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My Latest Cover Letter (Part 2)

Posted by on August 5, 2021 at 07:38 | Last modified: July 11, 2021 07:54

Last time, I presented a job listing I recently stumbled upon. My cover letter follows.

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To Whom it May Concern,

Applying for this job is a reach for me. I believe I fall short of your job requirements. I also believe I am one of the more unique candidates you will find.

I resigned after several years as a staff pharmacist and pharmacy manager to start a securities trading business at the age of 36. This has been a journey without clients or co-workers that has required extensive self-study, intrinsic motivation, and outside-the-box thinking. I have since learned a great deal about the mechanics of trading and investing. I have truly risked my own hard-earned capital to learn the craft.

My ultimate goal is to significantly improve risk-adjusted return. I want to be investing with insurance, which will leave me somewhat worry-free in the face of drawdown. I have seen enough to know this might be possible. I have a rough draft of a complete portfolio plan in mind.

I hope to do extensive backtesting to develop this approach, but I feel I need more programming and statistical expertise. Working with a team could help. A team is also advised to validate results. Confirmation bias dictates that once something seems promising, the rose-colored glasses slide in undetected. Critical peers can help to defend against this.

I have always been excited about the prospect of learning. I would be happy to get the Series 3 license. With your support, I would also welcome the challenge of pursuing the CFA designation.

I am not so excited about tight deadlines or loads of stress. For the vast majority of my 13+ years working alone, I have done sufficiently well without them. For long intervals, the trading component of my work has been like watching paint dry.

Working without pressure does not mean I lack with regard to discipline or determination. My approach has evolved over the years through backtesting and live trading. While I have slightly outperformed the indices, untapped potential remains. Good ideas have come from casual online/voice communications with other retail traders. Some ideas have been researched and many others discarded. I maintain a list of hypotheses to test and explore.

All this is what I stand to bring to your firm if you believe what I seek for myself can also satisfy your clients. You “are beholden to returns above all else.” I would simply add the words “risk-adjusted.” I suspect some sort of hedging is in order.

I fall just short of the listed job requirements in areas I would hope to grow in working for you.

Despite these shortcomings, I have succeeded as an independent retail trader by replacing my previous pharmacist salary. I think the MSFEs and M.S. in Data Science students graduating today have the additional expertise that I seek while being short on actual trading experience: my teacher and continuous motivator for better than a decade.

I graduated with the Pharm.D. in 2002 and in hindsight, I retired in 2007.

I never really thought of myself as retired, though.

I still have so much more to accomplish.

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My Latest Cover Letter (Part 1)

Posted by on August 2, 2021 at 07:02 | Last modified: June 4, 2021 13:07

I recently saw a job listing that really piqued my interest. With the exception of selected words to protect the innocent, the listing reads as follows:

     > KLM implements bleeding edge ML techniques to solve the
     > extremely challenging problems of modeling and predicting
     > financial markets. We build predictive models using propriety [sic]
     > software as well as open source tools, which we use to drive and
     > execute trade decisions. We are seeking an enthusiastic, self-
     > motivated Research Analyst to work collaboratively with data
     > scientists to meet… [our] mission of delivering superior risk-
     > adjusted returns using proprietary modeling techniques. Our
     > Research Analysts are mathematically gifted, intellectually
     > curious, highly analytical and detail oriented.

I do not consider myself gifted. Any accomplishments are due to hard work. That’s it.

     > Minimum Requirements
     >
     > Four-year college degree (or higher) in Math, Science, Engineering,
     > Statistics or other highly quantitative disciplines

IMHO, my doctorate in pharmacy and all the prerequisites should qualify.

     > 0 – 5 year’s work experience in an analytical and quantitative role

Check.

     > Strong Programming abilities. Python, C/C++/C#, Java, SQL a plus

Miss. I have weak (but existent) Python programming skills thus far, but would be very motivated to improve under the tutelage of others.

     > Excellent oral and written communication skills

Check.

     > Ability to demonstrate strong problem-solving skills with an
     > aptitude for numbers and accuracy

I sure hope so.

     > Preferred Skills and Previous Experience
     >
     > Experience with programming and data analysis tools such as MSSQL,
     > Tableau, AWS, GIT and Conda

Miss.

     > Experience working on large data sets with a strong focus on data
     > quality and attention to detail

Check.

     > Able to independently bring projects to successful completion

Check.

     > Highly organized and enthusiastic with a positive attitude

Check.

