Maverick Trading Risk Management Produces Gains During Crash

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Aug 11, 2011, 08:10 ET

SALT LAKE CITY, Aug. 11, 2011 /PRNewswire/ -- Maverick Trading was proud to announce that its internal risk management techniques weathered the recent market crash with flying colors, to the point of actually producing a net gain in the firm's portfolio.

Robb Reinhold, Founder and Head Trader at Maverick Trading, praised the firm's traders. "Too often, firms and individual traders focus too much on the trading system that they're using, and not enough on risk management. At Maverick, an integral part of the firm's orientation for its traders is risk management, position sizing, and portfolio construction. I am truly proud to say that our traders rose to the occasion during the recent market crash and produced gains in the firm's portfolio during some extremely volatile trading."

Jon Frohlich, Head of Operations at Maverick, continued Reinhold's remarks. "We had faith in the firm's risk management controls prior to the market crash, but it is still gratifying to see them working so well in such a chaotic environment. The firm was expecting a trading range often common to summer trading, and had largely positioned itself in a delta-neutral stance prior to the crash."

Reinhold continued, "Down to the individual trader level, our traders sized their positions accordingly. While the long positions we had were stopped out for small losses, our traders didn't panic and let their short positions run, with profits more than exceeding the losses on the long side."

Darren Fischer, Head of West Coast Operations, added his observations. "During the crash, communication within the firm was surprisingly light. Since short-side targets were taken out and exceeded in rapid succession, we just saw quite a few traders moving their stops and letting the short positions run. As volatility began to crescendo, many traders locked in gains completely on their own late Thursday and Friday (4 and 5 August) leaving them largely in cash on Monday (8 August). Selectively, late Monday, traders began entering long positions in issues that held up during the crash."

Reinhold expanded on the firm's short-term market outlook. "For the meantime, we're treating this bounce as an opportunity for counter-trend trading. We have a guideline at Maverick we use frequently, 'Trade the market in front of you, not the market you wish for.' That said, until the market ultimately chooses a direction, we're taking smaller position sizes and setting close stops on our positions. Moves like this can be a gift, but you have to be around to take advantage of them. Individual traders trying to make it on their own often get over-leveraged one way or another and then destroy their portfolios when the market changes direction. At Maverick, we look for traders who are going to be with the firm for the long run and train them accordingly to profit in any market environment."

With regard to operations, Frohlich added, "If this crash highlighted anything, it's that it's best to trade in a supportive environment. Having a community of profitable traders around to bounce ideas off of keeps people from becoming married to a position or thesis. We are still seeking talented traders to become members of the firm and, in addition to our normal recruiting efforts, we will be recruiting at the Las Vegas Traders Expo in November."

About Maverick Trading

Maverick Trading is a premier proprietary trading firm based in Salt Lake City, Utah, with divisions in Equities/Options and ForEx.

Traders interested in joining Maverick should apply at: http://www.mavericktrading.com/apply.php

For more information on Maverick Trading, please visit http://www.mavericktrading.com.

Contact:

Jon Frohlich
Maverick Trading
801-652-7180
[email protected]

SOURCE Maverick Trading