • His exits very discretionary, watches for breaks of 20 day MA 
  • Rarely trades short side
  • Best names to short are the former leaders, "most froth"
  • Puts trading profits into venture capital
  • Trading nice because you can just go to cash and relax
  • Running a real business, you can never relax
  • Twitter: @RollyTrader

Notes for Chat with Traders, Episode 111

Added on by C. Maoxian.

Episode 111 ... David Bush (79:46)

  • Started in TradeStation's EasyLanguage
  • Previous guest on CwT podcast, episode 023
  • Has won quant trading competitions, "Battlefin"?
  • His model has traded with real money for six years [how much money?]
  • Going from discretionary to systematic trading
  • Good results, crummy Sharpe ratios
  • Don't look at average drawdowns, look at max drawdowns
  • Code your cherished notions to find that they're ridiculous and you'll abandon them
  • Simple things are more robust
  • Mandelbrot saying about simplicity??
  • Avoid complex travel routes, being overly specific
  • You need to be able to generalize well
  • Decimalization, new regulations changed everything
  • Market microstructure has changed dramatically
  • 2000 share average trade size to 200 shares over last decade
  • Strategy should be so simple you can write it down on a napkin
  • "Poetry is moving easy in harness" -- strategies need a degree of freedom
  • Backtesting poorly is easy to do: poor data, frequency of data, missing intraday lows and highs, sample sizes too small
  • Must be able to articulate why model is working
  • Does same logic for one market's strategy work for other markets? It should (at least have a positive expectation)
  • Avoiding curve fitting: minimize rules and complexity, include out of sample data
  • He's not a gunslinger, wades into the water
  • Paralyzed by fear that your model is ineffective, you'll find reasons to delay launch
  • Have super conservative assumptions -- slippage estimates should be large
  • Fills and commissions estimates need to be large (realistic)
  • Modeling market impact is huge ... trade size, illiquid markets need to be realistically accounted for
  • Some rarely tweak their models, others constantly alter them
  • After 1987 crash, reversion worked better
  • "I've never seen a bad backtest" -- all survivorship bias
  • How do you know when your model isn't working anymore?
  • You have to be fascinated with markets to succeed in them
  • Need more tools to manipulate data ... better than "word clouds"
  • Need time and space and silence to have uninterrupted thoughts when coding
  • View your own life as theta, "time decacy" ... don't waste time
  • Use an egg timer, set it, and focus the entire time -- stay on task
  • (Aaron mentions the Life Calendar)
  • Practices zen meditation
  • "Sit like your head's on fire" -- carpe diem
  • You need to be mentally resilient as a trader, lot of stress, setbacks, uncertainty
  • You need to be physically fit to trade
  • Sunday is his zone-out time, no screens, chills out completely
  • Need a healthy mind to trade
  • Twitter: @alphatative

Notes for Chat with Traders, Episode 112

Added on by C. Maoxian.

Episode 112 ... Jorge Soltero (73:09)

