 Feature
E-Mini
Futures � Lessons from Legends
by D.R. Barton, Jr.
Great lessons
in trading can come from lots of places.
Sometimes we
get insights while playing golf or watching the ocean waves. But
more traditionally (and reliably), I find that I learn best from
other traders � folks who have �been there� and �done
that.�
So it should
come as no surprise that my business partner is a Wall Street
veteran who has traded and worked with top traders for many decades.
Christopher
Castroviejo is one of those rare individuals who can look at an
issue from many angles. He can take in competing points of view
simultaneously and cull through scads of data to reach a meaningful
conclusion. While this
is helpful in many areas of life, it�s easy to see how useful this
skill set is in the trading world.
As I�ve said before, Christopher is a market maven in the every
sense of the word. Here�s
a short re-introduction for those of you who haven�t been
introduced to my good friend:
Christopher has
spent 35 years in and around the markets, and his resume and
track record on Wall Street became something of legend: stints with
Smith Barney, J.P. Morgan, a partnership at Bear Stearns, financial
consultant for The Vatican Bank, to name a few. Christopher was hot
and getting hotter. Highlights including turning $10,000 into
$178,000 in four weeks, 8 straight years of 43% compounded
profits as a top hedge fund manager, a sleek Manhattan brownstone
and a spacious summer getaway in the tony Hamptons. Christopher
even struck up a friendship with his money making idol, billionaire
George Soros.
Along with
multi-million dollar wins, there were a few huge losses; in just six
short weeks, $10,000 became a cool million, and quickly nothing but
air. And, in one monumental transaction gone wrong, Christopher lost
$15 million dollars in just a few months�$1.5 million of it his
own money. But, unlike the Vegas poker player who can�t leave the
table, Christopher learned from the missteps as well as the wins.
�You have to reinvent your performance all the time. I used to see
the business as just about orchestrating wins, but the rational way
of thinking about it is really about controlling your losses.�
Today,
Christopher is an active intraday and swing trader and continues to
manage money for a select list of Wall Street insiders.
Christopher is
a master at several aspects of intraday trading and is particularly
skilled in the application of key level support / resistance and
Market Profile. We will
be covering these topics in depth at the upcoming Professional
E-Mini Futures Tactics workshop, so I thought I�d ask him to share
some insights with you as we put the finishing touches on that
workshop. Here�s an interview I did Christopher just this morning.
D. R.: Christopher,
you basically grew up on Wall Street with a grandfather who was a
famous depression-era trader. You�ve
had a chance to trade, advise, manage money for and learn from some
very household names. Folks
like Paul Tudor Jones, Ed Seykota, George Soros and Julian
Robertson, to name just a few. What
key lessons have you taken away from your interactions with the
legends?
Christopher:
You�re right in that I�ve been fortunate to deal with
some amazing folks. What
has set these guys apart is their mental approach to the markets.
All were absolutely dedicated to what they were doing.
And, perhaps because of that, they all mastered adversity.
Every one of them had to live through drawdowns and fallow
periods. But persistence
paid off, and we all know how they came out the other side of tough
periods with massive successes.
Another key I
see with these guys is that they show multiple ways to make money.
It�s clear that they all traded in very different ways, yet
found significant edges in different instruments, strategies and
time frames. Each one of
them found an edge that was consistent with who they are as traders.
I think this carries over to what we�re doing in the
e-minis. Even in day
trading, there are different styles and time frames.
Trend following and counter-trend.
Shorter holds and longer holds.
Traders that stick around found the edges that are consistent
with who they are.
D. R.:
You�re the most knowledgeable person I�ve ever met when
it comes to Market Profile. So
I didn�t hesitate for a second when you suggested that we spend
time one-on-one with Market Profile creator Peter Steidlmayer.
Those were two of the most intense days I�ve had in a
while! You�ve known
Pete for a while � what were your main take aways from our time
with him?
Christopher:
Yes, Pete is certainly a guy who�s always thinking on
another level. I thought
his most interesting concept was how the market has undergone a
structural change due to the high volume, short time frame trading
associated with the hedge fund boom.
This has, interestingly, made Market Profile more important,
not less. And the way
that these big funds leave behind signs in the Market Profile �
like elephants leaving footprints, I thought that session was particularly intriguing.
I look forward to sharing these insights with others.
D. R.:
In the current market environment, what tools and strategies
have struck you as particularly useful, especially in the e-mini
futures?
Christopher:
You and I were just looking at some amazing double top
formations that played out beautifully.
Combined with the divergence pivots that we use, those have
been particularly notable. In
addition, gap plays are still working very well, but only in the
right structure. The
key numbers continue to be a great guide for market behavior.
And if I had to pick one, it would be those double top patterns.
D. R.:
I�m really looking forward to teaching with you again in
Raleigh for the e-mini
futures course.
Christopher:
Thanks. Same to
you!
About D. R. Barton:
A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena where he is one of the most widely read and followed traders and analysts in the world.
He is a regularly featured guest analyst on both Report on Business TV, and WTOP News Radio in Washington, D. C., and has been a guest analyst on Bloomberg Radio. His articles have appeared on SmartMoney.com and Financial Advisor magazine.
You may contact D.R. at drbarton@iitm.com.
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