In this podcast, Matt Zimberg interviews Asim Ghaffar from AG Capital, a Commodity Trading Advisor using fundamental, long-short strategies across equity, fixed income, currency, and commodity markets.
Asim discusses how to generate and implement trade ideas and the crucial role of risk management in his strategy. You will learn how a licensed money manager approaches trading in an objective manner, weighing the pros and cons of each trade before execution. Asim also discusses how he adapts to changing markets as his strategy evolves to the environment it trades in.
If you are a trader and wish to gain insight into how professionals operate, please listen to this podcast.
Optimus Futures, LLC is not affiliated with nor does it endorse any trading system, methodologies, newsletter or other similar service. We urge you to conduct your own due diligence. There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
Episode TranscriptRead Episode Transcript
Welcome to the Optimus Futures Podcast. A place to learn from an industry insider with over 20 years of experience in commodity futures and options. Gain insight to the newest technology, platforms risk management, trading philosophy and advice about the current state of the futures and options markets. For futures trading platforms, deep discount trading commissions, overnight margins and instructional videos. Feel free to visit our website at Optimusfutures.com.
Please remember that this matter should be viewed as a solicitation to trade trading futures and options involve substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. Optimus Futures LLC is not affiliated with, nor does it endorse any trading system, methodologies, newsletter or similar service. We urge you to conduct your own due diligence.
Now here’s your host. Founder and CEO of Optimus Futures, Matt Zimberg.
Matt Zimberg: [00:01:11]
Hey guys this is Matt from Optimus Futures. I got Asim Ghaffar with me here today and he’s a commodity trading advisor. He runs along with his partner Roger, AG Capital. The reason that I brought them here is because they have a really different approach to trading. They look at trends, long term trends, macro trends which is very very different and what most traders do today which is focus on day trading. So, I find it very fascinating they’re more traditional that way. But the interesting part is that you know how they implement their risk management and this is where I want you guys to listen and pay attention to how they have a strategy how they implement that how they go about devising a long term plan for their trading and I think whether you’re trading short term, swing trader, long term, I think it’s important to have the perspective of everybody in the industry. And there still are a lot of traders that do think long term and are trend followers. So Asim thank you very much for coming. I really appreciate your time and being here.
Asim Ghaffar: [00:02:17]
Matt, thanks a lot for having me on. It’s the pleasure.
Matt Zimberg: [00:02:22]
Thanks. OK. Let’s get started. So, tell me how did you and Roger get started in the global macro and futures industry?
Asim Ghaffar: [00:02:32]
It’s a great question and it’s very interesting when you think about it. We both come from very different backgrounds. I’ll start with Roger actually. So, Roger comes from what I would call more of the pure play financial services background. Back in the late 1990s he was working at a blue-chip macro CTA called Caxton and he had an interesting job. He was working on the overnight dollar Yen desk. And what that entails is basically getting to the office late in the evening and staying until 4:00 a.m. and we’re looking at the Japanese yen and how it trades against the dollar and for those who don’t know the Japanese yen tend to be one of the more volatile currencies we can make some very very big moves. Roger at a young age was working on a team late at night analyzing the Yen and putting on trade and making sure that the portfolio was properly hedged and making money from different movements and again. But he started doing that and then he moved into more of a prop trading and wealth management background. And that was sort of his career in the markets trading S&P futures and trading other futures. I on the other hand come from more of a consulting back on my history is more academic in a way. I studied economics in undergrad in college. I worked at some different consulting firms looking at industry data, economic data doing advisory services for very large endowments and foundations helping them with their asset allocation and helping them think about how to put their portfolio together, how to hedge against different risks and you know the entire time that I was doing that I was very interested in the markets. I would go home on nights and weekends and basically trade futures markets starting back in 2002 and it was just it was consuming my life I was spending all my time analyzing the markets and knew that eventually that was the direction I wanted to go. So, Roger and I have been friends for a long time. So, we decided to set this up as a business together. I think that we worked very well together because we have that complementary and different background.
