Jaffray Woodriff: A Money Doubler?

LEARN FROM THE GENERALS OF THE MARKETS - PART 46

Born in 1969, Jaffray Woodriff is an American trader. He’s CEO of Quantitative Investment Management (QIM), which he co-founded with Michael Geismar in the year 2003. He spent his childhood in Charlottesville, Virginia; and went to the University of Virginia. He largely taught himself the art of trading, for he’d been craving to be a trader in a unique way with computer programs: he achieved unique results.

He’s been referred to as one of the biggest hedge fund managers. Having only 32 persons working at his firm, his firm manages more than $4 billion. With an income of $90 million, he’s been listed by Forbes as one of the highest paid funds managers. He’s featured in Jack Schwager's ‘Hedge Fund Market Wizards.’

Jaffray is married with 2 kids, and he likes to play squash. He likes to write article about various interesting trading topics.

Lessons

These are some of the lessons that can be learned from Jaffray:

1. While some successful traders have been trained and groomed by other professionals, there are other self-taught traders like Jaffray Woodriff. Discovering what it takes to be a successful trader by trial and error isn’t an easy thing.

2. Jaffray also had rough/tough times in the past. Since he didn’t give up, he’s now enjoying success in the markets. Are you experiencing any rough/tough times in the markets? Please don’t give up, day by day, you breakthrough comes nearer.

3. He’s a proof that computer programs can make money for people in the markets. Yes, reliable auto trading programs can help one reach one’s financial freedom providing that one programs sensible risk control and positive expectancy rules into it.

4. Is Jaffray a money doubler? Far be from that. He simple makes decent but consistent annual returns in the markets. Sometimes he may make 30% or 20% or even 18% (or more or less) per annum. The most important thing is that he makes money per annum. His firm doesn’t double accounts in weeks or months as many people would prefer. The thoughts that most people have about trading are wrong indeed. For you to double your account, you need to bet too big. However, those who risk less tend to make more money than those who risk more. Those who risk less tend to survive bad markets more than those who risk more. The fastest way up may also be the fastest way down.

5. Sometimes, a combination of good trading methodologies can generate better results that just using one good trading methodology.

6. It is better or safer to test a trading idea in simulation mode before one applies it on real account.

7. Tradable setups often appear in the markets over and over again. Historical data contains this as well. This means that trading methodologies that work don’t change with the time and changing market conditions.

Conclusion: When using a trading approach, more is made if one rides one’s gains when one happens to be right.  When the price seems overbought, some would expect it to reverse sharply. In most cases, the reversals that occur are temporary. What you think is overbought can still go far further upwards. This fact may seem impossible, but it often happens that the price that has gone in one’s favor by 1000 points can still go further upwards by another 1000 points (it may even go further than that). This isn’t a new thing.

This article is concluded with a quote from Jaffray:

“…If you are trading the system, and it is not performing in line with expectations over some reasonable time frame, look for overfit and hindsight errors. If you are expecting a Sharpe ratio above 1, and you are getting a Sharpe ratio under 0.3, it means that you have made one or more important hindsight errors, or badly misjudged trading costs…”

Source: www.tallinex.com

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