i have to tell you a story about the perils of not following the rules.
Many years ago, when i was at Lehman Brothers, probably in 1989/1990, there was a broker/money manager in the Paris office who traded exclusively in the FX markets. He was a strict technician and while he traded in the OTC market, his signals were based on the IMM close. However, when a signal triggered, he would not execute until the next morning in paris. This process had been successful for at least 5 years and he traded significant size, $300mm - $600mm per trade.
However, the NY FX desk was desperate to get that business in NY, rather than executed in London after a signal was found. They tried to explain that it would be better if he executed as soon as the signal was triggered. eventually, they got their way and he started to execute in NY when the IMM closed. that lasted about 3 or 4 months, at which point he blew up completely and closed down his business.
the moral of the story is he had defined rules and they worked, and when he changed them under internal political pressure, the system broke.
i have to tell you a story about the perils of not following the rules.
Many years ago, when i was at Lehman Brothers, probably in 1989/1990, there was a broker/money manager in the Paris office who traded exclusively in the FX markets. He was a strict technician and while he traded in the OTC market, his signals were based on the IMM close. However, when a signal triggered, he would not execute until the next morning in paris. This process had been successful for at least 5 years and he traded significant size, $300mm - $600mm per trade.
However, the NY FX desk was desperate to get that business in NY, rather than executed in London after a signal was found. They tried to explain that it would be better if he executed as soon as the signal was triggered. eventually, they got their way and he started to execute in NY when the IMM closed. that lasted about 3 or 4 months, at which point he blew up completely and closed down his business.
the moral of the story is he had defined rules and they worked, and when he changed them under internal political pressure, the system broke.
Amazing story. Thanks Andy.
Execellent podcast guys! Big fan of Jerry Parker!
With your substack handle I am guessing we had you at hello! Thanks Tex!
Haha you did indeed!