  • Lives in Puerto Rico
  • Native Puerto Rican
  • Not all flip-flops and shorts in Puerto Rico
  • Best of both worlds (commerce & leisure) in Puerto Rico
  • US regulations
  • Studied in the US
  • Philosophy major, University of Chicago
  • Lived in Chicago 25 years ago (aware of exchanges: Board, Merc, CBOE)
  • Had friends who worked on the floor
  • Worked for Archdiocese of Chicago, board member was bond trader
  • Admin job at Archdiocese, wasn't leaving a big salary job to try to trade
  • Asked quick-thinking math questions in interviews
  • Pacific Coast (San Francisco) used to have exclusive options listings for tech stocks
  • First job at Apollo Trading (small market making firm)
  • Clerk in currency pit on Merc floor, D-mark was huge, Yen big (1994?)
  • Always worked on options side
  • "Controlled chaos" on the floor
  • Eurodollar floor huge, you needed to be tall and strong and loud and aggressive
  • "You never want to be the biggest trader in the pit" (you need liquidity, avoid getting stuck)
  • Occasional scuffles and shoving matches, have to pay a fine for "non-business-like language"
  • Spend all day next to competition, not co-workers -- unique environment
  • Lots of settling of slights, real and perceived, off the floor
  • He'd be waiting off the floor at 4AM in San Francisco, floor opened at 4:30 AM, needed to claim spot in pit before 6:30 AM open
  • Left Apollo, got job at Hull Trading
  • Hull was well known, big user of trading technology, no third-party options pricing software
  • Timber Hill had its own options pricing software
  • Interview question: Stack of pennies as high as Sears Tower, would they fit in this room?
  • Hull Trading style -- never boredom traded, not cowboys ... very methodical, more confident
  • You have to trust your model if you trade options
  • Went from Ten Year Note pit to Equities (OEX) ... used to be super big deal, the OEX
  • Just trying to capture bid offer all day long
  • "Pit awareness" way ahead of the machines in the past, not true anymore
  • Blair Hull, blackjack "wizard" 
  • Have an edge, exploit it when you have one, back off when you don't
  • Hard to find a copy of Thorp's original book
  • NCAA tournament a big recreational gambling thing
  • Hull guys would try to model everything, horse racing, NCAA, etc. 
  • Hull bought by Goldman Sachs in 1999
  • You needed to fit in at Hull, everyone got along, traders, developers, etc. Good teamwork important.
  • Goldman Sachs a more competitive place than Hull
  • QQQQ just listed in 1999
  • Moved to London with Goldman Sachs, had no idea what he was walking into
  • Hard to switch from floor to screen, point and click and pick up phone
  • No energy, no noise from the crowd ... hard to judge market tone
  • Silence of being off-floor very strange, he was told to "please calm down"
  • Got into backdoor of institutional side through Goldman buyout
  • Moved to UBS, back in US, and then moved to Merrill Lynch (back in London from 2009)
  • Information edge that institutional trader has over retail trader is no longer large 
  • Heavily regulated on institutional side, duty to find best price and structure for clients
  • Playing field no longer as distorted as it used to be
  • Position size matters and how you're going to use leverage
  • Enjoyed his pit days the most from his trading life
  • Now he's isolated, trading his own money
  • Institutional traders just reacting to client order flow
  • Go where the liquidity is
  • Mixed bag results for him for the last six months on his own, but he's optimistic
  • May have to hire a programmer to try out ideas, building models
  • First saw ETFs in 1996, thought they were a great product
  • ETFs liquid, cheap
  • Lots of ETFs have options listed on them
  • Twitter: @El_9uapo (Old joke from the Three Amigos movie)

You Fear That You're Living in Lebanon

Added on by C. Maoxian.

I suffered through the entire Spotify Global Top 50 song list and only found one song I liked ... this one ... she was born in 1997. (The post title is my interpretation of the unintelligible lyrics ... ain't true, ain't true, ain't true, no.) 

Notes for Chat with Traders, Episode 113

Added on by C. Maoxian.

Episode 113 ... Benjamin Small (60:02)

Interesting episode ... I know a bit more about Bitcoin now.