     > Demonstrated ability to work efficiently in a demanding,
     > team-oriented and fast-paced environment

This described my every single day as a pharmacist, but now I want and believe in a more relaxed environment. The kind of investing I do doesn’t need to be fast-paced and the ideas can flow at least as well when the pressure is off. “Prepare for war in times of peace.”

If they feel I am not worthy for any reason, then I don’t need to be there. I would not be taking this job for the money.

I am highly motivated to learn, and in this vein I could flourish even more in a team environment. I am eager to get the Series 3 license and study the philosophy behind whatever trading style they have found to be successful. With corporate support, I would like to pursue the CFA designation.

Hitting the pause button for just a moment, their mention of ML suggests my investing path may differ markedly from theirs because my early experience with algorithmic trading was not so encouraging. I am willing to work hard for growth, though, especially if they are open to my approach, too.

     > Compensation and Benefits
     >
     > Highly competitive base salary + substantial profit-sharing bonus
     > Highly flexible career path and growth opportunities
     > Health, dental, vision, life, disability insurance
     > Stocked kitchens with breakfast and salad bars as well as snacks and drinks

If only there were an on-site fitness center! My dream would be complete.

I will continue next time.

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Updated Meetup Hopes (Part 2)

Posted by on July 19, 2021 at 07:16 | Last modified: June 2, 2021 10:49

In an effort to network with other traders in my new state, I have been messaging people from a few pertinent [dormant] Meetup groups. I recently got a response from one claiming to know a handful of interested traders who asked me to compose an e-mail describing in more detail what I am looking for. I continue the e-mail from Part 1:

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This is another place where compatibility fits in.  I believe becoming a good trader means building number of occurrences, repetition, and discipline.  Not everyone lives by these virtues and I probably won’t work well with those who don’t.

Either of the previously-described group formats could be a destination. In a structured manner, we would be pursuing serious, consistent trading with the potential for solid profit potential. This might make driving to a central location more feasible. I can also see much of the work being done online through Skype, Zoom, or Slack. In going that route, I would still like to at least have periodic social gatherings.

The previously described formats are highly-selective structures that beg for substantial individual commitment.  I got one reply from a Meetup member saying he applies a fundamental approach to stock selection that he complements with a few technicals.  I see nothing wrong with this and yet, it’s not something I would do.  First and foremost, he trades stocks—not options. Second, it’s unlikely he would be interested in an option group if, in his mind, he’s onto something that works (why would he continue to do it otherwise?). I would not be in one of the previously-described groups with him. 

As an aside, the [humility to] detect and abandon flawed methods for something better stands in juxtaposition to the host of people who tweet on social media about trading accounts going “to the moon,” making money hand over fist, and trading services that advertise outrageous performance. I’m not sure what the trash talk and braggadocio is all about, but I want to improve regardless of how well I may have done thus far. I would prefer to discuss my current strategy development rather than actual trades because I hope to morph the latter into something more comfortable and secure.

I hope one of the benefits of my experience is knowing where I need to improve.

Stepping down in sophistication, we could have a group of diversified traders who informally share trades and strategies, discussion about the economy, market predictions, etc. Personally, this would allow me to meet people although it may not result in [much] professional enhancement. I think people would be less willing to drive distance for this since it doesn’t offer the payout potential of the more sophisticated formats. This format would be more suited to beginners.  I wouldn’t want people who think they will take without giving, though. I would suggest a mandatory contribution of either money or content. 

The dream, as written about in so many investment/trading books, is to leave the employer and trade for oneself on a more flexible schedule from any desired locale. The conundrum for many, I think, is that the dream can only be accomplished with full-time effort that most people cannot afford (i.e. quitting their job).

I hope we can make something happen!

Sincerely,
Mark

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Updated Meetup Hopes (Part 1)

Posted by on July 16, 2021 at 06:54 | Last modified: June 2, 2021 09:44

In an effort to network with other traders in my new state, I have been messaging people from some [dormant] trading-related Meetup groups. I recently got a response from one claiming to know a handful of potential members who asked me to compose an e-mail describing in more detail what I am looking for.

———————–
Hi BD,

Nice talking with you yesterday.

This message got lengthy!  Please don’t forward the whole thing to anyone you think might get overwhelmed.  Feel free to pare it down or I can write something altogether different.  I would like to hear what potential members might be looking for, what kind of trading they do, what they might be able to contribute, etc.  When I organized that small group 5-6 years ago, I started with a short assessment questionnaire designed to help me tailor the group accordingly (and decide whether it was even something of which I wanted to be a part).

