Chat With Traders 285 · Greg Magadini - Cashing in Through Exploiting Volatility
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Aug 6, 2024 Greg Magadini, a former proprietary trader who transformed $50,000 into $1.3 million, discusses his dynamic journey through trading. He shares insights on volatility trading in the crypto market, particularly in the wake of the FTX crisis, and the unique challenges compared to traditional equities. Greg highlights innovative strategies that identify market inefficiencies while emphasizing emotional resilience in trading. He also opens up about founding a crypto options analytics company and navigating the complexities of trading with both personal and external capital.
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Bootstrapping Trading Success
- Greg Magadini began trading his own book with under $50,000 in late 2015 and consistently made profits averaging 120% annually.
- He focused primarily on short-term trading of volatility using strict risk management and income-oriented strategies.
Mean Reversion in Volatility
- Mean reversion is the fundamental source of edge in volatility trading, where volatility tends to revert to a median level over time.
- Timing volatility moves is key since holding obvious directional trades is costly due to premiums.
Early Prop Trading Experience
- Greg started as a prop trader with small capital, targeting 25% quarterly returns using options delta trading.
- He gained valuable experience trading others' money and learning from professional traders at SMB Capital and firms in Chicago.