  • Got Ph.D. in Electrical Engineering in 2006
  • Wall street firms started hiring people like him to automate things
  • At UBS in spring 2006
  • "Junior Quantitative Researcher"
  • Prop trading allowed before Volcker Rule
  • UBS had huge retail market making operation
  • Worked on whether to internalize retail order flow or send it to the Street
  • Algorithm they design makes the decision
  • UBS, Citadel, KCG biggest buyers of order flow
  • They want exclusive access to retail order flow
  • Most retail orders are market order or marketable orders
  • Any order that's willing to cross the bid ask spread has value
  • Non-marketable limit orders must be routed to an exchange
  • Brokers pick an exchange where rebates highest
  • Beginning 10-15 years ago, desks got more aggressive about maximizing profitability
  • Equity options orders can't be internalized (illegal)
  • Trading desks are profitable, so are retail investors getting screwed by them? Tricky question
  • Off-exchange volume is ~30% of total volume
  • Worked at Citadel, then Credit Suisse
  • Built statistical models to improve prop trading desk algorithms for eight years in all
  • Must constantly tweak, fine-tune models used by desk
  • Monitoring the algorithms in real time to improve things
  • Latency is a huge issue in US equity markets
  • Have to optimize computer code so it's fastest, competitive edge
  • Memory versus disk versus cache
  • Worked at IEX, head of quantitative research for one year
  • IEX had ambitions to become an exchange (now it is one)
  • One of the inventors of the "Discretionary Peg" order
  • Tries to predict on client's behalf to switch between inside peg and midpoint peg
  • Works at Gemini currently, head of market structure
  • Market structure an interesting combination of microeconomics, statistics, and computer science
  • Most Bitcoin exchanges have central limit order book
  • Winklevoss twins founded Gemini a few years ago
  • Received licensing to trade Bitcoin from New York State Department of Financial Services ~15 months ago
  • Gemini a fully regulated, licensed Bitcoin exchange
  • Traditional financial services players could be comfortable with Bitcoin on Gemini
  • Licensing important because US heavily regulates financial services
  • Risk and compliance concerns put to rest
  • Need to make an on-ramp for institutional money into Bitcoin
  • Need to normalize Bitcoin, just another asset, not a crazy crypto-currency
  • Evidence that people are seeing Bitcoin as a virtual store of value, not just a speculative thing
  • More institutions are getting involved in Bitcoin
  • Majority of Bitcoin trading is by professional Bitcoin market makers
  • Only 20-25% of stock trading is retail
  • Bitcoin not too tightly correlated with other asset classes, useful for portfolio managers
  • Choice of exchange and wallet providers is all important ... your account could be hacked [or Mt. Gox'd]
  • Many Bitcoin exchanges and wallet providers are not vigilant about security
  • Can manage your own Bitcoin wallet but if you lose the key, it's lost
  • Bitcoin trading primitive, only $15BB market cap
  • Most sophisticated market makers don't want to deal with Bitcoin because it's too small
  • Think of trading SPY by comparison -- tons of market makers, penny spread, hundreds of millions of notional at both bid and offer at any time
  • Any aribtrage opportunities in Bitcoin?
  • Arbitrage across exchanges worldwide ... liquidity, credit risk different by exchange
  • Statistical arbitrage a profitable strategy by itself
  • HFT haven't entered Bitcoin ecosystem ... yet
  • Lots of scams and ponzi schemes in crypto-currencies, just like penny stocks
  • Why is Bitcoin big in China? Avoiding capital controls and Chinese are natural speculators (gamblers)
  • There are hundreds of other crypto-currencies, alt-coins
  • Bitcoin is only five years old, but it's the "core concept"
  • Ethereum network added a lot of new ideas, help ecosystem evolve, "Ether" is the token
  • Ether has "smart contracts" -- like a derivative contract but enshrined in computer code, not law
  • Ether faster than Bitcoin when it comes to settling transactions
  • Founder of Ethereum is a young Russian kid from east Brooklyn
  • Bitcoin has first-mover advantage
  • 10 or 20 years from now, could be a much better idea than Bitcoin
  • Gemini has anti-money-laundering controls
  • Bitcoin is no scam
  • Any alt-coin that doesn't have an adequate market cap should be avoided
  • Look at the source code, all alt-coins are open source, do background research
  • Lots of oddball alt-coins based on weird ideas
  • Big laboratory for experimentation
  • "Shitcoin"
  • 4PM auction at Gemini, match buyers and sellers to get a solid price for the asset, one price
  • Walrasian equilibrium is the algo they use
  • Gemini exchange broadcasts forecasted auction price starting at 3:50 PM
  • Bitcoin will eventually take its place among commodities like gold and oil (he predicts)
  • Bitcoin has mathematically defined supply, so should become stable store of value [he says hopefully]
  • Transactions take 30 minutes to clear on the blockchain -- slow!
  • In future, with instant transfer of value, Bitcoin accepted at point of sale is a possibility
  • We never touch paper currency anymore, all credit cards and (stored credit cards at) Amazon now
  • Banks already have full control of your money, no need to be paranoid about it
  • Not on Twitter

Chairman Recommended: Cherry & Olive Pitter

Added on by C. Maoxian.

I eat a lot of olives and did a big study on whether it was better to buy pitted or unpitted olives. My conclusion after exhaustive research eating thousands of olives was you should always buy unpitted olives and pit them yourself.

I had been using this cherry pitter to pit my olives, but of course it didn't work very well. Then my wife bought this Cherry & Olive Pitter from Oxo and it is the bomb; it works beautifully! No splatter, easy to clean, and consistently smooth pitting.

I eat $13 worth of unpitted olives a week, so this thing is a steal at $13.

Notes for Chat with Traders, Episode 114

Added on by C. Maoxian.

Episode 114 ... Brannigan Barrett (69:33)