Explaining what I seek in a group is difficult.  What I’m ideally looking for is probably a pipe dream so I’ll start with that.

As a full-time option trader, my aspiration would be to find people with whom to collaborate on trading strategy development.  This is simply stated yet extremely complex because it requires people who are advanced traders, who have studied, who have already put in extensive time and effort, who know some statistics/quant methods/coding, who have unbridled passion…

I’m here to tell you that aside from our discussion about the challenges of organizing a successful trade-related meetup, I have looked high and low over the years for other full-time traders.  On the rare occasion I stumble upon one, I usually find incompatibility because I can’t get behind the philosophy (for a reason, which sometimes makes me question whether they’re even being honest with me), the vehicle, the time frame, the limited sample size, the level of discretion, etc.

It’s no joke when they say the trading strategy must fit one’s personality.

Aside from such a collaborative effort, I would be interested to form a trading team where each member specializes in a particular strategy.  This will be a strategy they track and follow every single day.  If they don’t trade it live, then they will paper trade it.  If they have the tools then they can backtest for a broader perspective.  At every group meeting, time will be allocated for each member to present updates, education, and/or discussion about their assigned strategy.  If this requires too much time then perhaps members present every x meetings; we just need to be meeting enough for this to make sense.  Learning new strategies is very difficult with infrequent exposure—we’ll repeatedly forget before hearing about them again.  
———————–

I will continue next time.

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The Road Forward

Posted by on May 4, 2021 at 07:20 | Last modified: April 19, 2021 08:33

I am at an inflection point. Time to take a step back, review where I’ve been, and more clearly define where I am going.

I haven’t been happy with my downside risk after 2018 when, for all practical purposes, I lost money for the first year since switching to full-time trading in 2008.

Initially, I thought the way around this was migration to a portfolio of diversified asset classes. I found Following the Trend by Andreas Clenow (2013) to be quite the eye-opener.

I then thought I should learn some Python to backtest some noncorrelated futures markets to validate Clenow’s book (especially because of this comment).

In between, I took a course on algorithmic trading and spent several months trying to develop my own trading system. Some of this time included use of a genetic algorithm. Although the total number of strategies I tested amounts to a proverbial “drop in the bucket,” none of this worked.

I spent a minute trying to build a futures backtester in Python. I wasn’t encouraged by the speed of my program and I wasn’t sure how to proceed coding the trading rules. Although I did not expend great effort in searching, I was not able to find a project collaborator.

Late February through March 10, 2021, I contemplated preparation for CFA Level I. I had several contacts with the CFA Institute and board members of the local CFA societies. As it turns out, my trading experience does not qualify me for CFA Charter because I haven’t been working in the industry proper. I could still take (and hopefully pass) the exams, but in order to become an official charterholder I would have to work 4,000 hours over at least three years at a financial firm.

Because of the low pass rates, I believe passing the exams would get me in the door with many prospective employers. Even without the charter, anyone who talks to me about what I have been doing since 2008 will quickly find out that I have learned a great deal about trading and investing over the 13+ years (regardless of how well I have performed doing it, which is another discussion altogether).

I decided not to begin preparation for the CFA exam and since making that decision, I have caught up on my 18-month backlog of financial publications.

Most recently, I have done some intense reading and studying of the writings of KR: an online investment contributor. This individual has been very generous writing many articles and answering questions about his approach, which hedges downside risk, for free. His is really a compilation of trading strategies that would best be served by backtesting each strategy independently and, if I could nail down allocation for each component, computing a weighted average of % PnL by date. This assumes I can get daily performance exported to .csv, which is not a trivial matter. The backtester I’d like to try for $39/month cannot do this.

Over the next few posts, I will start slow by discussing some of KR’s content.

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An Insider’s View on Jobs in the Financial Industry (Part 2)

Posted by on April 29, 2021 at 07:19 | Last modified: March 15, 2021 15:21

Today I will conclude discussion of a phone call I recently had with my brokerage rep about jobs in the financial industry.

If I insist on sticking with options, my rep said I would have trouble finding a place with large, established firms because most do not deal in options due to their risky perception among the general public (I disagree as discussed in this mini-series).

