Greg Cotter, president and head trader of Tri-Global FX, spent more than 20 years trading the interbank forex markets for some of the largest institutional banks, including: Societe Generale, Banque Indosuez, Credit Suisse and JP Morgan Chase. Despite this pedigree, Cotter considers trading forex a blue collar job and approaches every day not from an investment banker’s or quantitative reasearcher’s perspective but with his lunch bucket in hand hoping for nothing more than to earn a hard day’s wage. “Put in your time every day trading. Try not to get caught, get out of positions that are wrong and just keep moving forward,” Cotter says.
While he will hold some positions long-term, he is a day-trader at heart. “We have [positions] on that we will carry for a month or two and we have [positions] that we are out within minutes. Given my druthers I would rather walk in every day with a clean sheet, day-trade and go home at night,” Cotter says.
It is his experience at the large banks that led to this short-term approach. “We are just traders. I have been doing this 25 years and the only guys I ever saw on the bank side that made money were traders,” Cotter says.
His methodology involves both fundamental and technical analysis. “We have a system here but if I see the stock market [turn], I’m not waiting for the chart to tell me to sell. I hit a bid and take some profits on it.”
The Roslyn Heights, New York CTA keeps his head down and trades. Cotter does not attempt to find long-term trends and does not jump on bandwagon trades. In 2007, Cotter saw this bandwagon mentality occur as everyone it seemed discovered the carry trade —going long the currency of a country offering higher interest rates and shorting the currency of a country offering lower rates — and he managed to exploit the oversaturation of carry trades in the market.
“Last year for me was really sitting around waiting for the carry trade to die. It just got too easy and you got too many people talking about it. Every time I would go to any Web site that had anything to do with currencies, all these guys knew how to do is buy euroyen,” he says.
Tri Global FX is up 11.62% through June after earning 46.78% in 2007 and has compiled a compound annual return of 34.55% since January 2005. But more impressive than those numbers are the CTA’s returns on a risk adjusted basis. Tri-Global has a monthly standard deviation below 3% and a Sharpe ratio above 3.0.
And Cotter targets those risk measures more than the 2007 return, which was above expectations. “We’ve had a coupe of very good years but we tell everybody that invests with us, ‘don’t expect that, we did well.’”
He targets steady returns and looks for opportunities, like the carry trade in 2007, for an extra bump.
“We look for 1% to 2% a month. That is what we trade for, if we can do better than that, great. We keep ourselves in the game and when things occur that we can make more than that we go for it but we just try and make money every month,” Cotter says.