Scott Phillips - Finding Ugly Edges in Crypto Markets (S7E15)

Hey everyone, Corey here. Thanks for tuning into another episode of Flirting with Models. If you're enjoying the show, I'd greatly appreciate it if you'd take a moment to rate, review, and most importantly, share with a friend. A word of mouth is how this podcast grows. And if you'd like to learn more about newfound's platform of Returnstack Mutual Funds, ETFs, and model portfolios, head over to Returnstacks.com. Now on with the show. 3, 2, 1, let's jam. Hello and welcome everyone. I'm Corey Hofstein and this is Flirting with Models. The podcast that pulls back the curtain to discover the human factor behind the quantitative strategy. Corey Hofstein is the co-founder and chief investment officer of newfound research. Due to industry regulations, he will not discuss any of newfound research's funds on this podcast. The audience expressed by podcast participants are solely their own opinion and do not reflect the opinion of newfound research. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of newfound research may maintain positions and securities discussed in this podcast. For more information, visit thinknewfound.com. Scott Phillips is just the second independent trader I've interviewed on this show. Like many independent traders, Scott found that his constraints, including the size of his capital pool, the ability to execute trades efficiently, and a lack of supporting infrastructure, made trading anything but loose pants trend following almost impossible in traditional markets. These constraints led Scott to look for easier markets to trade. Markets where the edges were so big they could survive inefficient implementations, all of which brought Scott to crypto in the late 2010s. While our conversation is at a high level, mostly about trend following, we spend a lot of time discussing what makes trading these markets unique. For example, with tens of thousands of spot cryptocurrencies, how do you choose what to trade? How do you choose which venues to trade when liquidity is so fragmented? How do you deal with the fact that both crime and degenerate gambling are real idiosyncratic factors? More than anything, painted between the lines, Scott provides a masterclass in thinking about edges. I hope you enjoy my conversation with Scott Phillips. Scott Phillips, welcome to the podcast. You have been on my list of targeted guests for a good year plus. Now your name comes up a lot. A lot of people ask me to have you on because I think not only do you have maybe one of the most interesting unique backgrounds getting into this space, but you are deep in the weeds of applying trend following programs in the world of cryptocurrencies, which is its own unique Wild West. I think bears a lot of interesting and unique factors out as to how you have to approach this. I'm very excited to dive into that today. As I alluded to from the get go, you are someone coming at this space from a totally different background, which I think could be likely a podcast in and of itself. Maybe you can catch me up as to how you came into this space originally. Sure. It's great honor to be here. I'm obviously not anywhere near the caliber of the usual guests. I'm a retail guy and a retail trader has just gradually upskilled myself by starting with really simple systems and then gradually upskilled myself to better and better systems. We have this weed story of my life, which I'm kind of where you're getting bogged down and the short version of that is that I live the kind of life where getting arrested or going to jail wasn't unusual. It was just like a normal Tuesday and I was more or less a career criminal. The Australian justice system is super lenient, like really, really lenient. But my last thing in jail, the judge made it pretty clear that he was doing me a big favor by giving me five years instead of probably the 15 that I deserved. If I didn't start it up, I was going to get the big one next time. So I was like, you have to go straight and I went broke in jail last time. So I was getting out of jail in middle age, broke with all my possessions in a shoebox and I walked out of maximum security prison in 2007 and my absolutely idiotic idea was I was going to go straight and come a retail trader because I knew a successful stockbroke goes my best friend. We all know that's like the worst possible idea that anyone could have and the worst possible thing you could do and no one should ever, ever, ever do what I did. But this is where it gets kind of interesting. My story is that I tried a lot of different approaches as a retail trader from garbage, technical analysis, see type things to lots of different systematic approaches and they were all unsuccessful except for loose pants trend void. And the reason for that is that loose pants trend volling systems are really, really forgiving. Like if you managed to blow up a loose pants trend volling system, you have to be really dumb. It's a blow up. I did this from 2012 to 2019 and there was a multi-year draw down that really sucked my soul away. In 2019 I realized I wasn't adding anything to the process and a manager could do it better. And as a trader trading with a little bit less than a million bucks in capital at the time, he is still a bit suboptimal in trade-fly trend. But just because of the nature of single contracts, there's still some stuff you can't trade, you can't trade certain bonds and blah, blah, blah. And so I found a trend-felling fund that was doing the closest to what I was doing, which was very fortunate because they're much better than I was at it. And I looked for an easier pocket table to sit at. And I had this feeling I'd been involved in crypto on the edges for a long time, but I poo-pooed it. I'd always like, oh, I trade real markets. I'm not this tinkertoy kitty market garbage stuff. And in 2019 everyone hated crypto. Like it was just like toxic and I just had this idea that wow, it's so toxic and so embarrassing. And I asked all my pro trader friends who wants to help work with me on a new system for crypto. No one was interested. I pivoted hard to crypto. And what I did is I took a system of Andreas Kleinoffs. He's got two books, one on trend systems, one on stock momentum systems. And I used his stock momentum system, but with weekly execution and the top five cryptos. And what we were doing, it was the simplest system you could possibly imagine. And it just worked amazingly well because we were fully invested in 100% long in crypto in the strongest crypto through the 2020 book market. And it was running it like a thousand volts on the stupid lake. And I didn't know any of this at the time, right? I didn't even understand. And so we progressively worked from there. I realized that we made quite a lot of money in that and I figured I better put the money into building better systems. And right now we're at, I guess you call it probably decent, vol targeted CTA trend following with mediocre execution. My execution is not particularly good. And we're adding more features into the mix. So right now in test, almost ready to go probably today or tomorrow is cross section momentum and cross section carry and cross section carry works quite a lot better than time series carry for reasons I can do into. And right now what I'm doing is I'm putting all my trend systems on Shane on the hyper liquid layer one, which is brand new. And I'd like to give people instant one click access to on Shane, no KYC trend exposure with instant liquidity on the hyper liquid blockchain. I think that's really worth one thing to do. So that's what I'm building out. Crypto trend has a big advantage if you're trading regular trend is that crypto trend is not correlated to regular trend at all. So the big advantage of regular trend is that it's not correlated stocks and the big advantage of crypto trend is it's not correlated both with stocks and with regular trend, which is pretty cool. And the other advantage is that it's so capital efficient because some of these assets, a thousand volume, two thousand volume, three thousand volume assets. And it is very much a capital. So the counterparty Greece, which is huge in crypto, which is largely what you monetizing, you don't have to leave that much on exchange. I'm excited to dive into all that my guess is there's a good 90% of my listeners who have no idea what you mean when you talk about bringing your process on Shane onto hyper liquid L1 creating a vault giving a single click access with no KYC. And so I want to come around back to that at the end of the conversation. Because I think that'll be a fun place to end. So here's where I want to start. I want to work backwards if you'll allow me. You started to get into it a little bit, but what does the program look like as it stands