The Trading Congress: Examining a successful diversified managed futures strategy

This study was presented by Jay Feuerstein, CEO and CIO of 2100Xenon.

The discussion centered primarily on what Feuerstein defined as desirable attributes and relevant considerations for a successful fund.  His group, 2100Xenon, is a global investment manager, involved in markets across the world.  Utilizing multiple time frames and global momentum, 2100Xenon implements global macro strategies in the fixed income space.  They aim to have a “long volatility” absolute return profile that historically succeeds when traditional strategies suffer.  As Feuerstein puts it, there are no bounds to where the markets can go, and it is on this tenet that his fund his managed.

A key advantage to trading fixed income, and the reason 2100Xenon places such emphasis on it, is its notable lack of correlation with traditional equities.  Feuerstein stresses this point as a possible opportunity for edge and a manner in which a fund may differentiate itself in a marketplace crowded with much larger CTAs.  It is this edge that can guarantee success for both a fund and trader.  Additionally, Feuerstein emphasizes the importance of recognizing edge and where exactly it comes from—if a trader doesn’t know why he is making money, he won’t keep it.

Further making the case for the bond market, Jay points to the central bank as a key indicator for fixed income and a method for trading this market.  As he states, if a trader understands the Federal Reserve, he can make money.  In this way, 2100Xenon gets their edge.  Through Feuerstein’s extensive experience in the bond market he has gained a feel for how fixed income responds to the central bank.

Finally, Feuerstein stresses the importance of risk management for any trader or fund.  As he asked the audience, how is a trader to know if he’ll have any money after he gets a trade wrong?  Through proper risk management techniques, a trader can make a bad trade, get back up and look towards the next position.

This study took place at the Trading Congress, at The Trading Show Chicago.

-Original content provided by Akshai Rajendran, an on-site blogger at The Trading Show Chicago 2012