Louise Bedford here. I’m so excited to introduce my friend, Jason McIntosh to you.
Jason is an independent trader and he’s going to share some specific strategies so that you could make the most out of the markets today.
I’m sure you’ll love this series of articles by Jason….
The Day My Life Changed Forever – by Jason McIntosh
I’ll never forget Peter’s first words to me…
Jason, you’ve made it to this side of the revolving door.
The hardest part for many people is staying here.
This was Peter’s way of telling me that results were everything.
You see, Peter was the chief of trading at Bankers Trust Australia.
It was the summer of 1991. Australia was thumping England in the Ashes series and Bart had just seen home his eighth Melbourne Cup winner, Kingston Rule.
I remember this time vividly. Not so much for its sporting highlights, but rather for the life changing door through which I was about to pass. I was about to join the world of high finance.
Just two days shy of my 21st birthday, I was nervously walking into the foyer of Australia Square Tower in Sydney’s CBD. Awaiting me on level 40 was my dream job. I was about to start work in the trading room of Australia’s then leading investment bank — Bankers Trust.
I could hear the buzz of the trading room as the lift doors opened. Walking towards the ever-increasing noise was exciting… yet terrifying. My heart was beating as if I were running… I could feel beads of sweat running down my side.
Stepping into the dealing room was like landing on a different planet. The sprawling open plan setting was full of bustle and noise. Before me was a sea of traders. Some were standing with a phone to either ear, while others were gesturing towards flashing screens.
This was an intimidating place to say the least. It was full of extremely smart and creative people at the top of their game. I was told that the average salary was greater than anywhere else in the country.
…the average salary was greater than any anywhere else in the country.
Many within the bank went on to become multi-millionaires (if they weren’t already). One even made it to the BRW top 10 in 2014. Bankers Trust was the original millionaires’ factory.
I remember reading Tom Wolfe’s bestseller Bonfire of the Vanities while at university. He tells the story of a high-flying Wall Street bond trader. The book is famous for popularising the phrase “Masters of the Universe”. To think, I was now standing amongst the Masters.
Eventually, I got the call to go and meet Peter, the head of the dealing room. His big glass office was in the middle of the trading floor. It was a bit like a goldfish bowl — you were on display for all to see. There was nowhere to hide if things went wrong.
But I wasn’t there for a dressing down after a bad trade. You see, this is when he told me I had my big break… I was going to get one of a handful of graduate jobs.
The financial rewards for success at Bankers Trust were boundless. My bonuses went on to double almost every year. There aren’t too many jobs where your pay packet increases so quickly.
The dealing room had a number of departments: Foreign Exchange, Options, Money Market, Bonds, and Futures. My initial job was a dealer’s assistant on the Bond desk.
The rocket scientists
It wasn’t too long before I got to know the lay of the land. The most raucous characters in the room were the spot currency dealers and the futures floor traders. In those days, it wasn’t unheard of for an angry dealer to smash a computer screen with a phone!
At the far end of the room was a mysterious group called Positioning. They weren’t loud like the currency dealers, they didn’t wave their arms around like the futures floor traders, and they weren’t busily doing deals over the phones like the bond and money market dealers.
The Positioning desk was different. These traders would sit quietly at their screens and use “quantitative” methods to analyse the markets. That is, they created complex mathematical formulas called algorithms. They’d then use these algorithms to trade the markets.
Algorithmic trading made it possible for this group to identify recurring patterns. Their algorithms, or trading system, would analyse huge volumes of data in search of opportunities.
Positioning wasn’t for seat-of-the-pants traders. These guys had no time for gut feel, and they didn’t crave an adrenalin rush. Everything they did had a statistical underpinning. These quiet and unassuming types were the dealing room’s “rocket scientists”.
…he could statistically prove that markets move in trends.
I remember listening to a conversation between my boss and the head of Positioning. He said that he could statistically prove that markets move in trends.
This was an amazing revelation to me.
You see, my professors at university told me that prices are random. They said no one could consistently beat the market. Yet now I was hearing one of the brightest stars (in a room full of superstars) say that trends offer an exploitable advantage.
And he wasn’t just saying it… I saw it happen first hand.
It was the early 1990s, and Australian interest rates were falling. The dealing room had a huge bet that rates would fall further at the next Reserve Bank of Australia (RBA) meeting.
And sure enough, rates fell — big time.
The RBA cut by more than the market was expecting. The room’s massive position was up $10 million dollars that morning alone. This was a huge amount of money back then.
Senior management were anxious — there was a lot of money in play. So they went to the head of Positioning. His job was to use his knowledge of trends to decide when to cut the trade.
And he did just that… the bank’s $10 million gain became a massive $15 million win. To put that into perspective, Westpac made $476 million in 1991 — a relatively meagre $1.3 million per day.
Positioning’s algorithmic techniques were a gold pass to making a lot of money.
Word of this success spread quickly. And within months, a Bermudan hedge fund made the head of Positioning an offer he couldn’t refuse. Even a top bank can lose its grip on talent of this nature!
I was hooked… I knew algorithmic system trading was my future.
Traders with an edge can potentially make high returns over time. And that edge was now within sight. Algorithms and trends would become the foundation of my career.
You can harness one of the planet’s best trading minds as your personal secret weapon! Jason McIntosh, our favourite professional trader, is now willing to give you his free training so that you could grab the sharemarket rewards you deserve. You’ll see his trades, entries, exits and trading rules and get his incredible views on the markets for free. Go to www.motiontrader.com.au/tradinggame so you can watch this intensive training as our guest.