Oct 31, 2022
Huss is a former tradfi market maker and investment banker, with over 7 years of market experience in crypto and equities. Huss has a deep understanding of liquidity, market microstructure, and options flows.
What attracted you to trading?
The inefficient, dynamic, and analytical nature of public markets creates an opportunity that I’m deeply passionate about, and is what attracted me to trading. I enjoy finding an edge and taking advantage of market inefficiencies in a level playfield where everyone has access to the same information, but where you can separate yourself from the others through your own analysis. Public markets are also dynamic and always changing. There's new information available every day, so there’s always something to learn, and there’s never a boring day. I see trading like trying to solve a puzzle and getting comfortable taking risks based on an incomplete set of facts.
I see trading like trying to solve a puzzle and getting comfortable taking risks based on an incomplete set of facts.
How long have you been trading and what markets have you traded over your career?
I started trading in 2015, with single-name equities (e.g. FB, AMZN) and Bitcoin. Once I started working on Wall Street, I was only allowed to trade equity indices and crypto, so I stuck with that for a few years. Nowadays, I also trade fixed income and FX given the current market environment. As a trader, you have to always adapt and learn, otherwise you’ll be left in the dust
How long did it take you to become profitable? Were there any major milestones where things just started to click?
Making profits was never my issue, it was being consistent. I learned how to be profitable early on, but it took me a while to learn how to hold on to those profits. In terms of major milestones, they were the two times I blew up… they say experience is the best teacher, but I disagree: pain is the best teacher. Only through experiencing the agony of losing everything, will you truly appreciate the short-lived nature of profits in trading. And only then will you be able to assign risk properly. In other words, it’s risk management that leads to consistency.
they say experience is the best teacher, but I disagree: pain is the best teacher.
What does a typical day look like for you?
Don’t really have a typical day. I try to stay away from a routine life (trading fortunately also doesn’t allow for one). I try to minimize how much time I spend in front of the screens – on average it’s probably 6 hours. Still, there are a few key elements I try to fit in regardless of order: exercise (running, soccer, basketball), crosswords, stargazing, and sports analytics (I love building econometric models for baseball/basketball).
Who did you look up to when you first started trading?
Never looked up to anyone, had to learn it all on my own through asking myself countless questions and never resting till I reached an answer. Every time I look at the chart, I ask myself four questions:
What happened? E.g. prices went up across the board, or major markets ranged
When did it happen? E.g. it happened overnight
How did it happen? E.g. there was a relentless overnight bid across major markets that further triggered short liquidations, and forced dealers to hedge their gammas
Why did it happen? This is perhaps where trading becomes more of an art than a science, and in my opinion, is the most important question. Keep digging until you find an answer that satisfies you. E.g. Vanna/Charm hedging happens on the close and in the morning. Volatility down every day means buying in indices overnight. Puts underperform ➡ they get closed ➡ dealers buyback delta hedges (ie the stock that they’re short) ➡ vol further decreases ➡ vanna and charm cause more delta buybacks from dealers. Let’s say we’re also close to opex, these flows become stronger
Tell us about your most memorable trade?
Shorted 69k because it was a funny number, but profited nonetheless. It’s my most memorable trade because it’s truly a testament to the idea that you do not need to be a genius to succeed in trading, you just need the balls to follow through your own ideas.
Shorted 69k because it was a funny number, but profited nonetheless.
What’s the best trading advice you’ve been given?
“Bet more”, seriously. If you feel confident about an idea, then put your money where your mouth is. Chances are, you won’t see this opportunity again for a really long time. Confidence, however, is subjective. To some, it could just be a “gut feeling”, to others it’s more data-driven. There isn’t really a correct way to define confidence in trading, it’s whatever provides the best results for you.
What drives you to keep trading?
A never-ending, unfaltering hunger to be the best. I’ve always been a competitive person growing up (perhaps too competitive), in everything I do. Trading was the perfect avenue to release this pent-up desire. There’s no BS in markets, you’re either right, or you're wrong. And very often, you’ll find out right away. Moreover, not being wrong is more important than being right. After all, it’s in our nature as humans to be loss averse, and you should listen to that instinct.
not being wrong is more important than being right.
Would you say you’ve ‘made it’? If not, what does ‘making it’ look like to you?