Logistics may be another issue with option trading. One transaction with stock, ETF, or fund proceeds can be easily distributed across multiple accounts. This would be more difficult with options. Since client suitability varies drastically, I probably would not have proportional positions across the different accounts. Such accounts would therefore require more individual attention: a slight tweak here or a larger hedge there to balance different accounts. In effect, I would have to go from one client account to another until I were through them all—and heaven help me when Mr. Market decides to make a sudden, large move against the overall position as I would hardly get the chance to adjust in a timely manner.

Whether starting with a more established firm or opening my own RIA, finding clients would be a challenge. Working for the brokerage, my rep gets leads every day from investors opening new accounts. Nobody is calling an Edward Jones or Raymond James wanting to open a new account, though; people calling firms like these are looking specifically for advisory services, which makes getting clients more difficult. This dovetails with a 2019 survey that reveals very few Americans actually have financial advisors.

He also mentioned that 95-97% of new RIAs fail in the first year or two. We didn’t discuss cost to start one, but the low probability of success provides plenty of reason to tread lightly (or not at all).

The rep talked a bit about his own background. He worked for a bank where he sold a $1M annuity in January of the early 2000s. This was about 5x more than the average monthly revenue for the entire investment advisory department. When the following January rolled around, his target was 10% more than what he took in the previous January: $1.1M. This was an outlandish expectation that put him under a great deal of pressure.

I certainly don’t want that.

Near the end of the call, I expressed my skepticism of algorithmic trading profits. I brought up “equity trading revenue” (with regard to Goldman Sachs) and he replied with “underwriting profits” and said this could be the result of positions held in a company for whom they are doing the underwriting. These are not profits generated from algorithmic trading at all, as people often surmise, and would support my thesis about how difficult it really is to develop algorithmic trading strategies that work.

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An Insider’s View on Jobs in the Financial Industry (Part 1)

Posted by on April 26, 2021 at 07:33 | Last modified: March 15, 2021 14:34

My primary brokerage has a toll-free number I can always call and a general e-mail to support. They were nice enough to provide me with a local personal contact in case I ever have issues to discuss with a familiar voice, as well. Back in January, I had an informative phone call with my representative about working in the financial industry.

I prefaced the discussion by telling him that I have been trading my personal account full-time for over 12 years and am very thankful things have worked out thus far. Since I have successfully navigated my own account, I would like to do the same for others. How might I make this transition?

My expertise is in trading and strategy development. I think of myself like a quant but not as sharp as the professionals because I haven’t had as much [recent] math, statistics, and/or programming coursework. I would like to at least think I know my way around making money in the trading space. This has been true for the better part of 13 years [and could end at any point, which is why I don’t really like to talk about it much as noted in the second paragraph here]. Most everyone with whom I have shared my career story has been impressed with what I have done.

I asked how the suitability standard for investment advisors compares with option trading clearance for brokerage clients:

I think Schwab has three levels, but this four-tiered structure is currently in force at E*Trade. To get full option trading clearance, one needs to claim extensive knowledge, trading experience, and sufficient liquid net worth. The option application asks about investment goals (e.g. why are you investing in options?) but nothing about investment time frame. A suitability assessment will ask about time frame but nothing about investment experience.

If I want to continue managing my own accounts, my rep said most financial firms would require I move the accounts over to them (or their custodians) and would not allow me to trade during the business day. The latter makes sense since I’m being paid to work for them. Moving accounts over, though, might come at a cost of being able to trade options altogether depending on their custodian, clearing firm, and/or available permissions. This may or may not be a compliance issue.

I would never want to give up self-directed trading, which is my primary source of income. So much for working as an investment advisor for an established firm?

I am worthy of self-promotion (see here and here) but still missing the piece about how to get from here to there.

I will continue next time.

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Lead Trader and Research Assistant (Part 2)

Posted by on October 23, 2020 at 07:26 | Last modified: January 9, 2021 15:31

I recently wrote about a second job that seemed very appealing as a formal introduction to working in the financial industry. My cover letter is below.

——————————–

To Whom it May Concern,

I am writing to apply for the position of Lead Trader and Research Assistant.

After working as a staff pharmacist and pharmacy manager, I retired at the age of 36 to start a securities trading business. This has been a journey without clients or co-workers that has required extensive self-study, intrinsic motivation, and outside-the-box thinking. I have since learned a great deal about the mechanics of trading and investing. Having risked my own hard-earned capital to learn the craft, I now seek to manage wealth for others.

