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Getting to Know Monroe Trout: Pioneer of Quantitative Trading

Monroe Trout is an investor, hedge fund manager, and professional trader born on January 22, 1962, in the United States. He is renowned for his success in trading and is considered one of the pioneers of quantitative trading. His career in trading began at the age of 17 when he worked with futures trader Vilar Kelly. Here is a summary of Monroe Trout's career journey and trading strategies:

Career Journey

  • Monroe Trout started learning about trading at the age of 17 while working with futures trader Vilar Kelly.
  • While studying at Harvard, he wrote six papers on forecasting futures and options prices.
  • After graduating, Trout worked as a futures and options trader at NCZ Commodities, Inc., where he established himself as one of the most successful traders on the exchange.
  • In 1986, he left NCZ and founded Trout Trading Company.
  • In the 1990s, Trout began focusing on quantitative trading by developing systems using artificial intelligence that combined technical and fundamental analysis.

Trading Strategies

  • Trout employs a combination of technical and fundamental analysis in his trading strategy.
  • He utilizes various tools, including charting and indicators, to identify entry and exit points.
  • Trout also employs short-term trading strategies such as day trading and swing trading.
  • He has a set of trading rules that he adheres to, including strict risk management and the use of good risk/reward ratios.
  • Trout believes that focusing on risk management and long-term profitability is more important than trying to be right on every trade.

Trading Tips à la Monroe Trout

  1. Ensure You Have an Edge: Traders must have an edge in money management and risk management.
  2. "Magnet Effect" Trading: Trout believes that markets often reach psychological or round-number levels, and waiting before the price reaches those levels can be advantageous.
  3. Liquidity Applies to Almost All Markets: The most liquid period in trading sessions is during market openings and closings.
  4. Trading Isn't Guesswork: Traders should focus on analysis and risk management rather than trying to guess market direction.
  5. Use Moving Averages or Other Indicators: Moving Averages can be a useful tool if used correctly.
  6. Be a Full-Time Trader: If serious about a trading career, becoming a full-time trader may be a necessary step.
  7. Have Risk Control: Traders should have risk control methods to deal with unexpected situations.
  8. Close Positions on Losses and Wait for the Right Time to Resume Trading: Trout has strict rules regarding closing positions on losses and waiting for the right time to resume trading.

Monroe Trout is a successful example of a quantitative trader who has made significant contributions to the development of advanced algorithmic trading systems. His trading strategies and principles remain relevant and are widely studied by traders to this day.
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