Matt Zimberg: [00:04:26]
Definitely sounds like it. I really like when people have when people in the marketplace they come from different backgrounds and they complement one another. So definitely you have a long-term view. He dealt with the risk management from day one. I see why you’re making such a good team together. I have, on that note I have a question for you. Then I was curious about you know most traders today, they seem to be moving towards a systematic approach, quantitative approach, HFT trading and you on the other hand and you guys have a very good track record. You decided to follow a discretionary and a fundamental strategy. Can you tell me why you chose that over more and I would say it’s in quotes more of the popular strategies today?
Asim Ghaffar: [00:05:20]
A fascinating question and you know what Matt, I’m going to answer in a bit of a controversial way. So, I’ll start going back in time and give a little bit of history to listeners back in probably 2004 2005 for well over a decade ago I actually started off by trying to program some trend following systems and some algorithmic systems we call them. They weren’t the high frequency thing that is sort of the big popular thing today but it was more of a multi-day to a multi week even multi month quantitative systematic approach in the process of doing that you know sitting there and coding things and excel and coding things in different programming languages taught me that it wasn’t something that was married to my own personal interest in the markets I wasn’t enjoying the process of doing that and it was simply in my mind a way to make money. And the lesson there was that you can’t just go into a business as a way to make money. It’s a very difficult business and you have to have the way that you invest and trade, be married to your own happiness and personal psychology when it comes to the market. So, I didn’t enjoy the quantitative and systematic sort of investing and that’s how I really started to then really put my own background of interest in economics and longer-term movements together and went in that direction. And the irony is that even Roger started off with a little more of a short-term swing trading background and he’s sort of overtime as well migrated to looking at longer term fundamentals.
Asim Ghaffar: [00:06:48]
I think when you think about the industry in general we tend to think that markets themselves keep changing on a granular basis whether it’s the way they trade on a daily, minute by minute, second by second or even a longer wave basis. But when you think about very very long-term reasons why soybeans might go from four dollars to eleven or why you know the dollar might go from 100 down to 70 on the dollar index. These things happen for real fundamental reasons that are driven by moves that can take months, quarters, years. And I think that’s fascinating that for me is very interesting and very fascinating. So, we wanted to build a business that we actually were happy with that we enjoyed coming to work every day to look at and the money comes if you really love what you’re doing, and the systematic approach is not the way we wanted to go. Although we do understand that it’s a very viable approach and we can understand that human beings want to find a quantitative way to analyze the markets given that there’s so much math that you can look at, but it has to be in my mind married to your happiness in your social psychology is the bottom line.
Matt Zimberg: [00:07:54]
I couldn’t agree with you more just to tell you that you know my experience is that you know what you mentioned by the way before I go into my experience is very true. People still look first at the money and they try to find an approach to make money. I really like to hear what you said to do. First of all, you like the approach you work on the approach and money in generating capital or gains is a byproduct of your efforts and what you love to do in your research. And I think you know this is the right approach. This is what we tell you know Optimus Traders all the time. We tell them first. You know realize your strength, what you like to do. If you like to micro analyze you know bar charts, then get into that business, if you’d like to look at long term trends and look at long term trends. What others do really doesn’t matter. So, I like your approach and I definitely commend you for you know going after what you love. Having said that, you know, you intrigue me in something that you said about research. So, you mentioned in some of your materials that you were going back to back in time to the 1980s and 1990s with your style of investing and trading. What does it mean exactly what are you looking for in something that happened? Well relatively speaking you know 30 years ago, 20 years ago. And how does it help you implement a strategy?