today? More specifically, what are you trading? What's driving those decisions? How are you building the portfolio? And then I sort of want to reverse engineer your thinking that got you to that point. So where we're at tonight is what we call CTI style, vault target, a trend volume. So what we're doing is we're taking our signal and that signal is a blend of a bunch of different very standard looking except for one of them trend falling features. Pretty much the same as every other firm does. If that signal is positive, we're going long. If that signal is negative, we're going short. If that signal is bigger, we're going more long up to a point where it's capped and the usual way is to the cap it or apply a signal in function to it. Very standard stuff in the trend falling work. And then what we do is we work out a target volatility way. How much volatility do we want to take? And we take the exposures based on an inverse volatility waiting that again, give us the exposures that we want. And what I started with back in the day, I actually started trading this live without doing any backtests. So what I did first is I started with Rob Carver's EW Mac and breakout features. And because I didn't understand the maths well enough then to understand why you would choose different look back periods, I just used his parameters. And I think it's important to credit Rob, if it wasn't for Rob, I'd be nowhere like I didn't use his code because it's not for crypto, but I use his breakout feature, his moving average features. and I applied them equally weighted and we tried it straight in production with no backtest at all and we didn't do a backtest until we were about a year and a half in. And this is surprisingly good. Let's talk about surprisingly good because in our pre-call, you said in, this is a quote, "Crypto has a risk curve where you make 1,000% once every five years and then you get hammered in the other four." And your goal was, quote, to shift the risk curve to a sharp ratio of about two. And I think a lot of people in, "Tradify would kill for a sharp ratio of two." But it sounds like you think of trend as a way maybe to manipulate the return distribution rather than necessarily a strategy within edge. So my question to you is, is there an edge here in applying trend or you just manipulating this risk curve that exists? There's definitely an edge and there's edge just all over the place in crypto. My view is I'm not actually sure if trend following is a risk premier or not, but it certainly behaves like a risk premier. If you think about how risk premier behaves, like they all have this awful sort of horrible tail on them, whether you're talking about value, whether you're talking about carries, got this awful negative skew. So what would I look at to say is something a risk premier? I would say is there academic evidence of it. There's a lot of academic evidence for trends starting with the 1993 jaggedition and Tidman thing. And it's beyond that that momentum and trends are a real thing. Academically, does it work across markets? Does it work in FX? Does it work in bonds? Does it work in stocks? Does it work in commodities? Yes, it does. Does it work in every country in the world? Yes, it does. Has it worked for over 100 years? Yes, it has. In fact, the very first price series we have, before there was even money like 5,000 years ago, the first human city they dug up in like a rock, they found all these tablets, they used barley instead of money and they found price series of barley back in the day. And it exhibits trending characteristics. So trends have been around a long time. And the last thing that I would look at is other people making money from it. And people have clearly made money off trend, value, carry, all these normal things. And there's just more risk in crypto. There's more risk. There's career risk. There's counterparty risk. There's smart contract risk. There's hacking risk. There's content computer risk. There's all kinds of risks that no one's ever even considered, even getting involved in crypto. As well as the obvious scam risks. Like you're going to get scamped here and there. But apples for apples, the risk premium in crypto, between everything that we've tested or done is between 2 and 2.5 times better than the traffic with one. And so CTA style trend works out to be reasonably done. I'm not even talking about well done. Like if you did what I do perfectly, you'd be up well over sharp to and probably with size. But the way that I do it, our four year sharp is 1.7 with retail level cost. So cross sectional momentum is a little bit better than that. But you don't have a really nice positive skew of trend. Cross sectional carry is about a sharp 1.7 as well and slightly orthogonal. So you blend the three of them together and then you're in your sharp too easily. And without even good execution. Like if you strap decent execution on that, then you increase your capacity and blah, blah, blah. So yes, it's an easier pocket table to sit at. And it's only easier because almost every one of your listeners who are listening to this now will be going, "Yeah, but it's still crypto. It's still this scammy market. I'd never do that. It's embarrassing." Like it wouldn't want to be a professional try to like I've had some awful Christmas dinner discussions with my family. So how about them big coins, huh? I'm sure around this Christmas it was your best trade was long fart coin, which that much worse. Which sort of leads me to my next question, which is when we think about applying a lot of these whether they're risk premium or just style premium within traditional finance, you're applying them to a fairly well-defined universe. And when we look into the world of crypto, there's very little friction for what it takes for someone to launch their own cryptocurrency. There are tens of thousands of different spot cryptocurrencies across different chains. Even if we limit ourselves to purpose trading on chain or on the major centralized exchanges, there's still thousands and thousands of them. So how do you think about culling down your investment universe, either when you're running these tests or trading live in production? At the heart of the big idiosyncrasy with crypto is that there's a size back. So what I mean is that trend works much better on Bitcoin than it does on Ethereum, much better on Ethereum than it does on Solana and so on, so on, so on, so on. And this holds through through whether you measure it by average daily volume or open interest or market capital. This desile is a little bit better than the one ahead, a little bit better than the one ahead. It works with a measure by volatility too. So unequivocally trend works better on largest size and lower volatility coins. What that means is that by the time you get about a third of the way through your list of cryptos, not only are we not exhibiting significant trend effects, most trend effects turn negative. So almost anything small, not only doesn't have trend effects, but it has negative trend effects. If you wanted to describe a negative trend effect, you would describe it as a pump and dump, right? Intuitively, we know that to be true. And in the same way that you find a lot of edges in small cap stocks that are very difficult to monetize on the short side, there's edges all over the place in crypto in very capacity limited shorts or things that you can't show. And you find these edges are monstrously magnificent for the retail trader. Like if you were a retail trader and a grinder, even if you can't do maths, like you can find edges in crypto that'll curl your turners, like no shit curl your turners. So once you take this size effect into account, how much diversification is really available in crypto versus say, I just run a naive trend program on Bitcoin alone. How correlated would a diversified trend program be and look to versus just naive trend on Bitcoin to sharp really scale with the number of markets that you end up trading? So the math still holds that returns scale with the square root of independent bets, right? But the size factor and the market factor mean that if the crypto market goes up almost at 90% of crypto is going up because down 90% of crypto is going down. So you can make trend work on a very, very large universe within crypto, but you have to beta models adjusting for that, which means a barra axiomar type thing. If you go down that route and you have decent beta models, you could trade everything where you're not above say 3% of average daily value, like if you had decent execution. But then you need a risk model because you're shoving it all into your MVO and you certainly don't want your risk model accumulating too much of some shot from nowhere garbage trash coin that's just spiked 10,000% on a trunk announcement