Automated Trader Magazine Issue 24 Q1 2012
If there is a theme to this month’s issue, it is the central importance of a good idea. We have a fascinating discussion with Colin Berthoud and Jason Larsen of TIM Group, page 52, about the effective development of trade ideas – and the technology to back them up – and on page 76, you’ll find Evan Hochstein of GHF Group describing the technology – and ideas – strategy that’s required when a large and globally diversified group of manual traders decides to go electronic. One of Mr Hochstein’s points – discussing HFT – is that there is a very significant difference between “trading time” and trading a good idea.
Thought-provoking notion? Yes. Indicative of an organisation worth getting to know? Exactly. You will understand our decision also to make GHF Group the subject of our Me and My Machine interview this month. On page 34, Andy Webb talks to Ron Hertshten, who is responsible for algo trading at GHF Group, about – actually, about an opportunity that might interest you. It’s a wide-ranging discussion, and a large part of it is devoted to joint ventures. If you’ve got an idea, and you think you might be interested in talking to a potential development partner with both capital and expertise, over to you. Page 34. I think the message is: pick up the phone.
Still here? Take a look – and it will be a long look – at this month’s frankly absorbing First Person conversation with Russell Newton of Global Advisors on page 6. Mr Newton started his trading life as a teenager, with his Acorn Atom (12kb of RAM), and when he grew up, went into the oil business as a trader for Shell. From there ... discretionary trading ... model development ... running Global Advisors with Danny Masters and (not the least part of it, in my opinion) chairing frequent meetings of quants and traders to debate new ideas and their development. Did I say “take a look”? Ha! Clear the diary.
Strikes me suddenly – how much of this month’s issue was dictated to us by the buy-side. There was also significant – if largely anonymous – buy-side participation in this month’s Software Review, page 61. No single piece of kit goes under the hammer (so to speak); it’s more of a “connectivity review” of what happens if, let’s say, you get an idea and you try plugging together the software you need to trade it.
Minor housekeeping point. Just this once, I’ve left in a few of the notes made on pages by our editorial people. They’re usually scrubbed off at the last moment, but this time – I’m not sure that it’s value they add, but I think perhaps they do add something.
- Natural-born quant?With his first Summer-job paycheck, Russell Newton bought an Acorn Atom and tried to model equities. Now, thirty-two years later, he's running Global Advisors in Jersey, the equities have given way to commodities, and - actually, the job may have got bigger, but perhaps it hasn't changed all that much. Andy Webb spoke to Russell Newton about discretion, model development and commodity strategies.
- Seriously, folks!Remember Europe? The Eurozone? Land of a thousand financial crises and quite a few fat-fingered fraudsters? Brussels? Bureaucrats? So do we. And it's not dead yet. So we've asked Anita Hawser, veteran of many a stirring press conference about the indivisibility of the euro, the invincibility of the eurozone and the inevitability of - stop sniggering at the back - ever-closer European fiscal union, to look into the crystal ball for some hint of the legislative outcomes, and their impact on us, if Europe doesn't collapse. Bit of a long shot, yes, but it's good to be prepared for the unexpected. Isn't it?
- The Automated Trader InterviewThere are beginners in this business... and there are beginners. GHF Group is the second kind. Big and global, GHF Group is an established financial services holding company that includes diverse, independent businesses: global clearing, investments, and trading. The trading business includes experienced traders and other market professionals, and has recently started a move into "the business of algorithms" that so far, has looked less like a learning experience for the Group, and more like a potentially big opportunity for the rest of us - for quants, model-builders and just about anybody else with an idea worth automating. Andy Webb went to meet Ron Hertshten, a managing director in GHF Group who is responsible for algo trading, to discuss.
- CBOE: Integrated ExtensibilityWhen it comes to senior technology personnel, not many exchanges enjoy the continuity of the Chicago Board Options Exchange (CBOE), the oldest and largest U.S. options exchange and creator of listed options. Gerald O'Connell, CBOE Holdings' Executive Vice President and CIO has worked there since 1984 and been in his present role since 1993. He talks to Automated Trader about the thinking behind, and evolution of, the exchange's current CBOE Direct technology - and its key role in supporting the exchange's business model both now and in the future.
- What an idea!If you were to list the key attributes of a 'future-proofed' enterprise, of whatever size, you would probably put sound trade ideas and effectively deployed technology somewhere towards the top. We certainly would. So, for the third of our series of conversations with key industry figures about ensuring the long-term survival of the enterprise, we spoke to Colin Berthoud and then Jason Larsen of TIM Group about - you guessed it - running a business focused on developing sound trade ideas and dependent on effectively deployed technology.
The two interviews were conducted on consecutive days by our founder and all-round techno-guru, Andy Webb, and, despite some degree of overlap, we have resisted the temptation to edit them into one continuous conversation. There are important issues being discussed here, and we were struck by the 'added value' of hearing two distinct perspectives.
Andy began by inviting Colin Berthoud to set the scene...
- Keeping the Edge in U.S. Options Strategies: Expanding from a Pair to N-LegsPair trading is one area of the market that has changed significantly over the past year. Traders are increasingly aware that their long-established methods of trade execution are now less accessible and that more complex trading strategies deliver more alpha per unit of risk. Gary Stone, Chief Strategy Officer at Bloomberg Tradebook, examines one way in which pair traders can overcome these issues to keep and enhance their edge.
- Mashup!Well yes OK, we know we're rather stretching the definition of "mashup" here, but it has rather more punch as a title than "we attempt to cobble together some random bits of software into a trading application/model doing a spot of (re)reviewing along the way". Though that's probably a more accurate description of what the Wrecking Crew and Automated Trader's Founder, Andy Webb, have actually been up to for the last month or two.
- Shut up!Key feature of today's electronic markets is noise, says Shayla Walmsley. But does that matter? Should we care?
- Algos with a human touch...and humans with an algo touch. Andy Webb spoke to Evan Hochstein, CIO, GHF Group, about the technology needed to give a human trader an algo-edge, and vice-versa.
- Max ADV, Minimum ImpactUS financial stocks had a rough time in 2011, with modest gains up to mid February more than expunged by progressive losses through to midsummer, which were then compounded by a sharp collapse in early August. Kish Desai, head of EMEA Equity Sales, and Ali Mohsin, Algorithmic Trading Product Manager, at ConvergEx Group describe how a trader managed to execute an order approaching half a financial stock's ADV on August 8th - one of the most volatile trading sessions of the year.
- Stop struggling!Where there's a will there's a rarity, in the cautious world of future-gazing.
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