Asim Ghaffar: [00:09:25]
You know it’s funny you mention that not because when we walk around whether it’s at a conference or a phone call like this and try to introduce ourselves to folks and give them a one sentence pitch on what AG Capital does. We often use that tagline we’re a throwback in style, going back to the 1980s and 1990s with our style. I think what I would say to really elaborate on that would be to talk about what’s happened today especially in the past 10 to 15, even 20 years call it. If you think about the hedge fund industry whether it whether it’s equity funds or CTA managed futures, majority of the assets that multi-billion-dollar fund would really contribute the majority the appetite in the industry. Now you have pension funds and endowments and very large institutional investors that have allocated and they’re writing checks for one hundred million two hundred million five hundred million what they want in exchange is they want to minimize career risk. They don’t want to have any risk at all. What that means is you also give up your upside so you’re going to end up having these multibillion-dollar hedge funds and CTAs trading and trying to produce a 4 percent return with 3 or 4 percent volatility. And so, you essentially have that minimization career that’s driven the industry. And I understand that it makes sense from a business standpoint if you are running one of these large companies and it also makes sense for the allocators perspective if you are you know a massive pension fund like a California retirement system etc. but it gets away from what the hedge fund industry used to be like in the 1960s 70s and 80s where it came from. It came from a need to deliver a strong return that was even potentially better than what the stock market could give you in a very differentiated profile in the initial hedge fund managers whether they were CPA or equity managers they were taking on personal career risk when they put these trades on they would contemplate the capital and give you a very very different return stream than what you would get by just buying bonds or stocks. And that’s what we’re trying to do with any capital we are willing to go and say listen we’re putting our own money in the strategy. We have our own network at stake and we’re willing to take the personal career risk to give a differentiated return stream to be different. We know we’ll have our drawdowns hat time. They know we’re going to lose money at time, but we want to keep the money locked in control. If the draw down control really try to deliver a substantial return without being able to promise anything of course nobody can do that. But at the very least in the 80s and 90s you had managers that would concentrate capital with their best ideas and be very very different than the big benchmark. And we’re not going to hug the S&P 500 by just deviating a teeny bit and they were willing to take that portfolio risk and deliver a substantially different return stream. I think that’s what we’re trying to do with that statement.
Matt Zimberg: [00:12:03]
Just to give you a little bit of feedback of what you said of seeing this change of myself. I would say you know most of my customers, I have been the retail broker for 20 years and most of my customers have changed. They’re the ones who invested in managed futures and invested money managers. I think what I saw and just from observation up until 2008 everybody wanted very high returns and they were willing to accept big drawdowns. I’ve seen the risk tolerance from that point on going to go down and say look we just want reasonable return with a reasonable drawdown. They don’t look for those you know three-digit numbers or high two-digit numbers that maybe before people were throwing around. So, I’ve seen the same change on the investment side you know reduction of risk. And you know and willing to accept in their portfolio lower return and just have more steady flow. So, since we’re talking about your approach you’re going back to the 80s and the 90s. Tell me a little bit. How have you seen the markets change in the way that they trade or move over the past two decades in terms of volatility, direction. Where do you see the flow differently? The market flow differently today?
Asim Ghaffar: [00:13:29]
Well by far the biggest change that I’ve seen in the 20 years almost 20 years that I’ve been trading in Roger can collaborate that he’s seeing the same things in his own personal experience is that that the very short term moves. What I would call the the minute to minute or even the 30 minute, multi hour and sometimes even a multi-day move. You used to be able to sort of swing trade on a three-day timeframe or day trade and if you found that you had an edge as the trader and saw patterns or certain fundamental triggers that you could pull from you could actually make a living. I think you can you can find a system or a way of looking at the market in a short-term basis that was sustainable. And I’m not saying that people can’t do it today. I think there are definitely managers who are able to do it today but it’s 10 time maybe even 20 times or more than that harder than it was 15 to 20 years ago to do that. It’s part of the reason that we’ve gravitated toward more of a long-term approach where we can be differentiated. Where we know that the fundamental combined with the technical and the sentiment of the market can help us have an edge and it really in the past I’d say five to 10 years we’ve been a radical change with more and more algorithmic trading. And especially with the rise of what I would call the PhD driven quants where you basically have 80 90 percent plus of the volume in futures market and equity markets being driven by algorithms that are programmed off a millisecond timeframe. It’s really changed the nature of the way that moves happen.
Asim Ghaffar: [00:15:00]
So, you’ll see stop losses where you know the resistant areas and support areas get broken on chart on a short-term horizon in a way that didn’t happen back say 15 20 years ago. I think the fact that the volume is now being driven by computer trading and as opposed to a large pool of human beings making their own intuition and putting on their own trades based on their intuition that change has distorted the real short-term time frame. And I think it’s become harder and harder and harder to get an edge at that level. In my opinion.