As most would define it (money), sure, I’ve “made it”. But that’s not how I define it; “making it” to me represents reaching a point where you no longer have any questions. Where your curiosity is satisfied. While most people seek this clarity, I pray that day never comes for me. I’m not sure what I’d be doing if I hadn’t pursued trading, probably playing poker professionally or competing/performing data analysis in some sport.
What's the most important quality in a trader and why?
Resilience. Get used to being wrong, learn your lessons, and move on. It’s easier said than done. The vast majority of traders simply do not have the humility to recognize that they are wrong, and those that do, often don’t have the mental stamina to keep taking it on the chin
Get used to being wrong, learn your lessons, and move on.
How would you describe the way you trade?
I like to analyze the relationship between positioning, liquidity, and narrative. Very often, I find myself trading counter to the prevailing market opinion. If the world is pricing in high volatility for an event, I’m usually the one selling it. The most money is often made in the most uncomfortable spots.
Has the way you trade changed over time?
Absolutely. I started out as a scalper, often not holding positions for longer than 5 minutes. That experience has informed and deepened my knowledge of market microstructure. Nowadays, I’m more of a swing trader, taking my time in building positions and holding them for weeks/months. Despite that, I still always pay attention to the smallest timeframes (usually the one minute), because it’s where positions are being built, and where you can more accurately draw conclusions about market positioning. Most days I’m charting BTC and ES side by side. Most beginners would get overloaded with information trying to track the 1-minute chart, and that’s okay. With more time and experience, you’ll learn where to look, what to track, which footprints/patterns matter, etc.
Why do you think you have success trading?
My relentless curiosity. I have ADHD, so it’s in my nature to keep asking questions and look at a problem from all angles. Hence, I have a deeper understanding than most about how and why markets move.
What's the worst thing about trading and why?
The best and worst thing about trading is its objective nature. There is no grey area, if you’re wrong, you’re wrong. Being wrong never gets easy, but consequently, there’s no better feeling than being right.
What's something you've learned in the last 6 months that has made you a better trader?
You have to be able to adapt quickly. Markets are relentless and impatient. Stop forming biases, and learn how to be flexible. Oftentimes, the most difficult balance to strike is between flexibility and conviction. Those that can find this balance, are the best traders in today’s market.
the most difficult balance to strike is between flexibility and conviction
What's the mistake you find hardest to avoid when trading?
Either holding on to positions for too long, or letting go too early… My solution to this was to stop thinking in absolutes. Stop going fully in or out of positions, start scaling in or scaling out. Understand that targets are simply that, they’re neither predictions nor guarantees. Give yourself some cushion, some margin for error.
If you could give someone starting trading tomorrow one piece of advice what would it be?
You’re gonna be wrong, you’re gonna lose money, and that’s fine. It’s the best, and frankly the only way, to learn. If you can’t stomach this fact, then don’t waste your time trading.
What goals do you set for your trading?
I have, and have always had, one goal: to be the best. It is my carrot on a stick, and the reason I’m still trading. Don’t commit the fallacy of making money your goal. Not only will that cloud your judgement, but you will also never be satisfied. In terms of measuring success, I’m not the biggest fan of exchange leaderboards for privacy reasons, and the fact that they mostly measure who’s the “largest” as opposed to who’s the “best”. All that matters is how you maximize your own profit, minimize your loss. Note the distinction between using your P&L as an objective measure of your success, vs. setting monetary targets as your goals. The goal is to keep improving. Being the best is about being the best version of yourself.
Don’t commit the fallacy of making money your goal. Not only will that cloud your judgement, but you will also never be satisfied.
Fill in the blanks
Most traders would be better off decreasing trade frequency, increasing size
What separates the pros from the rest is commitment and drive
A good trader should never be stubborn
The biggest misconception about trading is that the best traders win very frequently
Any other comments you'd like to share:
“I fear not the man who has practised 10,000 kicks once, but I fear the man who has practised one kick 10,000 times” rings true, to me, in trading. Find your strengths, hone them, and stick to them. There is no “ideal trading strategy”, it’s idiosyncratic
I’ll leave you with another Bruce Lee quote that is highly important in trading (he would’ve been a great trader in my opinion): “Be like water. Empty your mind, be formless, shapeless — like water. Now you put water in a cup, it becomes the cup; You put water into a bottle it becomes the bottle; You put it in a teapot it becomes the teapot. Now water can flow or it can crash.”