From the May 2014 issue of Futures Magazine • Subscribe!

Tim Fligg cooking up profits

Tim Fligg has taken a circuitous route to becoming a successful trader, which recently culminated in him winning his category in the most recent BattleFin trading competition. 

BattleFin is a tournament platform that holds competitions to identify trading talent and then crowd sources the winners. The best are chosen and connected with seed capital. BattleFin President Tim Harrington recently told Bloomberg TV that it is a way to help emerging managers get allocations. 

Fligg actually was in chef school where an instructor introduced him to trading. He was so interested in it that he changed his career path and began taking trading courses at Oakton Community College in suburban Chicago. 

There an options professor solidified his interest in trading as they traded a $100,000 simulated account and took it to $2.1 million in nine weeks. Fligg’s professor Asher Bronfeld, who was also a stock specialist on the Chicago Stock Exchange (CHX), recognized his talent and offered Fligg a position at CHX. Fligg clerked for Bronfeld and quickly moved up to a stock specialist at Dempsey & Co LLC.

Like many aspiring traders Fligg set out to learn all he could and gobbled up information on successful traders. After reading Jack Schwager’s “Market Wizards” he reached out to three traders: Linda Bradford Raschke, Ed Seykota and Paul Tudor Jones. Raschke and Seykota responded. Jones did not.

He went to one of Raschke’s classed in Las Vegas. “It was the most influential thing [for my trading] that I ever did,” Fligg says. The first day was just a meet and greet, the second day she said, “this is what we are going to be looking for: regression and set-ups and potential breakouts.”

She taught him that if certain levels are reached it would trigger a trade the next day. “Sure enough, everything that she said—what is going to happen in bonds, in gold—it all happened,” Fligg says.  “It was awesome—all the technical breakout stuff. She is really big on only taking high-probability trades.”

“Even though I was on the stock exchange floor, not until I took a class with Linda did I ever see anyone really research and have a solid plan going into a trading day. Her game plan still to this day was spot on for what happened when she traded live in front of everyone,” Fligg says. 

However, this was just the beginning of Fligg’s education. 

He took portfolio management classes at DePaul University over six years where he was the only undergraduate to be a manager of a portfolio. The class was taught by James Booth who Fligg credits for having huge impact on his trading. 

“This class had fund managers come in on a weekly basis and speak to everyone about their views and strategies. Meeting so many successful people and hearing about what they did helped me form and create the strategy,” Fligg says. 

Fligg trades mainly stock and hedges with options on futures. He coded his own system, which is automated. For the competition he was trading equities and futures, looking for breakouts on the equities and riding the long trends. He was introduced to the strategy by two managers who spoke at DePaul and added a lot of his own twists including covered call and custom made stops created through his regression analysis. 

He uses E-mini S&P options to hedge his stock portfolio but will gradually lift his hedge and leave covered calls and his stops when the stocks move in his favor. 

Every trade has been tested and proven. 

“The system only signals a trade when cetain criteria are met. It looks back three years and if there were 100 trades and 70% worked, and of the 70% on average you made $300 and the biggest drawdown was $150, then you would put the trade on,” Fligg says. 

 “The base of the strategy has been run on more than 18,000 securities over 12 years yielding a 15% return yearly unleveraged. What I’ve added are stops, covered calls and hedging with futures,” Fligg says. He also credits Tom DeMark’s indicators for finding exhaustion points. 

For the competition he earned 25.1% over three months. 

Fligg has taken a vigorous systematic approach to his trading education but is cognizant and extremely grateful for all the professionals in the business who reached out to him and helped him learn to become a better trader. 

Fligg still has a day job as a proprietary trader for Susquehanna, but he will be receiving a proprietary allocation for his trading and looks to have a bright future cooking up alpha as a professional trader.

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