Matt Zimberg: [00:15:34]
I think your 100 percent right. Just to give you further points. You know what you were discussing in the last the last 12 months we had back in February the highest VIX Volatility rises. We in December we had one of the highest rises in the S&P market in terms of points. So, every year there’s something historical that happens in the market that’s done before. And those one-day volatility or a week of volatility or a one-month volatility could be very very hazardous to a lot of traders who are not used to this kind of environment. So, I definitely agree with you on the short-term trading goal all the angles are really distorting a lot of things that correlate to one another. They’re all tied up in one way or another to tell you the truth I don’t know the complexity of all, but I see how they’re all tied up for example in February last year we had one fund that went out of business and it just affected the whole market. So, I definitely understand where you’re coming from. Something that would be very very interesting to our listeners is this, take us through how you generate a trade idea and implement it?
Asim Ghaffar: [00:16:49]
So, I’m going to do that by starting off by telling your listeners a little bit of a story and I think it’ll help frame the rationale for why we do what we do. So, this is interesting I’ll tell a quick story. Back in the early to mid-2000s before I set up AG Capital working at a large consulting firm and a lot of the time we would work with clients who would invest the capital into leading hedge funds. Now I’m going to change the names we’re not even going to name the name of the firm but there was a discretionary CTA effectively a managed futures strategy that had about five billion dollars under management blue chip name in the industry and had a prestigious track record everything. So, we had put them clients with them and they decided in probably the 2004 2005 timeframe that they wanted to go short copper because copper had been doing very well and they had done a lot of analysis that they should be short. Now why did they go short. Well look they had a team of five geologists, but they were paying on retainer. They also would go out and do detailed Excel models and other regression analysis looking at each individual copper mine all over the world whether they were in Australia and Chile and they would do detailed supply demand forecasts that particular mine and get their data in the data showed that the copper price had just gone way too far and was really just overextended and shouldn’t have been where it was probably in the 2004 and 2005 time range. So they went short, what would happen if you fast forward about 18 months to two years later copper doubled and almost tripled from that price where they went short and in their style of managing money they didn’t use stop losses they were very large and they didn’t they thought they did enough analysis to not do that and they basically put down the business they had to close the shop. One of the things that we do, and this is why I told the story is no matter how much homework we do we always have a couple of reasons to be bullish on the market. And we have a couple of reasons to be bearish on the market. And then we do that with every single market whether it’s copper or soybeans. And the only two of us so we’re not sitting there and pretending that we’re going to do mine by mine analysis or get fractal data on certain fields. That’s not the point. We think we can do is do our homework by reading research looking at technical charts and putting together those a couple of reasons people watching bearish every single market and then based on our own intuition and reading of those fundamentals and our own history with these markets we decide which side we want to be on in those markets. So, let’s take that same copper trade if we had decided we wanted to be there we would pick that side to be on it. And then after that we decide how much exposure to put on but the way we handle the fundamentals is not to do so much research that we become dogmatic but rather to have both the bull and the bear case. When you look at the charts and we go through all of our 50 markets every single day the charts and we already have a thesis built up from having studied these recent reports and our own research on these markets. But whether it’s equities or bonds or commodity markets that’s how we go about it and then we winnow things down and narrow down the list of those 50 to say five markets we’re bullish on and five we’re Verizon and ultimately we build a portfolio that might have anywhere from say two to five actual trades in it on different time horizon based off looking at the chart and combining it with our own fundamental reading knowing that if we’re wrong we can we can take a small loss of the stop loss and not be dogmatic. So, the key is to not be dogmatic and try to box yourself into one side on a permanent basis
Matt Zimberg: [00:20:30]
I agree with you. I always tell people just look at the price. Doesn’t matter what your belief system is always be open minded to the idea that you could misinterpret even the best data out there and there’s data that you might miss. It’s so comprehensive today there’s so much research coming out you can’t cover it all, so I agree with your approach. Risk management is everything you generate the idea you implement and if it doesn’t go you get out of it. Don’t fall in love with it the price tells you everything. Having said that and also talking about the HFT environment that we’re in and the Algos, Tell me some some of the other additional challenges that our money manager in the futures and commodities arena face today?
