Greetings from San Diego, fellow traders.  This is Steve, your friendly “Quant Guy”. I received a request from Samantha with questions regarding the large purchase I made at the end of market close Friday (actually lots of buy orders all day) to go long this market, and not quietly. I think her exact words in her live trading room were, “Slow down action boy.” She respects my Quant track record but still, she didn’t see what my Quant strategy was signaling and why I would make such an unusually large purchase into what could be a continuation lower in the indices next week.

Before I discuss my trade rationale, it is probably best to give you a general overview of who I am, why I trade this way, and why I decided to choose Samantha as a trading mentor in the first place.

I worked for two large investment firms, on both coasts, as an investment advisor and CFP, specializing primarily in asset allocation and retirement/income planning.  Although my primary function was client acquisition and relations, my true passion in finance has always been markets and trading; particularly options and market psychology.  At one of my portfolio management positions I was able to run some personal trading accounts on the side, but company restrictions and extremely panicked clients during the 2008 debacle forced me to adapt an “automated” style that I didn’t need to think about.  Quant trading made logical sense at the time since I was allowed to trade Long/Short leveraged ETFs with no restrictions, and could place predefined entries, stops and exits early in the morning before hitting the phones.

I am not a true “Quant” Trader in a sense that I am also using Samantha’s macro, technical, intermarket and fundamental analysis to enhance my probabilities that a particular Quant signal will work.  Most Quant traders ignore fundamental data altogether and focus on the backtesting of specific technical strategies and/or indicators. In a nutshell, I am attempting to enhance my win percentage in a robotically traded strategy with a solid human analysis of the underlying security we are trading.  I am also using discretion in choosing an exit signal based on Samantha’s analysis of the market environment in real time. Since my strategy trades infrequently and maintains extremely high levels of cash, I devote a good portion of my trading capital to trading her style.  I primarily joined her service because I wanted to learn macro, sector and momentum trading…ordinarily I’d have to seek out separate mentors for those disciplines, but Samantha is extremely well versed in nearly every topic I wanted to learn…truly remarkable for someone with no inside (buy or sell side) traditional financial industry experience. Not only that, my primary ETF/option Quant strategy I am posting is completely different from her style of trading…often goes in the opposite direction and often allows more time. I am more than excited that Samantha is open-minded to my process and sees value in it so together we offer a balance in trade set-ups/ideas that can add much value to her clients.

As an added bonus, she possesses none of the saltiness and grumpiness customary to most of us fellow Bostonians 😉

Now for the important caveat: Although I managed portfolios professionally, I consider myself an amateur trader – hence why I joined Samantha’s live trading room. My musings are not recommendations but for educational purposes only. My various Quant strategies/signals that I post through LaDucTrading’s Live Portfolio Trade Alerts are my personal trade set-ups and are not to be taken blindly. I only trade speculative money and so should you. I do trade both portfolios in her service, and these Quant strategies are not reviewed/approved by Samantha before I post them. 

What’s a Quant Bounce/Fade Trade?

Let’s look at an example now. As you can see from my Live Quant Portfolio…I went heavily long the QQQ via April calls on Friday.

QQQ is a long trade set up (Quant Bounce) while IYR put trade set up I posted last week was a short setup (Quant Fade). The basics of the Quant research I am utilizing for this trade analyse is from mean reversion strategies I purchased from, and was created by Larry Connors and Cesar Alvarez.  I will write more about these various strategies and how I implement them in my speculative trading accounts in future posts.

Long story short, I had an incredibly strong signal to go long the QQQ’s at $168 (after the bloodletting from Trump’s Tariff/Trade Threats with China and Zuck-Boy’s floundering on the Cambridge Analytica issue). I mean I deleted my FB profile a year ago…like I need my Mom watching me take tequila shots with my old college buddies at weddings. However…thanks to Samantha’s short term assessment of the market, I was able to hold off a bit on taking that QQQ trade around $168 where I was getting a signal for a Full Position and instead I waited to allocate my maximum size position to a TQQQ scale when QQQ was at 158!  Other Quant traders I admire that run similar By-The-Dip style swing trades were definitely not as relaxed as me this weekend, so I’d say Samantha earned her $500 trading room charge this month…and the other serious traders in the room with real skin in the game would wholeheartedly agree.

On one hand, if we bounce next week or two, which I think is actually fairly probable as the market puts in what I think might be a double bottom, I’ll make some decent scrilla in this trade. If I’m wrong, Samantha’s portfolio, which has a bearish lean, will likely explode in profitability far beyond anything this strategy will ever put up. I mean, I have a solid 10% return YTD. She has 80% in combined Chase/Swing accounts. So you see, I learn how to better position my Quant trades and learn how to better trade momentum set ups all the while having a profitable hedge portfolio to mine.

I hope this helps provide some background and strategy context to “Steve’s Quant Portfolio” that dovetails with Samantha’s Live Portfolio Trade Alerts. I will submit future posts to members of LaDucTrading on the mechanics such as:

  • What are the main Quant trading techniques
  • How I scale in/out via position size and typical timeframe
  • What are backtested results of pure Quant versus this style of trading a hybrid of ‘mathematical models with instinctive market timing calls’

I’m not sure where this trading journey is going to take me, but I’ve never been happier since doing what I love, and I love not having some manager harping on me about some BS sales metric instead of portfolio results. Samantha doesn’t harp; she is very supportive. And she really wants to add value to the process as well as the results for her clients. I am excited to be in the live trading room every day and invite you to join us. I look forward to meeting any ambitious and talented traders that wish to jump on board!

Your Reformed Broker and Quasi-Quant Guy,

Steve Charros

Friendly Sidebar:  It’s easy to subscribe to the LaDucTrading Free Fishing Stories/Blog and follow along with the #LIVEPortfolio of Closed Trades.  You are also invited to Come Fish With Me in my LIVE Trading Room for custom analysis or receive actionable trade ideas with my real-time Trade Alerts! Thanks for reading and Happy Trading.

At LaDucTrading, I analyze price patterns and intermarket relationships across stocks, commodities, currencies and interest rates. I develop macro investment themes to identify tactical trading opportunities and employ strategic technical analysis to deliver high conviction stock, sector and market calls. Through LIVE portfolio-tracking, across multiple time-frames, my real-time Trade Alerts via SMS/email frame my Thesis, Triggers, Time Frames, Trade Set-ups and Option Tactics. I selectively use Unusual Option Activity (UOA) and Deal Flow but no proprietary indicators – just solid chart pattern recognition, volatility insight and some big-picture perspective thrown in. Twitter:  @SamanthaLaDuc