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FX MANAGERS

Interview with Jamie Charles

CIO of GreenWave Capital 

In this interview, Jamie Charles talks about the company’s short term global macro discretionary strategy and how he sees himself both as an artist, a poet and a lover of how numbers dance,  and  a blend of mathematician and human behavioral scientist.

 

FX Manager

CIO of GreenWave Capital 

Strategy

flagship

Location

Chicago

Assets Under Management

125 million $

Type

Global macro

Style

Short term

Traded Currencies

90 %

 
fx managers global macro strategy Jamie CharlesFXTM

How long have you been trading foreign exchange for and what first attracted you to this industry? Tell us about your career evolution.

JC

My first exposure to forex trading began as a college student in Brussels as a junior in college. It was fascinating to me that most people carried several different currencies in their pockets. I studied at the University of Brussels and when I graduated I was lured into the excitement of trading global financial markets at Bank of America on Wall Street. I started my career as a market maker in major currencies like the ancient Deutsche mark and British pound and soon progressed as a proprietary trader learning how to take more defined risk.

FXTM

What do you particularly like about your job?

JC

Markets change and adapting to these changes are lessons in survival.

FXTM

Is FX a unique market? In what trading currencies is different from trading other financial instruments?

JC

A market is a market but what makes fx unique is the role central banks play. The incentives of the largest participants in forex are not based on profitability and that’s quite a paradox in a world of fear and greed. This adds a perverse twist to the discretionary game theory of trading fx.

FXTM

When was GreenWave Capital born?

JC

The basis of my main program - which is short term global macro discretionary-  is the credibility of its metrics based on risk reward. This has been a philosophy ingrained in me since I started trading. Any risk I take is born from a solid understanding of what are the key determinants behind any idea. I then look for the right trade location and leverage accordingly with hard stops attached to every position.

FXTM

How is the company structured today?

JC

I have a plan for growth both in terms of aum and headcount internally as a company. Greenwave currently has 4 full time associates and I am very pragmatic about growing carefully. We are currently looking to outsource our trade administration and compliance.

FXTM

What are the key positions in an FX Management company?

JC

A creative research team , partners with a vision of industry trends to steer the company and of course a fascinating portfolio manager.

FXTM

You are in charge of the currency program. How would you describe your investment strategy?

JC

The strategies I created are a hybrid. When I design trading ideas I see myself as an artist, a poet and a lover of how numbers dance. As a trader I see myself as a blend of mathematician and human behavioral scientist.

FXTM

Risk, an exciting yet dangerous word. How do you manage it?

JC

Risk is a function of leverage and margin use. We employ hard defined risk to every open position and marks to market its position so that aggregate daily losses are contained to normally less than 10 basis points (10,000 euros for an account with a notional value of 10 million euros).

FXTM

Do you trade less mature currencies?

JC

One of Greenwave’s competitive advantages is its expanded universe of traded currencies. The flagship strategy typically regularly analyzes 25-35 currencies and how it can best long the strongest 3 and short the weakest three currencies. The global economy has changed dramatically in the past 20 years yet most hedge funds and CTAs still focus on G-3.

FXTM

How much time do you allocate to research and development of existing or new trading strategies?

JC

Our strategies are a constantly on-going process. The greatest edge of Greenwave is its adaptability to a rapidly changing world.

FXTM

What is the average and maximum leverage you use?

JC

An advantage of Greenwave’s Flagship strategy is its low margin use which normally requires an average of 1 percent of any account’s notional trading level. Margin use rarely exceeds 3 percent.

FXTM

 How many execution brokers do you use? How do you split execution between electronic and “dear old voice”?

 

JC

90 percent of my trading takes place on e-platforms but I still love the vibrations of trading with the floor.

FXTM

What kind of historical data do you use in developing your strategies? How important is that?

JC

What I think is more relevant is the accuracy and context of historical data and how it applies to today’s market. For example, if comparing the value of  precious metals against energy commodities is it more important to understand 100’s of integrated studies how to intra=day trade gold versus crude or should we be comparing gold’s value in the time’s of king Tut vis a vis the cost of camels and goats in 100 BC. What I am saying is that there are a lot of mindless correlations in vogue that actually compel a lot of traders to risk other people’s money.

FXTM

How does liquidity impact the efficiency of your strategies?

 

JC

Have you already explored to what AUM limit the strategies would allow you to grow to? Reliable liquidity is the basis for quantifying risk. Greenwave’s leverage and trade location are inextricably linked to any market’s liquidity consistency.

FXTM

At FXTM we say it’s more important to plan and know how to react than forecast. Can you give us your feeling about the EurUsd over the next months?

JC

The euro will survive for at least another year and that’s not said without deliberation laden with anxiety. Bernanke wants a lower dollar and though the euro may become the second weakest currency on the globe it will outperform the greenback. Euro will be 1.3750 by the summer of 2011 but the road there will require a lot of infrastructure improvements.

FXTM

What’s the best advise you would give to an individual trader or to a semi-professional trader who wants to enter the FX fund management industry?

JC

Don’t trade anyone’s wealth before you’ve risked your own. Create your own rules and most importantly, be yourself.