Asim Ghaffar: [00:21:12]
Well we’ve had a lot of changes in the industry. It’s obviously a tough thing to build a business over time. One thing I think you have to do is look at it as a business. This is going to be a very simple example but I think a lot of people get into the commodity markets, the futures market or even just as I mentioned the broader hedge fund business and think of it as a way to get rich quick or they look at it as a money making machine when instead of doing that you should think about it as basically no different than setting up a coffee shop or selling cupcakes you know you name it a small business that is going to take five to 10 to 15 years to really build over time. I think that’s the approach you have to have because it’s difficult to raise money. It’s a lot of effort a lot of work. It’s extremely difficult probably more difficult than it ever was in the past to actually make money on a consistent basis because of how the markets have changed their nature and how much more difficult it is to find those easy shorting trade that you talked about earlier in the season. I think you have to treat it as a passion as a business and then you want to build really strong partnerships with the client. Be very very transparent with them about why you lose money when you’re down equally transparent on what your themes are when you’re up and when you’re making money and treat it as a business and build the business customer by customer with transparency with honesty year by year and instead of thinking about it in the short term get rich quick scheme. Think about it more than 10 20 30-year affair where you really slowly building something with a group of good partners such as folks like yourself a great group of customers who understand what your philosophy is that you’ve articulated and then build that partnership over time because it is a difficult business more so than it ever was in the
Matt Zimberg: [00:22:58]
It definitely is. And just to again just to add to your perspective. You and Roger come in from, you come from an institutional background and academic background. But many CTAs have entered this arena enter because they either had their own accounts and then they handled friends and family accounts and then they become license CTAs. One of the things that I always tell them that might affect their business despite their trading skills is the ability to trade money for other people. It’s extremely difficult. It’s challenging even if your customers are not challenging you directly. So, if you’re through a draw down you know you’ll have to know how to get out of it without being emotional. And for many people that’s the hard part that’s the part they don’t consider because they said they’re alone. They traded their own money and they had a reasonable track record and I said Oh well I can do this for a living. Why wouldn’t I raise some money. But then they realized what comes with it which is the emotional baggage of trading other people’s money and the pressure of trading other people’s money. And I tell them this is something that you really have to be conscious that you will go through difficult periods you will have times that your customers will call you and you still have to stick with the strategy. My experience that the retail traders who became CTAs it’s extremely challenging for them. I can tell you this and I would say that the majority of them will not survive this pressure but I’m happy that you guys come from a different background and you’re it’s probably reflected in the terms of the customers that you take on board. Having said that I wanted to ask you just a little bit. You know kind of a general question that people always ask if somebody let’s say has a traditional you know assets like stocks and bonds you know in their portfolio. Where do you see the value of your specific program adding value to their overall portfolio?
Asim Ghaffar: [00:25:02]
Great question and I’ll start off by saying that I’m not here to create any kind of a doom and gloom scenario where you must invest in futures and you must get out of the stock market because it’s about to crash 50 percent like it did during the crisis back in 2008 or like it did during the dot.com bubble bursting in the turn of the millennium 2000 2001. I don’t think that’s the right frame of mind. But beyond that I don’t even think that’s a scenario that’s probably going to happen although who knows. I think a better way to handle it is to say well let’s look at what you have if you have the stock market today. You’ve had a great 10 year run and the stock market by all means is expensive. Just the fact when you look at it on different measures whether it’s the capitalization we call the market cap as a ratio to GDP the earnings multiple you can look at that in different ways. But the stock market is expensive and if we assume that there’s no crisis and it just has of a path forward over the next five to 10 years maybe it’s going to return 4 percent a year, maybe six, maybe seven, eight percent at a very optimistic scenario, but it’s not going to give you that 10 to 15 percent that it’s given you in the past 10 years and honestly giving you that fantastic return ever since say the early 1980s when we had the big boom that kicked off when Reagan was president. But think on a going forward basis it’s a much lower projected return and that’s probably not a return that might be adequate for a lot of folks or they could they could look to do something better with that and same thing with Bonds. Bonds I think are in a little more of a risky situation and even stocks where you get a dividend from high quality blue chip corporate bonds and you have safety when it comes to the principal in nominal terms of government bonds. We’ve got a 40-year bull market where interest rates have declined for 40 years and bonds have done very very well. And if you think about over the next decade or even decade the bond market will probably struggle and will be very difficult to make money there. The key to a program like ours is we think on that long term horizon and take on that five year 10 year horizon very often we think about themes but we’re going to give you a very different exposure so I’ll give you a very simple example, you look at the system oftentimes you have big moves in currency like the dollar over a five to seven year horizon where it can go from the peak level to the central level or vice versa. You can have big moves in commodity markets like oil when it went from twenty dollars to one hundred and forty back in the earlier part of 2000. Large moves in precious metal which often include the monetary system and we’re in a position to take advantage of those move over a multi-year timeframe that gives you a very different set of exposures and different return and balance out with what I would call low projected return from a conventional portfolio of stock and bonds.
