Oct 24, 2022
Nadogoyard is a quant trader, edge searcher and full-time student.
What attracted you to trading?
When oil went to the negatives in March 2020, I thought it was an easy opportunity to exploit and make money. The fact that there are seemingly free opportunities you can take advantage of and make large amounts of money intrigued a part of my brain, and ever since then haven’t been able to switch it off.
How long have you been trading, and what markets have you traded over your career?
I started trading right after oil went negative in March 2020 when I was 15 years old. I begged my parents to open an account for me to trade with my birthday money. I had to prove to them I could trade profitably, so I opened a Plus500 demo account and started trading commodities/forex/equities. I made just under 10% in a month, and they opened an account for me. I found crypto in February 2021 during the altcoin season and have been hooked due to the number of opportunities.
What sort of trading were you doing to make that 10%? How does it differ from how you trade now?
Back then, I was trading off the news mostly. I wasn’t sure what I was doing and was lucky from the COVID rebound. I remember buying $PLTR stock off the IPO because they had a contract with the NHS. I wasn’t looking at charts either, just basing actions off the news, and if the stock went up for a bit, I would sell once it started to cool off. Nowadays, I study orderflow, deviation from a mean, the limit order-book and how it changes over time. It’s a much more information-driven process, and I take the information from financial products rather than the news. The Keynesian beauty contest is an economics concept that I base most of my trading around nowadays, and I highly recommend everyone to look into it.
The Keynesian beauty contest is an economics concept that I base most of my trading around nowadays
How long did it take you to become profitable? Were there any major milestones where things just started to click?
I have been profitable since I started. However, I became accustomed to taking large high-conviction bets where I thought I had more edge than I had in reality. This drove my interest in quantitative trading, where you break down everything through statistics. In November 2021, I had a moment in which it seemed like I hit a flow state for a few months, and I made over six figures in just two months which was a hell of a lot for a 17-year-old. This was when I started to get deep into quantitative trading, and there was a huge amount of exploitable edge back in Nov 2021.
How would you describe quant trading to a 5-year-old?
Quant trading is essentially taking market data to help with decision-making. The reason this helps is that humans are very good at dreaming up narratives in their heads. For example, if you look at a cloud, you might see a rabbit or a cow, and this is the same as when a human looks at a price chart. With financial decisions, we want to be as accurate as possible. So we use numbers directly from the market, such as how much price moved in a certain time or the number of trades in a whole day.
humans are very good at dreaming up narratives in their heads.
What does a typical day look like for you?
Wake up and head to school. After school, I head down to the skatepark to shred for a bit, then finish some schoolwork and trade once home. My favourite times to trade are the first hour of NY, the last hour of NY or the first few hours around the Asia open (12am to 2am UK time). You may notice I spend barely any of my day actually trading, and that’s because there’s simply no need. Anyone who spends all day trading is likely to have no edge . It’s highly unlikely they have more than an hour of beneficial exposure per day. They are likely gambling or doing something so repetitive it should be automated (such as market making).
It’s highly unlikely they have more than an hour of beneficial exposure per day.
Who did you look up to when you first started trading?
When I started trading, I didn’t look up to anyone. However, when I delved further into quant trading, I'd say the most influential person has been BBM (@quant_arb on Twitter). He has taught me a lot and is an extremely knowledgeable individual. I also want to give props to Cantering Clark, one of the most real guys I’ve ever spoken to from CT and a very wise trader. Super appreciative of them both.
Tell us about your most memorable trade?
My most memorable trade was sizing almost $100k into BTC call options in late January 2022. I lost all of it, and I think it was a great lesson on bet sizing, and not letting natural biases take over. It helped me become a better trader today. Wins don’t mean much to me at all; I care more about not losing.
Do you study previous losses? Do you journal?
I don’t study previous losses, and I don’t journal. I may export a big bunch of trades now and then and look for commonalities in my losses, such as oversizing or days with too many trades leading to down days. I’ve never been a fan of journaling as sometimes your losses can be due to a specific market regime that doesn’t fit your strategy (for example a trending market whilst you’re running a mean reversion strategy) and you simply have to stop trading or forecast/react to a regime change in the future.
