Trading often is viewed as a game of strategy and risk, so you can understand how Glenn J. Graham, principal of CPO/CTA Golden Point Capital Management’s Global Fund, compares his successful algorithmic strategy to the game of backgammon.
The golden point is the most significant point to capture early on in the game of backgammon. “I believe that capturing this point early in the game shares some similarities with this trading strategy,” Graham says. “We take many small risks in the hopes of capturing some large rewards later in the game.” As an avid backgammon player, that is how he came up with the name for the Chicago-based manager.
His fund’s strategy appears to be working. Since its inception in July 2012, the Global Fund has seen a return of 67.29% as of November 2014, was up 12.35% in December 2014 and ended up 117.75% for the year in 2014.
He attributes the success of the strategy to its 100% systematic nature and his discipline to stick to the system. “We do not make modifications. We made a [system], built a model and have stuck with this same model since inception. We’re not a bunch of cowboys going about speculating wildly,” he says.
He also insists a long-term model is better because it gives trends time to develop and gives him the ability to capture the full magnitude of price moves. He adds that transaction costs also are lower when you have fewer trades, which can add up to substantial savings over time.
The fund’s success also comes from having someone like Graham, who holds the alternative asset class designation of chartered alternative investment analyst, at the helm.
He has been interested in trading and honing his skills for a long time. He took an interest in trading in grade school and his father opened up a custodial account for him to begin trading cheap tech stocks in the early 2000s. He then attended the University of Illinois at Urbana–Champaign, studying finance and working at the business library where he educated himself on trading methods throughout college.
“My first professional trading job was at Allston Trading in Chicago. Within one year I was managing the high-frequency energy desk there,” Graham says.
Also, to add balance and help with the stresses of trading commodities, he teaches high-intensity interval training as well as teaches yoga sculpt.
While the Global Fund program sticks to all liquid North American commodities, there is a bigger percentage allocated to grains (16%) and currencies (16%) because that’s where he says the liquidity lies. “We also believe that these markets have the most real hedging demand and it is real hedging interest that can drive trends,” he says. “As a firm that looks to capture large price trends we believe these markets are where a lot of opportunities lie.”