Matt Zimberg: [00:27:59]
So quite often in the industry itself I’ll share it with you. Again, coming from the retail side and I see that retail side perspective when they being sold and managed futures so the industry typically sells managed futures as an asset class. And I tell my customers you have to look at the individual trader. So, I treat every trader as its own entity in its own risk and that’s what they have to analyze, and I say if you have risk capital that you build as a result of your appreciation you know if you’re had gains in the stock market look to build a portfolio with your risk capital with talented traders. So, for me I always talk about you know manage futures not in the broad perspective that most people talk to I usually narrow it down to the manager the risk that he takes directional risk whether it’s short volatility risk. And that’s what I tell them to look at because they say you know you have to look at the one-off event that would happen that may affect this specific strategy. What I particularly like about your strategy with our customers that I’ve been following is really your diversification in markets. You have gold in one direction crude oil and a different direction. You have a very broad perspective on all the commodities and that’s where I see the value is really being in a number of commodities. Diversification and they see that you stay in them for a long time or at least you attempt to stay in them as long as possible. And ride trends. That leads me to the next question. Obviously, your business is growing. So, what the growth. Could you share with me what the growth path has been for the business as well and where do you see it going forward.
Asim Ghaffar: [00:29:53]
Thanks Matt, so we’ve taken, you mentioned we have an institutional backbone and I agree with that. We also have taken the approach and really building that business from the ground up and we literally bootstrapped it with our own capital and with friends and family capital from day one. What we did not do is we didn’t come off of an investment bank. They didn’t start with 500 million and try to build that strategy of delivering a 4 percent return with 2% of volatility on day one we decided to build as you mentioned earlier. I real return to the fundamentals of what a hedge fund and what it is give you. We built this business from the ground up and in 2014 we started off with a few hundred thousand dollars. We built it every year and gotten up to a much larger scale now at around 15 million. And then I think what we want to do it further and try to get to a point where it’s far more solidified and sustainable way beyond that hundred-million-dollar threshold. I think it’s also important to talk about what we do not want to do. We do not want to end up at a multibillion dollar on that that doesn’t deliver on the promise of what invigorate will make us happy. I think by helping fulfill the client needs to deliver the differentiated take the rest of the personal that are being able to do that. Knowing that you’re going to lose money at time. I think we can do that for many years to come that we scale the business at before. But doing so in a fashion that a lot of will to root and fire burning it. What do we want to spend time and life in the market we want to have fun doing it? We want to keep on giving people that different approach and not turn it into more of a calcified type of business.
Matt Zimberg: [00:31:39]
I think you’re going to get there I think you’re a very cautious person. You know the example you provided with the copper. It’s something that’s stuck in your mind and you obviously remember that and I remember those kinds of things as well. I share them with my customers. You know I was still them but the one you know because you have this experience you’ve seen how one trade can literally wipe your capital. So, I’m happy or actually shared it with us and you’re very conscious of it and I hope you will get to know 100 million dollars fast. Talking about you know those kinds of events that nobody wants to consider. Let’s talk about risk management. Tell me how you handle that. How do you use stops and how do you manage the volatility of the futures markets in general?
Matt Zimberg: [00:32:27]
Since we are talking about stop losses I have to read this disclaimer. The placement of contingent orders by you or broker or trading advisor such as stop loss or stop limit orders will not necessarily limit your losses to the intended amounts. Since market conditions make it impossible to execute such orders.