or something like that, right? So for practical reasons, I'm here as someone who started with an equal way to no portfolio management, nothing system gradually worked my way into something better. Trading systems become really hard to diagnose and hard to reason about at a frightening rate. So if you're going to whack on beta models, then you have to whack on a risk model and then you're doing this and then you're doing that. And then all of these things require people to babysit them, right? You know, I have a team of six devs and a researcher. So I think it's more like, could you make trend work on an expanded universe? It's more like should you? So if you were doing the first example that you said, like just do Bitcoin and Ethereum, there's probably not that much difference. In fact, we both have a mutual friend who runs a half yard of just Bitcoin and Ethereum, CTA style trend following at a sharp ratio, which would absolutely shame rent. But you're assuming stationarity, like there's been a hundred Ethereum killers. What if one of those Ethereum killers actually killed Ethereum? Or you're going forward, Ethereum looks like it might die now because it's got leadership issues and technical problems and better competitors. If you just bet on Bitcoin and Ethereum, well, that's a bet that I don't think you have the basis for saying that my space is going to be the premier financial network or that Yahoo is going to be the best search engine or any of those like tech examples. Like that's not a bet that you should take. So what I personally do is I do the top 50 because it's a reasonable compromise that looks not a lot different than doing it properly. And in a practical sense, if you're talking about directional CTA style trend, what is the effect of having your exposures not exactly right? Probably means that your volatility target is going to overshoot a little bit when the market is really trending. So in a practical sense, if you run a crappy trend system and mine has been crappy at various points, what you're going to do is you're going to be overweight the garbage stuff in the middle of the pot or you're going to be overweight the garbage stuff short in the middle of the dump. And both of those aren't necessarily the worst things in the world, right? The big thing about trend falling is that if you're going to trade trends, either you get trends or you don't. And if you don't get trends, no amount of math can can fix that. And that's something that people don't seem to understand is that trend is like the weakest edge that's still an edge. And if you get trends, those trends are probably going to be so strong that you could trade trend on crypto with a potato. So let me give you an example. Here's a sharp 1.4 system rules. Write this down. Go long, equal weight, every coin that has made a 20-day high within the last five days. That's it. If it's made to 20, you don't hide within the last five days, go along. Equal way. That's sharp 1.4 in crypto. So if you get trends, crypto is really, it's the same poor old in a different colored glitter. And you have to be at a certain size and sophistication to make it make sense. Like we all know what the platonic ideal of a system is. Like it would be something like Gappy's system in his books, right? And he's a mate and he's offered to help. And if I start building a Gappy system, then I need a team of people who are super smart to maintain it. And then it goes wrong and I can't figure it out because I'm not smart enough to figure out whether the MVO got in some weird inputs and gave some weird outputs. And what I'm big on is 80/20 solutions. And I took this from Rob Carver. So my system's a little bit more sophisticated than the one described in his books. But his books are absolutely the limit of what a single person can do. Like he's got absolutely chad solutions for everything where he's not going down academic node holes. So you mentioned this idea of the limit of what one person can do. But we are talking about markets here that trade 24/7 and can move incredibly fast. A positive trend can turn into a 75% loss overnight. So when we talk about trend programs, what sort of speeds are we talking about here? Are these intraday trend, multi-day trend? What sort of infrastructure do we really need to support these speeds? Daily execution is totally fine. So the usual way of doing is to have target exposures, what your trend features say that you should be exposed to. And then the exposures that you have now. If trading was free, we trade continuously towards our ideal exposures, right? But trading's not free. So we want to minimize our trading because otherwise trading costs an infinite negative sharp. So you put a barrier. And the barrier could be simpler arbitrarily chosen, like 10%, or my smart friends tell me that it's a benign curve fitting thing to run a bunch of back tests and work out the optimal, which is what we do. And so you work out an optimal barrier with. And once a day execution is fine, intraday trend following our system turns over the book around 20 to 25 times a year. So if you want to move up to running the same features but turning over the book every day, that would be better. But I would have to have execution good enough to turn over the book every day without losing money on that. So essentially what I would need to do is strap a market maker and hope to buy somewhere a little bit worse than mid price on average and get top tier fees and potentially rebates. And basically strap a market maker to a trend. And what we see is that if you plot how predictive these signals are, they're most predictive one day out. And even 14 days out, it's still better than a coin flip. So the advantage of trend is that it's a very slow converging edge. So if we compare to say relative value strategies, relative value strategies, you have to be very, very good at execution. Otherwise you can't compete and you're competing price inefficiencies against the stat arb guys and they just eat you for what should. But because trend is so slow converging, this is why trend is so easy to trade. Because you've got two weeks, it doesn't matter if you delayed execution by day actual. Which is why you see a lot of the old school trend followers prepare the more modern methods because they have no need for it because the old stupid stuff from the 80s still works just fine. So I want to push you if you'll allow me on back to the trend speed concept, right? Because in traditional markets, you read the academic papers, it talks about, well, let's look at a one year trend. These are multi month trends in the expected evolution of where trend applies is maybe over the next month. My perception in crypto is the markets move a lot faster than that. Your example of looking at, I think it was 20 day highs for example and rotating. You get a decent amount of turnover and you're talking about faster moving markets. Can you still look at long term trends in crypto? Or do they tend to be much shorter term trends by nature? I started out saying that I didn't have any business having any dog in that fight. So I threw all the long term trends into the optimizer and let it figure them out. And recently I've just realized that we have four years of evidence that long term trend just doesn't work on crypto. And my professional peers at actual firms tell me the same like, I don't know why, but yeah, we pulled a long term stuff out. And it's a little bit shorter. Well, that sort of brings me into my next question, which is given that crypto is such a rapidly evolving space, how do you think about the future selection aspect of running your systems? I don't think you can say the breakouts are better than moving average crossovers, are better than this, are better than that. You can say they're slightly different and you want to blend a few of them together. And with diminishing marginal returns. And if you think about what's going to happen if you say you, if your feature is say the distance between two moving averages, what say it's the difference between four and 16 day moving average and you're applying it to Bitcoin and you're applying it to some garbage coin. And the market goes up. So the market has bumped them both up. Your garbage coin is going to artificially show you a higher trend score than Bitcoin, right? So that's not really real. And we know that the garbage coin actually trends not as good as Bitcoin. So there's definitely an advantage to scaling all of your time series at a constant volatility so that you can bearing apples for apples, volumizing it. So the smart thing to do with crypto, the biggest 8020 modification is not going all the way down the rabbit hole with a bearer axiomar beta model. It's just volumizing your features. And you don't need that many features like all the