002: Kirk Du Plessis – How to Gain an Edge When Trading Options

To start the year with a bang, I have a very special guest on the podcast this week, who I’d like you to meet – his name is, Rishi Narang. Rishi has an impressive background, and has been involved with financial markets for over 20 years now. He originally started out as an analyst at Citibank, prior to co-founding TradeWorx with his brother Manoj Narang (a fintech company, turned high-frequency hedge fund). Since 2005, Rishi has been the Founding Principal at T2AM – a fund of funds, which specialize in short term quant trading strategies. He’s also the author of Inside the Black Box, and was featured in a must-watch VPRO documentary titled ‘Money & Speed: Inside the Black Box’. During our discussion (which went for well over an hour), we spoke about; the non-textbook definition of alpha, the components of a black box, where humans have an advantage over computers and vice-a-versa, and we also explore the subject of high frequency trading and speed. Learn more about your ad choices. Visit megaphone.fm/adchoices

7 Jan 20161h 26min

This week I interviewed a short-term Bitcoin trader, who goes by the alias of BTCVIX. As you can imagine, this episode is a little different – this is an area (or should I say, a market) we haven’t yet explored on the podcast, in past interviews. With that being said, I found this discussion to be really interesting and I’m certain you will also. Some of the topics we spoke about include: Why VIX went from initially trading stocks and options, into the Wild West – Bitcoin markets. We spend plenty of time discussing the landscape of Bitcoin; going into how the digital currency is ‘mined’, how inflation is hard coded in the ‘ledger’, and the real ‘counter-party risks’. Changing the way you may think about consistency, and understanding non-linear outcomes within your trading results. But that’s just a quick sample of topics ahead – hit the ‘play’ button to learn more about the realm of cryptocurrencies. Learn more about your ad choices. Visit megaphone.fm/adchoices

31 Dec 20151h 2min

This week I had the great pleasure of speaking with Dr Ernest Chan, from Toronto (Canada). While many traders in the quantitative arena will already be familiar with Ernie, here’s a brief intro… You could say, Ernie had somewhat of an unconventional introduction to trading – he started out on a research team at IBM, using machine learning and artificial intelligence techniques, teaching computers to understand human languages – before joining a prop trading group. Today, Ernie has upwards of 15 years applying similar techniques to the domain of finance and trading – working with multiple prop firms and hedge funds across his career. And currently, Ernie is the managing member of QTS Capital Management. Just to top it off, Ernie has written two books ‘Quantitative Trading’ and ‘Algorithmic Trading’, and also regularly speaks at conferences. Some of the topics we cover during this episode are; diversification, capital allocation, generating strategy ideas, back-testing and a much more. Learn more about your ad choices. Visit megaphone.fm/adchoices

24 Dec 20151h 2min

I have a brilliant guest on the show this week who I can almost guarantee you’ve never heard of, he generally likes to fly under the radar, but thankfully for us he did agree to an interview – his name is Bryce Edwards. Bryce is an Australian equities trader, he takes a discretionary approach, making his money from intraday price movements and goes home flat at the end of each day. During the interview we walk through the 10+ years in the build up to Bryce becoming a profitable trader – he’s got an interesting story, and you may discover it’s quite relatable to your own situation. We also talk about how the order book plays a key role in his trading decisions, and how he creates a ‘stocks in play’ watchlist using catalysts such as; company news, underlying commodity prices and broker upgrades and downgrades. Learn more about your ad choices. Visit megaphone.fm/adchoices

17 Dec 201552min

You may recall for episode 25 I invited Zach Hurwitz back onto the podcast (after being a featured guest on episode 011), to grill me about my own trading progress – well we’re another 25 episodes on now, so I thought it’d be a good point to check in with you and give another update on how I’m tracking… To do this, Zach joins me again for the big 5-0 – and you’ll find the first part is mostly Zach asking questions for me to answer, then we switch it up, and during the later part I fire questions at Zach to answer. And we dive into a bunch of great topics (many listed below). Just to add on this – pretty much every question asked during this episode has been crowd-sourced, so if you contributed a question last week, then there’s a good chance you’ll hear it asked at some point. Two things you should know: Zach is offering a FREE 30 minute, one-on-one coaching session to any trader listening who is, of course serious, and feels as though they could really do with some help. This is a very generous offer, and if you’d like to take him up on it – then send Zach an email, his address is TradingCoachZ@gmail.com. And second, if you have any questions or comments for Zach or myself, scroll to the bottom of the page and drop a line in the comments area – both Zach and I will be keeping a close eye on this to respond and interact with you. Learn more about your ad choices. Visit megaphone.fm/adchoices

9 Dec 20152h 46min

There’s a very special guest on the podcast this week, who I’m excited to introduce… His name is Haim Bodek, although some refer to him as ‘The Algo Arms Dealer’ (and I totally understand why). Haim began his trading career at Hull Trading, a prestigious firm well known for driving forward innovation in the domain of automated trading. Following Hull, Haim then went into significant roles at Goldman Sachs, and UBS – which are all discussed during the interview. But to further set the scene, in 2007 Haim founded Trading Machines, a high frequency trading operation. At the peak, Trading Machines accounted for 0.5% of all options trading volume, with a team of 25 (one of who, was Bryan Wiener of EP 040). All was well for a couple years until the beginning of 2009, when Trading Machines ran into issues and began to bleed money, for unknown reasons. Until Haim later discovered, at the root of the problem were secretive order types being used by a select few firms, giving them an unfair advantage to front-run the orders of other participants. With this discovery, Haim went to the SEC to raise his concern about such order types – little did he know at the time, that this would be the beginning for one of the most sophisticated and complex investigations carried out by the SEC to date. So of course, we speak about all of this in much more detail during the interview. And we also speak about another fascinating topic – which is, Payment for Order Flow. Haim shares with us what is really happening to your orders after you click the button to buy or sell – you might even be surprised to find out that a large majority of retail orders, never even make it to an exchange… Learn more about your ad choices. Visit megaphone.fm/adchoices

3 Dec 20151h 10min

This week on the show I interviewed Linda Raschke – an active trader since 1981, when she started out on the floor of the Pacific Coast Stock Exchange as an options market maker. In 1992, Jack Schwager interviewed Linda for his second installment of the Market Wizard series; The New Market Wizards. Since then, Linda has traded for several hedge funds, and in 2002 she began one of her own – which has been ranked 17th out of 4,500 hedge funds for ‘Best 5 Year Performance’ by BarclaysHedge. During this interview we covered some great topics, for example; adapting to environment changes, using models to study price behavior, and the part I really enjoyed was Linda’s advice to young traders towards the end. So please, make sure you pay close attention to this part. Learn more about your ad choices. Visit megaphone.fm/adchoices

26 Nov 201551min

This week I interviewed Timothy Sykes (of Profit.ly). If you’re not already familiar with Tim (for some strange reason), he’s made quite a name for himself as the penny stock guru, who trades, teaches and flaunts big piles of cash on Instagram. And before you can get a word in sideways, he’ll also gladly remind you that he does have ‘millionaire students’! I really enjoyed this conversation with Tim, because we covered many substantial topics that do play an important role in a traders’ success. To rattle off just some of those topics, we discussed: What’s all fuss the about making a million dollars? How to stay motivated and get the most out of your dedicated study time? How to combat the urge of over-trading? How to avoid liquidity issues in OTC markets? And so much more… Hope you enjoy this episode, with the man who has become wealthy from penny stocks (the most hated niche in all of finance) –Timothy Sykes. Learn more about your ad choices. Visit megaphone.fm/adchoices

19 Nov 20151h 24min