We have our first guest from China on this episode, Derek Wong – Director of Systematic Trading and Options at a private fund in Shanghai.
Derek first worked in the agricultural pits at the CBOT, before moving on to work at various quant firms in Chicago, South Korea, and lately, mainland China.
After exploring Derek’s background and history, we get into convergent and divergent strategies, diversification, emerging markets, cultural differences of Chinese investors, and a few uncommon ways of thinking about how you trade.
In addition, Derek shares his insights into traders who are discretionary and what traders should focus on once they’ve reached a stage of profitability.
What’s Covered in This Interview:
- What it was like for Derek in the CBOT agricultural pits, at a quant fund which managed 300 strategies, and trading emerging markets.
- The viral nature of news, why retail investors are more prominent than institutions in China, and the major cultural differences between U.S. and Chinese market participants.
- Strategies are either ‘convergent’ or ‘divergent’ in Derek’s view, and find out how he approaches the three dimensions of diversification; strategies, timeframes, and markets.
- The reason Derek rejects “voodoo magic” data mining strategies in favor of hypothesis based strategies and why you can’t have perfect parameters.
- How traders could benefit from mixing strategies, as well as the most important things to consider when building a portfolio. Plus, how to think about strategies as return series…
- What discretionary traders should take away from these types of conversations and where traders should focus their attention after becoming profitable.
Links and Resources:
- CWT Facebook group – Derek isn’t in many places online, but one place he can be found is the CWT Facebook group. Follow the link and click ‘join’ to access.
- Active Portfolio Management, by Richard Grinold & Ronald Kahn – According to Derek, this book is the Holy Bible of diversification and portfolio building.
- TradeStation – TradeStation clients have it pretty good; an amazing platform, great commissions, and all the rest! More info.
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