Author, "Trading Systems that Work", and "Trade Systems and Money Management".
Program(s) Developed: Alfa Axiom Fund, of Alfakraft AB, a Swedish fund management company.
Interview Date: October, 2016
Interviewed by John F. Gallwas, Founder of Striker Securities, Inc.
Thomas Stridsman in the author of numerous articles on trading for Futures Magazine and Active Trader Magazine, as well as two highly acclaimed books "Trading Systems that Work", and "Trading Systems and Money Management". A native and current resident of Vasteras, Sweden, 66 miles West of Stockholm, he is the Trading Manager for the Alfa Axiom Fund, one of the six funds provided by Alfakraft AB, a Swedish fund management company
John F. Gallwas : Thomas, as a long-time student of the markets, we wonder what you think about all this "high frequency trading" (HFT) we hear so much about and has HFT materially changed the way futures markets behave?
Thomas Stridsman: John, good to talk to you again. It has been way too long since the last time. I am personally not into HFT at all. It seems to me that it has turned into a technology and hardware game, demanding some serious money and company infrastructure to get up and running. I try not to kid myself in what I do. As a small fund manager and CTA with limited resources I don't stand a chance against the big behemoths of the financial industry playing the HFT game, therefore I stay away from it.
Has it changed the behavior of the futures markets? Probably, but how do you measure that? Especially in these times where we still suffer the huge macro-economic consequences of the housing bubble with this zero interest rate environment. The markets have changed significantly since the years 2000 and 2008, that's for sure, but given everything else going on, probably only marginally due to HFT.
John Gallwas: As one of the pioneers in computer analysis for the futures markets, what technical tools have you found to be most useful for trading the current markets?
Thomas Stridsman: As for entry and exit strategies, I find myself reverting to more and more simple and fundamental stuff the longer I keep doing this. Robust price patterns, repeatable in most markets, and basic indicators - moving averages, Bollinger bands, Rate-of-change, etc., not more complicated that that - based on 10 to 30-day lookback periods.
Things get a bit more complicated for my position sizing and money management algorithms. Here I use a lot of intermarket relationships, usually the market in question to be traded, relative trends in the equity, bills and currency markets, as well as correlation patterns in the return stream from the trades.
John Gallwas: Please tell our readers the key points in your first and most popular book "Trading Systems that Work", as well as the overall message of the book.
Thomas Stridsman: It's been a while now since I wrote the books, but then as well as now, my key point is: Money Management Is Everything!!! Without proper money management no entry/exit strategy will make you money, no matter how good it is. In my books I try to convey that you need to think about the strategy development process as a whole - entry, exit and sizing, and follow a development process that will optimize your likelihood for success in all areas. Not doing that, you will have no clue what makes your system work or fail. The initial chapters of the book discuss which variables to look at when evaluating your system, with all the above in mind.
Also as a researcher you are much better of improving the money management of your system rather than tweaking its entry and exit rules, but to get to the point where you can do the research you need to study the subject. Ralph Vince's classic books are probably still the best place to start.
John Gallwas: Tell us about Alfakraft AB, located in Stockholm, Sweden and your role as a member of their team of traders?
Thomas Stridsman: Alfakraft, in its current shape, has been active on the European financial markets since 2010, which also is the year Alfa Axiom Fund was launched - thus to date we have a 6-year profitable track record, in the most difficult of trading environments.
As one of the founders and original managers I have sort of a Nestor roll within the organization - although the managers of the other funds probably don't agree (laughs). Strictly speaking I am only one of several managers responsible for a specific fund, in my case the Alfa Axiom Fund, which is a classic CTA type fund (by the American definitions), but which operates within the EU, following the regulations we have here. Which, by the way, means we are VERY regulated and transparent. It is no small feat to start a fund today in Europe. For American clients we do offer managed accounts upon request.
As for Alfakraft, our mission is to niche ourselves as a quantified and systematic trading organization with a set of internally diversifying funds and fund-of-funds, also well diversified to all traditional investment alternatives, as well as competing funds. Alfa Axiom - as a trend-following CTA, for example, is not only very uncorrelated to equities and bonds, as we should be, but also ?partially by design - rather uncorrelated to other trend following CTAs. Remaining a strong and diversifying alternative is very important to us.
This interview is for informational purposes only and is not intended to be
a solicitation of any kind. Trade only with risk capital. The risk of
trading can be substantial and each investor and/or trader must consider
whether trading systems are a suitable investment.
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