  • South African 
  • Futures day trader
  • Not easy to sit in front of the screens for ten hours a day
  • Trading for four or five years
  • Getting bigger is a process
  • Write down why you want to get bigger
  • Liquidity factors to consider
  • Hates targets, thinks they are limiting
  • "Clipping," "Clip" ... must be a British term for trade size?
  • Always wanted to trade
  • Formerly a currency dealer
  • Landed in UK Sep. 1, 2011
  • Got a job with "Futex" ?
  • No futures trading in South Africa
  • 400-500 millisecond delay in South Africa too great for day trading
  • South Africa not a gambling culture
  • Wage earners, value family life, not like the Western world
  • Never taken "no" for an answer
  • Futex took him on because of his enthusiasm
  • Successful traders are dog fighters, have to keep coming back
  • Types of traders in a firm all important
  • Every successful trader super diligent about managing risk
  • Lee Gibbs traded in his firm ("legendary trader")
  • 6:20 AM every day Lee Gibbs in the office (he was already rich but that didn't matter)
  • Everything Lee Gibbs did, Brannigan Barrett emulated
  • Successful traders understand how to employ leverage
  • Good traders know when to back off, take days off, and also know when to press
  • Trusting yourself and your abilities takes at least two years
  • One person's 10,000 hours of practice different from another person's 10,000 hours
  • 2011 markets extremely volatile
  • 2013 2014 markets were dead
  • Not going to talk about Futex, but they had some of the best traders in the City
  • Futex defunct now for some reason which goes unmentioned 
  • Started with new firm in the City with four or five original Futex guys
  • "Axia Futures" ?
  • Trades across eight markets: 1) German bonds and US Ten Year 2) Emini S&P 500 and Euro Stoxx 50 3) Euro and Sterling 4) Oil & Gold
  • Can watch him on YouTube and Periscope?
  • Likes to trade "flows" ... going with the flow?
  • Likes to trade news
  • Prepares for Central Bank news
  • If you think you can move the market, you're not going to last long
  • He used to average down down down ... risk manager would shout out him
  • He now reverses a trade when he's wrong
  • Emotional, weak traders need to be taken advantage of ... identify where they are (where he used to be)
  • Does daily debriefing
  • "There is one good trade every single day" -- analyze it during daily debrief
  • Only need to make one good trade a day
  • Records his screens every day and then replays it during debrief
  • He has daily checklist: 12 things he ticks off every day (going to the gym, etc.)
  • Figures out what sets him off emotionally, then avoids it in future
  • Not a time-based job, in the office at all hours
  • Takes December and January off
  • Traded US election starting 10PM till 8AM next day (London time) 
  • Alex Hayward was his mentor, had a term "energy capital" ... you've only got so much energy for taking risk
  • Most be people need someone to hold their hand; instead, write it down
  • Your goals need a process ... make a tick sheet, a.k.a. a checklist
  • You can make money doing the wrong thing or the right thing, so making money not a goal
  • Open your mind up! Discard your false truths
  • Trading is a skill you develop over time
  • Everyone in the world would trade if it were easy
  • Trading is a simple binary (up or down)
  • Trading is a "silly silly game," don't make it complex
  • Keep it simple
  • Periscopes every Sunday
  • Twitter: @Trader_Bran (doesn't remember it)

Notes for Chat with Traders, Episode 115

Added on by C. Maoxian.

Episode 115 ... Adam Grimes (107:14)

  • Been in the markets for 20 years
  • Started out trading small accounts while massively over-leveraged
  • Day traded S&P 500 futures
  • Got MBA and did a lot of PhD coursework
  • Spent time on NY Mercantile Exchange
  • CIO for Waverly Advisors 
  • Has traded everything over every time frame
  • "Been around the block a few times"
  • Appeared on Chat with Traders episode 20
  • Only looks at price, no fundamentals, no political factors
  • Trading style is now very simple
  • Used to have very marked-up charts, not anymore
  • Tries to understand momentum and volatility
  • Can't compete with HFT, but:
  • There is power in human discretion, intuition
  • P&L tells you if you're learning anything over time
  • Need money and time to graduate from the "school of hard knocks"
  • Discretionary traders need to "ask the data" about their ideas
  • Spend a few hours to learn how to use Excel
  • Don't need tick data and C++
  • Easy to identify patterns in middle of chart, difficult to identify at hard right edge
  • He's a "Numbers Nerd"
  • Forward test with small trades
  • Many find their brilliant system never beats buy and hold [Indeed]
  • To pay for your time and risk, must beat buy and hold by huge margin
  • Day trading edges usually don't cover transaction costs or the bid-ask spread
  • Many successful traders don't understand why they make money
  • Was a professional musician before he started trading
  • Former composer of music
  • Quants tend to be too rigid, lack creativity (engineering backgrounds)
  • Big believer in meditation and breath work
  • Doesn't base position size on confidence or a "pretty chart pattern"
  • The market will encourage you to do the wrong thing at the wrong time
  • Grew up in a farm community, so thought he could trade ag futures (wrong)
  • He could have 12 hour conversation about any of these topics [I believe it]
  • Had no math background (a musician) but he learned later on, anyone can do it
  • Need knowledge first, then develop your skills
  • People without emotional control rush to become system traders, but:
  • Not a substitute, system trading has its own emotional pitfalls
  • Focus on just one thing for a few years at first
  • Don't be the bee who bounces from flower to flower
  • Learning curve at least several years
  • Do a lot of trades, collect a lot of data
  • Five step plan for struggling traders:
  • 1) stop the bleeding (stop trading)
  • It's true that you can't learn to trade without trading (but you know you're a loser so stop)
  • Struggling traders have no written trading plan 2) write a trading plan
  • 3) Start backtesting (yes, they're worthless but you need to find an edge)
  • 4) Start forward testing your successful backtest, but without money
  • 5) Start trading it with real money (vanishingly small size), mainly about collecting data (slippage, commissions, etc.)
  • Have to earn the right to trade size
  • Need patience and discipline, trading is a real grind, most can't do it
  • He's a fan of group trading, less likely to do "stupid shit" if it hurts everyone
  • Trading journey above takes many many months
  • Idea of 10,000 hours of practice is misguided
  • Are you up for five years of consistent losses? Can you structure your life to do this?
  • If you don't know you have an edge, you have no business trading
  • Any money you make at first is pure luck
  • Traders who are beaten up in the beginning have a better chance for success
  • Has large free trading course at his blog
  • Twitter: @AdamHGrimes