standard ones are fine, better by a long way is Bollinger bands for some reason, which I can do. That was going to leave me right to my next question because you said that in our pre-call, which was that Bollinger bands were something that did seem to test in a significantly more predictive manner than other naive features in crypto. I suspect the reason why is related to something you just said, but I'm curious if you have any thoughts as to the cases to why Bollinger bands ultimately were more predictive in your tests? Well, they kind of let us down a rabbit hole. And by the way, almost everything I know about trading is from my great friend, the Robo James. You should all be following him on Twitter. He's probably the best trading vulgarizer of complicated trading concepts into things that a dummy like me can understand. And if I say on smart, it's probably because he's told me some stuff and he helps me with design my systems and he's going to share my company and he's a wonderful man. Exactly like you'd expect. So he was measuring internal correlation of our features set. And he found out that the Bollinger bands, distance to standard deviation Bollinger band had significantly more internal correlation than our other features. And what he found is that when you took it to all of our other features and vol normalised it because Bollinger bands are calculated with standard deviation, which is a dodgy proxy for volatility and what's not really dodgy, but all of our features from breakouts to moving average cross-service to normalised momentum, Bollinger bands, everything becomes more predictive when you're just for volatility first, which is something that professionals really knew because I was really excited when James and I figured this out and then we told Macarose Follapod and he's like, "I just assumed that you knew that." And there's like a hundred things that we talked to Steph and he's like, "I just thought everyone knew that." And so we've given up, we spent a month on one thing and then when we figured it out, we realised that Steph had told us it in passing the exact answer to the thing and we just like skipped over it. So there's a bunch of things like that and I went to trade off in twit and the smart people, the Gappies, you, Macarose Follapod, James, you and Sinclair like, "You guys all told me to trade." I think I've had just about everyone on that list on my podcast except James, so he's up next. Oh, you shoot. He's a wonderful man. And what we find is that when we've all normalised our features, they're more predictive and this holds right the way through, if you slice them up by volatility desks, so this holds through from the least volatile coins, the bitcoins and the theorems, it's holds through way down to the shit coins. And it improves every feature and it's just a good thing to do and it's a way that gets you close enough to the proper way of doing things that you don't need to go down the rabbit hole of beta models and wrist models and so on and so forth. Someone related to the idea of breakouts and you mentioned this term very early on in this episode was this idea of what you would call loose pants trend systems versus which are sort of the more traditional models of trend following versus the more mathematical volatility targeting approach. But I wanted you to spend a little time if you would talking about the differences of those approaches, maybe both philosophically and mechanically and which you prefer as it relates to crypto. Sure. That's really interesting. I have traded and I continue to trade. All my trade-file trend money is in a loose pants system. So I got some perspective here. Some of the loose pants guys are very religious about it. Like if it wasn't mentioned in the holy book of the turtles, it's not true trend following and there's all kinds of purity tests and they have a Friday night Twitter space where they rail against the evils of volatility targeting and it'll just melt your brain without dumb it is. So let's talk about loose pants systems first. So the big problem of a loose pants system is that you can run it from a spreadsheet and I have run it from a spreadsheet. You don't need a research department of any sort. You can kind of keep mental track of exposures in your head when I was running loose pants myself. Like I'd wake up, get some coffee into me and flick through five screens on my charting program and even without running the spreadsheet, I kind of know what my exposures were and it's very, very simple stuff. stuff. And when I described typical loose pants, firms to you and Sinclair, the first thing he said to me was, "What are these guys do all day?" This is like five minutes a day work for you into it. And that's a pro. So let's talk about what a loose pants is and sometimes called a one entry one stop system. The signals are usually binary. They're all in or all out. So this is the first inefficiency because you're assuming that you have no information. If you're going in on a 50 day breakout or a 16 day moving average crossing over a 64 day moving average and then back out at the other end, you're assuming there's no information in the continuous signal, which isn't true. So the signals are binary. There's one stop loss. That's the defining thing. So either a hard stop loss in the order book, which is very suboptimal for obvious reasons because people can hunt your stops or a soft stop, which is if it closes below this level, we're going to get out tomorrow on the open. And that's the way most people do it, because there's about 70 basis points of improvement in tradfly, just from doing it now. Typically these systems don't trade entry day once a day or execution or even less is actually fine. And so a bulk standard loose pants system, my system, is a 50 day breakout entry with a 70 day low stop. That's it. Run it on a diversified set of futures markets. 40 to 50 futures markets as many as you can afford. You've got a problem as a retail trader. You don't have enough margin to trade as many markets as you want. So you have to be curious, sucks, or 70 day entry, 90 day stop, 100 day entry, 120 day stop, you get the idea. So the other common choices for stop losses are multiple of average true range, usually somewhere between four and five ATUs. And you'll notice that the terminology that these types of systems use, breakouts and moving average crossovers and average true range, it's very clearly got a lineage from the retail technical analysis. He will. It's very clearly not a quant finance derived thing. So these guys kind of evolved on their own. It's a completely separate ecosystem. So a bit or more sophisticated loose pants system. Like if you were going to build the best loose pants system you could, you would base your exits on a probability distribution implied by the option surprise. That's the smart way to do it. Anyone is not doing it that way is the suspecting. The problem with these systems, if you're getting along on say 50 day breakouts, sometimes you're going to have a lot of breakouts like in 2008 or 2020, everything's broken out. And sometimes you're going to have not many breakouts. So your risk, how much risk you're taking in 2022 or 2020, your 25 volt, strat five loose pants system was probably taking 200 volts of risk. Just because everything broke. And the loose pants guys would say this is not a bug. This is a feature. Like when we get a 2008, we want to be short everything. And we want to be short everything in 10 times the normal size. And because outliers, outliers, outliers, they kind of have a point. And the point is that if you want to absolutely maximize the amount of convexity that you have for a portfolio, the amount of money you make in 2008 or 2020 or 2022, then you would want to take no risk when the shit hits the van. And this is probably more so if you're looking at from a portfolio total basis, if I'm long a lot of stocks and we get a 2008, I really want my trend falling to be running at 200 volts while my stocks are taking it. You know what I mean? If you think about that in the context of a 2008, you can see how frightening this could actually be. It's easy from the cheap seats to say, I would hold that, but a lot of trend following managers, push it out in those times and reduced exposures. And so if you're looking for a trend falling manager for tradfly, you should be looking very hard at those stress situations and say, did you stick to your rules or did you push it out? And that's something that you're not going to get the right answer from a lot of trend managers. The second problem that loose pants systems have is they don't manage exposures once you're in. So if I want to take 50 volts of risk, I need to have a certain set of exposures. So the volatility and market changes are quaint, would say we