Jul 23, 2012
Michael Covel talks to trader and programmer Brad Rathe. Rathe allocates funds to other traders, as well as operatoring his own global macro fund. Rathe has worked at such firms as EMC (original Turtle), Northbourne, and Rotella. Rathe moved to Chicago the day he graduated college and immersed himself in the pits of the Chicago Board of Trade, initially working in the "meats" pit (pork bellies, live cattle, live hogs, and feeder cattle). Covel and Rathe talk about some of the practical/physical factors involved in the futures pit in the late 80's/early 90's. In the off-season, some of Chicago's athletes would work in the pits, and Rathe was surrounded by ex-Bulls, Blackhawks, and Bears. It was a very physical game back then, and Rathe saw broken ribs in the pits. Rathe shares some great anecdotes about someone who sold his spot in the pit for $1 million dollars - even though there were no assigned spots to begin with. Covel and Rathe discuss the move to screen-based exchanges (computer trading) replacing floor trading; Rathe states that when you get off the floor, it takes on more and more importance to have a systematic, non-emotion based trading strategy. Rathe fell into working at Globex, which was just starting, and saw some of the beginnings of electronic trading. By 1991, Rathe moved to EMC, where he worked under Liz Cheval (original Turtle). Rathe relates some of the lessons he learned from Cheval, and sheds a little light on the Turtle story from the perspective of having worked for Cheval. Covel and Rathe also discuss how the CTA business grew under the Turtles; the importance of programming; tweaking and changing your trend following system; MF Global, Madoff, Wasendorf and other cheaters; and the importance of being unemotional during a big blowup.