Answers to Lingering Questions from Bloodline

Added on by C. Maoxian.

Answers to these lingering questions posed by Bloodline:

1. Seriously, where was Meg? Or, really, where was Linda Cardellini for most of this season?


2. And, if we’re working under the assumption Meg really wanted to disappear from her life, we’re assuming she could not practice the law under an assumed name — so how in the hell did she afford that sweet apartment in L.A.?


3. Who really was that Beth Mackey lady? Did we ever really figure out if she was a Rayburn (secret love child of Robert) or what?


4. Where was Evangeline? I know she was “recording” somewhere but what was the point of her coming into our lives in such a significant way in season 2 only for her to disappear completely?


5. On that note, after creeping menacingly around for a whole season, why did Ozzy just up and kill himself?


6. And, more importantly, was he really getting visions before his death thanks to getting his head kicked in?


7. Did Sally Rayburn and Roy Gilbert have an affair?


8. Why doesn’t Ben Rayburn ever get a chance to have a storyline of his own?


9. Will the Inn really be entirely underwater in a few years?


10. If Meg hates boats so much, how on earth does she know how to expertly pilot that sunfish?


11. Why did Kevin think he couldn’t get extradited from Cuba? Why didn’t Belle turn off her GPS?


12. Is Chelsea (the consistently wonderful Chloe Sevigny) going to be okay? Because if anyone deserves happiness…


13. Will Eric O’Bannon (also consistently wonderful Jamie McShane) really serve 30 years for a crime he didn’t do? Or will John do right by him?


14. What was the deal with Diana repeatedly getting drunk out of the blue? Were there any hints to this behavior before this season?


15. Who was Janie having sex with?


16. What ever happened to Meg’s hot affair dude, Alec (Steven Pasquele)?


17. What was the significance of Meg’s big back tattoo?


18. Did we ever really get to the bottom of that seahorse necklace thing?


19. Why did the Rayburns suddenly become Catholic in season 3?


20. Who has Robert’s ukulele?


21. Why couldn’t they get Ben Mendelsohn a better wig?


22. Why couldn’t they get Owen Teague a better wig?


23. Why did the show decide to introduce apparently important figures — John’s BFF, Mike Gallagher, or his new comely partner Detective Carol—right at the end?


24. But did Carol eventually get the job of sheriff?


25. Did Mike really come to town just to court Sheriff Franco away?


26. Why was John not mad that Mike made a pass at his wife?


27. What on earth was Roy Gilbert’s deal anyway? How did he get tangled up with the Rayburns and get them the money for the Inn?


28. Where did all his money come from, anyway?


29. Why must Kevin be the only Rayburn to be punished?


30. How will Kevin survive wearing closed-toed shoes?


31. Who will take care of Rocky?


32. Why did Sally really leave the day of Sarah’s death?


33. Why did the Rayburns like taking the bus so much?


34. Whatever happened to John Rayburn’s dog, Surf?


35. What happened to Mia Kirshner?


36. What really happened after John Rayburn’s deep sea fishing accident?


37. Was that marlin’s brutal attacker ever brought to justice?


38. What does John say to Nolan out on the dock?


39. Does it even matter?


Notes for Chat with Traders, Episode 116

Added on by C. Maoxian.

Episode 116 ... Sean Hendelman (65:44)

Good episode ... Hendelman "bursts a lot of bubbles," but he's right on the money, knows of what he speaks.