have to take some risk off and the loose pants guys might do that because they're wanting to maximize our weight. So you know, like in cocoa this year, so cocoa was like a 20-bagger in price, but volatility went up 40 times. So these guys are holding it like a hundred times the size that Cliffassons would hold. So those guys made the year off one trade. So that's the good news. And I got some cocoa this year, it was a great win for me. But the bad news is that that convexivity, that positive skew that you're manipulating isn't free. It comes at the expensive shop. So this trade off between how much convexity you get and how much sharp you have. And by accepting random exposures that the market wants to give you, both in the number of trades you take and the size of the trades that you're taking, is sort of by definition introducing luck and variance into your results. And I feel positive, bad luck, I'd have no luck at all. luck is not really your friend. And it's not really the end of the world taking random exposures like all things being equal. It will reduce risk adjusted returns because you're taking what the market gives you instead of actually choosing what you want to take. And I think that's a period full stop into story kind of thing. And the next problem that you're running to as a loose pants trader is that it's used 50 day breakouts, but 20 day breakout would have got you into the same trend earlier with a larger position, which you're not adjusting. So that's a big, if you get a 500 bagger and you got onto it a week earlier with triple the size, it's a big difference to your yearly results. And this is one of the reasons why there's so much manager dispersion in trend, by the way. So you're taking parameter risk. And parameter risk is a risk that you're not being paid to take, but you're taking anyway. So the usual way of amuletiorating that is to blend three or four different loose pants systems together, to get an approximation of the single continuous system. And that's the usual way of doing. And then the last problem is that when you're using binary signals like breakouts and moving average crossovers, you're implicitly assuming there's no information in a continuous signal. And we know how to test that, we can test that with centials or desisals. And we know for a fact that a continuous signal has predictive power in that a strong negative signal is better. It predicts more of the short side than a weak negative signal and a strong positive signal predicts more of the upside than a weak positive signal. So we know that there's information there. And you're throwing all that information away as loose pants trading. You're saying it doesn't matter all I want are the allies. So loose pants systems in tradfly are sort of in the range of 0.4 to 0.6 sharp, would you say? That's a big difference in risk adjusted returns. But the loose pants guys would say we're not playing the risk adjusted return game. We're playing the absolute return game. And they also say that sharp doesn't accurately measure what they do, which is nonsense. But there's a kernel of truth in that. And the kernel of truth that the loose pants guys not all of them know it. If you bucketed the winning and losing trades of a loose pants system, the winning and losing trades would look like two totally different systems. So on average, the winning trades have four times the vol of the losing trades. So the loose pants guys are like, well, who cares about having high vol on a winning trade? And you know there's some truth to that. There's definitely some truth to that. Where it turns into nonsense is that they talk about outlier hunting as though there's some sort ofness into web magic and no one's figured out that there's tails of a distribution. And everyone else is just assuming that market say it galsy and normal, which is something that no one ever in markets has ever assumed. And no one believes it. And you're kind of interested in your take because you've done both. Well, this is an interview of me. I think one of the things we've seen over time right as we've seen the increased there as a quantification of the strategy is it is one of those cases where for this strategy to become institutionalized, it had to have a more predictable return stream. And so you got to this vault targeting approach. Right. And I think there are, as you pointed out, astutely the pros and cons, which is the vault targeted approach is going to create a higher sharp ratio at the cost of convexity. And so you can make an argument that the higher convexity product actually might be more attractive when you're considering total portfolio construction. As we all should, that's how we should be thinking about it. But the reality is every stakeholder in the world is scrutinizing at the line item level. And so behaviorally, I think most people can probably stick with the vault targeting programs. And I think Coco is a great example where you saw all the vault targets who traded Coco were selling Coco down as Coco was going up for the exact point you made, which was all exploded four times faster than the price trend went up. And then all the people who were holding at the top were the loose pants trend followers. And that was their blowout year. But you would know better than me. I mean, what was the drawdown they had on Coco in their PNL when it went back to Earth? Oh, it's like 40%. Now holding 500% of value, they're financing Coco. They guys who got it. Right. And so they have this enormous return. And hopefully no one was buying into the fund at the peak of that return. The cost is, right, you're now holding enormous size. You're going to have this really big drawdown on the way down before your trend signals get you out. So again, I think there is an argument to be made for the loose trends systems in my opinion when you look at it from a total portfolio construction perspective. But I just don't think that's how the world really works when it comes to allocation. And also like let's be really honest here, the guys running loose pants systems couldn't in a million years run a vault target system. Then I don't have the research department. Then I don't have the technical capability. Then I have the execution capability. Surprise, surprise. The guy runs a hundred million dollar hedge fund from Google sheet that has done for 20 years without modifying your system rules for changing markets. Surprise, surprise. That guy thinks that it's a waste of time doing anything else because he can't do that. He couldn't even employ the talent to do it. Let me ask you a follow-up question about volatility targeting because one of the big battles is always around what is the volatility you should be running your program at. And I find what's interesting is the more purest people get about trend following the higher-vol program they want. And I'm curious how you think about what target you set for that vol level. This is where I'm somewhat of a heretic. I'm one of those trend plus nothing guys. I think running a trend system at low vol is suboptimal for your whole portfolio. I think the big advantage of trend following, purest trend following, CTA style trend following, whether you're doing a volatility target or lose pants, is that it's extremely difficult to blow up. And not running it at a reasonable Kelly fraction. You're doing yourself a disservice. You can't spend shop. If you're trading your own money and I only trade my money, actually that's not true. We trade other people's money. I use the returns from that to fund the development of the trend system, but my wealth comes from my own. So I run most of my money at 50 vol. But I have some accounts running at 90 vol. That seems insane except the advantage of high shop comparatively with crypto is that you're wrong quicker. So I think it was the finish guy, Marty, who was on your podcast. So for Kelly is sharp squared on two. So if you think your real sharp is one, then half Kelly is 50 vol. And your sharp in crypto trend is a lot higher than one. But I think that leaves you a safe margin for error. And for me, 50 vol has been really good. It's been like 93% CTA over bull end bear markets made money every single year at sharp 1.7. I mean, that's what it's been for me at retail level cost. I want to take the conversation from this theoretical level down to an operational level if you'll allow me and talk about exchange selection and execution and tea costs. Really curious how you think about venue selection. I'd love for you to comment on decentralized versus centralized exchanges in crypto transaction costs consideration and slippage and trading certain cryptocurrencies on certain exchanges and others elsewhere. And the idea of who's on the other side when you're trading at different venues? Yeah, this is really