Lee Gettiss focuses controlling risk
Trader Lee Gettiss first drew attention to risk control as the main factor of its success in the commodity markets. However, it was not always. Gettiss met with the commodity futures markets, when he was on the phone call from a broker. "He told me how Omar Sharif has earned $ 50 million in the sugar market, beginning with an account of 50 000," - says Gettiss. According to the broker, the same pattern, manifested in the sugar market and allowed Sharif to earn lots of money, reappeared. "So I gave him 10 thousand dollars and three weeks later he gave me three thousand, - says Gettiss. - But I knew if I may quickly lose money, you can just as quickly, and they earn. " He began studying the futures markets.
While engaged in Gettiss computers. "I tried to read everything I came across, and the technical side of me more than impressed. I guess I mainly developed in the left hemisphere. "
He "tried a little" to do trading in the mid-80s, but switched to OTC trading October 12, 1987, just days before the stock market crash. "The only thing I knew - it was trading S & P», - says Gettiss. However, the collapse has not affected him particularly. "I was on the wrong side of the market and lost a half thousand dollars. However, you can suffer a loss, to be completely wrong, but in the end to congratulate myself that everything was right "- he says, meaning out of the deal at the right time and risk control. "I could not afford the loss of fifteen thousand dollars. It was a good deal "- adds Gettiss.
"Then all I was told that the goods market is very risky, and certainly need to stay away from S & P and pork bacon, so I decided to do them. Be necessary where there are major events where there is potential for profit, but the task of the trader - to control the risk, "- he explains.
Gettiss used his computer skills to develop for several years over hundreds of systems, including one called Volpat Trading System a decade ago that the magazine called Futures Truth as "one of the ten best trading systems for all time." Acronym «Volpat» means «volatility and pattern recognition» - recognition and volatility patterns. Gettiss says: "Volatility - It requires an active market. If the market does not fluctuate, then not make any money. " Regularities are "short-term things that are objective enough to be able to instruct the computer to find them. You can try all possible combinations - he says. - One of the laws - much activity outsiders closing lows, - market beliefs say that all this is very similar to the bearish trend. I found that if the market opens with an increase in the next day, then most likely need to buy. This is all the observed phenomena, something must seem very dangerous, but I look at the market, and it does not seem to me so dangerous. " So Gettiss explains his logic when searching for patterns similar to those used in computer testing.
Transactions Gettissa usually last from one to three days, he prefers markets with liquidity. "Wood and orange juice does not interest me" - he mentions the two markets with a thin margin. "My favorite market today - it's bonds. It is so large and liquid that I can roll over any size with a good performance - says Gettiss. - Here I manage risks better than the S & P ».
For Gettissa all depends on the risk: "The only thing that can control a trader - a risk. If you go to the market and say, I do not want to lose more than a thousand dollars on the deal, then at night may be breaks in the price or there is the difference between estimated and actual cost of operations, but still you can be sure you do not lose more than a thousand dollars on the transaction. " "I know how much I'm willing to take risks, but I have no idea how the market will allow me to return the money. If the market can give you back $ 500, you have to take "- adds Gettiss.
"I focus on risk control. So do all of the leading traders "- he said. However, although Gettiss and uses protective stops for their positions, it is not always on the transaction stop-loss. "I am watching the market during the day, and if you foresee any messages in the media, I do not set foot since the market may be following the news a while to go mad, and then I'll think about whether I want to still be" - Gettiss said. However, he cautions about the use of protective stops, "Risk control does not mean the use of incredibly tight stops - a trader in the room sneezes, and the market will swing for $ 100. The data of my research show that the market should be given considerable scope in order to increase the chances of success. "
As a board beginners Gettiss warns: "Do not nurture unrealistic expectations. People ask me how best to trade. This is a question that can not be answered. I can not say who is right. " In his opinion, everyone should find a method of trading that would suit his personality characteristics.
"For me, this work - better than you can imagine. When I worked for General Motors, they had great benefits, and all told me that this is a great, reliable company. But one morning I woke up and found out that I have them no longer working, although I liked them and they gave me good reviews. Then I realized that the reliability is based only on self-reliance "- concluded Gettiss.