What’s the best trading advice you’ve been given?
Build. Build something that makes your life easier and automates a repetitive process. It could be a scanner, tape filter or alert system. At the same time, you’re learning to code which is a hireable skill. You start to notice things other participants automate, helping you understand automated flows you can take advantage of.
What was the first thing you built?
The first thing I built was a portfolio rebalancer for FTX. I had to run it manually, and in retrospect, it was terrible. Still, it felt good seeing it make the trades on my behalf through code. For those struggling to get into coding, it's best to make a simple ‘make-your-life-easier’ tool to get the ball rolling.
What drives you to keep trading?
I would say money, but the underlying result is freedom. I’m not insanely rich, but the freedoms, both financially and with my time, allow me to practically do as I wish, whether it's study, travel, party etc. I’ve done many things people my age cannot do, and for that, I’m super thankful to the markets but also proud of myself for putting in the work. Thanks to trading, I could also financially support my family to escape Ukraine back in February and help pay off my parent's mortgage this year. It is crazy to think of the butterfly effect of clicking a few buttons on a computer.
It is crazy to think of the butterfly effect of clicking a few buttons on a computer.
What does ‘making it’ look like to you?
Making it for me would be having complete freedom to do as I wish. Trading with proprietary money has unlocked a new world for me, with access to capital at near-zero risk. I wouldn’t say I have made it, as making it for me would be not having to depend on profitable trading at all. I think I’d like to get into DJing or fashion alongside trading, so being at a point where I could focus on that without having to worry about having a profitable trading month would be a ‘made it’ moment for me.
What's the most important quality in a trader?
Logical thinking. It helps you stick to strategies, solve problems and stay away from emotions which are likely to be the bane of your account (which is why I promote algorithmic trading).
Do you have an example of a time when your emotions got in your way?
The most memorable time would be when I burned $100k in BTC call options by holding through the 21st January drop. At first on the 20th there was a pretty large move up and I was up around $20k. I knew in my head this was just the starting move of a volatility expansion and that it would revert and make a new low. But for some reason, the greed of making an unrealised $20k in a day just froze my decision-making. All my friends also urged me to sell and reminded me what I had told them about volatility expansions. Still, I ignored it and alienated myself. The next day the options went around -80%, and I was distraught. It was definitely emotions taking over my trading but looking back I laugh at it. All losses are lessons.
I ignored it and alienated myself. The next day the options went around -80%, and I was distraught.
How would you describe the way you trade?
Mean reversion is my forte (specifically intraday) through statistics and order flow. I also dabble in some arbitrage where it's obvious/free money. I haven’t launched any high-freq market-making systems yet as I still have a lot to learn/build; however, that’s the current project I’m building. Galois once said there are only a few trades a year where there is free money, and that’s where you should get involved, and that’s excellent advice.
Has the way you trade changed over time?
It has changed a lot over the years; however, it has constantly improved after each change. I started with technical analysis, then moved to order flow/market profile, and now settled on ‘quantitative trading’ and don’t plan to change for the foreseeable future.
Do you worry about edge erosion?
It’s an issue as markets change daily, butterfly effects etc. However, it’s an issue that affects larger-sized players more than someone like me. One of the best examples of edge erosion was shorting move contracts on the weekends; it was an extremely profitable strategy during 2021 and early 2022. Around Summer 2022, it started to get extremely popular, and now it's no longer a viable strategy.
I don’t have any specific methods for reviewing my performance; if a strategy is starting to lose more than expected: I might revisit how it works and optimise it. If the strategy is not suitable for current market conditions I’ll put it on pause, or completely scrap it and take the time loss. Sometimes it can be highly annoying, especially the move contracts edge erosion since it was CT’s fault. There’s always going to be something new, and the grind is the fun part in my eyes.
How important is backtesting?
Backtesting isn’t helpful without statistical context. Again, the butterfly effect of your trade execution, in reality, can completely change the future direction of price. This is something no backtest can replicate.
Backtesting isn’t helpful without statistical context.
Why do you think you have success trading?