interesting. So I think it's axiomatic that you should trade at the highest liquidity venue that you can for any sort of style premium risk premium harvesting sort of proposition. So we trade on Binance by bit dydx version three dydx version, which has been sunseted dydx version four, kukoin and bitget and about to start on hyper liquid. And Binance and by bit are clearly superior. I have high hopes for hyper liquid. So in general, risk premium harvesting works better on high liquidity venues. But any sort of price inefficiency strategies. So we have some stuff that we trade on some other non-trend stuff, some carry trading strategies and dirty carry trading strategies that we trade on really fourth tier garbage venues. The garbage are the better because any sort of price inefficiency strategy is going to work better on a trash exchange than a good one. So you see certain things, for example, we run a thing we call the dirty carry trade, which is going along the five coins with the highest positive carry and short the five coins with the highest possible negative carry. And hopefully those two are roughly balanced out. It's a dirty hedge. So we call a dirty carry. And that used to work a long time ago on Binance and FTX in 2020 and then stopped working on all the good places. And when hyper liquid opened up it worked really, really well. And now it works really, really well on some other even progressively crappier exchanges than that. So as far as execution goes, as long as you stick to the big stonkingly obvious stuff, like your execution doesn't have to be great. But your execution, the further you go towards stat-arb stuff, the further you go towards cross-sectional strategies, the better your execution has to be because the idea with cross-sectional momentum is I'm not taking any market risk. I'm holding 50% longs, 50% shorts. And I want to stay balanced. And hopefully the long stuff goes up more than the short stuff goes down. And if your execution is poor, that's going to get out of balance and out of whack very quick. And then you're taking unintended exposures, which is wrong. So if you're talking about straight trend, your execution can be terrible. You could trade trend with a potato. As soon as you go from something beyond trend to something more sophisticated, you kind of have to pay a lot of attention to execution and vanity. I want to stay on the carry topic for a second. In crypto and particularly during bull markets, we see this really high cost of carry for levered positions versus what we see in traditional markets. I mean, by comparison, we're seeing really abnormally high cost of leverage, cost of financing, embedded in S&P futures today. And it got up to like 120 dips above so far, right? And for anyone in cryptocurrency markets, it's like laughably low. What are the high cost of carry for this levered position? Tell us about the ecosystem. Tell us about the participants. Tell us about the opportunity for cash and carry or these dirty carry strategies being profitable. If we talk about what makes crypto crypto, the first thing that's really obvious is that there's friction on getting your money in and getting your money in. So the tendency is that the money stays within crypto as a whole and also within chains. If you've ever had to get money from Salana chain to Avax chain or whatever, you'll be slayerist. It's so awful to do that. That once liquidity comes into one chain for an external event like, for example, Trump launching a meme coin, that liquidity should slosh around creating excess waves of liquidity, pumping and dumping random and semi-random coins for a little while. How does the carry rate decided in crypto? They trade these things called perpetual futures, which we use as know about perpetual futures. I think most of them would probably understand perpetual futures. Okay, so if you understand perpetual futures, the carry rate is set by the differential between the spot and the futures price. And they should converge. When that blows out, it's usually because someone is running some sort of crime or doing some sort of exit scam or the tails of carry get very weird. The left side of the tail, negative carry is a lot better behaved than the right side because it's hard to monetize the short side. It's hard to monetize the left tail. Sorry, that wasn't great. So carry rate is quite sticky as in today's funding rate is quite predictive of tomorrow's funding rate. So you can earn a basis as in going long spot, short the futures, which is something I do in my personal account and earn that basis. Now, this is one of the areas where small crypto traders have a huge advantage. You can easily target forwards to 700% carry trades in capacity constrained markets, small chicont. And that's because lottery ticket bias people desire for leverage that will into pay more for leverage for Trump coin or whatever garbage trash coin of the day. And you can monetize that. And as long as you can keep it dealt in neutral, you can earn a lot of money doing it. And that's probably a great place to start for a retail trader. There's also very interesting funding apps between venues and the funding apps between hyper-liquid and finance have been good between hyper-liquid and fourth tier trash exchanges are very, very good. So you can get on dealt in neutral trades, not with a great deal of size. But if you're a trader, this stuff is incredible. You mentioned crime. And on Twitter, there have been several times where you've posted a chart that'll have the spot price versus the pricing of that perpetual future. And all you'll put in the tweet is it's crime. It's always crime. And I was hoping you could talk me through specifically these examples, right? What are you showing? When you're showing the price blowing way out from the spot price, why do you think that's crime? And then more broadly taking a step back, how do you think about crime and rug pulls as a unique idiosyncratic driver of behavior in this market? This is where it gets super interesting. Let's talk about what we would call the vanilla model of crypto crime that almost every VC does. Since time immemorial, they've invested in startups at one to five million dollar market cap and they've used their contacts to get them listed on exchanges and create fake-ass communities around them and get some buzz and get a bunch of retail guys, find mowing in to become exit liquidity. And you've got this situation where a VC or seed investor or a founder will have a hundred bagger or a 500 bagger on paper. But the liquidity in crypto is largely an illusion. It's like the thing that Nessine Taleb said, like any idiot focuses on the size of the movie theater and not the width of the door. And the width of the door in and out of crypto is very, very now. So for example, I personally and permanently on purpose wrecked for all time a one million dollar market cap, mean coin recently, with a four thousand dollar sell. That's the level of like four thousand dollars. Can you do something for all time at a million dollar market cap at a hundred million dollar market cap, you'd be lucky to get three or four hundred grand out without materially affecting the price. So we know that the spot price in the futures price should be coming back into alignment at very predictable intervals otherwise as an hub. And someone should be closing that up. If you see that hub, not closing and in fact blowing out the only possible reason for that is someone is just dumping with both hands. So what happens is the classic model of crypto crime is when the derivatives market gets bigger than the spot market. You can walk the spot market up with some judicious fraudulent market making which isn't illegal like it would be in Tradfly world, right? In fact, that's a very important thing to notice, especially with the Trump administration, we've making crypto stuff illegal illegal like without world crime in crypto like everything's on the table. So you can get a market maker to walk your spot, tape up while you're selling in size on the derivatives market in the per futures market and that's the usual model of gaining exit liquidity because if you think about it, everyone can fully evolve. Everything's public. So you're a founder, you've got a hundred million coins in your wallet, everyone's tracking that wallet, the coins I mean, I've got all that's on all the top holders. If someone starts selling, no one knows. So if you want to sell, if you want to get out, you have to hedge first in the derivatives market. And when someone does that, this is price and sensitive trading and price and sensitive trading almost always has edge to it, right? If you see for sure that the owners of a coin are dumping their whole stack in size in the secondary markets, you can pretty much say that that coin is