From a young age Kevin Jamali, founder and co-principal of Auctos Capital Management, saw the best trading can offer as well as the worst. Even though he saw his father, who traded stocks on the side, go through the 1987 crash, the energy and challenge of trading still called to Jamali.
"I will never forget what my family went through and what can happen in a day. The fact that things can change so quickly has always stayed with me. That day helped give me a respect for markets and the importance of proper risk management" he says.
While his interest was piqued, Jamali did not embrace trading immediately. Initially, he went to college for business, but after visiting a friend’s brother who worked at the Chicago Board of Trade, he quit school and started looking for a way to get his foot in the trading door.
"In 1995 I started as a runner. At the time, I didn’t know anybody, so I went door-to-door passing out résumés. It was so important for me to get my foot in the door that I was willing to work for free for two or three weeks just to get the shot," he says.
Two years later, after being promoted to a floor clerk, Jamali began trading electronically overnight. "I traded overnight and clerked during the day, which resulted in very little sleep. I was so excited about what I was doing, that it didn’t matter," he says. Jamali was committed to being a successful trader. "This is going to happen," Jamali told himself. "Failure was not an option."
Jamali began trading in the five-year bond pit in 2000 and predominantly traded the yield curve until 2003 when he went upstairs and began trading the basis (cash vs. futures). He benefited from the more difficult environment as electronic trading eliminated some of the edge floor traders had. "I was never a scalper; the electronic trading transition had been difficult for a lot of traders."
In making the move away from the pits, Jamali was able to step back and assess his strengths and honestly identify his weaknesses. He knew spread trades, but also knew that strategy wasn’t very scalable. He also realized he didn’t know much about the business side of running a commodity trading advisor (CTA). "You could be the greatest trader on the planet and not have any of the skill sets to run a CTA. Running a CTA has many components to it," he says.