Elite Trader Insights: Stan Gluzman

Episode 14: Raid The “Money Box”

Each week we try to unlock the collective wisdom of the Trading Elite. Strategies and unique insights from hours of interviews with top traders, sliced into bite-sized pieces and delivered to your inbox for your pleasure.

Stan’s an intraday equities trader at proprietary trading firm Seven Points Capital. He also heads up a small team of junior traders at one of the firms’ additional offices—outside of New York—in Fort Lauderdale, Florida.

The guys discuss Stan’s path to consistent profitability as a prop trader, and then we get into specifics about the various strategies that Stan has traded in recent years—including the actual strategies that he implements today. Stan also share’s details about methods of analysis (statistical, fundamental and technical) that he uses to identify his best trading opportunities each day.

Key Takeaways for Day Traders:

1. Adapting to Market Changes:

Stan stresses the importance of adaptability in trading. "If something stops working, there's another place to make money somewhere else," he remarks. This proactive approach is essential for traders aiming to remain profitable in the ever-evolving market.

2. Multiple Entries and Exits:

Stan's strategy involves multiple entries and exits to better manage risk and seize market opportunities. He explains, "If I think this is the top, let me take a quarter position... if I’m right, I add more; if I’m wrong, I take a small loss." This technique allows for flexibility and better risk control.

3. The Importance of Statistical Analysis:

Stan has developed custom tools for statistical analysis to enhance his trading decisions. "I track the performance of my setups... how much does it gap up, how far does it spike, what time does it top out," he describes. This data-driven approach helps identify consistent patterns and optimize entry and exit points. He finds this gives him a real edge.

4. The Markets Largest Inefficiencies Occur in the Morning

Stan is usually position neutral by 12pm in the trading day, placing his largest trades around 9:45am and managing / scaling out until he is done by 12pm. He believes that the largest mis-pricings which can be arbitraged are available in the morning.

5. Emphasis on Team Dynamics:

Stan believes in the power of teamwork for consistent trading success. By sharing insights and strategies with his team, they collectively improve their trading outcomes. "We share setups... alert each other if someone's missing something," he says, underlining the collaborative environment at Seven Points Capital.

6. Journaling and Review:

Regular review sessions and journaling are part of Stan's routine. "Everybody journals and next day we repeat," Stan notes, emphasizing the importance of reflecting on past trades to improve future performance.

7. Mentorship's Role in Trading Success:

As a mentor, Stan provides guidance and feedback to help junior traders develop their skills. "I think that when a new trader has somebody to watch... he has a much better understanding of the process," he asserts, showcasing the value of experienced guidance in accelerating learning curves.

8. Resilience in Face of Challenges:

Stan's journey includes overcoming periods of underperformance. "I was down in a month... pulling a lot of all nighters," he recalls, reminding traders that persistence and hard work are critical during tough times. When he has more than 2 ‘Red’ days in a row, he immediately reverts to 1/4 positions size, and goes back to basics.

9. Balancing Risk and Reward:

In 2019, Stan focused on finding a balance between risk and reward. "My goal... is to find a balance between being sized in and getting out at the right time," he explains. This balance is crucial for maintaining profitability while managing potential losses.

10. Leveraging Market Tools:

Stan uses specific market tools to assist in his trading decisions, like dark pools for advantageous positioning. "We have access to like ten different dark pools... it’s one way to use that technology to get short if you actually want to execute a position," he details, illustrating the tactical use of market tools to enhance trade execution. He also runs a ‘Gap Scan’ each morning to identify stocks that have gapped up, and so provide an opportunity to short.

There is a lot to take away from this one. It would come as no surprise that I enjoyed his focus and thoughts on statistical analysis. I just don’t think you can trade successfully without some form of this.

Stan also suggests his No. 1 Secret is multiple entries and exits, and this is something you’ll hear from many professional traders. Short the pops, cover the washouts, but at the same time, ride the trend. The way he thinks about this is to divide the trade into a ‘Scalp’ portion, & a ‘Core’ portion to take advantage of an all day fade/rally.

His practice of significantly reducing position sizes when on a bad run is important. It goes against what many of us feel like doing naturally, which is increasing positions as a ‘revenge trade’.

Cheers

Marto