Quote from southall:
Does anyone have info on Trout and VN.. reading from new market wizards it seems Trout never had anything resembling a student teacher relationship with VN. Its seems Trout worked as a floor trader at VNs firm and developed his own methods (and learnt methods from other floor traders) and his own trading models.
The relationship between Trout and VN seems nothing like say between Dennis and his Turtles. Who were taught to use Dennis's trading systems.
From the Interview between Jack Schwager and Trout:
How did you break into the business?
The athletic director at Harvard, Jack Reardon, knew Victor Niederhoffer, who headed NCZ Commodities, a New York trading firm. .. Jack knew I was interested in trading and suggested that I talk to Victor. We hit it off, and he offered me a job. It was a great job because I got a lot of responsibility very quickly.
==== Doing what? ====
Within two weeks I was trading on the floor of the New York Futures Exchange [trading the stock index], Victor owned seats all over the place and needed people to trade on the floor for him.
==== Executing his orders? ====
A little. But mostly I just scalped for myself. I had a profit-sharing type of deal.
==== You were fresh out of school. How did you learn to become a scalper overnight? ====
You ask a lot of questions. You stand in the pit and talk to the people around you. It's actually a great place to leam quickly. At some point, you hit a plateau. But when you first get into the business, it's a great place to start, because there are hundreds of traders. If you find the ones who know something about the markets and are willing to talk to you about it, you can learn quickly.
==== Why did you leave the floor? ====
I found that what I did best on the floor was position trading. I had experience developing computer models in college. Each day when I finished on the floor, I would go back to the office and develop trading models. Victor was kind enough to let me trade off some of these models, and I started making fairly consistent money. Since on the floor I could only directly trade one market, it was more efficient for me to trade off the floor.
I was a COMEX floor trader back in 1986 for Paul Tudor Jones and met Monroe through a friend of mine that was in the Silver pit. My buddy lived in New Canaan, CT along with Monroe. Monroe would occasionally come over to my buddies estate (7 acres) and we'd play everything from "3 on 3" basketball to tennis and even paddle tennis. I had just finished up a 2-year stint on the NYFE trading for Victor Sperandeo, and it was nice being able to get out of the City on the weekends.
My buddy (at one point a ranked tennis player, #127), found his way onto the COMEX to become a small 1-lot silver trader. He scalped around like everyone else and basically stayed out of trouble. He had a genius IQ, the son of a former CFO for Pepsi, who graduated from Wharton with a degree in Philosophy. As you can imagine, I spent many a weekend up in New Canaan as a great way to get out of the NYC during the Summer. He lived with his Mom in a huge house and we fondly called the Estate....
The Schafe-Dome given all of our endless pick-up games and sports activities.
One year later (1987) I was trading on the NYFE as an independent local and noticed that Monroe was checking out the pit and trying to figure out whether he wanted to begin a career as a floor trader. I never noticed him again on the floor, let alone in the NYFE pit scalping.
So when Monroe talks about having been a member of the NYFE, it's possible that he was a member in 1986, given that the NYFE floor was still located next to the NYSE over on Broad Street. (The NYFE did not come over to the World Trade Center until the NYFE merged with the Cotton Exchange in late 1988 under the leadership of Paul Tudor Jones, the Chairman of the NY Cotton exchange at the time).
We seemed to have "crisscrossed" paths, given that I was over on the NYFE on Broad Street in 1984-1985, while he was over on the Comex as a clerk. In 1986, I went to work for PTJ on the Comex, and Monroe may have gone over to the NYFE during that year. But I never got that feeling during all of those basketball games that we played up in New Canaan on the weekends. His Wiki entry says that he had become a bit of a celebrity on the trading floor given some sort of amazing track record that he had accumulated, turning profits in 69 out of 79 months, but I tend to think that is a whole lot of embellishment. I had never heard of him on the Comex floor in 1986, and I certainly never saw him on the NYFE from 1987 on.
Again, when I left PTJ to go on my own in early 1987, I spent the next 6 years on the NYFE floor and never saw Monroe in the NYFE pit scalping. So my guess is that if he was a member of the NYFE, he was most likely "off the floor" position trading, as he indicates in his interview.
In any event, I'll never ever forget reading an article in Barron's during the Summer of 1991 during Desert Storm in which they highlighted a 28 year old Commodity Pool Operator who was managing about $50 million at the time. It was
Monroe Trout
And I was like.... are you kidding me???
During a 5-year period he averaged 67% annual gains and was managing hundreds of millions of dollars using various quant models.
In his final year (2001) his Fund posted a 13.6% gain.
He retired in 2001 at the age of 39.
The Bottom line..... Monroe Trout was a "quant" before there were quants on Wall Street.
