If you are talking of Schneider in the City of London (Leadenhall Market) the same people who run a hedge fund incubator, then ask them very, very specifically about what "methods" or "systems" they adopt. A year or so ago they were trying to teach a bunch of people new to trading how to trade a spread of the bobl vs the US 5yr. They claimed their "method" had been backtested.
But it was never made remotely clear what their "method" was and the guys doing the teaching seemed to change their minds from day to day.
It really all bolied down to a more or less gut feel as to where the spread was going. Purely discretionary. No backtesting possible therefore. But it was tough to get them to admit this. And frankly, on that basis, why bother with the complications of a spread anyway. May just as well trade an outright.
Does it feel like a range has been established? If yes, then does this look like the boundary of the range? If yes, then lets play mean reversion for a hour or so. Oh dear! Bother, the spread seems to have broken out of the range - hey, I think its going further, lets follow the trend for a bit. And so forth. You get the picture.
The trading floors are full of no-hopers bleeding themselves dry paying commissions and seat hire. There are a few, a very few discretionary traders who seem to be able to read the markets right and seem to make a good living. But of those I spoke to there was no one who had been making a good living for more than a few years. I suspect the drop out rate is phenominal. probably the same for all these shops.
No doubt now this thread will fill up with the usual bluster from vastly successful individuals claiming to make 80% a month. But that is my impression of Schneider. Great for the owner - commissions and seat rental pouring in from the clients (IE those who rent their own seat and put up their own risk capital.)