can have a lot of problems going forward, but that's a good show. You're looking for price and sensitive flows and price and sensitive flows could be on the long side or the short side. In most markets, you see crime and you rush the hell away from it. In crypto, I see crime and you're rubbing your hands together and you're running racing towards the crop. So for example, North Korea hacks some exchange. The first thing they're going to do is go to thought chain, the crime chain of choice. They're going to try and bridge as much as they can into something semi anonymous or hard to track or hard to freeze and they're going to try and get it out as best they can quickly and get it to that Cambodian fraud exchange that doesn't care. This will push prices, price and sensitive seller selling as much as he can in the 15 minutes before his wallet start to get frozen. It really doesn't care that much about price. He's probably going to trade at bad prices. So like when you see North Korea doing a hack, you want to sit at the screen, you want to be on the other side of North Koreans because they're going to be selling at bad prices. This goes through to mean coins as well. We talked about there's negative trend effects with the smoker coins rate and mean coins are the smallest in the smoker. So not only is the negative trend effects downstream of that when a chart guy sees a trend on a chart, what he's seeing is momentum. But if we know that not only do we not have momentum, but we have negative momentum and if you see a chart that looks like this perfect bull flag or whatever on a mean coin chart, a small one, not one that's listed on exchanges, you know that that's artificially created. That's something that does not happen in nature at this market cap and size. And you can almost bet that that's crying. And when you see crying in crypto, you want to either trade against it or trade alongside with it depending on how much it's got to go. And so with mean coins, the play is finding things right now. One of the things that will absolutely take you sanity, that's very easy to do is to find a mean coin chart that is being shielded by everyone on Twitter and don't have nothing to do with it. Just look at the wall to buy and sell it and you'll find the same three wallets by and selling the next one. So you see a successful wallet and you get in on the next play before it. And as soon as you see them starting to support the tape and make it look like a beautiful work of art, they're spending money to commit a crime. And that's when you want to buy and you want to kind of have a rough guess where they need to get out to make money and write along and jump out before they get out. So let's stay on this meme coin, shit coin phenomenon that sort of took off and was pervasive in 2024 continues to be pervasive into 2025 here. A lot of people call it the trenches, this whole pump fun non-salana situation that's happening for people who are not paying attention to crypto markets. Can you first explain what is actually happening here? And then can you talk about you started to talk about it with the crime, but I'd love for you to expand how would people actually find edge in this market that appears to be from the outside looking in nothing but degenerate gambling. There's no fundamentals. This isn't tight anything. There's no real value. It is more or less just pure supply and demand randomly driven. I'm listening to that because the phase is so high and so extractive and it's obviously a net negative value for the world type situation, right? So how do you find edge when there's a really strong has edge against you, right? So it's probably good spot to talk about what causes the idea of crypto markets in general then get into meme. So we've got sticky and capital and sticky capital in crypto as a whole, but within a chance. So once a little bit of capital gets into salana, it washes around and creates further mean coin pumps. And so we saw that last year with bonk and then dog with pat that created a thousand mean coin pumps, just the residual liquidity flushing, frothing array. And so what that means is a small amount of, for example, capital flowing out of Bitcoin into salana chain. And those are two separate things like it's not all just crypto. To get it back out is such a ball like that it generally doesn't happen. So it frosts around and creates this illusion of massive liquidity, which isn't true. And so the upshot of that is that anyone who smart realizes that you have to take the liquidity while it's there because it's sure as I won't be there when you want. The next thing that we've got is we've got desire for leverage and things with lottery ticket like characteristics. And you see the situation where we're wired for story much better than maths. And this story of the bonk guy put in $500 and now it's eight figures and he helped through multiple eight figure draw downs and bull posted it the whole way. He went down from $10 million down to $2 million and now he's 50 million. And like that story is a human story that we're wired to. And this is the beating heart and soul of crypto. Like whenever you see the little guy gets a win that's something that you can bet is an idea virus. It's a virus that spreads and I've tested this like Mimcoin trading when I introduce my non crypto trading employees to it is addictive like crackies. So the next idiot of crypto is that we've got really small on offer instance like hotel California or always up at the casino but you can never stop playing. And we've got price incentive behavior on mass. We've got people buying Trump because they like Trump. We've got people falling coal falling influencers and we've got people who are making their identity tied to a cult. So I'm part of the XRP army and anything that you make part of your identity makes you stupid and you've got price incentive behavior. The next thing is we've got our wallet public. So for example I'm a large holder of a Mimcoin called Retardio for a bunch of you're going to laugh but I'll say fundamental reasons. If the other whales in Retardio saw my wallet start dumping I'd have some questions to answer. That would absolutely know that like wallets are public and after that the desire for exit liquidity is the biggest overwhelmingly the biggest idiot of crypto. It's the desire. Crypto people might seem stupid but they're not stupid. We know that this picture of a dog with a cute hat on it is not worth $3.6 billion like intuitively everyone knows that that's a delusion that is going to come crashing down to earth at some point so everyone knows and everyone is going to take the exit liquidity when it's on off and when the retail exit liquidity arrives they have to take it because it's not going to be there and so what this leads to is because we don't have proper fundamentals you've got friction on the way in, friction on the way out positive feedback leads going about which is why momentum and trend effects are so much stronger but it's also altcoins had 98% average bear market in 2022. It's just like the bear markets in altcoins are just horrific and so to a large degree in previous cycles VCs just took the piss and founders took the piss. It was hugely extractive 80% of people who traded crypto loss money over time it's just a hugely extractive way. All the criticisms of crypto are absolutely valid and true and so main coins are a reaction to that so instead of this sort of fake ass governance token we've got all these complicated mechanisms which are basically most crypto variations are trying to get the rules of the crypto token as close as possible to a Ponzi flywheel because we know that Ponzi go up and blah blah blah and you want to make it as close to a Ponzi flywheel as you can without going to jail so instead of that wait Ponzi flywheels in mutating variations we go straight to what's the true product market fit of crypto which is people just want something to bet on like let's bet on it people want to bet on a 2000 dollar or a 5000 dollar asset like you were telling me before the call your friend call a figures out over the weekend little guy hero champion cheer for that guy anytime you see that you know that people can get interest and means do that in a way that's really unpretentious without any of this fake market increase and it's the future of money in the future of technology and it's a way that an army can get oh it's a dog with a head on it you oh those oh they called the new department those we're wired for story and those stories are much more spreadable or mimatic than someone telling you I hear a sharp three strategy for crypto a much better story is this could turn a thousand bucks into 10 million and he's retired his blood way it's hard to not be cynical about that though because it is ultimately zero