Asim Ghaffar: [00:32:46]
It probably the most important question that you’ve asked and the most important question for anybody in this business. And it goes back partly to what I said earlier when I mentioned we make a bull case and a bear case for every single market that we analyzed, and we try to have two different reasons to be bullish and two the three reasons to be bearish market. The reason we do that. We didn’t used to do that by the way. So, I’ll tell another little story. When you look back at our history like anybody else you want some handholding in the beginning because the market’s going all over the place and when I was younger and when I was in my 40s now but when I was back in my in my 20s worth analyzing the market I would go on the Internet or even subscribe to publication look at people who have been involved with the market for a very long time who were famous in some way shape or form. Maybe they had a newsletter maybe they went on Bloomberg TV or they were on CNBC and I tried to look at their opinion to help me figure out which side of the Euro I wanted to trade or which side of the soybean market or the stock market. I didn’t feel confident doing it myself and I figured they must know something because they’ve been doing this for 20 30 40 years and they’re very famous and they’re. And nothing could be further. The one thing I’ve learned over doing this in the last decade is nobody and I mean absolutely nobody knows where a market is going. Nobody knows. And that’s why you have to have both the bull case and the bear case and be very willing at the trader to change your mind. If the technical and the fundamental want that and if you don’t have both sides on the fundamentals if you only have the bull side in your mind frame you’re going to really be in trouble when you get popped out and don’t know what’s going on. You want to be able to say listen I want to be bullish if market is trading totally differently. That’s actually a very bearish signal to be able to flip and change your mind and then you also want to make sure you do your own homework and don’t try to follow what somebody saying on TV because that’s the path to ruin. The risk management it’s come from that philosophy. And then when you get more technical you always have to have a stop loss, meaning you with anywhere from a 10-basis point on the low side to maybe one hundred and fifty basis points which is one-point five percent on the high side depending upon your conviction. And if you’re wrong you take the trade off and take the loss. Maybe you tried again a week later. You take another loss. Try it again two weeks later and all of a sudden you get the position to work and you hold that and that ends up not only covering the two losses, but it makes quite a bit of money. That’s the way you have to frame every single trade every trade has to have a stop and every position has to be held with conviction but with both sides of the argument clearly held in your mind and must follow your own light and not not be led by others is what I would say.
Matt Zimberg: [00:35:29]
I couldn’t agree more. I always tell my traders that risk management is a strategy and it’s not just another site component to your strategy your long your stop losses where you decide to get out of the market. It is equally important as it is just the trade generation itself. So, when you generate a trade. I think sometimes the risk management is more important than the idea itself because ideas can come from multiple if there’s enough liquidity in the market it can come from multiple ideas. And so obviously people taking these different views on the market but the way they handle the risk management will determine in my opinion their outcome. I really appreciate your time here. I appreciate your perspective. I appreciate everything that you shared with us. I ran out of questions. Is there something that I didn’t ask, and I should ask before we wrap up.
Asim Ghaffar: [00:36:33]
You really were thorough Matt. The only thing I would say at the end of the day goes back to some of the things that even you were talking about with your business and others to reiterate it. You have to love it. You have to do it if you love it and not do it for the money. Even though the business itself is all about trading and investing, your own money other people’s money and being a great toady and fiduciary for that money. You have to love the market love the way they move to figure them out. You have to love waking up at 2:00 in the morning some time because something is nagging at you. And we do. You know I go on vacation I’m reading for pleasure and reading a book on trading or I’m looking at the market. I love it. I think that’s why even the biggest stays small or whatever it can provide whatever happens happens. But this is what I want to do with my life. It’s what Roger wants to do and that’s what we came together. We’re happy with that. That’s the bottom line. That’s the way I look at life.
Matt Zimberg: [00:37:29]
I definitely can appreciate that, and I am an avid reader myself. I always read. I read a lot about you know multitude of subjects and everything else. But one thing that’s interesting you know I’ve read a lot of books about that are not related to the markets. And sometimes I think ideas that people implement in their business and their success and bring it to the trading world and I share it with customers. And one of them is which you mentioned before you know it’s this risk management thing. I tell them you know there were a lot of companies who took care of the risk management. They love what they did. Just like you did in the business grows so I’m sure you will have a lot of success. Asim, I appreciate your time. Thank you very very much. I hope I’ll have you here you know in a year or two and you can tell us that your assets grew to 1,500 and 150 million dollars I definitely wish you all the best in the world. I think you so far done did a wonderful job with our customers. I really appreciate it. I appreciate the time. You always when I have me and my staff have questions you’ve been always immediately available, and I appreciate that. So, thank you again for your time.
Asim Ghaffar: [00:38:45]
Thanks Matt, it’s been a pleasure and I would love to be back on the air with you again in the future. Thanks very much for having me on.
Matt Zimberg: [00:38:52]
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