Keep their quant tactics incognito
Off to One Moorgate Place, London, on the 10th October 2023 and an unusually balmy evening, for an in-person monthly meeting of the STA. The presentation by Thiru Nagappan was billed as: ‘Quantative Strategy Construction with 3 Critical Stats’. Opaque enough, but bound to draw in members who enjoy the challenge of alchemy, I thought. Interesting also was the presence of many guests who are obviously loyal fans of Mr Nagappan.
Looking through his LinkedIn profile this morning has tag line reads: ‘Helping traders build sustainable & scalable strategies through transparent, truthful trading for consistent performance’. A trader, entrepreneur and speaker, since 2011 he and Rishi Patel have been running their firm, Master the Markets, and he can be reached on firstname.lastname@example.org.
Networking over drinks later, his loyal fans explained that he does a lot of coaching of potential traders, (he claims to have helped 25,000), and that there is the option of investing directly in his automated trading systems.
These are based loosely on the concept of swing trading where markets move in cycles, not straight lines. From a significant low point a trade is entered into on the next day’s opening price (note: other time frames also work). Then the maximum unrealised profit is calculated, something he calls Open Equity; the jargon grows, with drawdowns labelled Maximum Adverse Excursion. The system includes stop loss levels. From these metrics tables are generated which calculate the probabilities of large and small moves and how long they might take to develop, with data going back over about 13 years on major markets. He repeatedly stresses that the system was developed by quant traders (as long ago) as the 1960s and that his mentor was mentored by one of the original designers of this black box. He isn’t allowed to give me their names as they value their privacy.
Unfortunately he didn’t have time to explain how he has embedded volume data into the system. This aspect was developed together with Gavin Holmes (who made it to the talk), CEO of tradeguider, a Gibraltar-based coaching and trading company. Interestingly he used to be a detective and has written a book titled ‘Trading in the Shadow of the Smart Money’. I guess he has a nose for it!
Tags: cycles, drawdown, jargon, Principles, Swing Trading
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