  • University of Michigan grad
  • Got an MBA at Stern (NYU)
  • Sounds like a New Yorker
  • Started on mortgage-backed securities desk
  • Greenwich Capital Markets
  • 1999 decided to start a trading business
  • Started with $50,000, lost within 3-4 months
  • Kept at it
  • Took him 18 months to get good
  • Founded Nexus Capital (2003) -- 40 traders [like an arcade?]
  • Read a lot of Peter Lynch in high school
  • Interested in trading in 1993-1994, while in high school
  • Worked as tennis instructor at country club, made good money (15K a summer)
  • Bought names he liked (Peter Lynch advice): DELL CSCO MSFT ORCL 
  • Put all his tennis money ($5-$10K) in each of above stocks, made massive money during dot com bubble
  • Luckily took all money out before bubble burst and bought NYC apartment, turned cash poor
  • Thought he was a genius
  • Made six figures at Greenwich Capital, which was good, able to save
  • Expensive to learn how to trade
  • SDLI QCOM, buying thousand share lots [Only old guys remember symbols like SDLI, JDSU :)]
  • Started hedge fund in 2002-2003, stat arb fund, broke even, expensive to run 
  • Running $15MM, not enough to make it work, too many expenses
  • First $50K loss was a great first learning experience
  • Not a math guy, not a programmer, doesn't know C++
  • Backs 25% of traders in his firm on prop side, other 3/4 self-fund
  • Traders in his firm have all kinds of styles
  • T3 name of his firm
  • T3 has 1,000 active accounts
  • Has two broker-dealers, one prop, one retail
  • Need series 57 license to use prop broker-dealer
  • T3 makes money on commissions, interest, profit splits
  • T3 only caters to active traders, competes with IB and TradeStation
  • Holdbacks and payouts of the trader's capital
  • Not focused on futures or forex -- don't understand, too much leverage
  • T3 can't spend enough money on infrastructure to compete with HFTs anymore
  • Co-location of servers, routing, data, compliance, best of the best programmers -- all expensive
  • T3's HFT successful 2004 to 2014, now much harder
  • HFT very crowded now
  • Hudson River, Virtu hired lots of people, built big organizations
  • T3 takes liquidity, no passive orders
  • 99% of all bids and offers aren't real [yes, I've found this too]
  • Flashing and spoofing very common
  • HFT never take liquidity at size, would show their hand
  • No more low hanging fruit in high frequency trading
  • Scott Redler his partner, "Red Dog Reversal," lives highly structured life
  • Everything gets priced in very quickly now
  • Medium frequency strategies also being priced in very quickly
  • Medium frequency not as expensive, no need for co-location, etc.
  • Medium frequency traders' success rates very low
  • Most don't understand market impact or slippage (+commissions)
  • Never backtest, always forward test, use 100 shares, take a few thousand trades, will have realistic market impact data
  • Tiny number of medium frequency guys successful and when they are, profits only last a short time [I'm sure he's right]
  • CalTech MIT guys are already exploiting every obvious edge
  • There are no edges out there ... they have better tech and programmers than you
  • Your ideas aren't good enough, someone else already tried and discarded them long ago
  • Your ideas after market impact, commissions, paying the spread, won't make money
  • Best black box traders are constantly changing, evolving strategies
  • 1 in 20 smart traders who try to automate things succeed
  • Medium frequency is the same as an active trader
  • Will take you a long time and lots of capital to even test your ideas
  • Double your commissions and slippage estimates
  • Good strategy might have 50% success rate after six months and tweaking
  • T3 has 50 strategies running live
  • Laughs when people say they didn't run their strategy with real money
  • Successful hand traders' pattern recognition still ahead of black boxes
  • Momentum traders (buying and selling within minutes) going away, black boxes taken all the profits away
  • Good traders don't get excited when they make money
  • No emotion with a black box, faster than humans, can prepare well in advance
  • Best business advice: Change. Adapt. Don't be afraid to make mistakes. Money in, money out -- positive cash flow   
  • Best trading advice: Risk management, emotions in check.  Preparation.
  • Best traders are in the office earliest, reading, adapting to the market
  • Don't try to beat the market, you're never going to do it

Notes for Chat with Traders, Episode 117

Added on by C. Maoxian.

Episode 117 ... Larry Alintoff (72:00)

