Nikita Kaploun and Paul Zalessky founded their trading firm, Absolute Capital Management, in 2008, but neither are trading neophytes with a combined 13 years of trading experience and additional experience as analysts at institutional trading firms.
Zalessky became interested in the investment industry while studying finance at the University of Waterloo in Waterloo, Ontario, where he earned a master of mathematics degree, specializing in statistics and finance, and a bachelor’s degree in mathematics. His mathematics background helped him to create quantitative investment strategies, and he got involved in forex trading “because it allows for numerous trading opportunities,” he says.
Kaploun’s interest in trading started all the way back in high school, when, he says, “the new and adventurous world of trading became [my] passion. [I] constantly consumed numerous books and articles regarding spot forex, futures and equity trading.” After graduating with a business administration and finance degree from York University in Toronto, he put his love of forex and equity trading into his career plans.
Prior to starting Absolute Capital Management, Zalessky worked as an investment analyst for the Ontario Teachers Pension fund, while Kaploun worked as an equity analyst at SSNC Technologies Inc. Zalessky has been trading spot forex for five years, Kaploun for eight. Absolute Capital Management specializes in currency-managed accounts. “We trade spot currency pairs intraday, focus[ing] on pairs that meet our strategy requirements - low spread cost, high liquidity, and high volatility,” Zalessky says.
The strategies are designed to profit from rational movements in the market regardless of direction and are flexible to handle short-term irrationalities. “Volatility creates more trading opportunities. Our strategies are positioned to profit from range and trend movement in the market. We focus on strict risk management and never allow for risk to increase over the set limits,” Zalessky says.
Absolute Capital’s strategies are based on trading behavior extracted from price action. “Our strategies are uncorrelated with other strategies, reducing our susceptibility to systemic risk in the market,” Zalessky says. Client accounts are set up with a third party broker and are independent from the Absolute Capital Management account.
Zalessky and Kaploun’s approach is based on statistically profitable systematic trading strategies, employing high frequency trading models which intend to profit on a daily basis. They exploit investors’ patterns in making investment decisions by extracting them from price action. “Constantly changing market dynamics makes it very hard for any particular system to be profitable. While individually, they might perform well in one type of market condition, they fail to adjust when conditions change. What makes Absolute Capital Management’s structure unique is that we utilize several systems that complement each other in bear, bull and range markets,” Zalessky says.
Absolute Capital Management has produced a total return 22.3% from Feb. 1, 2009 through Nov. 30.
Kaploun and Zalessky say the most exciting thing about trading is that it involves constantly coming up with new ideas to adapt to ever-changing market dynamics. “We make decisions with uncertain market information and get to see the organized and profitable results in short term. It constantly challenges a person’s ability to analyze the data, make structured concepts and implement solutions for profitable outcomes,” Zalessky says. “The dedication, discipline and humility that is required to become a successful trader becomes a philosophy of life. You start to notice patterns and concepts that you have never seen before.”