TTU08: Key Traits to Success in the CTA Industry ft. Martin Estlander of Estlander & Partners – 2of2

Top Traders Unplugged

Niels Kaastrup-Larsen

Business, Business News, Investing, News

4.8 • 670 Ratings

🗓️ 26 June 2014

⏱️ 49 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Today we rejoin the conversation with Martin Estlander the Founder and CEO of Estlander & Partners. If you missed the first part, feel free to listen to it here.

In this episode we explore the evolution of the CTA industry, the skills required to run a successful business and finally the fun, less known facts of Martin’s life outside of trading.

Welcome to the second part of our conversations with Martin Estlander.

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In This Episode, You’ll Learn:

The best rule of thumb to visualize risk in a traditional CTA portfolio
What Martin has learned from being in drawdowns and the difference between drawdowns before and after 2009
The effect of volatility in the markets and how this impact CTA performance
How Martin Estlander manages the emotional roller coaster
Research processes and research cycles at Estlander & Partners
How to identify and address systems that were working but now aren’t
The biggest challenge for Estlander & Partners going forward
What are investors not asking that they should be asking when choosing a CTA
Where the misunderstandings can happen for investors when trying to understand the CTA industry
How to become better at communicating with investors
Martin’s key traits to success in the CTA industry
Personal habits that have contributed to the success of Martin Estlander
How Martin manages failures and improves from them
The things Martin would do differently if he started over today

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Transcript

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0:00.0	You're listening to Top Traders Unplogged episode number 0.08, where I continue my conversation with
0:07.1	Martin Eslander, founder and CEO of Slander and partners. This episode is sponsored by Saxo Bank and
0:14.8	Swiss Financial Services. Welcome back to Top Traders Unplugged, where the best traders in the world
0:20.5	come to share their experiences, their successes, and their failures.
0:24.6	Let's rejoin the conversation with your host, veteran hedge fund manager, Niels Kastra Pilarson.
0:43.3	Another topic I wanted to touch upon is risk management.
0:51.4	And I wanted to start by asking you a little bit about how you define risk.
0:59.9	You know, what does risk really mean to you and and and then how you go about dealing with it and and managing the risk in terms of whatever target you have yeah sure well i think I think, you know, the risk management approach that we run is sort of divided into two pieces.
1:18.7	And it all dates back to when we're trading options in the beginning and we had really little equity and we were required by the exchange to make markets in all series and from time to time
1:30.2	we had to put on, take on much bigger positions than we were, than what was sensible for
1:36.7	our little, little equity pile.
1:40.3	Sure.
1:40.8	And that led to a philosophy where we really sort of look at everything from the worst
1:46.8	case scenario, continuously sort of making sure that we can survive to the next trading
1:52.2	day and never put on more risks and we're comfortable in holding.
1:55.2	And that means both market risk but also operational risk.
2:03.6	So you have to be extremely careful with how you operate and how you make sure that you have backups and integrity checks for everything you do
2:09.1	so that you don't fail operationally so that's something that our risk manager looks at continuously
2:14.5	during the day that all all the aspects of the process are running smoothly.
2:19.3	And then from a market risk perspective, the way we approach trading is really from
2:27.3	sort of managing the left tail of the distribution.
2:32.3	And the idea, I guess, is that if we have a future sort of
	...

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