  • Lives in Florida
  • Sounds like a New Yorker
  • Trading for 30 years
  • University of Michigan grad
  • Sophomore year of college, watching FNN on day of 1987 crash -- hooked him on markets
  • Born in 1967
  • Started plotting prices on graph paper in his dorm room
  • Read as many books about trading as he could
  • Discovered "pressure points" 
  • Ascending triangle, or sideways action [he discovered coiling, power of ever narrowing range]
  • High frequency traders sniff out order flow and run ahead
  • Worked at RefCo, forex broker, odd hours from 2 PM to midnight
  • Worked for Paul Tudor Jones
  • Reminiscences of a Stock Operator (favorite book)
  • "Yuge"
  • "... if that makes sense." Ends a lot of sentences with this phrase
  • Paul Tudor Jones staked him and a group of people a bit of money
  • Traded from a little office at RefCo
  • "Yuman psychology"
  • No guidance from Jones or his people
  • Jones kept close tabs on positions of all the people he staked, created "sentiment indicator"
  • All people who trade for a long time evolve
  • Friend trading stock options on the American Stock Exchange, he joined him
  • Profits just handed to you there, no need to think or understand what you were doing
  • American Stock Exchange had no competition, everyone must see specialist on floor
  • Other exchanges started to make markets in options, spreads narrowed with competition
  • Pacific Coast, Boston, CBOE broke up American Stock Exchange monopoly
  • Went to New York Board of Trade, worked in frozen concentrated orange juice pit
  • Good traders can separate signal (good information) from noise
  • What should happen versus what did happen? Pay attention to that
  • People who grow oranges know the orange juice market better than guys on the floor
  • Have a point where you know you're wrong, and get out
  • He takes profits too quickly
  • Make sure no one trade really hurts you
  • When Trump won and the market should have gone down and didn't, that was valuable information
  • Turns over his portfolio every five days
  • Holds 80 - 100 longs and 80 - 100 shorts
  • Computing power today so great, he can filter thousands of stocks for his criteria in a minute
  • Larry has yellow pads, he's not a programmer, gives his ideas to the young programmers
  • Knew the floor was coming to an end, everything going electronic
  • Had to figure out how to do what he did on the floor once he was off the floor
  • Hated weekends, couldn't trade then, deeply depressed every Friday afternoon
  • Obsessed with markets for 30 years
  • He's not a quitter, not lazy ... a workaholic about the markets
  • "Yuman nature" will never change ... fear and greed still exactly the same, elation and despair
  • Keeps a low profile
  • Twitter: @AlintoffLarry

Notes for Chat with Traders, Episode 118

Added on by C. Maoxian.

Episode 118 ... Manoj Narang (58:47)

Sharp guy, interesting episode.

  • Has new fund: "MANA Partners"
  • Formerly of Tradeworx (left July 2015)
  • Quant trading the way to go
  • IP has more value than PL you can generate (does that make sense?)
  • Bringing high frequency trading to asset management investors
  • Double digit Sharpe ratios, most not comfortable with this
  • Started at First Boston, 1991, equity derivatives desk
  • Front office technologist supporting trading desk
  • 8-9 year career on Wall Street 
  • Knew nothing about Wall Street when in college
  • Never took a statistics class, finance class, economics class
  • Studied theoretical math and computer science (algorithms, graph theory)
  • Reasoning quantitatively and thinking logically are the key skills
  • Algorithmic trading is a quantitative challenge
  • At Goldman Sachs in late 90s, favorite job, phenomenally smart people
  • Trading manually back then was exhausting, nothing electronic
  • Burned out, wanted to start tech firm
  • Online brokerages to 40% market share in late 1990s, boom
  • Early adopter of Datek, 1996
  • Could build tools to help mainstream investors 
  • Started Tradeworx
  • "Analytical decision support tools"
  • 2001 -- Dot com bubble burst, 9/11 happened, everything changed 
  • Tradeworx became a hedge fund then
  • Why would a hedge fund commercialize its technology?
  • 2008 a difficult year for hedge funds, Lehman demise
  • Started high frequency trading in 2008
  • Eventually became a large high frequency trading firm by volume
  • Example of valuable IP: intraday trading signals, "MIDAS" bought by SEC to monitor markets
  • Early adopter of Amazon Web Services, tick data storage
  • Consolidated audit trail, successor of "OATS" owned by FINRA
  • Giving regulators investigative powers in modern, fragmented markets
  • Thesys, an offshoot of Tradeworx, won audit trail contract
  • Quantitative trading -- hypercompetitive, zero-sum
  • Paranoid conspiracy theories abound about high frequency trading
  • Inequality is a natural aspect of any system
  • Engineer systems to compete after studying the rules (which are complicated)
  • Questions of fairness, but it's really about discrepancies of skill [one way to rationalize it]
  • Simplify the regulatory regime, too many rules to understand
  • Proprietary traders are largest beneficiaries of HFT, then it trickles down
  • Fragmented markets glued together by HFT
  • Several dozen trading venues, both lit and dark
  • Quantitative investing strategies now very crowded
  • All quants use the same data, same inputs, so use of non-traditional data now key, such as:
  • Twitter firehose, e*commerce data now mined, satellite imagery
  • Discretionary managers not worth the fees they charge
  • If you charge high fees, must empirically show you deserve them, no one can
  • RenTech, successful quant hedge fund, all employee owned now, no outside money 
  • Secular trend towards mechanization, automation of investing process
  • Look for patterns in non-traditional data
  • Renaissance in artificial intelligence now, "machine learning"
  • Quantitative trading is tolerant of noise
  • Statistically orthogonal signals
  • Humans control the capital, not the quants
  • Quants have super short holding periods, generally
  • New datasets have very limited histories, so model building from them also limited
  • Investment success comes from bucking the trend
  • AQR, DE Shaw, RenTech ... you won't succeed if you try to copycat them
  • Think for yourself 

Notes for Chat with Traders, Episode 119

Added on by C. Maoxian.