If you have an edge and act on it, you’ll have success, whether it be immediately in the short term or by the law of large numbers in the long run. The use of statistics/maths helps make sure I do have an edge. Some people may find success with drawing shapes on the charts with logically flawed reasoning/backtests, and that’s just part of the game with a level 2 chaotic system such as markets. However, you don’t see many of these people getting anywhere regarding a career or long-term performance. I have also experienced a lot of failure, despite my being profitable since I started trading (due to random chance). I have stupid amounts of screen time, and by introducing coding as a catalyst, you can process even more data. I have experimented with practically every strategy out there, and it's clear which is sustainable.
I have experimented with practically every strategy out there, and it's clear which is sustainable.
What is a level 2 chaotic system?
A level 2 chaotic system is a random/unpredictable system that reacts to predictions. In the case of the market, each order (both limit and market) will affect the future projection of the market. This makes it practically impossible to predict accurately; however, technically, you could exploit the fact that each order affects the market by trying to forecast/react to what people may do.
The issue with predicting future movements with a price chart is that you don’t have any perception of the limit orders, so you only see half the picture.
What's the worst thing about trading and why?
How boring it is; I’m bored the entire time I'm trading. I think of that as a sign that I'm doing things right. I don’t see trading as much of a satisfying career, and it is over-glorified by gambling traders; however, these types don’t last long. I combat this by spending a lot of time on hobbies, whether coding, skating or raving.
I’m bored the entire time I'm trading. I think of that as a sign that I'm doing things right.
What's something you've learned in the last six months that has made you a better trader?
It may be controversial, but drugs help. It may not work for everyone, but I believe we have one life, so why not try everything (within reason)? Even simply a party drug while having a fun weekend, then coming back to markets on the weekday, you’ll find you’ve had so much fun that you can now focus on getting work done and being productive. Or you can go directly with cocaine/Adderall for the amphetamines to speed up your central nervous system. Be safe, though. Test what you take, and don’t let this advice cause you to do something you wouldn’t already be comfortable with.
It may be controversial, but drugs help.
What's the mistake you find hardest to avoid when trading? Any tips to avoid it?
I’m extremely greedy. I trade just for the money, so this leads me to over-risk or hold positions for longer than I statistically have an edge. It’s another good reason to automate your trading. We can’t all be perfect; sometimes, you just have to work around your flaws. I guess this is solved just by time and experience.
We can’t all be perfect; sometimes, you just have to work around your flaws.
If you could give someone starting trading tomorrow one piece of advice what would it be?
Try just one trade per day, maximum. If you’re a swing trader, stop now before it's too late. It's extremely hard to accurately predict where price will be in the next hour, let alone the next few days, and it gets exponentially harder the longer the trade is.
By trying only one trade maximum per day (whether a loss or win), you’re likely to save that trade for only the absolute tip-top setup you can find. This should stop you taking those shitty trades on a whim which kills your account due to overtrading, fees and unwarranted losses.
Learn your philosophical razors; they apply to trading and general life.
Ultimately, 95% of traders fail, and that's just the truth, and this statistic could very well include me sometime in the future. So always be aware.
Be more cutthroat. Don’t settle for bullshit paid groups, Twitter Hollywood, clout based friend groups. These people are all on the same level as you as a human. Most are complete LARPs and are unbearable to talk to.
Before you take a trade, take a deep breath and think to yourself “is this actually a good trade, or am I being a fucking idiot?”. It will likely prevent >50% of your losses.
Fill in the blanks
Most traders would be better off quitting and finding a job.
What separates the professionals from the rest is real edge. Many think they have edge by kline data, but why would edge be out in the open and accessible with drawing tools? If it can be identified by a five-year-old, you’re better off hitting the local casino after a few drinks.
A good trader should withdraw from their trading account often. Spend your profits whether it be a nice holiday, a weekend out with your friends, some nice clothes for yourself etc. By rewarding yourself, you start to become less greedy as your perception of money grounds itself from being a number on a dashboard of your exchange to actual spendable money in your bank account.
The biggest misconception about trading is you’ll get rich without doing anything demanding brainpower. If it were easy, everyone would be rich. You’re competing against millions of people worldwide. Put in some real work and dive into complexities!