difficult to be successful when you are trading size? At some level it would. I don't think we have reached that point yet, although we may not be tremendously
far away from it. I think about three times the amount we are handling now would be just about it. We currently have
about $120 million in customer funds.
In other words, you haven't hit the wall yet? No.
Is that because you are using many different approaches and, therefore, don't have all your orders going in at one point? Yes. You have to think about diversification. If you had one method, or one person, making all the decisions,
you couldn't handle amounts that large. But if you use different strategies and have a diversity in decision makers,
you can handle several hundred million dollars without any major problem.
Could that have been a subliminal reason for developing your training program—to try to diversify the decision-making process? Actually, we hadn't thought of it that way, but it did work to our advantage. In fact, we are going to try to
market some of the traders we have trained for trading customer money.
Is slippage a problem in your trading? [Slippage is the difference between the theoretical execution price assumed by a computer program and the actual fill price.] No. We try to make a hard-nosed estimate when building the cost of trading into a system. Also, we reduce
our costs significantly by having our own brokers.
When you hold a major position, at what point do you know you are wrong? What tells you to get out of the position? If you have a loss on a trade after a week or two, you are clearly wrong. Even when you are around
breakeven, but a significant amount of time has passed, you are probably wrong mere too.
Do you define your maximum risk point when you get into a trade? You should always have a worst case point. The only choice should be to get out quicker.