Episode 119 -- @TAGRtrades (60:51)

  • "Alex"
  • Interested in trading in college, age 19 or 20
  • Waiting tables, summer job
  • Opened e*trade account with 2 or 3K savings
  • Dad suggested ag stocks
  • Retired Dad has CNBC on all the time
  • Grew up with Jim Cramer shouting on TV in background
  • Never thought about being a trader
  • Sounds like a Southerner, Texas maybe?
  • Worked in software
  • Used Yahoo Finance for research
  • Serious beginner's luck, made 20-30% on first trades
  • Solar stocks going nuts
  • Read message boards
  • Earthy guy all behind this solar thing
  • Put all his money in one small solar stock [doesn't say symbol]
  • Hands shaking, up 20K in one day
  • Frozen excited and scared
  • Told his wife he was quitting his job and going full time
  • Went 8 for 10 when he didn't know what he was doing
  • 25 years old, had some savings, wife had nanny job, no downside
  • We're going to get rich quickly!
  • Selling parents and in-laws on day trading much harder
  • Plowed through dozens of trading books
  • Had a written trading plan from the start
  • Quickly realized he didn't know what he was doing
  • Google search: how to make money in small caps
  • He did have security of being able to go back to software job, but never has
  • Spent thousands on alert services, chat rooms, DVDs
  • Learned horrible habits: averaging down
  • Red months for first six months
  • Green months ever since (not huge green but green)
  • Wife working, one check coming in, cut expenses way down
  • No steak and champagne dinners with the occasional winner [or cigars]
  • He did have a dollar figure in mind where he'd quit 
  • Tried trading options or futures -- whole 'nother world
  • Tried to short, didn't suit his personality
  • Learning experiences of what not to do
  • Talks a lot about trading with his wife [she must be an angel]
  • He didn't know what he didn't know, just made the leap
  • Wouldn't want his kids to trade -- the work is just too hard
  • Risked 2% in early trades, so he never blew up
  • Never once traded on margin, so he never blew up
  • You never hear from loser traders once they blow up, they disappear
  • First two years, profit curve: big spikes, big drops
  • Averaging down is still his biggest fault
  • Took a year to figure out averaging down is terrible thing to do
  • Good, knowledgeable chat guys are really helpful [but rare]
  • Nobody cares about how you manage a trade, or control your emotions
  • Track your progress, "journaling"
  • Must figure out what works for *you*
  • Get into the hot sector, you have a bid under you [a tailwind]
  • Chat with Traders podcasts were super useful to him
  • Constantly trying to evolve
  • Looks for specific set-ups, at specific times of day
  • 3-4 stocks in play
  • Plays small cap garbage stocks that will eventually do an offering
  • Been trading for four years but considers himself new
  • Chart set-ups that work intraday also work on longer time frames
  • "Grade A" setup -- something going bananas, looks for sector sympathy plays
  • Scales in and scales out
  • Gotten good at controlling his emotions, seeing chart clearly
  • Favors longs over shorts due to his personality
  • Doesn't want 11 good years of trading, and then blow out with one trade
  • What if your computer turns off and you're in over your head?
  • Used to play off scanners or people's trade alerts, no more
  • Comes in with 3-4 stocks each day, sets stop levels where trade no longer makes sense
  • He will put a third of his account in a single trade
  • Knows where he's going to get out
  • Takes starter positions then builds position
  • Tries to go home green every day
  • Hard to let winners run, psychologically hard *not* to take profits
  • First trade is smallest then larger then larger, as soon as it works take part off
  • Size is based on your confidence
  • Spends $1000+ a month on scanners and charts
  • Microsoft OneNote for trading journal + Excel spreadsheet
  • Time consuming to enter each trade but worth it
  • Works from home, just talks to himself all day [thus wife's suggestion to join Twitter]
  • Final notes at end of day
  • EdgeWonk, enters detailed information, time of day -- useful tool -- coupon code "traders"
  • Can find one or two trades a day
  • Wants to slowly increase his size
  • Still has never traded with margin
  • Does zero swing or position trading
  • Journal tells him that he shouldn't trade stocks under a dollar
  • Figure out what you're comfortable doing, must fit your personality
  • Can't fit in somebody else's mold
  • Just grind, no margin
  • Twitter: @TAGRtrades