sum and you say that the pure product market fit is just betting right and gambling and I'm sure there are people who are ultimately dismissive of crypto so I want to contrast that and bring this way back around to something you were saying at the beginning of the conversation and something that people who are pro crypto talk about a lot which is the decentralized of finance and I want to talk about this idea where you were saying you might be able to take your trend program and Create a vault on the hyper liquid L1 and allow anyone to allocate capital to your program without KYC For people for whom nine out of ten of those words didn't make any sense I was hoping you could quickly explain what is it and why it's such an interesting opportunity So let's compare having the count with psychoinvice With self-custoding of your own coins if I have an account with coin base I hook my bank account at coin base. I buy some Bitcoin coin base hold to my Bitcoin and I have to trust that they Don't ban my account for some reason or put a block on it or whatever In defy I'm taking responsibility for my own coins. I'm having my own wallet and that wallet is not tied to my email address My address my nation. It's just an address that address I can hold coins you can dump those coins into What I'd like to do what I am doing actually is there's a new layer one which is a new type of blockchain called hyper liquid Which is a very very fast high performance blockchain? So first one is high performance enough to have an auto book in the blockchain and It's got a bunch of auto book primitives built into the rules of the blockchain So you can do basis trades you can do order book stuff all my trend features We'll go straight on there as well as basis trades and carry trades and all kinds of stuff. It's a very very Great way of starting it. I don't want to say that HF word because they're not in legal territory. It's just a smart country You can put money in you can pull money out it earns what the trend system earns you don't have to trust me when I say that my trend system returns X amount per year at X well You can just look it up on the blockchain. It's all public knowledge So I can't lie about my track record. You've got instant liquidity You don't have to tell you name to your wallet and the big advantage of trend in crypto is that it's non correlated to regular trend And that if you try and do track flight trend as a retail trader even with half a million bucks You can find a problem just because it contracts us but you can run with two thousand dollars you can run quite a diversified Crypto trend falling broke. So it's perfect for retail. I'm a retail guy at heart Who knows if he's to get a go-and-a-go retail guy at heart. I want to see the little guys make it and in my view I want a guy who's got a small amount of money in crypto should be cranking his vol up and taking some risks and getting paid for those risks Getting paid for all the distasteful nature and all the bad stuff that happens in crypto because it won't last forever Crypto is basically speedrunning every financial panic and everything that the traditional finance world figured out in 1880 or so through 29 like every single Grifty barnacle attached to tradfly world that we've seen in crypto You go back in time a hundred years and crypto guys are just too smart to go read a history book and figure out I get people have tried Ponzi fly wheels before people have tried banking panics before people have tried fractional reserves before people have tried all these scams before And any new technology has a grifty barnacle attached to it when the internet came internet and I know this because I was there Internet was 90% grief at the start And so it's a mistake to look at crypto as being this game because crypto was a skin Bitcoin's been going for 16 years Let me tell you an awful story. I sold a thousand bitcoins at an average price of $23 awful I don't think that's as bad as how much of the guy pay for the pizza in Bitcoin I mean And you know at the time you couldn't do anything with Bitcoin and I needed the money I needed money to live off you just couldn't do anything with Bitcoin It went from four bucks to 32 bucks and it looked like it was going straight back down to one dollar and I sold Panics all I had nine bitcoins left and thankfully I go close and then an exchange Mount Gox went bust and stolen and I just got him back It's a mistake to view it as it was when every year it gets a little bit more legitimate Bitcoin has been running for 16 years. It's never been hacked It still works exactly as function like Bitcoin is not really useful as Money because it fluctuates and price so much, but it definitely has a use case like I live in Puket Thailand and My little village in my little island is overrun with British Russians who Get their wealth out entirely through stable coins and Bitcoin. They don't have access to credit cards They don't have access to sweet banking system and my street. There's five little air-conditioned kiosks that look like street food noodle stands Where you can walk up and transfer some Bitcoin and they'll give you a sack with a hundred thousand dollars in cash Like this is just by the side of the road in an island in Thailand and so is that a good thing or a bad thing? Well if you had to pick use cases Switzerland's done pretty well out of money laundering and tax evasion over the last 500 years like I think the base case is that Bitcoin has a use what percentage of global finance Worst case scenario it's a small but significant fraction of global finance and my personal opinion is that this year was the first time that you could really say For sure that there's no second best crypto. I think that was open to debate until this year. I don't think Bitcoin's going away anymore What advice would you give to a new retail trader getting started today? Okay, so as a new retail trader if you think you have age in the FX markets you don't if you think you have edge scalping in queue futures You don't grow up like seriously grow up You need to find a way to make money today with the skills the technology the infrastructure that you have today now You might want to have $10 million in capital you might want to have a team of devs You might want to be good at maths and be able to program And so the classic new thing to do is to put that day of reckoning off And just learn stuff and you'll end up starting an undergrad Substack and being a fake bus the way to get into it as a retail trader is to find the easiest possible poker table to sit at By far the easiest tables to sit at are in crypto and then you want to find what you can make money with today So if you were coming in as a brand new trader today I wouldn't think you would be able to understand the idiosyncrasy of the crypto market at a deep level I wouldn't think you'd be able to compete with me in identifying on chain crime and monetizing it before People got out ahead of you. I wouldn't think you could do any of that I would think that you could do simple train strategies I think you could do simple carry strategies. I think you can do simple basis trading strategies And those are phenomenally profitable You can target over a hundred per city year comparing in crypto as a retail trader As long as you know, not Trading size and that's what I do and then learn more and learn by do Last question for you it's the same question. I'm asking every guest this season Which is to tell me about what you're passionate about today outside of what you do for job Books movies music something that's really caught your attention and your passion For me being a CEO of a company has meant that I've had to narrow my focus significantly So I have a bunch of hobbies like I'm a lifelong martial artist. I'm a Brazilian jiu jitsu and the position of my hobbies and my interests and everything in my life has had to come down to I have CEOing and then I have enough stuff to keep me healthy and then periodically seasonally I trade so I don't have much of a life to be honest I've got a four year old daughter and that's the thing that I'm really passionate about in my family and I've Beautiful Labrador and a couple of nice kiddies and we live on the beach in Thailand. It's a nice life and I mean you know because you're building a company like I'm building a company to sell and it's a very same as you where fellow travel is like I get you and I've got a lot of people riding up my judgment and so I feel the weight of that quite heavily to be honest Scott this has been phenomenal I really appreciate you taking the time to dive into these markets and I know that the listeners will have gotten a lot out of it So thank you. I really enjoyed it and yeah, I'm a huge fan and yeah, I'm a little well-wisher on the fan so excellent