I feel my experience is something of a contradiction. I have never worked publicly for a financial firm, but I probably have more trading and portfolio management experience than the vast majority of industry participants. Trading has been my sole source of income for the last 12 years.

I have given extensive consideration to a potential career in the financial industry. I have researched the possibility of starting my own hedge fund, working as an IAR, or managing money for a family office.

I suspect the kind of trading I do for myself would not be appropriate for most clients of an IA. Accredited investors aside, I may never trade an option for the firm’s clients due to suitability standards. If options can be used in client portfolios, then I would be very eager to work together in designing viable strategies. This is not my expectation, however.

Regardless of derivative suitability, one topic for discussion is whether my nearly 20-year experience trading stock and derivatives can be marketable for the firm. I want to believe it can and would be very interested in talking this through.

My journey as a full-time trader has [by necessity] put me on a quant-related path. Over the last two years, I have invested in additional education to better understand and immerse myself in algorithmic strategy development. Overfitting is a nemesis that requires constant surveillance. A curve-fit system will look great and convince casual observers, but performance at the hard-right edge is likely to disappoint.

Aside from developing trading strategies, I hope to soon research potential benefits of combining asset classes. While “diversification” has been a prized industry buzzword, I am not sure it is as simple as being plucked out of thin air. Backtesting can be done with Excel VBA, but I think greater potential exists with Python—–a versatile programming language I have made decent headway getting to know in recent months.

As with options, my foray into algorithmic futures trading may not be suitable for client accounts. The work certainly falls in the realm of both research (backtesting) and trading (“Lead Trader and Research Assistant”). Although not expected, I would jump at the opportunity to work with a team in developing diversified futures portfolios.

I am willing to pursue further credentials that may be valuable to the firm in its dealings with clients. I have passed the Series 65 twice and am no stranger to exam preparation (Pharm.D. graduation and NAPLEX). On my own, pursuit of further credentials (e.g. CFA, MSFE, CFP) has been difficult to justify since I have been able to cover living expenses on trading profits alone. As the most highly regarded sign of success for a retail trader, this achievement makes me both thankful and proud.

I have attached a résumé for a more detailed review of my education and experience. My e-mail is {1}, and my phone is {2}. Thanks for your time and consideration!

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Lead Trader and Research Assistant (Part 1)

Posted by on October 6, 2020 at 07:06 | Last modified: January 9, 2021 14:30

I recently thought I found my “dream job” but, as described here and here, that did not work out. Today I want to discuss another job opportunity that just made it to my inbox.

Here’s a job description for Lead Trader and Research Assistant:
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The trader/research assistant position focuses on… trading funds in our client accounts and researching for our investment committee as directed by our CIO. We are specifically looking for a tech savvy candidate who has extreme focus and attention to detail but is ready and able to work under pressure. It is also essential that this person can work independently, meaning they can be trusted to focus on work during work hours (putting the cell phone aside) without having to be supervised. As a company we strongly believe the best team members do not need to be managed, they simply need to be supported. We expect out of the box thinking and problem solving, this team member will always have the benefit of a team but should be able to work through issues independently as well.

Duties include but not limited to:

Qualifications:

——————————–
Unlike the last job, I think I meet all the qualifications for this one:

Although job applications are no longer being accepted, I will continue next time with the sort of cover letter I would submit.

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Wooing My Dream Job (Part 2)

Posted by on September 22, 2020 at 07:08 | Last modified: January 9, 2021 11:01

Continuing on with a recent job listing for my potential dream job:

The Jr. Investment Analyst will be responsible for collecting and managing performance and market data used for reporting on portfolio performance.

In this role, the Jr. Investment Analyst is expected to:

Required Knowledge, Skills, and Abilities
The candidate will be early in their career and will have served as a junior investment or finance analyst with experience in managing investment portfolios, evaluating strategies, assessing portfolio performance, coordinating resources, and reporting. The candidate should be very familiar with investment concepts, asset allocations, and have experience using a variety of tools and data sources with experience in a foundation, pension, or endowment.

Critical competencies and experiences:

I can fast forward and tell you that I did not get a call back for this position. To be sure, I was overreaching in some areas:

Finally, I have worked as a full-time option trader for over 12 years, which exceeds their desire for no more than 3-5 years in finance. I have trouble understanding why this would be a deterrent, though. I would imagine this—perhaps more than anything else—is what made me unique compared to most other applicants.

This was my first job application in over 19 years. It was not meant to be.

On to the next one!

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